At first glance, Telecom’s decision today to “offshore” 250 help desk jobs to Manila looks like a cynical and pointless attempt to go for the lowest common denominator – lower wages regardless of where people work.

But I want to stand up for Telecom on this and say this a price worth paying for free trade and a globalised workforce.

Obviously the 250 people who lost their jobs will feel the pain directly and I don’t want to disregard the disruption and financial losses they may feel. I’m sure Telecom will be making redundancy payouts and many will find other (potentially more satisfying and rewarding) work elsewhere, but being let go is no fun. It would be tempting to say this is a bad idea and we should protect our own. It wouldn’t be hard to mount an argument that New Zealanders would look after New Zealand customers better than Philippine workers. This customer service theory may be true and Telecom may be proved wrong in time, but Telecom needs to be allowed to carry on with its trial.

The worst thing would be to ban this sort of offshoring. The biggest threat right now to the global economy (and New Zealand in particular) is the closure of borders to trade, to financial flows and to labour flows, either in the direct form of migration or indirectly through outsourcing. Put simply, trade makes everyone wealthier. It is also one way to redirect wealth from the rich to the poor, while making everyone a bit wealthier.

The big mistake made during the depression of the 1930s was to shut down trade and to try to protect jobs at home. Trade collapsed, which extended and deepened the depression. This makes poor people even poorer globally.

Restrictions on trade and the free movement of capital and labour should be fought tooth and nail. The signs are bad from Europe and the United States at the moment with export subsidies for dairy products being reintroduced by the EC and Congressional Democrats trying to insert a “Buy American” clause in President Obama’s US$800 billion-plus fiscal stimulus.

The other point here is that Telecom needs to be a bit more ruthless and focused on cutting costs to rebuild profits for shareholders and to preserve cash to reinvest in the likes of fibre-to-the-kerb broadband and a (true) third-generation mobile network. All power to them.

Last 5 posts by Bernard Hickey

• Dear John: Please tell us the truth about the economy - we can handle it - February 23rd, 2009
• Kill the glass white elephant in Dunedin with a rates revolt - February 9th, 2009
• A ‘rolling maul’ budget is better than an ‘up the jumper’ miracle - February 8th, 2009
• Freeze public-sector wages and lift the minimum wage - February 2nd, 2009
• Five reasons why Alan Bollard should not have cut the OCR - January 28th, 2009