This story of human progress has been uneven across countries. Europe, North America, and a few other locations have witnessed the greatest increases in real per capita income and the greatest decreases in poverty. By contrast, the standard of living and the extent of poverty in many African nations have changed little over the past 250 years.

The past half-century is but a small part of a story that has evolved over the course of 250 years or so. In the middle of the eighteenth century, perhaps 90 percent of the world’s population lived in a state of abject poverty, subsisting on the equivalent of less than $1 per person per day, measured in today’s terms.

If you find this hard to believe, you can look west or east. In Japan, efforts to “protect” workers from international trade resulted in economic stagnation and have depressed real income growth over the past twenty years. In Europe, similar efforts to “preserve” the jobs of existing workers have resulted in higher , not lower, unemployment because firms are unwilling to hire people that they cannot fire later.

If you own the only grocery store in your small town, you are clearly harmed if a competing store opens across the street. If you work in a small telephone equipment store and a large company starts taking away business via Internet sales, you will obviously be worse off. If you used to be employed at a call center for customer service at Wal-Mart and have just lost your job because Wal-Mart outsourced to a cheaper Indian firm, you will have to look for a new job.

U.S. firms are not the only ones that engage in outsourcing. Many foreign firms do the same. When a foreign firm outsources to the United States, we can call it insourcing . For example, Mexican firms routinely send data to U.S. accounting businesses for calculation of payrolls and for maintaining financial records.