A conversation with Jaeger a couple days ago reminded me of the RentACoder site.

Tonight, weary of a job search that has produced no results so far, I wandered over to the site, browsed around for a while, and decided to bid on a couple of little projects. To figure out amounts for my bids, I made a rough guess as to how long I thought it would take me to do a given task, multiplied my number of hours by what I would consider an acceptable hourly wage, also made sure to factor in the 15% cut for the middle man, and entered my bids.

Having browsed the site a little longer afterwards, I have a sinking suspicion that my bids will not be accepted, not only because I have no history on the site, but looking over completed past projects (which interestingly, are viewable by everyone), the bids that got accepted on many of the jobs turned out to be exceedingly low. One may as well work at Taco Bell. (Though admittedly, coding would be more fun.)

I found it amusing that in one of them, the coder even estimated in the comment section that the job would probably take 3 hours. The bid? $20. Subtract rentacoder's 15% cut, and it comes out to less than $6/hour.

What's going on here? Nobody could possibly make a real living on that, right? Maybe it's just a bunch of people amusing themselves by poking around in their spare time? Teenagers (or people slightly older than teenagers [gulp]) still living off their parents? Or...

Looking at the coders' profiles reveals more. Over and over, for the majority of coders, especially the higher ranked ones, the location field reveals India, various parts of the Ukraine, and elsewhere. (Though I did manage to find 1 among the top ranked hall of hame batch who who was from the U.S., so maybe it's not entirely hopeless.)

So this got me thinking.... About trade policy, overseas outsourcing, and other associated hot button political topics that are all the rage.

Though I generally have tended to favor free trade, I have never taken a strong position on the matter of protectionism, not that me "taking a position" on this, or any other issue, matters one iota in the grand scheme of things.

Going at it from a free market perspective, if a coder from India can as good or better job than I, for a fraction of the cost, then by all rights, they should get the job over me because they're obviously being more efficient.

Of course, we all know the real reason they're able to give such a great bargain isn't so much that they have super human ability to be efficient (although I'm sure they're very good). It's because all other expenses are significantly lower, when measured as U.S. Dollars. Housing, food, clothing; all a fraction of what you'd normally pay in Colorado, or any other part of the U.S.

This part of the equation, the part that has nothing to do with who is really being more efficient, but instead has everything to do with massively unbalanced local market values, seems hugely unfair. But such is life, right?

So, while we're idly debating policy, what might be a good solution, in terms of what congress et al should do? (Not that they ever will, of course.)

I'll go out on a limb and declare that protectionism, in the long term, doesn't work. Such policies might save jobs for a few years, but only at the expense of long term competitiveness. (I could go into further detail, but it's been debated ad nauseum elsewhere. However, if someone really wants to engage on the matter, we can do so in the comments section.)

To get closer to an answer, let's look at a microcosm of another similar situation. During the boom, and even afterwards to a certain degree, wages in Silicon Valley were grossly inflated by the rest of the country's standards, and for similar reasons. The cost of living was (and still is?) much, much higher in San Francisco than everywhere else.

So you might have people getting by on salaries of $25k/year in, say, small town Montana (or something), whereas such a sum probably wouldn't even pay the rent on a basic apartment in Mountain View, CA.

If people start telecommuting from Montana to undercut the jobs in California, do we need to put a tariff on them? Of course not. Why?

Because, in a case like this, the markets pretty much work themselves out. If the cost of living in the Valley becomes too ridiculously expensive, people won't be able to find work nearby, and will move elsewhere. Housing prices will drop to something slightly more reasonable (though they'll probably still be higher, due to one place being more desirable to live than another), and some will move back. Which is exactly what happened.

We need the same kind of policy with India, Russia, Mexico, and every other country on the globe. That is to say, if we are going to have free trade, it needs to work both ways. Anyone and everyone in the U.S. who isn't happy with the market conditios here should be able to get up and move to Delhi and back just as easily (legally speaking) as they can go from New York to Seattle. Ditto for Mexico, Argentina, Europe, China, and Africa. (Or, at minimum, all the countries where we have free trade agreements.)

Naturally, this would also mean we would get an instant tide of Mexican immigrants, currently known as illegals. They wouldn't have to worry about border patrols or INS, which would mean the ones who are here could bargain for better wages, since they wouldn't have to fear deportation. (It might also act as an incentive for Mexico's own government to get its act together economically before they lose their entire labor pool.)

Global markets and free trade, if they are to exist at all, should apply in every sense of the word.

Fair, simple, and reasonable. Why not?