Outsourcing

It’s a hugely sensitive topic, of course, the outsourcing, or offshoring, of US jobs, particuarlly now that more white collar positions are being thrown into the mix.

But it may be not only that the problem has been overblown, but that actually it’s been stated backwards.

“Any way you slice it, the world is creating or transferring more jobs to the U.S. than we are doing to the rest of the world,” said Daniel T. Griswold, a trade specialist at the Cato Institute, a research organization in Washington.
India’s Essel Propack Ltd., Taiwan’s Teco Electric & Machinery Co. and Denmark’s Vestas Wind Systems A/S all have built plants in the United States in the last year and a half.
Other non-U.S. companies announced plans to increase hiring in the United States last year including Japan’s Nissan Motor Co., with 3,350 jobs in Canton, Miss.; DaimlerChrysler AG of Germany, with 2,000 at a new Mercedes-Benz plant in Vance, Ala.; German appliance distributor BSH Bosch and Siemens Hausergate GmbH, with 1,300 in New Bern, N.C.; and Magna International Inc. of Canada, with as many as 800 in Bowling Green, Ky.
The movement of U.S. jobs abroad “has been blown out of proportion” mainly because domestic companies in the United States have been slow to increase hiring, said Martin Baily, chairman of former President Bill Clinton’s Council of Economic Advisers. “There was lots of offshoring going on in the 1990s, but job growth was so strong in the U.S. that nobody really took much notice.”
While reliable figures aren’t available for the last two years, the Commerce Department estimated on March 18 that the number of Americans employed by U.S. affiliates of majority non-U.S. companies grew by 4.7 million from 1997 through 2001. In the same period, the number of non-Americans working at affiliates of majority-U.S. companies abroad rose by 2.8 million.

If we don’t want to be encouraging through tax policy (assuming we are) the transfer of US jobs overseas, we also want to be sure we don’t set up barriers that prevent the importation of jobs to the US.

Another article, here, notes:

The first mistake of many politicians, argues Matthew Slaughter, a professor at the Tuck School of Business at Dartmouth College, New Hampshire, is to assume that a job created overseas is one not created in the US. “An overseas worker is sometimes a substitute for a US worker but very often they are a complement for a US worker,” he says. “Expanding an overseas network frequently means you have to hire more workers in the US too.”
Even if much low-end production takes place outside the US, the management, logistics, research and development and international IT remains in the US. “As the international network expands, so does the the US network managing it,” Mr Slaughter says.

Which was, after all, one of the arguments behind the Clinton-era NAFTA legislation. But that’s a difficult argument to make, in a period of economic uncertainty.