A great deal of effort is being expended to convince us all that the outsourcing of jobs under the rubric of free trade is a good thing. I would like to discuss some of these arguments.
Our labor force is not better trained, harder working, or more innovative than our foreign competitors. The argument that we will create new jobs in highly paying fields simply is not true. We have no comparative advantage or superiority in innovation. To assume that we are inherently more creative than our foreign competitors is both arrogant and naive. We are currently empowering our competition with the resources to innovate equally as well as we. Consider the number of new non-native Ph.D.s that leave our universities each year; consider our low rank in the education of mathematics and the sciences; and consider the large number of international students enrolled in our most difficult technical degree programs at our most prestigious universities.
Most of our best, high-paying jobs can be exported.
doctors (even surgeons)
mathematicians
accountants
financial analysts
engineers
computer programmers
architects
physicists
chemists
biologists
researchers of all types
Our trading problem is an externality
An externality exists in economics any time there is a separation of costs and benefits, and the decision maker does not have to incur the full cost but receives the full benefits of the decision. The fact is, there is no economic force, no supply and demand equilibrium, no rational decision process of either business or consumer, that will make an externality go away. Classic examples of externalities are when a business dumps toxic waste into a nearby river and the downstream residents incur the costs of cancer. The business is able to lower its costs and pass those lower costs on to its customers, and never pay for the treatment of the cancer patients. We have laws in this country against dumping and pollution because they are externalities -- they require a legislative solution.
Cost reductions and other benefits provide a strong incentive to outsource jobs. A company that decides to move its production overseas cuts its costs in many ways, including the following:
Extremely low wage rates
The circumvention or avoidance of organized labor
No Social Security or Medicare benefit payments
No federal or state unemployment tax
No health benefits for workers
No child labor laws
No OSHA or EPA costs or restrictions
No worker retirement benefits or pension costs
Besides cutting costs, there are other benefits to exporting jobs, including the following:
Tax incentives provided by our government
Incentives from foreign governments
The creation of new international markets for the company's products (which ultimately empowers the company to turn a deaf ear to this country's problems and influence)
The continued benefits of our legal system and the freedoms that we provide
The net effect of all of this is lower costs, higher revenue, higher profits, higher stock prices, bonuses for management, and the creation of wealth for a subclass that benefits from low taxes at the expense of the rest of us.
The costs of the decision to outsource are not borne by the decision maker. As a society and as a country, we experience many costs from outsourcing, including the loss of jobs, social costs, higher costs of raw materials and loss of national sovereignty. Loss of jobs reduces the tax base, creates high unemployment benefit costs, and raises the cost of government retraining programs. Displaced, unemployed workers have higher rates of child and spousal abuse, alcoholism, bankruptcy, divorce, etc. As China and India and other large populations grow, they demand huge quantities of oil, gas, steel and other basic raw materials. These costs are born by all of us -- every time we fill our gas tanks, for example. And as a nation, we lose our ability to make independent decisions that are in our best interest when we are dependent on foreign debt and foreign manufacturing. This is a classic externality.
 

President Bush is out jogging one morning and notices Little Hannah on the street corner with a box. Curious, he runs over to Little Hannah and says, "What's in the box, little lady?"

Little Hannah says, "Kittens, they're brand new kittens."
Bush laughs and says, "What kind of kittens are they?"
"Republicans," says Little Hannah.

"Oh that's cute," he says and goes on his way.

A couple of days later, Bush is running with Colin Powell and he spies Little Hannah with her box just ahead.
Bush says to Colin, "You gotta check this out," and they both jog over to Little Hannah.
Bush says, "Look in the box Colin, isn't that cute? Look at those little kittens. Hey, kid, tell my friend Colin what kind of kittens they are."

Little Hannah replies, "They're Democrats."

"Whoa!" Bush exclaims in total surprise. "I came by here the other day and you told me they were Republicans. What's changed?"
"Well," Little Hannah explains, pointing into the box. "now, their eyes are open."
 

Hey all from Somers! We are putting together grades for the fourth quarter and getting ready for the end of the year. Hope all is well with everyone.