Posted on 10/13/2004 9:16:36 AM PDT by xsysmgr
The outsourcing of U.S. jobs to foreign countries has been a major theme of the Kerry-Edwards campaign. During his debate with Vice President Cheney, John Edwards repeated the standard Democratic line: The administration says over and over that the outsourcing of millions of American jobs is good. Were against it. A search of John Kerrys campaign website turned up 176 separate statements on the evils of outsourcing.
What you wont find on the Kerry website are any references to serious studies of outsourcing. The reason is that they all find the issue to be seriously overblown: Outsourcing is responsible for a trivial amount of job loss at most, and is generally a positive for the U.S. economy. Serious studies of outsourcing include ones by former Democratic administration officials.
In July, economist Martin N. Baily, chairman of the Council of Economic Advisers under President Clinton, looked at who benefits from outsourcing. He found that for every $1 spent by a U.S. corporation on outsourcing to India, only 33 cents stayed in India. The other 67 cents came back to the U.S. in the form of cost savings, new exports, and repatriated profits. However, productivity gains add another 45 to 47 cents of value to the U.S. economy. Thus, on balance, the U.S. economy gains $1.12 to $1.14 for every $1 invested in outsourcing.
In August, economist Charles Schultze, chairman of the CEA under President Carter, looked at the number of jobs lost to outsourcing. He found that between the end of 2000 and the end of 2003, at most 215,000 service-sector jobs were lost. This is a minuscule amount in a working population of close to 150 million. Moreover, Schultze says, the productivity gains produced by outsourcing raised real incomes and living standards in the U.S. He concluded that outsourcing cannot be blamed for the jobless recovery.
Also in August, the nonpartisan Public Policy Institute of California looked at the costs and benefits of restricting outsourcing. It found that the cost of restricting outsourcing would greatly exceed any gains. Policies targeted toward those affected by outsourcing are far preferable to a ban on outsourcing. For this reason, California Gov. Arnold Schwarzenegger recently vetoed several bills that would have restricted outsourcing in that state.
In September, International Monetary Fund economists Mary Amiti and Shang-Jin Wei did the most thorough study of outsourcing to date for the prestigious National Bureau of Economic Research. These are their findings:
U.S. imports of computing services the most controversial area of outsourcing came to just four-tenths of 1 percent of the gross domestic product in 2003.
In 2002, the U.S. was the worlds largest exporter of computer services, which added almost $60 billion to our exports. By contrast, Indias total exports in this area came to less than $20 billion and Chinas were just over $10 billion.
China and India, the two countries most blamed for outsourcing, actually outsource more than we do six-tenths of 1 percent of GDP for the former and 2.4 percent of GDP for the latter.
Contrary to popular belief, the U.S. is a large recipient of outsourcing from other countries i.e., insourcing. In 2002, the U.S. ran a healthy trade surplus in this area receiving $22 billion more in outsourcing from other countries than it paid in outsourcing to other countries.
The number of jobs gained from outsourcing approximately equals the number of jobs lost.
The Federal Reserve Bank of Kansas City did the most recent study of outsourcing. It concluded that outsourcing has no permanent employment effects, although there can be temporary displacements.
Finally, press reports indicate that the outsourcing boom may have already peaked. A Sept. 22 report in the Wall Street Journal said that Chinese workers are now demanding better pay and more time off, which has sharply raised the number of labor disputes. This is quickly eroding the cost advantage of outsourcing to China.
An Oct. 7 report in the Financial Times said that General Electric, which pioneered outsourcing to India, has decided to sell its international outsourcing business. It found that the savings from outsourcing were mostly one-time gains that tended to dissipate over time. One reason is high employee turnover. Call centers operated by GE in India lost 40 to 50 percent of their workers every year.
Perhaps for these reasons, in his debate with President Bush on Oct. 8, John Kerry backed away from some of the more extreme statements he and John Edwards have previously made about outsourcing. Said Kerry, You cant stop all outsourcing. You cant. He added that anyone who says he will stop outsourcing would be pandering.
Kerry is right. I hope Edwards and other Democrats were listening.
Bruce Bartlett is senior fellow for the National Center for Policy Analysis. Write to him here.
ping!
Just another reason that Kerry is wrong for America.
Kerry has seem to forgotten how much Heintz out sources. Big Surprise There!
"Kerry has seem to forgotten how much Heintz out sources. Big Surprise There!"
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And we should not forget the LIBERAL DOUBLE STANDARD -- WHAT IS GOOD FOR ME IS N-O-T GOOD FOR YOU !!!!
Last week I heard Rush Limbaugh said that according to his studies, number of in-sourcing job out numbers the out-sourcing one. I even wrote to Rush asking him to give the data to the President. Sick of Kerry's fals accusations.
Infosys to hire 4,500 more techies: (In India)
Tell it to the people I actually know who were fired so their jobs could be shipped to India.
This deserves an outsourcing bump! Great post, xsysmgr.
Rush Limbaugh is wrong.
Since Dubya took office, the amount of Direct Foreign Investment in the United States (insourcing) has plummeted 80%.
Bruce Bartlett is an idiot.
Maybe NRO should follow Reuters and start locating it's analysts offshore.
It's important to recognize that these new jobs are almost entirely outside IT. According to Global Insight, the largest beneficiary is construction, which will gain 75,757 net new jobs due to outsourcing. Other industrial gainers are transportation and utilities (63,513), education and health services (47,260), and wholesale trade (43,359).2004-05-04 Article
A national medical transciptionist company with a local office in my area outsourced all the jobs (47) to India.
Tell this story to those 47 people.
Kinda like the old story: Do you know the difference between a recession and a depression? A recession is when you neighbor gets laid off. A depression is when you get laid off.
I know many many people in the tech sector who lost their jobs to outsourcing can tell you a thing or two about this article.
FDI is not insourcing. I suspect you know that Willie, and your simply blowing smoke up the butts of your friends that don't know any better.
your=you're
I'm sure a good number of them post here. Their replies usually begin with, "waaah."
Of course it is.
Why else would you be so quick to deny it with no substantive arguement to back it up?
Just the same old skanky ad hominems that we've come to expect from you.
Sadly, the libs have framed the issue already and the President cannot afford to say tonight that outsourcing is not a problem.
Quote: I'm sure a good number of them post here. Their replies usually begin with, "waaah."
Whatever job you hold in life I hope it gets outsourced. Uncompassionate people need to be taught a lesson in civility once in a while.
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