The Ignorant Investor

Millions of low-technology jobs, from textile production to corporate call centers, have migrated to Asian countries like India and China in recent years. Now, though, high technology is increasingly coming up for grabs, and no company illustrates the speed at which corporate America can replace high-priced American talent with cheaper foreign brainpower than Conexant Systems.

(from Now, High-Tech Work Is Going Abroad, N.Y. Times, 11/17/05)

We spent the '90s watching low-skill, lower middle class jobs go overseas. So now we're going to spend the '00s watching the high-tech jobs go overseas. At what point does this trend begin to hurt our own growth?

I'm not an economist, but I have difficulty seeing how we maintain our economic strength by focusing our economy on the housing market and retail sectors. It's tough to export houses and shopping malls and doctor's visits and landscaping. How long before every job that doesn't require the employee be in the immediate area of the customer gets shifted to India, China, Singapore, Eastern Europe, and wherever else the local schools are churning out educated workers for whom a dollar an hour sounds like a very good wage? Some of the profits off these workers come back home, but there's no denying that there's less money in the hands of a large block of American consumers who used to, well, consume.

Seems to me that the rest of the world is growing while we're just standing still, waiting for them to catch up. I don't doubt that eventually China and India will see their labor costs rise. But between now and then, keeping all ones assets tied to the United States seems like a risky proposition. Mutual funds are a good option here. And because some of the foreign markets aren't as efficient at pricing stocks as our own are, investing in foreign stocks through an actively managed fund might not be a bad idea. Leastwise, that's what the conventional wisdom says.