The Outsourcing Bogeyman

Aug 23, 2011 Jagdish Bhagwati

If free trade is to regain the support of statesmen who now hesitate over liberalizing trade with developing countries, the myths that turn outsourcing of services into an epithet must be countered. What few understand is that everyone wins from such trade flows.

NEW YORK – Outsourcing of services has been a persistent cause of panic and protectionism in recent years, especially in the United States since the 2004 presidential election. Back then, the Democratic candidate, Senator John Kerry, upon hearing that digital x-rays had been outsourced from Massachusetts General Hospital in Boston for examination by radiologists in India, denounced firms that outsourced as Benedict Arnolds, the most infamous traitor in US history.

Kerry’s misstep was followed by alarm over outsourcing across the West. If free trade is to regain the support of statesmen who now hesitate over liberalizing trade with developing countries, the myths that turn outsourcing into an epithet must be countered.

Myth 1: Outsourcing will be like a tsunami. While even a shrewd economist like the former US Federal Reserve Board member Alan Blinder thought this, it is not likely for several reasons, both “natural” and manmade. Consider just two.

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Jagdish Bhagwati

Writing for PS since 2010
28 Commentaries

Jagdish Bhagwati is University Professor of Law and Economics at Columbia University and Senior Fellow at the Council on Foreign Relations. A renowned expert on international trade, he has served in top-level advisory positions for the World Trade Organization and the United Nations, including Economic Policy Adviser to the Director-General, GATT (1991-93), and Special Adviser to the UN on globalization. He is the author of many books, including In Defense of Globalization.

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Boris Krumov Sep 2, 2011

"In short, everyone wins from outsourcing of services. Alas, few understand this." - it has always taken time for people to realize, see and grasp the bigger picture.

Humanity is "slow" with adapting to structural social changes and accepting them, not because there are no bright minded open thinkers, visioneers and leaders of its progress, but because - as in any hikers' group - the overall speed is determined by its slowest members.
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