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To: RealMuLan who wrote (20866)	1/9/2005 6:05:44 PM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

Doing nothing on outsourcing will be costly By Miguel Helft It was just about a year ago that the issue of offshore outsourcing made its debut on the national stage. Before then, the migration of software development and other white-collar jobs to cheap labor markets was the source of some hand-wringing in Silicon Valley and the source of real pain for some of its workers. But it wasn't until last January that billboards sprang up in states such as South Carolina asking: ``Lost your job to free trade and offshoring yet?'' And it wasn't until a month later that one of President Bush's top economic advisers set off a firestorm when he said the outsourcing of jobs overseas was good for America. All this raised expectations that the nation would respond to the significant challenges created by outsourcing. Yet precious little has happened, and that's both good and bad. It's good because the few policy initiatives proposed by legislators for dealing with job losses to other countries were terrible ideas. It seems that all our representatives in Sacramento and Washington could come up with were bills that would restrict some government jobs from being sent overseas. Since the overwhelming majority of outsourced jobs are in the private sector, these measures would have had little or no benefits for American workers. Worse, they could have cost taxpayers and would have exposed the United States to retaliation by its trading partners. Fortunately, these bad ideas were defeated in Congress and vetoed by Gov. Arnold Schwarzenegger. But it's alarming that a year into a growing outsourcing phenomenon that promises to reshape the American economy, not a single, significant and sensible measure was enacted in response. And it wasn't for a lack of good ideas from outside Congress and the legislatures. Take the approach favored by business groups: making America more competitive. This is as essential as it is common sense. Other countries are catching up to America, and to stay ahead, we must run faster. That means improving education, increasing funding for basic research, reducing barriers to high-risk investments and a slew of other measures aimed at supporting innovation, creativity and productivity. These measures, however, will only deliver results in the long term. That makes them a tough sell for politicians focused on the next election. So despite the best efforts of some vocal leaders such as Intel's Craig Barrett and others, nothing much was done. Another set of good ideas involved expanding and modernizing the social safety net. One possibility was to extend to white-collar workers a program intended to assist manufacturing workers displaced by trade. This simple plan, championed by some prominent think tanks and labor economists, never got off the ground. Other smart people proposed to create a wage-insurance program that would work a bit like unemployment insurance. But instead of paying unemployed workers, it would compensate workers who, after losing their jobs to outsourcing, end up in lower-paying positions. Such wage loss is common for workers whose jobs fall victim to trade. The wage-insurance program would cushion that blow, while getting workers off the unemployment rolls more quickly. Combined with good retraining programs, it would help workers shift out of careers whose days in the Untied States are numbered. That idea, apparently, was beyond the grasp of lawmakers. Of all the factors contributing to offshore outsourcing, none is more powerful or threatening to the American economy than the following: Hundreds of millions of educated workers from India to China to Eastern Europe have joined the global workforce in the past decade. This near-limitless supply of cheap, increasingly skilled labor could lead to an extended period of job losses and wage stagnation. We could choose to do nothing for another year. But it will be at our own expense. MIGUEL HELFT is a Mercury News editorial writer. His column on tech-policy issues runs the first and third Wednesdays of each month. mercurynews.com