How to talk about outsourcing

How to talk about outsourcing without getting in trouble

This past February, the Chair of the Council of Economic Advisors, Greg Mankiw, created a controversy with remarks about service imports that weren't politically astute - although they made good sense about what would be best for the country. This CBS News analysis by Douglas Kiker tells what happened: "Bush Econ Advisor: Outsourcing OK".

A recent Fred Barnes article in International Economy contrasts Mankiw's comments with an alternative, politically sensitive, and vaguer, way of talking about the issue that Barnes attributes to Treasury Secretary Snow (although he doesn't say exactly when Snow made the remarks) : "Grading Bush's Economic Team"

What Mankiw had said was hardly incendiary. It merely reflected mainstream economic thinking. The Economic Report of the President, which Mankiw authored, contained this sentence: "When a good or service is produced more cheaply abroad, it makes more sense to import it than to make or provide it domestically.? Asked about this during a White House briefing, Mankiw reported to have labeled out-sourcing ?a good thing."

His answer was actually more elaborate than that. "Outsourcing is just a new way of doing inter-national trade," he said. "We're very used to goods being produced abroad and being shipped here on ships and planes. What we're not used to is services being produced abroad and being shipped here over the Internet or telephone wires. But does it matter from an economic standpoint whether values of items produced abroad come on planes and ships or over fiber optic cables? Well, no, the economics is basically the same. More things are tradable than were tradable in the past and that's a good thing."

It was left to Snow, more experienced in Washington than Mankiw, to come up with
a way to discuss outsourcing. It's a four-step approach, first empathy for those who lost jobs, then economic growth as the source of new jobs, then job training, and finally a denunciation of "economic isolation" as harmful to American producers. The word "outsourcing" is never mentioned."