On progressive and regressive outsourcing

The meetings of the Public Laboratory for Inventive Creativity used to take place on Thursday evenings at Altshuller's apartment. Once Altshuller opened the meeting with an unusual statement: the belief that technology frees mankind is a myth !
- How come ? - Gorin asked with a disbelief.
- Look, - Altshuller said, - today while I have been working at my desk, I observed through the window how an excavator all day dug a pit in front of our building. Three laborers with shovels could have dug it out in 5 hours.
- Well, - Gorin replied, - it would have required 3 laborers, as you mentioned. Whereas the excavator's operator did the job alone. Hence, the technology freed two people !
- You forgot to add to this operator thousands of engineers and workers who designed and manufactured the excavator, - Altshuller objected.
- Well, they manufactured not a single excavator but many more, each of which freed, say, 2 people. On the whole, the number of the freed people is greater than the number of people involved in the design and manufacturing of excavators, - Gorin replied.
- It is a myth, - Altshuller said.
- No, no, no, - Gorin replied, - I disagree with you. Technology definitely frees mankind.

I recently recollected this debate while thinking about a hot issue of the current economy: outsourcing. There are two types of it: outsourcing of work to machines/technology and outsourcing of work to a cheaper labor. The former is progressive, the latter is regressive.

Outsourcing to machines/technology creates new occupations: machines/technology designers, manufacturers, maintenance personal, sale persons, etc. etc. The number of these people may really be greater than the number of the "freed" people (as Altshuller guessed). Moreover, it has to be greater in order for economy to expand and involve more people and support a bigger population. Since advance in technology does really bring about population growth and creates jobs, one can view it as a proof of Altshuller's insight.

Unfortunately, outsourcing of work to technology not always was a dominant trend in the history of mankind. There were times when outsourcing to cheap (or even slave) labor took place. Every time this happened, such an oursourcing created an impediment for the further technology development and deployment.

An example is the ancient Rome. The reliance on the cheap (slave) labor over there hindered the advance of technology. A more recent example is the US before the Civil war. The South did not wish to buy and employ machines manufactured by the North because slaves were cheaper. This put brakes on the technological innovation.

In both cases economy on its own could not overtake such an impediment. In the case of Rome, slavery as the foundation of economy disappeared with the fall of Rome. In the case of the US, outsourcing to cheap (slave) labor was eventually prohibited by law. Since then technology has experienced a rapid advance.

However, with advent of globalization, outsourcing of work to cheap labor has began to take place again. This time in the form of its outsourcing to poorer countries. It is cheaper to outsource hundreds thousands of jobs abroad nowadays than invent new technologies that automate them and thereby create new more intelligent professions around the automation that eventually consume the "freed" people. Even in engineering it is cheaper to outsource work to cheap engineers abroad than invent and deploy new engineering technologies that make engineering more efficient and engineers more productive.

The desire to reap profit this very moment precludes seeing the eventual losses in the long run. Meantime one lesson that can be gleaned from the history is that automation (including the automation of creative jobs such as engineering) is a recipe for creating new professions, new branches of economy and, thereby, its growth. This is the only way to achieve the real profits in the long run.

However, the history also teaches that economy on its own cannot pull itself from the trap of outsourcing of work to cheap labor instead of outsourcing it to technology. The political intervention is required.