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Milton J. Madison - An American Refugee Now Living in China, Where Liberty is Ascending

Federalism, Free Markets and the Liberty To Let One's Mind Wander. I Am Very Worried About the Fate of Liberty in the USA, Where Government is Taking people's Lives ____________________________________________________________________________________________ "Extremism in defense of liberty is no vice. Tolerance in the face of tyranny is no virtue." -Barry Goldwater-

Saturday, August 26, 2006

Outsourcing....

According to a recently released Princeton University study, outsourcing of some low skill labor intensive jobs to foreign countries actually improves wages of low skilled workers in the US...
Rising productivity associated with U.S. firms' moving some tasks offshore "have served to bolster U.S. wages ... contrary to the fears of Lou Dobbs and others," they said in reference to the high-profile CNN anchorman who has waged a campaign against outsourcing of U.S. jobs. Outsourcing has also been a political hot-button issue in the United States during recent election cycles.

Those wage gains are "far from exceptional" but not as bad as might be expected based on the improvement in U.S. terms of trade with non-industrialized countries, they said.
Traditional static economic thought argues that when each job moves overseas, that 1 job is eliminated at home leading to employment losses and lowering of the costs of unskilled labor. However, this study finds otherwise.

I suppose what does happen, is that by moving the lowest value added functions to the lowest cost environment, both monetary and labor capital is freed up for more productive enterprises.

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