In an article in the NYtimes, Paul Krugman seems to be arguing against outsourcing/offshoring.
He goes on to say that since American contractors just use workers with lower benefits and pay, even outsourcing is bad for Americans in general, and it comes off sounding like he is against outsourcing in principle.
This doesn’t make sense to me. Outsourcing is just a strategy that enables firms to cut costs and maintain a competitive edge. If you argue that an approach which allows your firms to gain an advantage should be taken off the table, you should either be able to ensure that every firm out there does not have that option, or you’re handicapping the firms that do have it. For instance, lets say Apple and every other American comapany is not allowed to outsource manufacturing to China, where it’s cheap. Samsung on the other hand, would face no such restrictions. Would Apple be able to do as well, or even survive? If it doesn’t, as is a possibility, the gains made in terms of factory jobs would be gone, as would any wealth created by Apple for its shareholders.
Being against outsourcing thus seems like a short-sighted approach, reminiscent of the (perhaps inaccurate) stereotype of unions insisting on benefits that end up running their firm into the ground. Do you think outsourcing should be disallowed? Instead of arguing that outsourcing is the Big Bad, wouldn’t it make more sense to try and address the reasons why companies feel the need to outsource in the first place?