Is the fear of offshoring rational?

is it rational? yes; is it valid? I dont think so. In the short and the long run I think it is going to create better environment for American workers.

In addition to obvious theory of migrating the low cost, high labor work and keeping the knowledge worker work on shore, there are other factors at work this time in dealing with India and China.

1) Move to new industries. Just like electronics became a low margin industry over time and US companies moved to high margin industries (software, computing and telecommunications), this is a shift when computing maybe a low margin industry and high margin industries are Biotech, Experience/Personalization of products for cusotmers, creative content creation, education etc.

2) Ushering of a Creative Worker Era and decline of the knowledge worker era. Focus needs to be back on innovation in America on new industries.

3) Opening economy also is opening new venues for American schools to attract new talent from these countries for industries of tomorrow.

4) ReEstablishing same industries by using offshore components as commodity components.

What we need to do to benefit from this change

A) lift bans on research in new industries (Stem cell research). Even though states are funding research on their own (CA funded $3B over 3 years for Stem cell research)

B) Establish closer ties with neighboring countries (e.g. Mexico) to close the wage rate gap with India and China. China's wage rate is less then $1 compared to US wage rate of ~$20/hour. Mexico wage rate is ~$2.5 which can help US in closing the wage rate gap.

C) Tough negotiation with China and India on intellectual property rights. This is currently the largest drain on US business revenue.