In a book (read it here) that’s starts with a lack of humility that we’d expect from anyone in finance these days, Andrew Lees argues that the productivity gains that the Western-World has seen are built principally around the exploitation of energy. And explaining how the availability of lower-cost skills in other countries provides a boost to profits, he writes:

The U.S. could therefore achieve a far greater energy subsidy by outsourcing production to the massive potential labour forces of Asia, than by trying to achieve productivity growth on its own.

Much of the logic in the book is compelling, though it’s principally about credit-crunches and not about the costs or benefits of outsourcing.

There are human costs, of course, to this urge to reap greater “energy subsidies” as related in this article in the New York Times. The heartbreak is that much harder to stomach when you read about the current Dreamliner mess. More about that in another post, but check out Andy Lees’ book linked above. It’s been a hard read for this engineer, but well worth it.