In economic terms, it makes perfect sense for a letter carrier to sub-contract. Say Postman Paul is earning $150 after tax per day for delivering the mail, but can make more money working in construction. (Before taxes, Canadian postal workers make around $23 per hour plus benefits - more if they can complete their route in under the allotted time.) Unemployed Al is willing to deliver the mail for $75 in cash. Imagine Postman Paul pays Unemployed Al $100.
Al is better off - he'd do the job for $75, and gets $100. Paul is better off - he has $50 cash in his pocket, plus freedom to work his other job. What's wrong with this arrangement?
Such contracting out has a long history: in one of the oldest books written in the English language, Chaucer refers to "farming out" a church living. This is how it works: A well connected priest obtains a church living, that is, the right to receive a fraction of the money local people are required to donate to the church. The official priest then hires a parson to do the actual work of preaching, ministering to the sick, and so on, then lives a comfortable life of leisure.
The historical parallel makes me feel that contracting out work is fundamentally wrong: the poor should not pay taxes so that a well-connected priest can live in style.
But what is the moral, practical, philosophical and economic difference between a worker outsourcing his or her own job, and a corporation outsourcing that job?
One could argue that, when a corporation outsources the job, the cost savings are passed on to the consumer in the form of lower prices. Yet it is an empirical issue how many of the cost savings are passed on - 100%, 50%, 25%, 0%? When less than 100% of the cost savings are passed on to consumers, are corporate outsourcers doing the modern-day equivalent of farming out a church living?
(Thank you, L, for bringing this item to my attention).