Outsourcing

There has been a lot of talk during this presidential campaign about the issue of outsourcing of jobs to other countries. Kerry and the Democrats have railed against this as an evil that needs to be stopped, and have, in effect, accused CEOs of companies who outsource jobs of treason ("Benedict Arnold CEOs"). Logically, one can see that this is nonsense. The US has always outsourced jobs throughout its history and in a variety of industries. In the 18th and 19th century (and even the beginning of the 20th) a large proportion of Americans were employed in agriculture; today it is around 2%. In the 19th century the US employed a large proportion of people in the textile industry; now that industry barely exists in the US. In the 20th century the proportion of the US population involved in manufacturing declined steadily. In all of these examples, many of the jobs were outsourced overseas because it was much cheaper to do those things elsewhere (obviously there was also some movement between industries). Yet our unemployment rate is near historical lows.

This study of the IT industry, released today, shows that "[u]sing offshore resources lowers costs and boosts productivity. As a result, inflation is lower, interest rates are lower, and economic activity is higher. The increased economic activity creates a wide range of new jobs, both in IT and other industries."