The "Outsourcing Jobs" myth

Human Events On line ^ | 3/23/04 | Thomas Sowell

[MNJohnnie]

Every political campaign seems to have some buzzword, and this year's buzzword is "outsourcing." Since the economic recovery has not yet reached the stage when new jobs are being created to the extent expected and hoped, the idea that American jobs are being sent overseas has political mileage, whether or not it has much economic substance.

A recent poll of economists by the Wall Street Journal found that only 16 percent of them saw outsourcing as having a significant impact on the over-all job picture. More important, the political remedies being suggested to stop outsourcing are virtually guaranteed to make things worse.

[adam_az]

2 million people working in IT... so then isn't it silly to claim that 2 million+ IT jobs have been outsourced to overseas?

[RUSure]

The avalanche is rolling... lowering taxes now will have no effect on off-shoring jobs. The labor is there, for a lower price. If corporate taxes are lowered, the labor will still be available for less... and the off-shoring will continue.

[StolarStorm]

It's great that you have such confidence in yourself that you think you can escape the outsourcing fad unscathed. Regardless of any response you may have, I KNOW that when your day comes to train your replacement, your attitude will be adjusted very quickly. Everyone is biased based on their self interest. You aren't any different. You may think you are, but you aren't.

We'll all be waiting for the "offshoring is unpatriotic" post from you in the future.

[adam_az]

"My point was that we can't act as though we are in a free trade environment while the jobs are moving to a protectionist state."

I agree - but my prescription isn't to erect our own protectionist barriers, it's to reduce regulatory burden and use our weight to get our trading partners to end their protectionism.

[Bikers4Bush]

That's according to the BLS and I believe does not include foreign visa stats.

Personally I think the number is extremely light.

[adam_az]

"We'll all be waiting for the "offshoring is unpatriotic" post from you in the future."

Harpseal said the same thing to me a few months ago, oddly enough.

I actually once believed that, until I took a closer look at the issue and related issues.

[bvw]

I've worked in and with computer thingies for thirty years plus and I have seen both innovation and cycle completion obsolete the jobs of prior generations of computer programmers and the support staff each magnificent programmer needs.

First it was the IBM 1441 programmers, then it was the DEC programmers ... sure, many could and did learn new languages and went on in the computer thingie (CT) field. (By golly, I depsise that idiotic "IT" moniker).

The bigger cause of mass retirements from the field was in what I'll call "cycle completion" -- that's when in a goven industry the current level of automation improvement hits the obvious diminishing returns point. That is, the systems become good enough and the market is saturated. Such points take a whole new, wholly new, generation of automata -- in hardware or software to re-awake the market.

It is not necessary for the new generation to be better in any way than the old, btw. I've already seen a number of examples where that is not the case. It's just that the support cost of the old generation becomes radically expensive or support becomes impossible because the hardware is no longer available -- at which time the industry goes through another capital replacement cycle. In the cases I've seen there is no continuance of intellectual tradition, no transfer of knowledge from the old crews of computer system thingie makers to the new. The old crews are all retired, dead, or in dispersed parts unknown, the documentation is found lost, scattered or too cryptic or volumnuous to bother with.

However, on off-shore outsourcing I am agreement with you -- and with the Truth, as it is. I suspect the Chinese already have teams here stateside -- scouting teams of vultures ready to move in when they break us. May have seen one today.

[bvw]

Well, adam_oz, it's almost certain that when Hillary sees me -- and I don't think she has yet -- like every other woman I meet she'll be lusting after me. Of course, I am already and permanently married, and a very closed marriage to boot. Tough for her.

[Bikers4Bush]

"to get our trading partners to end their protectionism."

Ain't gonna happen. Third world emerging hell holes have no reason to end their protectionism if it's getting them on their feet.

[adam_az]

"It's great that you have such confidence in yourself that you think you can escape the outsourcing fad unscathed."

My confidence isn't that I can remain unscathed, it's that I can be resourceful and flexible enough to be self sufficient.

"Regardless of any response you may have, I KNOW that when your day comes to train your replacement, your attitude will be adjusted very quickly."

Been there, done that... only my attitude didn't turn bitter, it turned to evaluating my options and finding something else to do.

[Bella_Bru]

Ordinarily that's true, but there's this block of bush-bashers on the Freerepublic who call for limited government-- but only for others, and expanded government assistance for themselves.

And there are Bush bashers and Bush bots who like big government for their moral causes as well. You will find very few people who want truly limited government.

[iconoclast]

use our weight to get our trading partners to end their protectionism.

Trading PARTNERS? Whahahahaha have you looked at the balance of trade numbers lately?

[StolarStorm]

"Been there, done that... only my attitude didn't turn bitter, it turned to evaluating my options and finding something else to do."

Same here, but it's not fun seeing friends and family, not as resourceful or ... lucky... destroyed economically.

I don't really want protectionism either... except to force reduction of protection from other countries. As things stand now though, we should have massive tariffs on all things Indian or Chinese since they are doing their best to keep us out of their markets. Problem is, we aren't doing anything. Tariffs are one of the few sticks we have available and we have to be willing to use it.

[bvw]

Any single thing taken in excess can colide with national interest. For example today -- the whole Senate is in excess, the whole Federal bureaucracy is in excess, the utterly ruining Federal Income tax is in excess, Regulation is in excess, and any corporate "income" tax whatsoever is in excess. All collide with national interest.

If you don't believe in Trade Barriers, let me axt you (that's an archaic and proper English usage "axt", btw) -- do you keep your car doors unlocked? Your house doors? Why not? Perhaps theres some tradesman who wants to enter your car while at a read light and make a pitch for Mary Kay Cosmetics to you. Are you against Free Enterprise?

[adam_az]

"Ain't gonna happen. Third world emerging hell holes have no reason to end their protectionism if it's getting them on their feet."

I can think of many carrot/stick approaches.... Upgrading/downgrading diplomatic relations, cutting foreign aid, military aid, military training, officer exchange, bilateral trade agreements, tourist visas, immigration, student visas, even threatening and enacting similar restrictions until they comply... the list goes on. The end game though needs to be less regulation on our side and real free trade.

[iconoclast]

Capitalism doesn't collide with national interest, because we benefit from being capitalist. Trade barriers are against the national interest because they hurt Americans.

Oh my.

1)This outsourcing thing is for real ... white collar and blue collar jobs ARE going to Asia and elsewhere. Where else do you think this historic JOBLESS RECOVERY is coming from.

2)Meantime the border goes unprotected and stands as an open invitation to those who would suck up the low end jobs and drive those wage levels down.

3)The middle class std of living has lost ground for 30+ years and the trend continues.

4)In case you don't know it our major exports are agricultural, mineral, and lumber. This is a characteristic of a THIRD WORLD NATION.

5)For heaven's sake stop ranting about LIMITED GOVT .. both parties abandoned that concept long ago ... not long after the Constitution was sh!t canned.

But you youngsters (I don't know if you're boomers or gen-x'ers, very very few of you post much if anything in the way of a profile) just continue to spout your WSJ bromides.

We old-timers had a phrase for that ... whistling past the graveyard.

[iconoclast]

I can think of many carrot/stick approaches.... Upgrading/downgrading diplomatic relations, cutting foreign aid, military aid, military training, officer exchange, bilateral trade agreements, tourist visas, immigration, student visas, even threatening and enacting similar restrictions until they comply... the list goes on.

Lotta that goin on is there sonny?

[adam_az]

4)In case you don't know it our major exports are agricultural, mineral, and lumber. This is a characteristic of a THIRD WORLD NATION.

Not true.

U.S. EXPORTS BY INDUSTRY
SOURCE:  MISER (NAICS OM SERIES)
Rank	Code	Description	ANNUAL 1997	ANNUAL 1998	ANNUAL 1999	ANNUAL 2000	ANNUAL 2001	ANNUAL 2002	Q1 2002 YTD	Q1 2003 YTD	%2000-01	%2001- 02	%2002- 03
		TOTAL ALL INDUSTRIES	687,597,998,554	680,474,247,508	692,820,620,412	780,418,627,647	731,025,906,239	693,257,299,708	166,505,722,383	173,720,820,817	-6.33	-5.17	4.33
1	334	COMPUTER AND ELECTRONIC PRODUCTS	152,896,163,582	147,474,575,061	161,542,924,849	196,234,424,305	165,345,224,168	145,847,734,626	36,018,904,130	35,179,867,716	-15.74	-11.79	-2.33
2	336	TRANSPORTATION EQUIPMENT	118,101,110,641	131,890,023,756	132,041,997,924	128,180,756,424	130,232,776,905	130,897,140,664	31,304,405,516	31,308,055,432	1.6	0.51	0.01
3	325	CHEMICALS	69,123,662,112	67,530,970,286	69,870,432,114	80,259,297,755	79,034,377,277	80,504,165,962	18,579,437,634	22,024,348,983	-1.53	1.86	18.54
4	333	MACHINERY, EXCEPT ELECTRICAL	82,874,443,664	79,444,589,793	76,388,334,298	89,842,640,620	81,512,645,805	74,945,292,363	17,663,991,502	17,989,485,501	-9.27	-8.06	1.84
5	111	AGRICULTURAL PRODUCTS	29,216,392,254	25,033,580,417	22,732,504,752	24,449,107,763	24,861,286,664	25,796,875,605	6,933,402,324	7,727,096,777	1.69	3.76	11.45
6	339	MISCELLANEOUS MANUFACTURED COMMODITIES	20,228,194,563	20,477,582,169	21,970,340,216	24,452,449,337	25,779,004,934	26,660,596,296	6,435,789,803	6,938,544,151	5.43	3.42	7.81
7	311	FOOD AND KINDRED PRODUCTS	26,314,025,111	25,163,454,263	24,112,719,596	25,745,199,866	27,088,914,301	25,855,503,616	6,572,069,492	6,502,880,986	5.22	-4.55	-1.05
8	990	SPECIAL CLASSIFICATION PROVISIONS, NESOI	22,023,318,485	22,681,501,470	23,635,278,297	25,695,195,205	27,018,528,381	24,715,850,584	5,773,521,171	5,675,573,722	5.15	-8.52	-1.7
9	335	ELECTRICAL EQUIPMENT, APPLIANCES, AND COMPONENT	22,917,452,164	22,382,959,132	23,716,103,221	27,477,686,010	24,922,653,565	22,848,272,994	5,440,594,473	5,474,664,909	-9.3	-8.32	0.63
10	332	FABRICATED METAL PRODUCTS, NESOI	19,190,632,504	19,984,946,064	20,135,842,100	22,913,143,413	20,699,353,436	20,186,682,206	4,792,264,605	5,011,504,985	-9.66	-2.48	4.57
11	331	PRIMARY METAL MANUFACTURING	20,855,133,056	20,129,951,896	18,667,289,464	21,498,372,002	19,311,951,803	16,688,673,921	3,846,936,813	4,369,711,730	-10.17	-13.58	13.59
12	326	PLASTICS AND RUBBER PRODUCTS	14,035,946,482	14,522,220,991	15,196,968,246	17,714,657,159	16,508,438,808	16,168,999,862	3,842,162,316	3,994,224,310	-6.81	-2.06	3.96
13	322	PAPER	14,593,482,173	13,820,254,909	14,131,195,275	15,978,498,573	14,495,880,040	14,107,299,427	3,395,607,383	3,529,341,147	-9.28	-2.68	3.94
14	324	PETROLEUM AND COAL PRODUCTS	7,201,379,911	5,387,976,358	6,006,633,410	9,028,719,500	8,416,443,615	8,048,568,386	1,748,874,323	2,734,457,374	-6.78	-4.37	56.36
15	313	TEXTILES AND FABRICS	5,587,280,579	5,672,307,946	6,055,009,301	7,284,161,847	7,365,202,174	7,642,419,100	1,768,598,772	1,913,715,778	1.11	3.76	8.21
16	327	NONMETALLIC MINERAL PRODUCTS	6,420,215,831	6,210,957,397	6,526,675,555	8,173,210,200	7,744,593,846	6,325,735,662	1,556,085,374	1,571,263,409	-5.24	-18.32	0.98
17	910	WASTE AND SCRAP	4,473,926,504	3,569,771,254	3,623,032,266	5,128,584,574	4,823,752,619	5,165,294,757	1,131,546,331	1,545,306,832	-5.94	7.08	36.57
18	315	APPAREL AND ACCESSORIES	8,551,110,314	8,707,823,470	8,193,870,347	8,557,864,466	6,956,291,908	5,994,072,326	1,450,806,192	1,426,224,056	-18.71	-13.83	-1.69
19	323	PRINTING, PUBLISHING AND SIMILAR PRODUCTS	4,863,724,383	4,955,114,742	4,866,427,809	5,097,473,813	5,124,509,897	4,773,594,136	1,120,380,942	1,120,895,825	0.53	-6.85	0.05
20	321	WOOD PRODUCTS	5,522,914,327	4,651,096,648	4,858,671,054	5,021,875,747	4,099,435,655	3,948,151,881	975,167,980	997,500,088	-18.37	-3.69	2.29
21	312	BEVERAGES AND TOBACCO PRODUCTS	6,739,417,483	6,527,970,650	5,535,649,781	5,679,770,658	4,434,859,946	3,659,181,126	900,190,324	922,621,247	-21.92	-17.49	2.49
22	920	USED OR SECOND-HAND MERCHANDISE	2,709,684,658	3,330,466,922	2,848,462,022	4,021,162,558	4,644,450,690	3,179,321,644	768,224,782	879,240,244	15.5	-31.55	14.45
23	212	MINERALS AND ORES	6,051,681,472	5,411,325,241	4,450,881,288	4,537,115,256	4,239,565,660	3,910,846,629	796,442,743	802,068,649	-6.56	-7.75	0.71
24	114	FISH, FRESH, CHILLED, OR FROZEN AND OTHER MARINE P	2,563,972,643	2,127,047,542	2,601,293,948	2,810,430,715	2,969,400,714	2,940,828,047	749,470,156	762,683,832	5.66	-0.96	1.76
25	316	LEATHER AND ALLIED PRODUCTS	2,623,466,393	2,693,216,143	2,569,732,994	2,687,939,307	2,709,178,135	2,593,195,272	617,904,483	638,819,265	0.79	-4.28	3.38
26	211	OIL AND GAS	1,673,761,463	1,257,022,608	1,459,663,354	1,746,929,613	1,339,370,804	1,727,015,124	318,660,913	616,192,215	-23.33	28.94	93.37
27	337	FURNITURE AND FIXTURES	2,496,638,896	2,612,709,340	2,562,582,761	3,024,477,247	2,588,021,976	2,323,373,781	567,161,249	600,546,572	-14.43	-10.23	5.89
28	314	TEXTILE MILL PRODUCTS	2,197,226,877	2,218,265,764	2,210,547,283	2,332,860,567	2,082,822,076	1,981,581,457	462,957,087	479,492,986	-10.72	-4.86	3.57
29	113	FORESTRY PRODUCTS, NESOI	2,023,379,458	1,550,323,535	1,567,770,631	1,673,275,597	1,472,380,262	1,449,678,828	373,651,947	388,447,323	-12.01	-1.54	3.96
30	980	GOODS RETURNED TO CANADA (EXPORTS ONLY); U.S. GOOD	2,378,098,707	1,933,405,560	1,702,843,564	1,905,210,533	1,879,520,577	1,339,476,605	351,567,578	307,215,364	-1.35	-28.73	-12.62
31	112	LIVESTOCK AND LIVESTOCK PRODUCTS	1,150,161,864	1,120,836,181	1,038,942,692	1,266,137,017	1,325,069,598	1,031,876,821	248,944,045	210,471,766	4.65	-22.13	-15.45
<![if supportMisalignedColumns]>
<![endif]>

[adam_az]

Table didn't reproduce well - click the link in that post.

[Il Duce]

I agree we're not in a free trade market, but economics shows us that if a country unilaterally lowers its trade barriers to zero, it will be better off, even if all other countries do nothing.

That said, we're increasingly better off the more countries that agree to lower tariffs, which is why I haven't a problem with the WTO.