The latest development in the outsourcing of America is the startling and almost unimaginable news that American drug companies are “outsourcing” their R and D (Research and Development) to China. This was supposed to be impossible. But the impossible is now not only possible but, if one looks back on the evolution of outsourcing in the United States from the end of World War II, also inevitable.
When, just a few years after the war ended, American producers began to get their work done in countries in which they could get cheap, child and even slave labor, the first industry in which American workers were losing their jobs was the apparel trades, the single-largest employer in American manufacturing. But the conventional wisdom was to tell these workers “not to worry.” Wages in the apparel industry were relatively low. The workers who lost their jobs in apparel would find more lucrative employment in the electronic assembly industries — assembling radios and televisions.
Then when the electronic assembly business began to be outsourced — as it shortly was — workers were advised that they would find better employment assembling computers. But when these jobs began to move overseas, we were advised that while assembly line jobs might leave the country, computer engineering would flourish in Silicon Valley.
But when the skilled jobs were transferred to some thousands of computer engineers in Lahore, India, and other centers in Asia, the nation was advised that while we might lose our manufacturing sector — for many years the backbone of the American economy — there would be more than enough jobs in the service sector.
But even as these soothing sages spoke, banks and insurance companies were moving their back-room clerical operations to countries in which they found English-speaking clerks.
The next step was to move centers you call to get information in how to respond to problems — like computer glitches. The voice you got might have a slight foreign tinge to it, since it was located in India. Also call centers that solicit you to buy a given product or service were moved from the United States to places like India, where solicitors take courses in how to speak English with an American accent.
Then came a few bizarre developments. Medical X-rays taken in the United States were transmitted to specialists in Asia for reading and interpretation. Why? Because it was cheaper to do so than to have them read here.
More bizarre was the outsourcing of legal work by American firms to foreign countries. The work was sent to young folk who had come to America to study at our law colleges. They then went back home to be with family and friends and to spend a life in a culture that is more comfortable for them. They do exactly what they would do if they were here in an American firm; the only difference is that they do it over there, and they do it for less.
Generally, for the high-level sector that was being outsourced, countries like India were favored because they spoke English. But now, The Wall Street Journal trumpets the latest development with the headline, “Drug Companies Look to China for Cheap R and D.” What’s next?