The New York Times tackles outsourcing
Today’s Times has a round-up story on outsourcing in the aftermath of Gregory Mankiw’s comments. Jagdish Bhagwati, an esteemed trade economist at Columbia, is quoted. He also has an op-ed in today’s Times as well. The good parts: John Kerry, the presumptive Democratic presidential nominee, described executives who import services — such as using lower-paid ...
Today's Times has a round-up story on outsourcing in the aftermath of Gregory Mankiw's comments. Jagdish Bhagwati, an esteemed trade economist at Columbia, is quoted. He also has an op-ed in today's Times as well. The good parts:
Today’s Times has a round-up story on outsourcing in the aftermath of Gregory Mankiw’s comments. Jagdish Bhagwati, an esteemed trade economist at Columbia, is quoted. He also has an op-ed in today’s Times as well. The good parts:
John Kerry, the presumptive Democratic presidential nominee, described executives who import services — such as using lower-paid workers in foreign countries to handle customer-service calls and Internet queries from American consumers — as “Benedict Arnold C.E.O.’s.” In objecting to moving service jobs overseas, Senator Kerry is wrong on two counts. First, his economics is faulty: the practice only adds to the overall economic pie and improves the competitiveness of American companies. In a world economy, firms that forgo cheaper supplies of services are doomed to lose markets, and hence production. And companies that die out, of course, do not employ people. Second, Mr. Kerry is making a political error. By playing to the understandable but incorrect fears of American workers that outsourcing is “taking away” jobs from Americans, he is painting the Democratic Party into the wrong corner on trade issues.
The most interesting part is Bhagwati’s point that while many blame trade for job losses, it has far more to do with technological change:
Unfortunately, the issue is further confused by claims that American jobs are being “transferred” abroad. This is usually not the case. When I came to my university 25 years ago, I got a secretary. Today, the new hires get a computer instead. In India, where a secretary costs a small fraction of what one would in New York City but a computer costs more, any Indian professor who asked for a new laptop would probably get a secretary instead. It is simply a matter of economic reality in both places. The hiring of the secretary in India should not be seen as “transferring” a job out of New York. The fact is, when jobs disappear in America it is usually because technical change has destroyed them, not because they have gone anywhere. In the end, Americans’ increasing dependence on an ever-widening array of technology will create a flood of high-paying jobs requiring hands-on technicians, not disembodied voices from the other side of the world.
For more on the technological driver behind the current creative destruction, Glenn Reynold’s TCS column from last November is still salient. The final outsourcing link of the day is the February 12th transcript from Lou Dobbs Tonight, during which Mr. Dobbs tangled with James K. Glassman on the subject. It was, to say the least, a yeasty conversation. [UPDATE: Dobbs’ exchange with Bruce Bartlett is less yeasty but equally informative.]
Daniel W. Drezner is a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and co-host of the Space the Nation podcast. Twitter: @dandrezner
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