Thursday, June 21, 2007

Outsourcing Destroys Jobs? 10m U.S. Jobs in 6 Yrs.

From yesterday's IBD editorial "Outsourcing Myths":

The media love victims. So when industries began moving jobs once done here to low-cost labor havens like India and China, pundits and reporters portrayed it as a devastating blow to America's traditional working class.

In 2005's "Outsourcing America," TV's Lou Dobbs warned that outsourcing was "nothing less than a direct assault on hard-working middle-class men and women in this country."

Chances are, if you've been fed a steady diet of this, you think outsourcing is a disaster. Well, you've been seriously misinformed. Outsourcing is in fact a big contributor both to recent productivity growth and to rising incomes for average workers in the U.S.

One of the most obvious falsehoods about job outsourcing is that it raises unemployment. Huh? Since 2001, during which criticism of outsourcing has hit a crescendo, U.S. businesses and entrepreneurs have created 9.9 million new jobs (see chart above, click to enlarge). The current jobless rate of 4.5% is below the average in any of the last four decades.

This is nothing new. It's free trade. As Adam Smith wrote in "The Wealth Of Nations" in 1776, "It is the maxim of every prudent master of a family never to attempt to make at home what it will cost him more to make than buy." That goes for outsourcing, too.

3 Comments:

At 6/21/2007 1:40 PM, Anonymous Anonymous said...

The response from the doomsayers will be "Yes, but those 10 million jobs are 'McJobs', low-paying service jobs not like the good old high-paying manufactuing jobs."

 
At 6/22/2007 8:07 AM, Blogger Vik said...

My two cents to the thought, the fact outsourcing became an apple to someone's eye and a sore one to another was mainly because of the Media. Even till date, the people that work in the real MNC's that operate out of India are not treated the same - reason Cheap Laborer is what one can think of and no know prods any distance far from that thought !

The biggest gain for Corporations is the value countries like India offer to their Currencies viz, Dollar, Euro or Pound Sterling PLUS the educational background AND the hard working mentality that the significant percent of the common population have.

Oh on the high note, to have wasted more than a Billion on a nothing warfare could have hurt the common American more than anything. And I still believe the shake down in each Corporation had to happen. It happened in the Manufacturing industry once and now it is the time for the Information Technology it seems and hey it is no longer a Fiefdom. And it is a free world indeed. Corporations go where they find rich benefits. End of story.

 
At 7/19/2007 9:51 PM, Blogger Jitender Ramchandani said...

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