OFFSHORING OF AMERICAN JOBS

Off-shoring of American Jobs

Off-shoring of American Jobs: What Response from U.S. Economic Policy?

The 2009 collection of essays, Off-shoring of American Jobs: What Response from U.S. Economic Policy?, co-authored with economist Alan S. Blinder, provides a forum for the discussion of outsourcing and off-shoring American jobs. In a unique format, Blinder and Bhagwati take opposing views on the subject, which are then commented on in a series of articles by other economists, including Douglas A. Irwin, Richard Freedman, Lori G. Kletzer, and Robert Z. Lawrence. Thereafter, Blinder and Bhagwati reply to these specific comments. Blinder takes the position that within a couple of decades the United States could lose up to forty million jobs to off-shoring, mainly to India, where English is spoken and there is a plentiful supply of college graduates. These jobs, according to Blinder, would be largely in the service industry, including accountancy and bookkeeping. Blinder argues that the United States must begin now to adapt its educational policies to train workers for other jobs to avoid huge unemployment and a downward spiral in wages. Bhagwati, on the other hand, contends that such off-shoring is a normal aspect of globalization and that it will, in the long run, benefit both the United States and countries like India. For Bhagwati, Blinder's claims are overblown and overly simplified. Bhagwati and other economists further argue that as innovation increases there will not be such a large number of jobs that can profitably be offshored; further they maintain that other countries will begin off-shoring employment to the United States. Off-shoring of American Jobs is a stimulating collection. Noting that the essays in this volume were written in 2007 before the recession and financial crisis that started in 2008. (Amiti, 2005)

Off-shoring refers to the practice, by either companies or government entities, of relocating goods or services previously produced domestically to unaffiliated firms or affiliated entities abroad. Off-shoring of manufacturing goods and components has been common practice for a few decades now, but recent advances in information and communication technologies (ICT), coupled with a notable increase in the supply of educated workers in certain less developed economies, has led to a remarkable increase in the incidence of service off-shoring. The often-cited examples of the relocation of software programming and telephone call center services to India illustrate this trend but so does the increased demand of financial services offered by U.S. firms to foreign firms eager to offshore to the United States. Is service off-shoring just another manifestation of the gradual process of U.S. economic integration with the rest of the world or does it raise new threats and challenges for American economic policy? This is the key question that Jagdish Bhagwati, Alan S. Blinder, and four other leading economists debate in this interesting, short book. (Crinò 2010)

The essays and discussions in the book were first presented at the fourth Alvin Hansen Symposium on Public Policy, held at Harvard University in May of 2007. I was fortunate enough to attend the symposium, ...