Downsizing and outsourcing

Tyler Cow­an has an inter­est­ing sum­ma­ry of a recent book on the loss of man­u­fac­tur­ing labour in the USA bq. The notion of “regres­sion toward a mean” describes the man­u­fac­tur­ing sec­tor bet­ter than the uni­ver­sal down­siz­ing hypoth­e­sis (Bau­mol, Blind­er & Wolff via “Mar­gin­al Revolution”:http://marginalrevolution.blogs.com/) Does this idea apply to ser­vices ‘out­sourc­ing’[⇒ relat­ed sto­ry] as well?

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