http://news.com.com/2010-1028-5162847.html The truth about offshoring February 23, 2004, 4:00 AM PT By Declan McCullagh Economic reality frequently makes for poor politics. That's what N. Gregory Mankiw, chairman of President Bush's Council of Economic Advisers, recently found out when he inadvisably spoke the truth: Free trade is good for America. Outsourcing gains "that take place over the Internet or telephone lines are no different than the gains from trade in physical goods transported by ship or plane," Mankiw, who is on leave from his job at Harvard University, told Congress. "When a good or service is produced at lower cost in another country, it makes sense to import it rather than to produce it domestically." Mankiw was restating for the 21st century the economic law of comparative advantage, which essentially says that nations should play to their strengths. No serious economist would disagree. But Mankiw soon learned a lesson: Better to cloak what you say in fuddy-duddy academic argot than to be clear and controversial. [...] Just as candlemakers and farriers lost their jobs a century ago, free trade results in temporary disruptions. But in the long run, free trade is vital to a society's overall health. In the 1990s, developing countries hostile to foreign trade experienced average growth rates of negative 1.1 percent per year, while developing countries that embraced freer trade enjoyed growth of positive 5 percent annually. And let's not forget that U.S. workers in the information technology industry often benefit from outsourcing. The German company Siemens, which makes electronic and electrical products, employs 65,000 people in this country. Sony Electronics employs 2,000 people in just New Jersey, while Belgium's Agfa-Gevaert Group, one of the world's leading imaging companies, writes paychecks to over 5,000 people in the United States. Spain's Terra Lycos employs 418 people in the United States to run Web sites such as Lycos.com, Hotbot.com, Gamesville.com, Tripod.com, RagingBull.com and Wired.com. [...remainder snipped...] _______________________________________________ Politech mailing list Archived at http://www.politechbot.com/ Moderated by Declan McCullagh (http://www.mccullagh.org/)
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