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

Bill Gates, Testimony before the Committee on Science and Technology, US House of Representatives, March 12, 2008.

"The simple fact is that highly skilled foreign-born workers make enormous contributions to our economy [...] The US will find it far more difficult to maintain its competitive edge over the next 50 years if it excludes those who are able and willing to help us compete. Other nations are benefiting from our misguided policies."
Bill Gates,
Testimony before the Committee on Science and Technology, US House of Representatives,
March 12, 2008.

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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