Here is something which I have written sometime back. Made a bit of changes to suit this discussion.Outsourcing:
It is obviously bad for the people who lost their jobs but it is generally good for the economy as a whole.
Let me give you one gory analogy, which focuses on the negative aspects of outsourcing. A person is trapped under a collapsed building and his leg is pinned down. He can either amputate his leg or die. Is amputating one's leg something one normally wants, of course not. But is it better than dying, of course it is.1) Outsource to protect remaining jobs
A widget may cost $10 to be produced in US but it only cost $1 to be produced in another country. Restricting production in leaving US may help save the widget industry in the US but for every other industry that requires widget it is an additional cost. And for US firms to compete not just domestically but internationally, one must ensure that they are not priced out of the market. So XYZ Widget Company may decide to shut its factory of 1000 workers in the US and move overseas but if company did not do so they would not be able to compete with other producers thus resulting in him not only losing the 1000 factory jobs but also the other 100 marketing and development jobs.
Recall how Bush initially tried to protect US steel industry only to result in lost of jobs in other industries that rely on steel and increase in prices.2) Outsource v Mechanised
Alternatively, the company has to reduce its cost or it will go bankrupt and option X is to outsource 800 jobs where the savings would allow the company to keep 200 jobs back home. Option Y is to mechanised the entire factory such that 950 jobs is made redundant and only 50 workers are hired. I do not believe one would say that Option Y is better because no outsourcing was done.3) Wider service and Lower prices
People often argue that they may be willing to pay a bit more to keep the jobs in the country. BUT there are many poor people who are unable to pay that bit more and as a result the poor suffer.
If the poor are not able to afford hiring a local tutor for their child's education, then any restriction on getting a cheaper service abroad serves not one. It does not serve the child as he is getting no tutor and neither does it serve the local tutor as the poor cannot afford them.4) Jobs outsourced and insourced
Its a two way street. Jobs may be outsourced out of US but jobs are also insourced into the US. (http://www.ofii.org/insourcing/
) The US is generally the largest recepient of Foreign Direct Investment, except in 2003 where it was pushed into second place. So to claim there is no investment in the US is a false assumption.
The US sell lots of goods and services abroad that is produced in US. If outsourcing is bad then the US should not conduct such trade. Unless one adopts a hypocritical position on outsourcing that it is ok if the US is the recipient of the jobs but if some other country benefit then it is bad.5) Bad working Conditions Abroad
The conditions of work are terrible by US standards but compared to not getting anything at all it is better. It could improve but to expect standards on par with developed nations is not realistic and detrimental.
Several years ago an Adidas factory was closed down in South Asia due to protests in the West, which resulted in workers losing their jobs and many female employees having to work in the sex industry as a result, yet the people who protest have no interest in the new situation.
Another example often used is that of Mexico but that is false since Mexico is one of the most trade dependant nations in the world and when the US had a recession from 2000/1 onwards growth the Mexico took a huge hit.6) What the liberal democrat economist says
I have used comments by liberal economists to show that the positive effects of outsourcing is not something that is accepted only by conservatives.
Now for a more "diplomatic" comment on the issue check out what Robert Reich, secretary of labor under Clinton have written.www.robertreich.org/reich/20031102.asp
Remember there is a difference between throwing up protectionist legal barriers that distort trade and prevent outsourcing and protecting US jobs through innovation, education and flexibility. The former harms the economy, the latter improves it.
Let us examine what the liberal economist Paul Krugman and one of my fav economist, have to say on this. In case you are not too sure who he is, he was the person that called Bill O'Reilly a "quasi murderer" on national TV to his face.www.pkarchive.org/column/022704.html
And a nice explanation on why putting up protectionist barriers to outsourcing may end up damaging the economy more than the worst case of outsourcing where there is no replacement jobs.http://www.pkarchive.org/economy/CNN...ide031004.html