The Outsourcing Bogeyman
“According to the election-year bluster of politicians and pundits, the outsourcing of American jobs to other countries has become a problem of epic proportion. Fortunately, this alarmism is misguided. Outsourcing actually brings far more benefits than costs, both now and in the long run. If its critics succeed in provoking a new wave of American protectionism, the consequences will be disastrous — for the U.S. economy and for the American workers they claim to defend.”
Daniel W. Drezner has written a good article countering the current ’sky is falling’ hype around outsourcing and its effects on the American economy.
This was an excellent example of policy backfiring:
“SPLENDID ISOLATION?
There are clear examples of jobs being sent across U.S. borders because of U.S. trade policy — but not for the reasons that critics of outsourcing believe. Consider the example of candy-cane manufacturers: despite the fact that 90 percent of the world’s candy canes are consumed in the United States, manufacturers have sent much of their production south of the border in the past five years. The attraction of moving abroad, however, has little to do with low wages and much to do with protectionism. U.S. quotas on sugar imports have, in recent years, caused the domestic price of sugar to become 350 percent higher than world market prices. As candy makers have relocated production to countries where sugar is cheaper, between 7,500 and 10,00o workers in the Midwest have lost their jobs — victims not of outsourcing but of the kind of protectionism called for by outsourcing’s critics.”
Posted on March 24th, 2004 under Work • 
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