Outsourced

Today in class we talked a lot about outsourcing and the fears that come with it. During the 2012 election, Mitt Romney was criticized heavily for outsourcing during his tenure at Bain Capital and commenting that outsourcing was critical to its success as a company. Obviously people disagreed and felt as if Romney was flip flopping due to his anti-outsourcing stance in the election. After today's discussion, though, it seems like Romney's apologies might have been a little premature. Outsourcing continues to be a point of contention and as we read from Friedman and Blinder there are many different points of view when it comes to how and if the United States should address the issue. Friedman points out that countries like India and China have graduated millions of engineers and doctors every year, and that if the US wants to stay relevant that they need to step up and put more emphasis on education and the sciences in general. Blinder disagrees and states that in order for the US to continue to dominate the world economy there needs to be a shift in specialization. Blinder says that the problem lies in jobs with impersonal connections. There are jobs that require face to face contact and outsourcing won't be able to provide the same quality work. 

The main question that arises, though, is if outsourcing is good for America. It's been an inevitable cycle, and the majority of goods already have a Made In China sticker, the only missing is a designed in China sticker as well. If we're outsourcing all our manufacturing jobs to China, does that give us more room to be creative, or give them the advantage to take over control? 

In a Wall Street Journal article by Douglas Irwin, Irwin states that outsourcing is actually benefiting Americans. Even though manufacturing jobs are being outsourced, US manufacturing has risen by 40% over the past decade as companies have deliberately chosen high wage workers, and "Between 1995 and 2002, China, Japan, Brazil and other countries lost more manufacturing jobs than did the U.S., according to an Alliance Capital Management study." Irwin's optimistic opinions don't do much to talk about the fragility of what Blinder calls "personal" and "impersonal jobs". Irwin comments that the service industry will persevere because of specialization. While we can outsource x-rays to any doctor in the world, there will only so many specialists in advanced radiography with relation to malignant tumors. He states that, "As long as the American workforce retains its high level of skills, and remains flexible as firms position themselves to improve their productivity, the high-value portion of the service sector will not evaporate." Irwin also notes that Americans ignore the need for outsourcing. There would be no way that an average consumer could afford their everyday products if they were solely manufactured in America, there needs to be a source of cheap labor in order to keep our standard of living. Necessity has always been the mother of invention, and the US has never been the type to shy away from a challenge, so why are we afraid now?
Sources
Wall Street Journal