Two Problems with Outsourcing Debates
The case against hysterical protectionists seems clear enough, even on the sound-bite level. Every dollar we send elsewhere comes back. (It might not come back immediately and it might be by an indirect route, but foreigners are not going to pile up worthless paper indefinitely.) It therefore follows that every job lost to imports here is matched by another job gained from exports. There are two reasons this isn't getting through:
- Free-market economists keep using the technical term “comparative advantage” without recognizing what it sounds like to laymen. It sounds like “American comparative advantage” is about comparing American jobs to foreign jobs. Actually, it's a matter of comparing some American jobs to other American jobs.
- Yesterday's free-market advocates used arguments along the lines of: We don't have to make cars, we can program computers instead. When foreigners started going into computer software, that looked refuted. The argument is that the jobs come back, not that we know which jobs those are ahead of time.