The Outsourcing Bogeyman

Foreign Affairs ^ | May/June 2004 | Daniel W. Drezner

[Steve Eisenberg]

When a presidential election year coincides with an uncertain economy, campaigning politicians invariably invoke an international economic issue as a dire threat to the well-being of Americans. Speechwriters denounce the chosen scapegoat, the media provides blanket coverage of the alleged threat, and legislators scurry to introduce supposed remedies.

The cause of this year's commotion is offshore outsourcing -- the alleged migration of American jobs overseas. The depth of alarm was strikingly illustrated by the firestorm of reaction to recent testimony by N. Gregory Mankiw, the head of President George W. Bush's Council of Economic Advisers. No economist really disputed Mankiw's observation that "outsourcing is just a new way of doing international trade," which makes it "a good thing." But in the political arena, Mankiw's comments sparked a furor on both sides of the aisle. Democratic presidential candidate John Kerry accused the Bush administration of wanting "to export more of our jobs overseas," and Senate Minority Leader Tom Daschle quipped, "If this is the administration's position, I think they owe an apology to every worker in America." Speaker of the House Dennis Hastert, meanwhile, warned that "outsourcing can be a problem for American workers and the American economy."

Critics charge that the information revolution (especially the Internet) has accelerated the decimation of U.S. manufacturing and facilitated the outsourcing of service-sector jobs once considered safe, from backroom call centers to high-level software programming. (This concern feeds into the suspicion that U.S. corporations are exploiting globalization to fatten profits at the expense of workers.) They are right that offshore outsourcing deserves attention and that some measures to assist affected workers are called for. But if their exaggerated alarmism succeeds in provoking protectionist responses from lawmakers, it will do far more harm than good, to the U.S. economy and to American workers.

[international american]

I dont know how old you are, buy I have been trading with Asia for 28 years. You don't have a clue:)

[international american]

You would be smart to take your money, and invest it over there!

[Celtman]

When eventually, you produce nothing, manufacture nothing, and service nothing...where are we?

      Indeed.  America has long been the major consumer - what has made this possible has been that we were also the major producer.

[pax_et_bonum]

ping

[international american]

I travel the world for a living! We are being played for suckers! Forget the political rhetoric...they dont know, or dont care!

[NMC EXP]

Indeed. America has long been the major consumer - what has made this possible has been that we were also the major producer.

Exactly.

Regards

J.R.

[neutrino]

Jobs outsourced are 0.3%. That's three-in-one-thousand.

Really? That's great news! Since it's such a small amount, it won't hurt a thing to end offshoring of jobs.

And, since it's so small, India and China won't mind ending the practice.

Except...they're fighting tooth and nail to prevent the US from reclaiming those jobs. And India and China are protecting their economies quite vigorously.

Maybe they don't believe in free traitin'...and that's why their economies are doing so well?

[glaux]

John "Heinz" Kerry: Outsaucing.

[Charles H. (The_r0nin)]

Since it's such a small amount, it won't hurt a thing to end offshoring of jobs.

And how, pray tell, do you intend to "end" offshoring of jobs?

[neutrino]

And how, pray tell, do you intend to "end" offshoring of jobs?

First, end the tax benefits for offshoring. You can read the details here

Second, make a variety of changes in the tax code, along with tariff increases, too make offshoring to expensive to remain viable.

[Luis Gonzalez]

More work outsourced to US than away from it

[Charles H. (The_r0nin)]

So basically, you are going to use the power of the government to make them stop doing it, right? That's what all the talk of taxes and tariffs boils down to, isn't it? You are going to artificially make outsourcing more expensive than the market would normally make it. This is your goal, correct?

[neutrino]

Per the U.S. Constitution:

We the people of the United States, in order to form a more perfect union, establish justice, ensure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.

Yes, I am all for using any and all means to stop offshoring. All to provide for the common defense and promote general welfare.

[neutrino]

(Chuckle) How funny. If one selects one's data carefully, one can attempt to prove almost anything, now, can't one? But the truth is that the total trade deficit is large and getting larger. The dollar is going lower as a direct consequence thereof. And the industrial and intellectual heart is being cut out of the U.S.A.

All so people can buy cheap trinkets from China.

[jpsb]

Details? Real details, thanks

[Luis Gonzalez]

The dollar being low is scaring the hell out of our competitors, so much so that Japan is trying to keep it up artificially.

The trade deficit is a sign of strength, not weakness.

[Luis Gonzalez]

Then you are a communist.

[Charles H. (The_r0nin)]

Yes, I am all for using any and all means to stop offshoring. All to provide for the common defense and promote general welfare.

Thanks for outing yourself. The Preamble's "general welfare" clause is the favorite of the leftists who have torn up the original intent of the Constitution with it for decades. Do a little research, you'll find out exactly what the intellectual heritage of your justification is. Add that to your stated intent to use the power of government to tell others what they can and can't do with there own money and property. Nice to see where your ideas originate, and what you advocate doing with them.

Hell, why not just have the government mandate which jobs a company must keep and which they can't? And set prices, too! And let's control which companies can make what! It's all part of national defense and the general welfare, right?

What a goofball...

[neutrino]

The dollar being low is scaring the hell out of our competitors, so much so that Japan is trying to keep it up artificially.

Um-hmm. The Bank of Japan just stopped. It was getting too expensive to support.

Now what do you suppose will happen to inflation as the dollar declines? You did hear that the PPI was up 0.6% for the month of January, did you not?

[neutrino]

Then you are a communist.

It appears that you are not equal to the task of defending free trade. I quite understand. You have my sympathy - holding on to an obsolete and discredited idea must be so very painful.