Reluctantly, Republicans have concluded that the outsourcing issue is not going away. Their first response was to shoot the messenger--in this case, Council of Economic Advisers Chairman Greg Mankiw, who simply said the phenomenon is an inevitable byproduct of free trade. House Speaker Dennis Hastert (R-Ill.) called for his head and Mankiw was forced to apologize. Journalist Robert Novak called the White House action "clumsy."
With polls showing growing numbers of Americans apprehensive that their jobs may soon be sent to China or India, Republicans eventually recognized that a more appropriate response was needed. According to a March 21 poll by Democratic pollster Stan Greenberg, respondents cited a fear of jobs being outsourced overseas 43 percent of the time when asked about America's most serious economic problems.
Of course, it is absurd that almost half of Americans should fear outsourcing. The vast majority of jobs can never be outsourced, because they require physical contact, close proximity to markets, and other factors. Nevertheless, fears of outsourcing can be potent politically if many people think that they are next, however remote that possibility may be. Senator John Kerry (D-Mass.) is doing his best to stoke those fears by making multinational corporations the scapegoats for slow job growth.
What has been seriously lacking in the outsourcing debate thus far is hard data. Estimates of huge job losses have been churned out by consultants in order to get outsourcing business. And because the data is proprietary, few people have been able to examine them in detail. One who did is Stephen Roach, chief economist for Morgan Stanley. He looked at Forrester Research's widely cited projection that 3.3 million U.S. jobs would be outsourced by 2015 and found it to be "pretty flaky."
Now, at last, we are starting to get some serious studies with good numbers. They paint a very different picture of the outsourcing phenomenon.
A new report from the Commerce Department shows that the U.S. runs a large trade surplus in information technology (IT) services. This is precisely the area where most of the job loss from outsourcing is supposed to be taking place. In 2002, the U.S. exported $3 billion worth of computer and data processing services and $2.4 billion in database and other information services, while importing just $1 billion of the former and $200 million of the latter.
Bruce Bartlett is a former senior fellow with the National Center for Policy Analysis of Dallas, Texas. Bartlett is a prolific author, having published over 900 articles in national publications, and prominent magazines and published four books, including Reaganomics: Supply-Side Economics in Action.
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