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February 6, 2004
Sauce For The Goose

In the midst of the outrage du jour -- outsourcing -- India responds with a big "so what":

Most jobs going to India are in the high-technology and professional-services sector. Data released by the U.S. Bureau of Labor Statistics show, however, that U.S. job losses are taking place mainly in manufacturing and retail services.

In the professional and business sectors, U.S. employers added workers in the last quarter. Although jobs did shrink — for many reasons, including a burst stock market bubble — employment in computer and mathematical occupations has grown since June last year by more than 150,000. According to the Information Technologies Assn. of America, only about 2% of 10 million computer-related jobs have gone abroad.

In U.S. manufacturing, jobs have been declining, but they have been gradually doing so over two decades. Investments by U.S. companies in India's manufacturing are still quite modest. In India's fast-growing automobile sector, for instance, Japanese and South Korean firms are big players. American auto giants have a comparatively low profile.

While much has been made of $80,000 jobs going to India for $20,000, Mr. Adhikari reminds us that the buying power between the two salaries is about equivalent, especially when you remember that India's per-capita income is less than $500 per year. The message is that the free market and globalization also relate to labor, as it must. We can hardly have a free market for goods if you have protectionism on jobs, or else we would have few markets with which to sell our products overseas. Forcing American corporations to eliminate low-cost labor alternatives will only mean that foreign corporations and governments will fill the market need themselves. Such a policy will increase our trade imbalance as American consumers will flock to lower-price options. Which is preferable: a policy that allows American corporations to profit from lower-cost (but hardly sweatshop) labor, or one that puts American corporations at stark international disadvantage? Where do you have your retirement money invested?

Of course, a free market cuts both ways, and what Mr. Adhikari doesn't mention is that Americans could simply refuse to buy goods and services produced from outsourced labor. That is also a free-market decision, and one that allows the market to work properly. The outcry from consumers is already having some effect to this end, and the perception that India's outsourced call-center services are lower in quality than comparable US services have driven some corporations to end the outsourcing of these jobs. Why not continue to allow the market to drive these decisions?

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Posted by Ed Morrissey at February 6, 2004 6:24 AM

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