The Bright Side of Sending Jobs Overseas

FOR most politicians - Democratic or Republican - the issue of outsourcing jobs to faraway countries is a no-brainer: It's bad for the United States economy and it's even worse for their careers, especially in an election year when the work force has just lost more than two million jobs. So it is unsurprising that politicians of both parties ripped into N. Gregory Mankiw, chairman of the president's Council of Economic Advisers, when his annual economic report on Tuesday made precisely the opposite point: that if services like software programming can be done more cheaply in India, it makes sense for companies to procure them there. Outsourcing will ultimately enhance their productivity.

Yet while debate is raging over globalization's costs and benefits, Mr. Mankiw's comments are based on solid, age-old economic arguments. Most economists agree that higher productivity - whether it comes from trade, outsourcing or technology - is good, even when it creates pain for many workers.

"Outsourcing does not reduce the total number of jobs in America," said Robert Reich, who served as labor secretary under President Bill Clinton. "If other countries can do something cheaper we ought to let them do it, and concentrate on what we can do best."

Indeed, despite the hemorrhage of jobs since Mr. Bush took office, the past performance of the American economy - particularly the pattern of job creation and destruction over the past several years - supports Mr. Mankiw's case.

In many ways, the economists' argument for outsourcing is as straightforward as the case for importing products. If an Indian software programmer is paid a tenth of an American's salary, a company that develops software in India will save money and - provided competitors do the same - the price of its software will fall, productivity will rise, the technology will spread, and new jobs will be created to adapt and improve it.

Take cellphones, which 20 years ago were luxury items with the size and weight of a brick. Today - thanks to competition and inexpensive, globalized production - they are cheap, ubiquitous, tiny and packed with a mind-boggling complement of ancillary functions. The industry and the number of jobs have only increased. Global outsourcing also played a big role in the information technology boom of the late 1990's. Personal computers were imported from abroad. Chip companies shipped production overseas. But this outsourcing prompted the creation of new jobs here, on the higher end of the technological spectrum.

A report released last December by Catherine L. Mann of the Institute for International Economics, a Washington research group that backs free trade, calculated that lower costs due to globalized production accounted for 10 percent to 30 percent of the decline in hardware prices during the technology boom of the second half of the 1990's, when computer prices fell 10 percent a year.

The impact of cheap hardware was felt throughout the economy. Ms. Mann calculates that outsourcing boosted productivity growth from 2.5 percent to 2.8 percent a year from 1995 to 2002, a gain that in turn added at least $230 billion to the country's total output of goods and services.

As lower-priced technology flooded the marketplace, it helped generate new jobs, as companies that snapped up computers suddenly required software and workers who could adapt the products to their needs.

Ms. Mann notes that demand for people who knew how to use computers grew by 22 percent through the 1990's boom, twice as fast as overall job creation. "This is despite the fact that outsourcing of computer jobs was going on," Ms. Mann said.

Moreover, lower prices also muted inflation, allowing interest rates to be lower than they otherwise would be - thus boosting investment and growth. And the Asian countries that made computers and chips spent some earnings buying other American services - like legal and financial assistance.

Over all, Ms. Mann notes, "unemployment in the 1990's fell to 4 percent," despite aggressive outsourcing during this period.

I quit for many reasons, some of which are not mentioned in my my resignation letter.

I am grateful to have been able to work in the US Space Shuttle program for the last 13+ years of my life. We Americans have been able to accomplish what others thought impossible only a few years ago -- providing reliable access to space in a reusable spacecraft that could maneuver, deliver and retrieve payloads, and then fly back and land on a runway. We accomplished this goal as Americans have always done it, by using our abilities to “push the outside of the envelope” in the search for technical perfection in the advancement of human knowledge.
I am truly proud to have been some small part of that effort.
ecently, however, it has become obvious that while those of us here at KSC have been doing what we have always done – safely processing and launching the Shuttles -- the goals and mission of the program have been redirected.
This once-proud program, which sparked the imaginations of millions of Americans such as myself, has seemingly been reduced to some kind of pathetic international welfare agency, transferring billions of US taxpayer dollars directly away from our professed mission and into the accounts of whichever foreign “partners” are favored by our current president.
These so-called “partners” have siphoned off American taxpayer money for purposes know only to themselves and provided nothing of value in return to the US taxpayers. The hardware and services that they cynically promised to provide have not materialized and probably never will.
Thanks to the policies of our current administration, the US Space Shuttle program now finds itself being held hostage to the whims of a miserable socialist country run by a declining alcoholic buffoon and a communist legislature.
How could our so-called leaders have let this happen?
Worst of all, it seems that seats on the few remaining Space Shuttle flights are now being handed out in return for political favors or to support causes unrelated to the exploration of space and other than the furtherance of our technical knowledge. Besides being an affront to those of us who once loved the space program, this new policy is a slap in the face to all those dedicated astronauts who have spent years (in some cases 30 years) honing their talents to better serve their love of space exploration.
These new trends are (or should be) alarming to all of us who believe that ability should be the sole criterion in Astronaut selection, and science or “envelope-pushing” should be the sole criteria for mission planning. The American Manned Space Program cannot and will not survive on any other terms.
In summary, I find that I can no longer allow myself to participate in what has become a cheap travesty of the former glory of the US Manned Space Program.
It is with great sadness, therefore, that I tender my resignation...

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.