Good news on outsourcing

Date: Thursday, June 29, 2006 6:24 PM

<<<<< JOB DESTRUCTION NEWSLETTER No. 1510 -- 06/29/2006 >>>>>

This article starts out somewhat pessimistic but it does have a silver
lining. Alan Blinder, a professor of economics at Princeton University and
former vice chairman of the Federal Reserve, cited two careers that may be
immune to outsourcing - babysitting and surgeons.

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http://money.cnn.com/2006/06/29/news/economy/fed_brainstorm/index.htm

Not sweating the Fed
Outsourcing and energy, not interest rates, dominate discussion about the
economy at Fortune's Brainstorm conference.
By Paul R. La Monica, CNNMoney.com senior writer
June 29 2006: 6:56 PM EDT
ASPEN, Colo. (CNNMoney.com) -- Forget about the Fed. Attendees at
Brainstorm had longer-term economic concerns.

Although the Federal Reserve raised the target on a key short-term interest
rate for a 17th consecutive time Thursday, economists at Brainstorm, a
conference sponsored by FORTUNE Magazine and the Aspen Institute, were not
discussing the rate outlook, inflation, or other factors that have recently
roiled the markets.

Instead, the issues of outsourcing, technology and energy dominated two
panel discussions about the global economy on Wednesday.

Alan Blinder, a professor of economics at Princeton University and former
vice chairman of the Federal Reserve, said the biggest threat to U.S
competitiveness in the global economy is the continued shift of jobs
overseas.

"The potential shift is massive, dwarfing anything we've seen in the past
couple of years," he said. Blinder estimated that between 28 million and 42
million jobs in the U.S. are "potentially offshorable" and warned that it
may not just be manufacturing and call center jobs that are at risk.

He said that any services job that doesn't require a large degree of
personal service could wind up being lost to competitors and he thinks that
a lot of white-collar workers are not prepared for this.

"To put it crudely, a lot of people like us are not used to the idea of
competing with people in India, the Philippines and China for jobs," he
said.

Blinder said that the labor force needs to be educated and that workers
need to focus more on jobs that are "personally delivered." However, he
said that it's not simply about skill and education; he cited both surgery
and child care as examples of jobs that were probably too "personal" to be
outsourced.

Waking up to playing catch-up
Speaking on the same panel, Thomas Hazlett, a professor of law and
economics at George Mason University, stressed how important it was for the
U.S. to catch up to Europe and Asia in certain aspects of technology, most
notably wireless telecommunications.

He said that while many other nations already offer the next generation of
wireless voice and data services through so-called 3G networks, the U.S.
remains stuck trying to figure out how to allocate the proper amount of
bandwidth to carriers.

"The U.S. has sat idly by while 3G licenses were being issued around the
world," Hazlett said.

Hazlett said that consolidation among carriers in the U.S., such as
Cingular Wireless' purchase of AT&T Wireless in 2004 and last year's merger
of Sprint (Charts) and Nextel have been the only way for wireless companies
to be able to upgrade their networks since they have to "make do with less
spectrum."

Gary Flake, a technical fellow with Microsoft (Charts), echoed concerns
about investing in new technology. During a question and answer session, he
said it was "shameful" that the U.S. lagged other areas of the world.

Flake added that another area of technology that the U.S. must do a better
job of supporting is the burgeoning field of alternative energy.

"We should have a man on the moon type mission for new energy sources," he
said.

And the discussion of biofuels like ethanol, as well as solar power and
wind turbines were a big part of another panel Wednesday.

Lester Brown, president of the Earth Policy Institute, an organization
focusing on ways to provide an "environmentally sustainable economy" said
during a panel highlighting the risks of global consumption of oil and
other natural resources, said that is becoming obvious that there needs to
be an alternative source of energy besides oil.

"We are an oil-based civilization. Oil is a depletable resource and it is
being depleted," he said, adding that the drain on the world's oil supply
will only worsen as China becomes more of an economic power.

Brown said that companies need to look more seriously at so-called
cellulosic ethanol, which is made from inedible parts of plants, as well as
solar and wind power. He said that one way to possibly spur investment in
alternative energy would be to change the tax system, i.e. raising energy
taxes while lowering income taxes.

It's debatable how well that would go over in Washington. But William
McDonough, a well-known architect who runs his own design firm, said it
would be economically short-sighted to maintain the status quo with regards
to energy. He pointed out that the construction of solar receptors and wind
turbines would be good for the economy since it would add jobs.

Nonetheless, as daunting as many of these economic challenges may be, it
was refreshing to hear more talk about longer-term problems and not a
myopic focus on when the Fed is going to pause.

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