Paul Craig Roberts (“Outsourcing after-effects,” April 24, B4) is ready to jettison the free market due to the questionable opinions of two brothers Mr. Roberts assures us are “experts” on outsourcing.
Given the dubiousness of their claims, it perhaps should come as no surprise these “experts” turn out to be an electrical engineer who is an assistant public policy professor and a Canadian professor of political science and Latin American studies. In other words, not only are these two uncelebrated prophets not experts, they are not even economists. Apparently, an “expert” is anyone who agrees with Mr. Roberts.
Ignoring the lessons of history, Mr. Roberts champions the xenophobic fallacies of the populist supporters of the disastrous Smoot-Hawley tariff, which were responsible for much of the economic havoc of the Great Depression. Unable to frame a principled logical, historical or empirical argument, Mr. Roberts is reduced to citing worthless anecdotes, relying on unsupported conclusions from dubious sources and defaming those who don’t share his pre-Adam Smith era views as “fools,” “no-think economists,” and (worst of all in Mr. Roberts’ mind) “American economists.” Unsurprisingly, the huge negative effects of the retaliatory trade barriers that would inevitably follow were Mr. Roberts’ notions actually carried out are found nowhere in his calculations.
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While Mr. Roberts bridles at being labeled a “protectionist,” he should feel flattered: for every person “protected” by the counterproductive policies he favors, 10 would be fleeced — so a more accurate label would be “destructionist.”
As for the bogeyman of trade deficits, Nobel laureate in economics (though admittedly no Canadian electrician) Milton Friedman has repeatedly pointed out imports are what we gain from trade — exports are what we give up. Mr. Roberts’ real enemies are those pesky U.S. consumers, who (inexplicably to Mr. Roberts), prefer paying lower prices for goods and services rather than higher prices.
The reality is we insource far more jobs than we outsource. This is true even in the field where Mr. Roberts believes his strongest case exists, information technology (“IT”). A study by the Institute for International Economics of the 12 IT occupations that earned more than $50,000 in 2002 showed 75 percent increased U.S. employment from 1999 to 2002.
U.S. IT jobs earning more than $50,000 expanded by 184,000 from 1999 to 2002, of which computer software engineers earning approximately $75,000 per year accounted for 115,000 jobs. Moreover, even in Mr. Roberts’ cherished manufacturing segment, in the last 15 years insourced jobs grew at 5 percent annually while manufacturing outsourced jobs grew only 1 percent annually.
Dropping all context, Mr. Roberts tries to whip up populist fears by claiming “14 million white collar jobs are vulnerable to offshore outsourcing.” But in a free market, all jobs (including newspaper column writing) are vulnerable to competition — and that’s a good thing. The deliberately ignored wider context is the net positive of free trade and technology, which utterly swamps any negative effects of outsourcing: The U.S. gained an average of 8.11 million jobs per quarter over the last decade — an average net increase of 400,000 jobs every quarter.
A rigorous 2003 study showed the benefits of trade outweigh its costs by 100 percent, or 2-1, and this finding is congruent with the lessons of history: Nations that practice free trade prosper while those that erect trade barriers flounder.
Most of the statistics cited here can be found at: www.heritage.org/Research/Economy/bg1757.cfm, which is Heritage Foundation Backgrounder 1757, “Myths and Realities: The False Crisis of Outsourcing,” by Tim Kane, Ph.D., Brett D. Schaefer, and Alison Acosta Fraser.
MICHAEL E. CRAWFORD
Great Falls, Va.
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