Published: July 18, 2012
The Washington Post today dismisses the attacks over outsourcing in the presidential campaign as pure politics, arguing that America benefits from trade and we better recognize the realities of the global economy.
From the editorial, "Political offshoring squabble doesn’t address job insecurity":
[If] economists are agreed on anything, it is the net benefits to society, both in the U.S. and abroad, of free trade. The same goes for free movement of investment capital, and the jobs it creates.
Recent empirical studies support the theory. In a May 2012 paper, researchers at the London School of Economics Center for Economic Performance examined 58 U.S. manufacturing industries from 2000 to 2007, and found that the cost savings and productivity increases from shifting some work overseas enabled enough new domestic hiring to offset the jobs lost abroad. Similarly, Mihair A. Desai and his colleagues at Harvard Business School found that foreign investment by U.S. firms does not detract from their investment in the U.S., but rather complements it; a 10 percent increase in the former leads to a 2.6 percent increase in the latter.
Summarizing the literature, the nonpartisan Congressional Research Service has noted that U.S. investment abroad may lead to job creation at home, which “makes it difficult to identify any broad trend regarding outsourcing.”
Such studies are little comfort to workers who lose their jobs, the Post acknowledges, but then let's have the presidential campaigns address the most effective response to the irrefutable realities of globalization.
In an ideal world, the president and his challenger would acknowledge that “creative destruction” is part of what helps an economy grow, while discussing the most cost-effective means of limiting and healing workers’ short-run pain. Alas, we don’t live in that world.
No reason we can't live in that world if the media and voters hold the candidates accountable. The Post editorial is a good example of what's needed.