This paper on Why Offshoring is Economically Unsustainable describes how the "Fallacy of Composition" applies to "offshoring" (offshore outsourcing).
It explains a basic systems concept: there are situations for which, while individual decisions may be logical, they produce behavior of the whole that is collectively insane. It describes, with parallel wording, the behaviors for Sports Spectators, Ocean Fishing, Farming, and Offshoring that are subject to the effects of the "Escalation" and "Tragedy of the Commons" systems thinking archetypes.
An appendix uses systems thinking diagrams to illustrate the outsourcing dynamic described in the paper. The systems thinking causal loop structure is based on statements of what's happening by those with favorable and unfavorable views of offshoring.
See also The Trade Deficit and the Fallacy of Composition.
Reader Comment, 12/18/05:
I spent about 10 years as a telecommunications traffic engineer and developed a pretty good intuitive sense of flows and economic processes. I probably designed most of the western part of the pre-MCI merger Worldcom network for companies they acquired. I could spend hours talking about what probably happened there after I left the industry, but I don't want to bore you. I left that field in 1993 when decided to become a programmer. I thought it would provide more stability and create more employment options for me down the road. Instead, I have been one of the sad statistics Lou Dobb's throws up on his TV program every day.
I am somewhat active on educating and informing people regarding the effects of these programs on Americans and the American economy. I have cited you article on numerous occasions and am finally getting around to complimenting you on a fine piece of work. I have read and re-read your article at least 50 times. I have done much research on this issue and I still feel yours is the best. Congratulations on a fine piece of work.