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Politics : Just the Facts, Ma'am: A Compendium of Liberal Fiction -- Ignore unavailable to you. Want to Upgrade?

To: Sully- who wrote (60207)	6/21/2007 7:56:47 AM
From: Sully-	Read Replies (1) \| Respond to of 90947

Outsourcing Myths By INVESTOR'S BUSINESS DAILY Posted Tuesday, June 19, 2007 4:20 PM PT Journalism: America's companies are shutting down factories and offices, and shipping jobs wholesale overseas. That's how the media have portrayed it. In reality, outsourcing has created more, better-paying jobs here. The media love victims. So when industries began moving jobs once done here to low-cost labor havens like India and China, pundits and reporters portrayed it as a devastating blow to America's traditional working class. Tales of "Benedict Arnold" CEOs, as presidential candidate John Kerry called them, peppered the media. A populist groundswell — fed by news accounts of huge executive pay packages, scandals and soaring profits — found ample space in the nation's newspapers and on the airwaves. From Lou Dobbs to BusinessWeek, questions continue to be raised about U.S. companies sending jobs overseas. Chances are, if you've been fed a steady diet of this, you think outsourcing is a disaster. Well, you've been seriously misinformed. Outsourcing is in fact a big contributor both to recent productivity growth and to rising incomes for average workers in the U.S. One of the most obvious falsehoods about job outsourcing is that it raises unemployment. Huh? Since 2001, during which criticism of outsourcing has hit a crescendo, U.S. businesses and entrepreneurs have created 9.9 million new jobs. The current jobless rate of 4.5% is below the average in any of the last four decades. "Believing that offshore outsourcing causes unemployment," economist Daniel Drezner wrote, "is the economic equivalent of believing that the sun revolves around the earth: intuitively compelling but clearly wrong." That said, many, including Kerry in 2004, blamed outsourcing for what was wrongly called a "jobless recovery." That became essentially the Democrats' position. They found lots of fodder in the mainstream media and popular books. They found support in some frightening forecasts, like the one in 2003 from Forrester Research predicting that outsourcing could cost 3.3 million white-collar workers their jobs by 2015. In 2005's "Outsourcing America," TV's Lou Dobbs warned that outsourcing was "nothing less than a direct assault on hard-working middle-class men and women in this country." All this sound scary? Consider this: The U.S. from 1996 to the third quarter of 2006 lost on average 7.83 million jobs each quarter. But it gained on average 8.17 million new jobs. Assuming that pace of job creation holds, some 302 million new jobs will be created between now and 2015. So Forrester Research's forecast of 3.3 million jobs lost is nothing — 1% of the total. Such fear-mongering aside, more sober assessments find net benefits from globalization — including the outsourcing of jobs. A study by two Princeton University economists last year found that productivity gains from outsourcing boosted the wages for the least-skilled workers by 1% a year from 1997 to 2004. Another study, this by McKinsey & Co. in 2003, showed a return of $1.12 for every dollar of work sent offshore. That money doesn't sit idle; it's redeployed in the economy and reinvested, creating more and better jobs than existed before. By the way, people forget one key fact: Outsourcing cuts both ways. The U.S. "insources" jobs from elsewhere, as a report by the Organization for International Investment found. "Over the last 15 years," the 2004 report said, "manufacturing 'insourced' jobs grew by 82% . . . and manufacturing 'outsourced' jobs grew by 23%." That is, we had a net job gain even on outsourcing. This is nothing new. It's free trade. As Adam Smith wrote in "The Wealth Of Nations" in 1776, "It is the maxim of every prudent master of a family never to attempt to make at home what it will cost him more to make than buy." That goes for outsourcing, too. No question, globalization and outsourcing entail some pain. But they provide many more benefits, letting companies cut costs, boost investment, create jobs and pay better. That's bad? ibdeditorials.com