Outsourcing creates American jobs
Treasury Secretary John Snow apparently sparked some controversy in a Monday interview with the Cincinnati Enquirer. Why? Snow said what Greg Mankiw said last month — that the outsourcing of U.S. jobs “is part of trade … and there can’t be any doubt about the fact that trade makes the economy stronger.” Hillary Clinton wasted ...
Treasury Secretary John Snow apparently sparked some controversy in a Monday interview with the Cincinnati Enquirer. Why? Snow said what Greg Mankiw said last month -- that the outsourcing of U.S. jobs "is part of trade ... and there can't be any doubt about the fact that trade makes the economy stronger." Hillary Clinton wasted no time in bashing Snow, saying: "I don't know what reality the Bush administration is living in, but it's certainly not the reality I represent, from one end of New York to the other." Funny thing, though -- Snow appears to be right, according to this CNN report:
Treasury Secretary John Snow apparently sparked some controversy in a Monday interview with the Cincinnati Enquirer. Why? Snow said what Greg Mankiw said last month — that the outsourcing of U.S. jobs “is part of trade … and there can’t be any doubt about the fact that trade makes the economy stronger.” Hillary Clinton wasted no time in bashing Snow, saying: “I don’t know what reality the Bush administration is living in, but it’s certainly not the reality I represent, from one end of New York to the other.” Funny thing, though — Snow appears to be right, according to this CNN report:
The outsourcing of prized information technology jobs overseas has created tens of thousands of new jobs in the United States, according to a recent study commissioned by the information technology industry…. According to this study, these benefits “ripple” through the economy, leading to about 90,000 net new jobs through the end of 2003. This effect, the study said, should produce a total of 317,000 net new jobs through 2008. The study also said outsourcing added some $33.6 billion to U.S. gross domestic product (GDP) in 2003 and could add a total of $124.2 billion through 2008. And outsourcing lifts the wages of U.S. workers, according to the study, though minimally — real wages were 0.13 percent higher in 2003 because of outsourcing and could be 0.44 percent higher by 2008.
[C’mon, this study was sponsored by the IT industry — can it be credible?–ed. According to the relevant Global Insight web page, Novel Nobel Prize winning economist Lawrence Klein was a major contributor to the report. But go read the press release and the executive summary of the report — you be the judge!] UPDATE: To clear up one source of confusion from some of the comments — the study is not claiming that an economy with outsourcing will create only 317,000 jobs by 2008. The study says that holding other factors constant (population growth, fluctuations in aggregate demand, etc.) an American economy creates an additional 317,000 jobs.
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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