The Outsourcing Bogeyman

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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