Outsourcing

A lot of fuss is being made lately about outsourcing. In the words of Henry Wadsworth Longfellow, quit yer bitchin’! Outsourcing is beneficial. As A. Barton Hinkle explains over at reason.com:

Meanwhile, economists are cradling their heads in their hands and ordering a round of boilermakers. Why? Because outsourcing is not the evil job-destroyer the candidates pretend it is. In fact, it produces a small but measurable increase in domestic employment. A recent study by the London School of Economics says so: As one news summation put it, “increasing offshore jobs by 1 percent is linked to a 1.72 percent increase in overall U.S. employment of native workers.”

How can outsourcing bolster domestic employment? Here’s one example cited by Team Romney: Setting up an overseas help desk to take customer calls about, say, the Japanese version of Microsoft Office increases software sales overseas, which creates jobs back at the home office. It also increases U.S. trade exports, which – the Romney folks tartly note – President Obama says he wants to do.

As Mr. Hinkle also notes, we encourage outsourcing all the time. Yeah, we do. He mentions the governor of Virginia convincing companies based in Europe to outsource jobs to Virginia. There are other examples. Toyota, a Japanese based car company, has manufacturing plants in Mississippi, Alabama, Kentucky and several other U.S. states.

Public opinion givers applaud that kind of outsourcing. But we do not just try to get other countries to outsource jobs to the U.S. Within the U.S., companies build facilities in various states all the time.

“But, but, but,” some of you are passionately saying, “moving U.S. jobs to other countries is just wrong!” Is it? Did you ever buy something made in China? Taiwan? Mexico? Ever buy a computer or a smart phone? Guess what. You are supporting outsourcing. Let me know how your quest to only ever buy things 100% made within the U.S. works out.

Mr. Hinkle also makes an argument I have made a few times as well:

Well. If we can save some jobs by stopping outsourcing at the U.S. border, then just imagine how many more jobs we could save by forbidding companies to move jobs between states. And if Obama and Romney really want to create jobs, then they should propose a ban on interstate trucking – and maybe in-state trucking, too. Wall off the cities and make the inhabitants fend for themselves. That will keep ’em busy.

If outsourcing is really as horrible thing, then let us kick out all foreign companies who are outsourcing jobs to the U.S. Let’s have strict control of every state and city border within the U.S. to prevent outsourcing.

Is this a serious suggestion? Of course not. It is intended to point out how ridiculous arguments against outsourcing are. The solution we need is not less trade in goods and labor with other countries. The solution is more trade. Protectionism policies cause more harm than whatever perceived problem they are meant to address.

“Oh,” you say, “but those other countries are using protectionist measures.” So? Let them? They will suffer the negative consequences of protectionist policies, and we will reap the benefits of more trade. Hooray for us! We win. Which is what we want, right?

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