[Previous entry: "Chirac's jet flew an extra 1,200 miles to let him sleep"] [Main Index] [Next entry: "Bush Guard Documents: Forged"]

09/09/2004 Archived Entry: "A Dissenter on Outsourcing States His Case"

Posted by steve @ 05:51 PM EST [Link]

THE DISSENT AGAINST OUTSOURCING: Judging by some of the email I've received the last couple of days you'd think that every economist before September 7, 2004 was in favour of free trade. I say this because I've received a pile of email calling my attention to an article about Nobel Prize winning economist Paul Samuelson and his recent dissent against free trade. Well actually if you want to be specific it seems to be mostly aimed at outsourcing but why split hairs?

That untruth, Samuelson asserts in the article for the Journal of Economic Perspectives, is the assumption that the laws of economics dictate that the U.S. economy will benefit in the long run from all forms of trade, including the outsourcing of call-center and software programming jobs abroad.

Sure, Samuelson writes, the mainstream economists acknowledge that some people will gain and others will suffer in the short term, but they quickly add that "the gains of the American winners are big enough to more than compensate for the losers." That assumption, so widely shared by economists, is "only an innuendo," Samuelson writes. "For it is dead wrong about necessary surplus of winnings over losings."

Trade, in other words, does not always work to all parties' advantage, according to Samuelson.

You can also read about Samuelson's thoughts in today's New York Times. The story has received so much play that even Slashdot has posted the story.

The argument he's making essentially states that even if the American economy grows due to trade and outsourcing, American workers may suffer regardless and not just those who have lost their jobs. Now I'm not going to pretend that I know one-tenth (and I'm being generous) as much as Samuelson but I haven't seen any data that suggests American workers are worse off today then they were twenty years ago. Of course, I guess we'll have to wait for this month's Journal of Economic Perspectives to hit the newsstand before we can judge Samuelson's case. Errrr....where do you buy the Journal of Economic Perspectives?

[Update - 5:54pm] See, this teaches me to go to obvious sources before I blather on. Dan Drezner kicks the tires of Samuelson's case (he hasn't read his essay either) and comes up with some early thoughts about it.