Outsourcing Benefits - Michigan Economy and Taxpayers | Cato's Center for Trade Policy Studies

Noteworthy

Jagdish Bhagwati, Obama and Trade: An Alarm Sounds, Financial Times, January 9, 2009.

"[L]abour union lobbies and their political friends have decided that the ideal defence against competition from the poor countries is to raise their cost of production by forcing their standards up, claiming that competition with countries with lower standards is “unfair”. “Free but fair trade” becomes an exercise in insidious protectionism that few recognise as such."
Jagdish Bhagwati,
"Obama and Trade: An Alarm Sounds," Financial Times. January 9, 2009.

Outsourcing Benefits - Michigan Economy and Taxpayers

by Daniel Griswold and Dale D. Buss

Daniel T. Griswold is director of the Center for Trade Policy Studies at the Cato Institute in Washington and an adjunct scholar of the Mackinac Center for Public Policy. Dale D. Buss also is an adjunct scholar of the Mackinac Center, a Michigan-based research and educational institute.

September 15, 2004

Lawmakers in Congress and in more than 30 state legislatures have targeted foreign outsourcing as a threat to U.S. employment and prosperity. Along with certain critics in the news media, such as CNN’s Lou Dobbs, they charge that U.S. companies are firing American workers in significant numbers and replacing them with foreign service workers in low-wage countries such as India. Legislative proposals in Michigan and elsewhere have focused on barring federal or state contracts with companies that would “offshore” the work to call centers or information technology providers abroad.

Contents

Introduction

Economic Benefits of Foreign Outsourcing

Outsourcing Job Losses in Perspective

The Fall and Recovery of the IT Sector

Michigan Companies Illustrate the Dynamics

Foreign Outsourcing Is a Two-Way Street

Outsourcing Is a Win-Win Arrangement

Restrictions on Outsourcing Are Self-Defeating

Conclusion

Endnotes

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