There are a number of comments to my post on off shoring/outsourcing and most of them highlight the emotional type of response vs. a more thoughtout response.

For example is this comment,

It is sad when people get in the way of the economy. One should be excited about losing one’s job to a foreign work force because it offers so much more to others and perhaps even an opportunity for you.

People are the problem, I see it now.

This is a classic strawman argument. I nowhere implied that people who are adversly effected by off shoring/outsourcing should be ignored or thought of as part of the problem. The thing is that people become unemployed everyday. Becoming unemployed is something that is happening right now, but where is this commenter right now? Where is his outrage at the guy who became unemployed yesterday? Nowhere. He is curiously AWOL. But if somebody is unemployed because a company moves its operations over seas, well that is somehow different than the company that simply decideds to shut down permanently or cut back on employment due to modernization.

The next comment is amazing in its level of nonsense.

This is Free Market Extremism carried to it’s horrifying logical end-point. Complete with Regurgitated Rush Limbaugh “zero-sum” platitudes.

Errr…what? It must be nice to be the type of person who can divide the world into two groups: those that agree with me, and the Regurgitating Rush Limbaugh crowd. Amazingly it seems to have never dawned on poor Mac here that perhaps the term “zero-sum” isn’t something that is unique to Rush Limbaugh, but is known to every economist who has studied game theory.

But it doesn’t end there,

In every paragraph above there is the admission that outsourcing is, in fact, costing Americans their jobs, followed by a big bucket of “But – but – but’s”

Apparently it didn’t dawn on Mac that the point of my post was that the impact of outsourcing/off shorring is basically and empirical one. We don’t know what the ultimate costs are going to be until we get the data. Further, it is highly unlikely that impoverishing the rest of the world will be good for the United States. As the incomes and wealth in other countries increase their demand for goods will increase. Many of those goods will be domestically produced, and some will be produced in other countries.

Excuse me… but Lou Dobbs IS an Economist. A HARVARD EDUCATED Economist. Are you? Did you get your degree in Economics from Harvard? Yet you feel at peace running down someone who has.

In addition he writes for Money Magazine, US News and World Report, and owns his own Financial News Report as well as a Financial Radio Show broadcast on over 700 stations.

Yes, but Rush Limbaugh has a very successful radio show, writes or has written for magazines (which ones I don’t know and frankly don’t care) and we know what Mac thinks of Rush Limbaugh, but apparently the success of Lou Dobbs is an indicator that he is right. Have I got this argument from authority right?

And it just keeps going.

Mr. Dobbs has most certainly done his research, and you would have known this if you had taken the time do do YOURS.

His 2004 book “Exporting America” painstakingly details the research you callously accuse him of NOT doing.

It also explains that it isn’t just “call center” jobs that are being “off-shored” (use the right word at least). It’s jobs in the MEDICAL and LEGAL and FINANCIAL professions too. Prestigious WHITE COLLAR jobs are being off-shored at a frightening rate in Corporate America’s rush to catch the last boat to China. But you don’t seem inclined to mention those.

This is just wonderful. Notice what Mac calls “research”. All of the above is nothing more than the costs of off shoring/outsourcing. There is no attempt to try and measure the benefits. Not that I expect Mac to even have the intellectual honesty to admit that things like increased corporate profits are a benefit. When economists, yes even those Harvard trained ones, measure the impact of something like off shoring/outsourcing they look at the net cost/net benefit. And something awful like corporate profits are indeed part of the benefit column. Further, there are the new jobs that might be created by increased trade which could very well include off shoring/outsourcing.

And Mac’s list of sources to get better informed on this topic is also telling,

• “Exporting America” By Lou Dobbs
• “The Great Betrayal” By Pat Buchanan
• “The Myth Of Free Trade” By Dr. Ravi Batra

Pat Buchanan? Is he a trained Harvard economist too? (By the way, that was sarcasm for those who missed it.) And Dr. Ravi Batra…say isn’t this the same guy who predicted a great depression in 1990? Why yes it is! (Oh and get a load of the used price for Dr. Batra’s book: $0.01. I think that pretty much sums it up.) Let me see…two kooks and a television show host. Yep, that is a stellar list of academics who plough through gigabytes of data and do peer reviewed research. Yep. Okay then.

I also find it amusing that somebody who claims to be a “libertarian/true conservative” also promotes a book that calls for “a five-year plan for economic“. Guess as a libertarian I’m just not up on the latest libertarian ideas.

Commenter Dave Schuler is always good for a rational comment though,

My sole concern in the outsourcing debate, Steve, is that more and more jobs here are relying on what’s being referred to as “IP production”. Most engineering jobs in the States these days, for example, aren’t producing stuff they’re producing designs for stuff or (in many cases) software. The reason for my concern is that in China and India and much of the rest of the world there isn’t robust support for the protection of intellectual property nor is there the legal or social infrastructure for doing so. Well, so what?

The so what is that there isn’t enough R&D spending in the U. S. as it is. Check the stats on business investment. They’re still lagging.

Also check where the increases in jobs have been here: government, health care (60% of every health care dollar comes from taxes), and retailing. No, the economy isn’t frozen in amber. But current managers make their hiring decisions based on current trends and, as I see it, the current trends leave us pretty darned vulnerable.

Frankly, I hate the U.S. approach to intellectual property. I think it is massively over-protected if anything and that could be one reason why there is less investment in R&D/intellectual property than there otherwise would be. Think about, the U.S. approach basically creates a temporary monopoly for the firm that discovers something useful. What do we know about monopolies? They increase their profits by restricting output. Is it a big leap from this observation to the conclusion that firms that engage in R&D might not want to produce as much new R&D lest they reduce their profits from past investments? A massive re-thinking of how the U.S. (and other countries) handle intellectual property needs to take place. Not that I expect this to happen.

Rick DeMent also usually comes through with good comments.

While I agree with Mr. Vardon that the economy is not a zero-sum game, it is also not “bandwidth on demand” and this is a point that no one ever talks about. Outsourcing displaces many workers who may or may not be in a place in their life where they can quickly replace the income they were receiving by a job that has been outsource.

This is quite true, but it is true of any and all unemployment. So why not simply rail against unemployment in general? Probably because it wouldn’t have the same appeal/draw that railing against off shoring/outsourcing has. Oh and Rick, its Verdon. 🙂

There is a concern with off shoring/outsourcing. It does displace people and cause them to suffer, and if something can be done to reduce/eliminate it great. However, making laws to simply prohibit off shoring/outsourcing aren’t going to work in the long run. The market is an impersonal and unfeeling place. Money goes where the profit is and no laws will change this. A law that prevents off shoring/outsourcing will only work in the short run, and will likely not prevent unemployment even in short run. Firms will always have the option of shutting down permanently. So unless commenters like Dale and Mac can come up with a way of suspending the laws of supply and demand, they are basically pissing up a rope.