Outsourcing remarks by White House advisor stir backlash

ft.com ^ | February 12 2004 21:42 | Edward Alden and Christopher Swann

[Destro]

Outsourcing remarks by White House advisor stir backlash

By Edward Alden and Christopher Swann in Washington

Published: February 12 2004 21:42 | Last Updated: February 12 2004 21:42

Gregory Mankiw, the chairman of the White House Council of Economic Advisers, thought he was stating the obvious when he said this week that the movement of some US service jobs to places such as India and China was "just a new way to do international trade".

"More things are tradable than were tradable in the past," he said on Monday in releasing an upbeat forecast predicting about 3m new jobs in the US this year. "And that's a good thing."

He added that the outsourcing of some jobs "is probably a plus for the economy in the long run". But Mr Mankiw's view, shared by virtually all mainstream economists, has ignited a furious political backlash, not only from Democrats but within the Republican party as well.

"I'm sure the Bush campaign is levitating, because that's definitely going to be a [John] Kerry 30-second ad," says Todd Malan, executive-director of the Organisation for International Investment, which represents foreign companies that invest in the US, referring to the Democratic front-runner.

Deborah Pryce, an Ohio congresswoman and chair of the House Republican Conference, said yesterday: "I do not agree with the president's chief economist. . . I think it was most, most unfortunate."

Speaking at a breakfast hosted by the Christian Science Monitor, Ms Pryce said that while Mr Mankiw's economic analysis was probably right, his presentation was definitely wrong. "At this time, it was very politically insensitive," she said. "There are different ways of saying things. You do not say: 'Outsourcing is a good thing.' You say: 'Outsourcing is an important part of free trade'."

The comments have drawn rebukes from other Republican leaders. Dennis Hastert, the House speaker, said in a statement on Wednesday: "I understand Mr Mankiw is a brilliant economic theorist, but his theory fails a basic test of real economics. We can't have a healthy economy unless we have more jobs here in America."

The weak pace of job growth in the US is likely to be the strongest card that Democrats carry into the November elections. Mr Kerry charged that the Bush administration had "delivered a double blow to America's workers: 3m jobs destroyed on their watch, and now they want to export more of our jobs overseas. What in the world are they thinking?"

Senate Democrats this week signed a resolution urging President George W. Bush to denounce the statement by his top economist. Senator Debbie Stabenow of Michigan, the state with the highest unemployment rate in the US, pressed the administration to encourage the creation of more manufacturing jobs through targeted tax credits.

"There are some actions we can take to level the playing field, and if we give American businesses and workers a fair shot, they will win every time," she said.

Economists warn that efforts to curtail the freedom of US companies to set up shop abroad could backfire, leading to higher domestic taxes and prices.

"You would need unthinkably large tax incentives to offset the appeal of cheap labour in countries like India and China," said Nariman Behravesh, chief economist at Global Insight.

Additional reporting by James Harding

[Destro]

Story live on NIGHTLINE.

He added that the outsourcing of some jobs "is probably a plus for the economy in the long run".

In the long run we are also dead.

[Destro]

bump

[NormsRevenge]

maybe if we outsourced some of our brilliant economic theorists ... Naaaaahhhh .

The WTO/UN/ICJ would probably be all over us..

[Schattie]

maybe if we outsourced some of our brilliant economic theorists Hahahaha, brilliant! Perhaps we could open an Indian branch of Ludwig von Mises... call it Lugiwana von Miseesh.

[neutrino]

maybe if we outsourced some of our brilliant economic theorists

Hmm. Wages in China are lower than in the US - probably for economic theorists too.

China has a trade surplus, right? And their economy is growing, isn't it?

So, let's save the U.S. taxpayer some money. Let's outsource Mr. Mankiw's job and hire a couple Chinese economists...

Surely he'll agree that the long term benefits make this a good move?

[Reelect President Dubya]

In the long run we are also dead.

How dare anyone imply that America's economy is the most robust on earth, and its people likewise the most productive.

Everybody knows that the American people are wimps who cannot possibly compete with foreign workers.

We must keep American jobs for Americans, because this country is over and all we can hope to do now is cling to memories of our past greatness.

We are all union thugs now.

[sharktrager]

The headline makes it sound like the White House will be outsorcing the making of remarks.

Does that mean every press conference will end:

"Thank you, come again."

[Waco]

Is the fedgov still offering guidence on moving your company offshore? I recall some talk-radio types ranting a lot about it, in the early 90's. The RATS were not complaining. All thru the klink years the fedguv couldn't do enough to encourage these "offshore" ventures. Question: Given this, why is the fedguv concerned about the "factory output" data at all?

[FRgal4u]

What a stupid idiot. First releases a report claiming 2.6 million jobs will be created by end of 2004, and now this. Why can't the President tell these people to STFU.

Even though in pure economic terms, outsourcing of some jobs benefiting the economy in the long term is right; but in the real world, the short term disruption causing by outsourcing is significant. Most people don't have the luxury to sit in an air-cond office, sitting in a leather armchair, reading the latest labor stats from the computer and thinking, oh, outsourcing, lower costs, higher productivity, must be good stuff then.

Time for the President to put in a close knit discipline group for the campaign. Please avoid silly statements like the one on outsourcing till Nov 2nd, 2004. Keep these political tin ears in the dungeon and may we never hear or see these folks till the election is over.

The democreeps are using outsourcing as their attacks now and this comment certainly doesn't help.

One silly comment by some economist in the administration (which before today 99.9999% of this country don't know his name)is going to cost the President 1000 responses to disassociate himself on the issue. Seriously, what can a President really do if IBM want to outsource its programming jobs to India? People got to have an honest discussion on the topic, reality is there is NOT a lot the President can stop this trend barring extra taxation on firms doing the outsourcing or create tariffs or cancel trade deals.

I feel for Bush when someone like Mankiw making silly (even though academically correct) stmts. What a horrible 4 weeks the President had. I hope he will recover from this.

[Objective Reality]

"You would need unthinkably large tax incentives to offset the appeal of cheap labour in countries like India and China," said Nariman Behravesh, chief economist at Global Insight.

AND?

Stating we need to have a massive tax cut for American businesses to stem the flow of offshored knowledge industry workers and cease the race-to-the-bottom?

Exactly how is this supposed to dissuade me?

[rebel_yell2]

Go to jail, directly to jail. Do not pass go. And remember the old adage about keeping your mouth shut. Read his entire speech, not just Pelosi's out-of-content quote. Free trade benefits both countries. Have you shopped at Walmart during the past year? If so, you have benefited. If not, you are a snob or a protectionist, most likely. Or you may live in Timbuktoo where there is no Walmart. The simple point he was making is that U.S. consumers benefit at the expense of some U.S. low-wage workers. In aggregate, both the U.S. and China benefit. On this, there is no debate among experts. Except the "stupid" ones . . . .

[xm177e2]

America has no special divine right to good, easy jobs with high pay. People would do well to remember that. We couldn't keep all of those jobs for ourselves, even if we tried... unless we were to actively subjugate/enslave the rest of the world.

[Destro]

I met Indians. They can in the long term out perform and out think Americans. We are all people. Nothing special about American DNA.

[A. Pole]

Economists warn that efforts to curtail the freedom of US companies to set up shop abroad could backfire, leading to higher domestic taxes and prices.

They forgot to mentioned the higher wages - the main culprit.

[A. Pole]

Ms Pryce said [...] "At this time, it was very politically insensitive," she said. "There are different ways of saying things. You do not say: 'Outsourcing is a good thing.' You say: 'Outsourcing is an important part of free trade'."

It is very important how you say it.

[ninenot]

In the long run we are also dead

But the run will be shorter if you starve to death.

[ninenot]

They can in the long term out perform and out think Americans. We are all people. Nothing special about American DNA.

So the Bell curve does NOT apply to Indians?

They're smarter than US citizens?

If they are so all-fired smart, howcumizzit THEY did not invent air conditioning?

FIFTY percent of India's population is illiterate, by the way. The only Indians you've met over here are the ones at the top of the curve--and I agree, those will be pretty smart cookies.

As to inventiveness, 'know-how,' and creativity--fugheddaboutit.

[ARCADIA]

Economists warn that efforts to curtail the freedom of US companies to set up shop abroad could backfire, leading to higher domestic taxes and prices.

They seem to neglect to mention that the "higher taxes" would be paid for, and driven by, a broadening of the tax base. More taxes would be collected to repay our public debt from an increase in taxable domestic activity and not by an increase in the individual tax liability, as these clowns would imply. The "higher" prices would also be more then paid for by the much stronger dollar. Hence, individual Americans would gain on both grounds (while international piratical corporations would lose on both grounds).

We couldn't keep all of those jobs for ourselves, even if we tried... unless we were to actively subjugate/enslave the rest of the world.

It is time to grow some spine. Actively subjugating and enslaving the rest of the world is and always has been the reality of international economics. It is precisely what the rest of the world aims to practice on the U.S. at present.

[A. Pole]

They seem to neglect to mention that the "higher taxes" would be paid for, and driven by, a broadening of the tax base.

I guess it is what they meant - higher wages and more jobs for Americans would mean more taxes would be paid :)

[DoughtyOne]

I stridently disagree with this spokesperson. Despite this difference, I don't expect him to change his spots and move in my direction. Still, unless you're on political 'suicide watch', you just don't talk about sending job one overseas when job starts have been at a net loss or barely positive for years.

In 1992 I watched as this president's father imploded. I sat there patiently expecting him to open up and run a campaign. I hope Bush's insiders don't sit around waiting this time.

The problem is, mis-steps like this one clearly show that a coordinated effort is still not being implemented. Hey, it's early, but there are certain elemental things that shouldn't have to be pointed out in an election year.