The Economist has a subscriber-only editorial and article about offshoring. From the former:

Like trade in goods, trade in services forces painful redistributions of employment. A study for the Institute for International Economics found that, in 1979-99, 69% of people who lost jobs as a result of cheap imports in sectors other than manufacturing found new work. But those figures are only for America, with its flexible job market, and leave a large minority who did not find new employment. Moreover, 55% of those who found new jobs did so at lower pay, and 25% took pay cuts of 30% or more. Some of the gains from free trade need to be used to ease the transition of workers into new jobs.

But those gains are substantial. Some arise simply from organising work in more effective ways. A fair part of the work that moves abroad represents an attempt by companies to provide a round-the-clock service, by making use of time zones. To that extent, offshoring directly improves efficiency.

In addition, a recent report on offshoring from McKinsey estimates that every dollar of costs the United States moves offshore brings America a net benefit of $1.12 to $1.14 (the additional benefit to the country receiving the investment comes on top). Part of this arises because, as low value-added jobs go abroad, labour and investment can switch to jobs that generate more economic value. This is what has happened with manufacturing: employment has dwindled, but workers have moved into educational and health services where pay is higher (and conditions often more agreeable)...

The British once feared the rise of America's industrial might: today, both nations are vastly wealthier than they were. In services, as in goods, trade brings benefits too great to refuse.

I referred to that "benefit of $1.12 to $1.14" before, but I forgot.

Meanwhile, LOUIS UCHITELLE worries about what will happen When the Chinese Consumer Is King

For decades, the United States was the world's only significant mass market, offering businesses more than enough consumers to buy up ever greater volumes of their merchandise and services. To gain access to all these consumers, companies had to operate inside the country. And they could do so very profitably, because they benefited from economies of scale, meaning that each item coming off an assembly line was less expensive to produce than the one before.

The wealth generated, in profits and wages, has made the United States far and away the world's most powerful nation for nearly a century. No one else had ever been able to match the American achievement. But now the world is witnessing the birth of a mass market in China, whose 1.2 billion people hold the promise of consumption on a much greater scale than in the United States.

But for him, power seems to reside primarily in resisting free trade:

China's power seems certain to increase as it develops its mass market, chipping away at the American role as the world's buyer of last resort, the only nation capable of bolstering other countries' economies with its vast purchases of their goods and services. For 60 years, that purchasing power has made America the unchallenged leader in trade negotiations and political influence, a leadership now gradually eroding.

A big stick in this leadership, apart from military might, has been the threat of tariffs and import quotas - of cutting off the golden American consumer from outsiders. But with the rise of China as an alternative mass market, American restrictions on European steel imports or Brazilian citrus, for example, lose potency. Why worry that much about being kept out of the United States when China provides more than enough buyers?

The man apparently knows nothing of comparative advantage. Still, assuming China does grow, he's right about the waning of American pre-eminence. It won't just be schlocky American culture that dominates the market, but some equally hideous Chinese crap. And then there's India...