NCPA - National Center for Policy Analysis

Trade Restrictions Impoverish Everyone

February 23, 2004

Rather than look at the ways U.S. trade restrictions are destroying jobs, many people continue to point to outsourcing by U.S. businesses that contract with foreign companies for information technology services. A new study by Jacob Kirkegaard of the Institute for International Economics should be required reading for them, says Bruce Bartlett.

From the amount of press generated by the outsourcing controversy, one would think that millions of jobs are involved:

  • In fact, according to Kirkegaard, only 70,000 U.S. computer-programming jobs have been lost since 1999, compared with the loss of millions of manufacturing jobs.
  • Moreover, almost all the lost programming jobs were in low-skill positions paying below average wages.
  • But over this same period, 115,000 new software engineering positions have been created, most paying much more than the jobs that were lost.
  • Some jobs are indeed lost, but new ones immediately replace them.
  • These new positions, however, often require higher and newer skills than those that were lost.
  • Workers without such skills must retrain, upgrade and move from where their labor is no longer needed to where it is.

This is a painful process. But as Federal Reserve Chairman Alan Greenspan explained in a recent speech, it is essential for growth that labor is redeployed in response to changes in technology, consumer demand and other economic forces. Anything that interferes with this process, such as trade restrictions, ultimately impoverishes everyone, says Bartlett.

Source: Bruce Bartlett, "Trade Restrictions Impoverish Everyone," National Center for Policy Analysis, February 23, 2004.

 

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