Meet the Zippies
Thomas Friedman jumps on the “outsourcing” issue that’s been the rage of the blogosphere the last few weeks.
“The Zippies Are Here,” declared the Indian weekly magazine Outlook. Zippies are this huge cohort of Indian youth who are the first to come of age since India shifted away from socialism and dived headfirst into global trade, the information revolution and turning itself into the world’s service center. Outlook calls India’s zippies “Liberalization’s Children,” and defines one as “a young city or suburban resident, between 15 and 25 years of age, with a zip in the stride. Belongs to generation Z. Can be male or female, studying or working. Oozes attitude, ambition and aspiration. Cool, confident and creative. Seeks challenges, loves risks and shuns fears.” Indian zippies carry no guilt about making money or spending it. They are, says one Indian analyst quoted by Outlook, destination driven, not destiny driven; outward, not inward, looking; upwardly mobile, not stuck-in-my-station-in-life.
With 54 percent of India under the age of 25 Ã¢€” that’s 555 million people Ã¢€” six out of 10 Indian households have at least one zippie, Outlook says. And a growing slice of them (most Indians are still poor village-dwellers) will be able to do your white-collar job as well as you for a fraction of the pay. Indian zippies are one reason outsourcing is becoming the hot issue in this year’s U.S. presidential campaign.
Somehow, I don’t think this issue will decide the race. Indeed, John Edwards is staking much of his candidacy on it and has won only one state in the Democratic primaries with it.
Taking all this in, two things strike me about this outsourcing issue: One, economists are surely right: the biggest factor eliminating old jobs and churning new ones is technological change Ã¢€” the phone mail system that eliminated your secretary. As for the zippies who soak up certain U.S. or European jobs, they will become consumers, the global pie will grow, and ultimately we will all be better off. As long as America maintains its ability to do cutting-edge innovation, the long run should be fine. Saving money by outsourcing basic jobs to zippies, so we can invest in more high-end innovation, makes sense.
Well, yes. Although it seems to defy the premise of the problem, which is that they’re just as smart and tech savvy (if not more so) and will work for less money.
But here’s what I also feel: this particular short run could be a real bear Ã¢€” and politically explosive. The potential speed and scale of this outsourcing phenomenon make its potential impact enormous and unpredictable. As we enter a world where the price of digitizing information Ã¢€” converting it into little packets of ones and zeros and then transmitting it over high-speed data networks Ã¢€” falls to near zero, it means the vaunted “death of distance” is really here. And that means that many jobs you can now do from your house Ã¢€” whether data processing, reading an X-ray, or basic accounting or lawyering Ã¢€” can now also be done from a zippie’s house in India or China.
I thought “zippies” were, by definition, Indian? And one wonders how much lawyering a Chinese kid is going to be able to do from his house.
And as education levels in these overseas homes rise to U.S. levels, the barriers to shipping white-collar jobs abroad fall and the incentives rise. At a minimum, some very educated Americans used to high salaries Ã¢€” people who vote and know how to write op-ed pieces Ã¢€” will either lose their jobs, or have to accept lower pay or become part-timers without health insurance.
That’s a trend that’s gone on for a couple centuries now. Although, granted, the pace is much faster in the digital age.
“The fundamental question we have to ask as a society is, what do we do about it?” notes Robert Reich, the former labor secretary and now Brandeis University professor. “For starters, we’re going to have to get serious about some of the things we just gab about Ã¢€” job training, life-long learning, wage insurance. And perhaps we need to welcome more unionization in the personal services area Ã¢€” retail, hotel, restaurant and hospital jobs which cannot be moved overseas Ã¢€” in order to stabilize their wages and health care benefits.” Maybe, as a transition measure, adds Mr. Reich, companies shouldn’t be allowed to deduct the full cost of outsourcing, creating a small tax that could be used to help people adjust.
Now, Reich is a really smart economist and I’m just a guy with a blog, but I fail to see how unionizing unskilled labor that’s by definition not mobile is going to solve the outsourcing of white collar jobs.
Either way, managing this phenomenon will require a public policy response Ã¢€” something more serious than the Bush mantra of let the market sort it out, or the demagoguery of the Democratic candidates, who seem to want to make outsourcing equal to treason and punishable by hanging. Time to get real.
What, precisely, does that mean? He doesn’t say–that’s the end of the column.
Update: Matthew Yglesias says Friedman is “totally right.” About what, he doesn’t say.