Atlantic Community:Global Must Read Article "In Favor of Free Trade"

Confronting some of the protectionist calls during the ongoing presidential nomination process, Steven E. Landsburg, a professor of economics at the University of Rochester, reminds us of the huge benefits of free trade we benefit from everyday. Thus, even when some jobs are outsourced, the fall in wages is more than offset by the gains through lower prices. Essentially, company managers, by outsourcing jobs, only do what all of us do everyday of our lives; that is find a certain product or service at the cheapest price. This "shopping around" benefits all of us through lower prices because of lower production costs. The opposite strategy, to retain the costlier workers and increase prices, would similarly lead to a big outcry. New York Times, January 16, 2008

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Wed, Jan 30th 2008, 23:25

Donald Stadler, Self-employed, Diamond Contributor (1052)

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Landsberg is being a jerk.....

Two problems with his thesis.

Outsourcing reduces the number of skilled workers in the US economy, and therefore reduces the national wealth. Cheaper goods make us feel richer in the short term - loss of good skilled jobs will make us feel poorer in the long term.

Second, Landsberg fais to mention coping mechanisms. When factory work as 'outsourced' during the 70's and 80's workers (and their children) could move into often better-paid knowledge work as a coping mechanism. When I graduated in 1976 I went to college rather than the factory. I endured a few hard years as a self-financed student, but reaped the benefits later.

Where do we go now when our corporate masters sent the skilled jobs to India? Good question, the answer seems to be to apply at Starbucks - or work (much) harder for much less income and with much less security at our last.

Our corporate masters benefit from higher profits while skiming off much of the savings from cheaper labor - one only has to look at the fancy cars in the underutilised parking lot at my employer to understand that much. But I don't see much in the game for me! After working an entire business cycle at a depressed income and working my butt off to become much more productive while getting paid less for it - I've had enough.

Time to send a lesson to the business leaders - and to tenured economists like Dr. Landsburg I think.....