The Facts on Outsourcing

[Aristotle]

Tracking own the actual facts on outsourcing (as someone in another thread requested) has been really enlightening. The most interesting thing I learned is that in-sourcing (the number of jobs we get in the US from other countries out-sourcing them to us) has increased more rapidly over the last 20 years than out-sourcing.

Also, out-sourcing peaked in the 1980s.

Source: U.S. Bureau of Labor Statistics

Between 1983 and 2003:

Outsourced jobs have increased from 6.5 million to 10 million. This is an increase of 3.5 million out-sourced jobs.

Jobs in-sourcing has increased from 2.5 million to 6.5 million. This is an increase of 4 million in-sourced jobs.

Thus, over the past 20 years, the process of out-sourcing and in-sourcing has resulted in a net GAIN of 500,000 jobs.

The net outsourced jobs figure (out-sourced jobs minus in-sourced jobs) peaked in the early '80s at nearly 4 million, then declined to a trough of roughly 2 million in the early '90s, before its recent gradual rise to just under 3.5 million.

An interesting (though partisan) analysis of this concept can be found in this article. The author makes excellent analysis but I wish the party bashing had been avoided. I feel it takes away from the excellent points made.

During this entire 20-year period, 38 million new jobs were created at home. That achievement is unmatched anywhere in the industrialized world. Hence, despite the pandering rants of Democratic presidential candidates, there is no evidence that the free flow of capital, labor, goods or services has in any way impeded domestic U.S. job creation.

Modern Democrats love jobs but can't stand the businesses that create them. They also claim to want prosperity, but don't want anyone to get rich should prosperity come about. Kerry and Edwards, for example, propose a sharp steepening of marginal tax rates on upper-income brackets and the investments that successful earners would make. But if these policies came to pass, they would rob the economy of the vital incentives necessary to expand the supply of capital that is crucial to inventing new products, forming new businesses and creating new jobs.

The Democratic Party has literally no understanding of the dynamic job-creating process -- what the eminent economist Joseph Schumpeter termed "gales of creative destruction." In the last 10 years -- a period that included NAFTA, the emergence of China, and the high-tech revolution -- 18 million new jobs were created, even with the 2000-02 economic downturn. Yet behind those 18 million new jobs, the economy actually wiped out a staggering 339 million old jobs, while creating an astonishing 357 million new jobs.

[Sebboe]

I don't have any statistics on this but what I would like to see is something that talks about the average salary of the jobs lost and the average salary of the jobs gained.

I know many foreign car manufacturers bring jobs to this country because they want to be able to sell cars that have a "Made in th e USA" sticker on them and autmotive factory jobs are jobs that one can make a good living wage on.

I'm sure there a lot of jobs that went out of this country that weren't as good as some of those jobs.

I'm more concerned with the trend of outsourcing high-tech jobs to other countries but in Newsweek even John Edwards admits that there really is no way to stop it.

As this become a more common media topic it will be interesting to see if Kerry or Bush will agree or if they will try to suggest that they have a way (or even an interest) in stopping it.

So while I do have the concern, realistically, how can you stop a company from paying a bunch of people in another country to write code? I don't think its possible.

Instead, I'd like to see people, be it individuals, businesses or government build viable strategies to compete it a global economy because there is no way to stop progress and the endless reach of technology.

[Aristotle]

All good points Sebboe.

History teaches us that the United States ALWAYS comes out on top from free trade. The main reason for this is that no other country promotes or rewards innovation like we do. Thus, we are always the country on the cutting edge and therefore have the most to gain from free markets.

Furthermore, with our current amazing labor productivity, we have yet another reason to excel in ANY new market, product, etc.

A lot of the things people complain about in relation to trade, jobs, etc. are the equivalent to pissing into the wind. You cannot change economic realities. You cannot heap massive costs onto businesses and then expect them to stay here without going bankrupt.