The benefits from new forms of trade, such as in services, are no different from the benefits from traditional trade in goods. Outsourcing [i.e., to another country, or "offshoring"] of professional services is a prominent example of a new type of trade. The gains from trade that take place over the Internet or telephone lines are no different than the gains from trade in physical goods transported by ship or plane. When a good or service is produced at lower cost in another country, it makes sense to import it rather than to produce it domestically. This allows the United States to devote its resources to more productive purposes.As Drezner points out, this is the economic equivalent of "the sky is blue," even among economists who oppose the Bush administration on just about everything else.
Wednesday, February 11, 2004
Shipping Jobs Overseas For Fun and Profit: Drezner has a good roundup on the reaction to Gregory Mankiw, head of the president's Council of Economic Advisors, who is getting it from all sides for saying this: