| In the words of Daniel Drezner, a University | | | | 2008. |
| of Chicago professor: "Believing that | | | | |
| offshore outsourcing causes unemployment is | | | | 4.Myth 3 = Free Trade, Free Labour, Free |
| the economic equivalent of believing that the | | | | Capital are harming US economy |
| sun revolves around the earth; intuitively | | | | |
| compelling, but clearly wrong." That | | | | Fact: It is a myth that economic freedom will |
| statement on its own should be powerful | | | | result in a curtailment of benefits and lower |
| enough to debunk the myths that surround | | | | wages for American workers if they are to |
| off-shoring / outsourcing. But, policy | | | | compete with the low cost labour in other |
| makers wanting to garner votes, the | | | | countries. The truth is that greater |
| unemployed or those who lost their jobs to | | | | economic freedom is essential for growth of |
| the trend will lay the blame for a failing, | | | | the economy, for new jobs to be created, and |
| stagnant economy, rising unemployment, | | | | higher standards of living. Rather than |
| anaemic job growth and worse at the door of | | | | protecting our markets, we should invite more |
| the capitalistic trend of off-shoring / | | | | trade in as the economy will suffer from too |
| outsourcing. Before sending it to perdition, | | | | little trade rather than too much. |
| it is important to examine the facts of sound | | | | |
| economics in order to kill the myths that | | | | From 2000 to 2003, while manufacturing |
| won't let common sense prevail. | | | | employment fell by 2.8-million, manufactured |
| | | | goods imports rose only by a miniscule 0.6%. |
| 2.Myth 1 = American / European Jobs are being | | | | Ironically, the current debate about the |
| Exported | | | | trend of off-shoring / outsourcing of white |
| | | | collar services revolves around an issue |
| Fact: Absolutely erroneous, the fact is a | | | | where US has a $60-billion trade surplus |
| greater number of Americans / Europeans are | | | | compared to the rest of the world. According |
| in more gainful employment than ever before. | | | | to a Morgan Stanley report, a strong US |
| Off-shoring / outsourcing may result in a few | | | | dollar and lack of growth / demand in our |
| lost jobs, but it is barely 0.6% of the | | | | trade partners were the two factors |
| unemployment figures. With a projected US | | | | responsible for reduced export growth in the |
| workforce of 165.3-million by 2012 and | | | | States, not off-shoring / outsourcing. Cheap |
| 3.3-million jobs off-shored/ outsourced that | | | | imports, e.g. IT equipment, computers, |
| is less than 2% of American jobs that might | | | | machinery, etc. have led to an increase in |
| go overseas. | | | | productivity, thereby adding $230-billion to |
| | | | the American economy between 1995 to 2002 and |
| In the past 3-years, roughly 100,000 to | | | | continue to do so. |
| 170,000 jobs found themselves to be | | | | |
| off-shored / outsourced. Despite an expected | | | | Embracing economic freedom i.e. free trade, |
| increase to 200,000, the figure represents | | | | free labour and free capital fuels a stronger |
| just 1% of the estimated 15-million jobs that | | | | economic growth than if we indulge in |
| are lost in the USA in a typical year. These | | | | protectionist measures such as policy |
| jobs are not lost due to off-shoring / | | | | restrictions and regulatory hurdles. |
| outsourcing, but as a result of changes in | | | | |
| business and economic sectors. | | | | 5.Myth 4 = Cost Reduction the only Reason US |
| | | | firms Outsource Globally |
| Every economic study carried out repeatedly | | | | |
| proves that a minute fraction of lay-offs or | | | | Fact: Cost reduction is part of the equation |
| job losses are to be laid at the door of | | | | but not the whole equation, off-shoring / |
| off-shoring / outsourcing. Study results | | | | outsourcing results in greater efficiency, |
| show real earnings are up, unemployment | | | | which is why firms are happy to follow the |
| numbers are down, jobless numbers are 10% | | | | trend. A global workforce allows them to |
| below the 25-year average, and 2.2-million | | | | access growing markets and offer better |
| more Americans are employed now than before | | | | services to non-US customers, enable 24 x 7 |
| the recession. Never before in the history | | | | and streamline global operations, while |
| of North America have 138.6-million of the | | | | accessing the best and brightest of global |
| population been so very gainfully employed. | | | | talent. |
| | | | |
| 3.Myth 2 = A One Way Flow of American Jobs | | | | Further, efficiency in company functioning |
| going Overseas | | | | lowers the burden on taxpayers, as private |
| | | | companies that off-shore / outsource are able |
| Fact: While some jobs get transferred | | | | to provide better services at lower costs |
| overseas, global trade has been responsible | | | | than the government. Sourcing a component |
| for generating millions of high-end jobs for | | | | externally from the end producer leaves a |
| Americans as off-shoring / outsourcing | | | | business free to focus on resources, their |
| foreign firms source work from the States. | | | | best use and the producing and selling of |
| Up 31% from 1991, more than 6.4-million | | | | products or services. |
| Americans work for firms that have set up | | | | |
| off-shoring / outsourcing offices in the | | | | Case in point, for semi-conductor companies |
| States. A proven fact as from 1997 to 2001 | | | | that manufacture, wages represent less than |
| in-sourcing outpaced outsourcing by 68% as US | | | | 3% of the total production cost. Confronted |
| citizens employed by non-US firms increased | | | | by fierce global competition, they often |
| by 4.7-million, while non-Americans working | | | | invest where host nations offer considerable |
| for US-firm affiliates rose to 2.8-million. | | | | financial incentives, innovative capacity and |
| | | | ability to protect intellectual property. |
| America racked up a service trade surplus of | | | | |
| $60-billion by 2003, while the trade surplus | | | | The are visible in the form of lower prices, |
| in IT services has grown each year since | | | | a higher standard of living e.g. computers |
| 1996. The increasing economic activity that | | | | and televisions that cost a fraction of what |
| followed off-shoring / outsourcing of IT | | | | they did in 1980, thanks to a relentless |
| functions created 90,000 new jobs in 2003, a | | | | process of efficiency-driven change. |
| number that is expected to rise to 317,000 by | | | | |