4/13/2006

Outsourcing

I recently read a blog posted by Gregory Mankiw, a Harvard professor, and author of Economic textbooks. Professor Mankiw referred to a comment he made in one of his textbooks which caused a bit of an uproar regarding outsourcing. In regards to outsourcing, Mankiw states, “more things are tradable than were in the past, and that’s a good thing.” The article goes on to mention the importance of facing the challenges which outsourcing will bring. I agree that outsourcing or offshoring is a means of seeking greater efficiency through the market, but I realize it means lots of temporary job loss for countries like the USA.

6 comments:

Jer said...

Some people won’t appreciate this, but I’m going to say that I think that the market determines the value of labor. The jobs that are lost in America to outsourcing are lost because they are priced too high; they are simply priced out of the market. I think outsourcing is cool because it lowers costs for companies that outsource, thus lowering costs for me.

Dr. Tufte said...

The posts and comments are all good here.

I tend to think this is an issue where there is a lot of selfishness involved.

We get upset when gas stations raise the price of their gas, indicating that we expect them to lower the price for us. Yet, we are appalled when employers have the same expectations of us and our labor.

Anonymous said...

"I tend to think this is an issue where there is a lot of selfishness involved."

Precisely!

Dr. Tufte said...

Agreed.

A lot of control issues too ...

Matthew said...

Dr. Tufte said, “We get upset when gas stations raise the price of their gas, indicating that we expect them to lower the price for us. Yet, we are appalled when employers have the same expectations of us and our labor.”

I agree. It's true that selfishness is an issue. Most people are only concerned about how things affect them and forget to look at the big picture. While outsourcing jobs may hurt a few people significantly, it will also help a lot of people a little bit, adding up to quite a bit. Businesses will have lower costs which will help them compete better overseas and will allow them to give lower prices to their customers.

Dr. Tufte said...

To selfishness, I would add asymmetry: the inability to admit that opposite sides of issues behave oppositely.