I am working as a consulting software designer for a Silicon Valley Company. These folks used to be one of the world's premiere engineering companies with annual profits of more than a billion $$, major accounts around the world, monopolies on key technologies, etc. It used to be that the software division took up a whole floor at the company's offices. Today the same division is a ghostyard with over 80% of the cubicles empty. The reason is simple: software engineers in Shanghai cost $80 per month and software engineers in the US cost $8,000 a month (although contractors without health benefits cost maybe 1/2 that much). Obviously it makes sense to outsource the software development when it can be done 100 times cheaper.
However the low cost engineers in China and India (Shanghai and Dubai) cannot be expected to understand the industry or the market requirements for the products they are building so they cannot be expected to design the products themselves. This leaves a slender opportunity for Americans (like me) to remain empoyed if they are lucky enough to be designers. But my employer has committed themselves to a rather peculiar path for an engineering organization: first they outsourced the "grunt" engineering work and now (to my benefit) they have outsourced the intellectual property development. The only employees left are marketers, project managers, and salesmen. That is 5 people where there used to be 100s. It is very strange that an engineering organization does not employ engineers.
Looking a little more at the consequences of this is frightening. First of all, there is little to stop an Indian or Chinese technical person from becoming a designer like me. As soon as they are able, my employer should transfer my work to someone who costs less. By the time that is possible you could also get project management outsourced. Following the natural progression, my employer will soon be down to 1 salesman and 2 marketing experts. OK, so the good salesman's job is protected, but nobody else's. The problem is that after this draining of talent away from the company, there is nothing left to make the place competitive. In fact what was a complete monopoly 15 years ago has now been eroded by at least two significant competitors. How much longer does my employer expect to survive as an organization?
How does this work out for the company's shareholders, the so-called "owners" in this "ownership society". My projection is that the shares will be worth less and less as the company becomes less and less competitive. Why? I cannot see us sitting here as "owners" continuing to profit while everyone else does the work.
My industry, and software engineering in general, is one which is hugely vulnerable to outsourcing. Some industries are safer: Medical care and Farming are things which cannot really be outsourced. But we know that as long as goods and services can flow across the oceans, the flow will continue until there is equilibrium. This means the quality of life if going to keep flowing away from America and towards places like Shanghai and Dubai until we have equal quality of life.
Can I speculate about movie and book publishing? Creative work will always be possible for people in any country. I suspect our film industry will continue to lead the world. The writers and directors can continue to be American. But what about all the "grunt" work and mechanics of film-making? I suspect that, like software engineering, most of this work can be done overseas for much less money. How can a film studio justify worker salaries 100X greater than they need to be? Probably no better than a software company can.
So if this sort of thing continues without any government "interference", we are going to lose our competitive strength in the world - just one more aspect of our headlong rush to lose hegemony any way we can. It is impossible to imagine a healthy America, where we sit back and "own" the work of others. If we cannot build it then we are going to lose it. In the meantime I am not going to encourage my children to become engineers, or camera men. I hope they will be doctors, writers, lawyers, or maybe we should all go back to the family farm where we are safe from Tsunamis, terrorists, and where we can keep guns ready to shoot Republicans when they get too near. We should look forward to returning to an agrarian America.
One last word about Microsoft's contribution to the current state of affairs of software development. We used to get wry smiles when we contemplated each new iteration of Microsoft technology. [The software would get bigger and more bloated with features that did not work right. But each new iteration would require a more powerful PC to run and, working hand-in-glove with Intel, these guys had it worked out to whipsaw the PC-buying public into forced new PC purchases every three years. Finally someone wised up and said: I don't need a faster PC. That is about the time the 'internet bubble' burst and Linux came on the scene. In fact it was the "WinTel" strategy that burst.] On the software development side, Microsoft played a different role. Each new version of Microsoft compilers required learning new skills. We started with a very fine product in "C" 4.0 and then they introduced Windows. Everyone had to go back to school and learn new things. Then Microsoft stabilized that part of the development process while experimenting with different forms of inter-operability called "OLE" or "COM". They played with easy development in the form of Visual Basic. Somewhere in there they missed the internet and web browsing and Java and then belatedly they developed the .NET development environment. Each of these changes required learning new skills until you got too old to do it anymore. Each new iteration antiquated a previous generation of workers. So, increasingly, software engineering could only be done by the young. Each new iteration invalidated the experience of the older workers. This created a significant bias agains older workers - the older you are the harder it is to learn new technologies but there was little trade-off for acquired experience. By obliging software development to be done by the young, Microsoft has greatly contributed to the threat of outsourcing software engineering jobs - Microsoft has taken away the compeitive advantage of the more experienced workers. I think that too is part of the dynamic moving us towards non-competitiveness.