In Offshoring: The Next Industrial Revolution in the current issue of Foreign Affairs, Prof. Alan Blinder, former Federal Reserve Vice Chairman, shows us why the New Economy had good currency at the Fed while he was there. He posits that as manufacturing takes up fewer and fewer jobs, the economy is going to mostly be two types of services: personal services and impersonal services. The former will be what almost everyone does in rich countries while they import impersonal services from poor ones.

This strikes many of the same chords as Glenn Reynolds's new book, Army of Davids (reviewed here and here).

He has a genuine dislike of teleoperation of heavy equipment expecting that, "It is unlikely that taxi drivers or airline pilots will ever be electronically delivered over long distances." Co-pilot seems to be a good job to offshore especially now that we have many trained teleoperator pilots that are already plying the civilian airspace. How often does the pilot become incapacitated, anyway? Taxi, too is a good one for offshoring. Especially if we can get a good liability regime together. DARPA already has the robot taxi contest. Maybe the tele-operator will have less to do so we won't worry so much if they are only a co-pilot for the robot. Most of a taxi driver's time is spent waiting. If that was multi-plexed so that a taxi waiting in line could be left without an operator making those trips cheaper and/or more luxurious depending on the regulations.

He also says that, "Most physicians need not fear their jobs will be moved offshore...." I agree, but mostly because the state is sharply protectionist with goverment purchases even as it promotes a free market for private industry and reaps higher taxes for the efficiency. Other countries have excellent doctors and as we spend more and more on services instead of cars and computers as they get cheaper, those doctors will compete with US doctors via telemedicine, internet drug sales, offshore dial-a-nurse and other cheaper substitutes to 7 minutes of a US physician's time.

He concludes, "Janitors and crane operators are probably immune to foreign competition...." Why? High bandwidth internet video and the crane operator will do fine. A teleoperated robot will certainly become competitive for sweeping floors and emptying trash cans if we ever get serious about blocking illegal immigration and alien workers.

He thinks that the keys to personal services are "face-to-face (child chare), inherently 'high-touch' (nursing), ... involve high levels of personal trust (psychotherapy), and some depend on location-specific attributes (lobbying)."

I think that child care can be delivered on a hybrid model with a tele-operated monitor providing alert service to an on-site home office worker. Much of nursing could be provided remotely: patient history and bedside manner can be provided by video call. Pychotherapy is denied to most of the economy who are uninsured so may be ripe for a cheap off-shore telephone alternative. Lobbying is already done on cell phones sometimes.

So what won't be outsourced? Premium services that we like a person better than we like a robot or a telepresence: waiter, massage therapist, live performer, personal chef, bartender, limo driver, concierge, greeter, agent/broker (but only for the nostalgic), coach/trainer, techster, expensive purchase sales staff, and so on. People we tip, people we seek when we want luxury will be around. People who we don't notice like sanitation workers, truck drivers, and the like are ripe to be teleoperated. Is native language without accent and native facial features important (TV performer)? If so, it will stay on shore. If a teleoperated robot can handle it and people won't freak out, it will be off-shored.

The industrial revolution of off-shoring, teleoperating, robotics and telepresence is now underway. To firms that guess wrong about what jobs to outsource, we will have to bid ta-ta.

"waiter, massage therapist, live performer, personal chef, bartender, limo driver, concierge, greeter"

So, you mean that those of us with liberal arts college degrees will already have a lock on the positions most likely to survive?

Woo hoo! I knew I spent all that money for something! :)

The good news is that the jobs will pay very well because people will be able to afford houses in the country, cars and lots of manufactured goods and digital products and impersonal services. It may be expensive to lure them out of their impersonal paradise.

So, how long before we go off the deep end and wander into "The Machine Stops" territory? :)

Apochryphal story: Henry Ford ask Walter Reuther where the union will be when factories are all machines (offshore). Walter asks Henry who will buy the cars. Jonathon Schefler, Technology Review, 1989

So...after we've outsourced our industry, and then outsourced our impersonal services ... what will our economy be based on exactly? And why will the countries with the industry and the services keep providing us with goods and serving us? I've always thought this new economy stuff a little foolish. To trade, it always requires we have something to give in return. We can't base our economy off lotus eating and playing.