Economics of Outsourcing


Supporting Arguments for Outsourcing:

Outsourcing is not a dirty word.  It is a process that has been critical to economic success and expansion. Business benefit from outsourcing through saving time so they can better focus on core business competencies and  by lowering costs.

Veteran democratic economist, Charles Schultze, states that off shoring has had a relatively modest impact on unemployment when compared to all the other economic factors that create and destroy jobs week by week in the U.S. economy. In the short run, an increase in off shoring reduces U.S. job growth. But in the long run it improves the standard of living, increases real wages, and increases the country's economic growth. (Source)

According to the Economist, in an article entitled, The Great Hollowing-Out Myth, “America's economy has, overall, lost jobs since the start of the decade, the vast majority of these job losses are cyclical in nature, not structural. Even at the best of times, the American economy has a tremendous rate of “churn”—over 2 million jobs a month. In all, the process creates many more jobs than it destroys: 24 million more during the 1990s. The process allocates resources—money and people—to where they can be most productive, helped by competition, including from outsourcing, that lowers prices. In the long run, higher productivity is the only way to create higher standards of living across an economy.” (Source)

Quotes By Outsourcing Supporters:

"Outsourcing is just a new way of doing international trade, which makes it "a good thing.""
-N. Gregory Mankiw, the head of President George W. Bush's Council of Economic Advisers.- (Source)

"'We can erect walls to foreign trade and even discourage job-displacing innovation. Time and again through our history, we have discovered that attempting merely to preserve the comfortable features of the present--rather than reaching for new levels of prosperity--is a sure path to stagnation."
-Alan Greenspan- (Source)

“The creation of new jobs always overwhelms the destruction of old jobs by a huge margin”
-Gregory Mankiw,- (Source)

"Is it possible for us to continue to have job growth and a thriving economy with all of this outsourcing? Yes, if we have demand growing rapidly enough, which, with the right policies, we could, and we would be creating different kind of jobs."
- Paul Krugman.-(Source)

Random Fact

Statistics show that the US economy loses an average of $231,289 for every job protected in the country. This leads to an annual loss of over $100 billion.(Source)


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