The Indo-Chinese Menace

Here's an essay that I wrote a little bit ago, with a few updates to account for newer data - before the whole illegal immigrant thing made outsourcing outrage seem quaint:

Is there anything scarier than foreigners who will take over US jobs and usurp the US position at the head of the global economy? During the 1970s and 1980s, the Japanese stole our jobs and became more educated than our children. In the 1990s, the Asian Tigers (Malaysia, Indonesia, Thailand, Hong Kong, Taiwan, and South Korea) and Mexico conspired to steal even more American jobs. The menaces of the new millennium are the Chinese and the Indians. They have already started stealing our jobs, and pretty soon they may become smarter than we are.
Unfortunately, this characterization is largely inaccurate. The Japanese menace was largely illusory, built on a pile of bad loans and overvalued real estate. They have made large inroads into everyday American life, with Toyota currently in a position to overtake Chrysler as the third largest automaker in the United States and companies like Sony and Panasonic dominating the electronics industry, but we are still here. There are more jobs today than there were at the beginning of the 80s, even in industries that the Japanese were poised to dominate, like cars. The Asian/Mexican threat was also overblown. The Asian Tigers collapsed under their own weight, and while NAFTA has brought more jobs to Mexico (many of them straight from the United States), the US has also benefited, with trade stimulating demand and increasing jobs in other industries.
Now our jobs are being taken by people in India and China. The internet has made it possible for call centers, computer programming, and other data driven jobs to be outsourced to anywhere in the world. As a result, people in the United States are at a disadvantage, because it costs more money to keep those jobs here than it does to move them to India. Some people argue that with the unemployment rate at 5.7% [currently unemployment is at 4.7%, proving that these people were alarmist], the US job market clearly cannot take having any jobs move overseas.
Despite their concerns, the US economy can readily export those jobs without much worry. Some of them will come back, as Dell Computers learned, because customers complained enough about incomprehensible accents and misunderstandings that they brought those jobs back to the United States. Beyond that, however, if some jobs are not moved overseas, the US economy will suffer disastrous consequences in the near future. Currently Baby Boomers hold most of the jobs in the United States. Unfortunately, every generation after them have been mere echoes, and as a result, when they start to retire, the number of Americans eligible to work will start to decrease.
This shock will be somewhat front-loaded, as more Baby Boomers were born at the beginning of their generation than at the end. As a result, there will be more jobs for fewer workers. There will be unfilled jobs, leading to US industry becoming less competitive, and foreign companies will have to pick up the slack, leading to an even larger trade deficit and more Americans buying Chinese products. This will make US companies less competitive (they will lose their economies of scale and prices on their goods will increase) and make the US dollar weaker against major currencies, leading to increased prices on imported goods. Those increased prices will force Americans to spend more, spurring inflation which would further weaken US companies and force them to send even more jobs overseas to try and compensate for the decrease in real profits.
Of course, that is a worst case scenario; however, it is still very real. As a result of the 2001 recession, companies have started moving those jobs overseas before they really needed to. In the long run, this will benefit the economy because US multinationals will already have the infrastructure and capabilities to be flexible in 2010, when the number of working Americans will decrease for the first time in history. We are beginning the transition to a new economy, one that we have not seen before, and it would be foolish of us to try and stop it. In the end we will only be hurting ourselves. Of course, that is no consolation to those who are out of work, but that will always be a caveat unless the unemployment rate is a theoretically impossible 0. Instead of worrying about the effect that India and China will have on the poor American worker, think about the rising standard of living these companies are bringing to other nations, opening up new markets for US goods that were previously too expensive for their people. We are facing a little hurt now, but it will save us from a big crash in the future.