Greg Mankiw is famous (infamous?) for his statements about offshoring back in 2004, when he was Chair of the White House Council of Economic Advisors. At the time, he said:
the "offshoring" of U.S. service jobs is only "the latest manifestation of the gains from trade that economists have talked about" for centuries.
"Outsourcing is just a new way of doing international trade," Mankiw told reporters. "More things are tradable than were tradable in the past and that's a good thing."
He took a lot of heat from people who thought this view was insensitive to the plight of the workers affected.
Never one to shy away from controversy, over on his blog he is picking up his defense of offshoring again. This time he is responding to well-known economist Alan Blinder, whose views on the issue were discussed in a recent article in the Wall Street Journal. As the WSJ put it:
[Blinder] is saying loudly that a new industrial revolution -- communication technology that allows services to be delivered electronically from afar -- will put as many as 40 million American jobs at risk of being shipped out of the country in the next decade or two. That's more than double the total of workers employed in manufacturing today. The job insecurity those workers face today is "only the tip of a very big iceberg," Mr. Blinder says.
Mr. Blinder says he agreed with Mr. Mankiw's point that the economics of trade are the same however imports are delivered. But he'd begun to wonder if the technology that allowed English-speaking workers in India to do the jobs of American workers at lower wages was "a good thing" for many Americans.
Mankiw's response on his blog was as follows:
Suppose some country had high tariffs that prevented many goods and services from being imported from abroad. Then a new President eliminated the tariffs. Alan would, I believe, applaud the policy move, despite job losses for some workers in previously protected industries.
But the rise in offshoring is much the same. If technology changes and suddenly makes previously nontraded goods tradable, that has precisely same effects as removing tariffs. In both cases, a barrier to trade has fallen. We would import more, and there would be some painful dislocations, but the nation overall would enjoy greater prosperity.
For some reason, Alan does not respond to this rise in technology-driven offshoring as he would to a rise in policy-driven trade. But economic logic suggests that if he is to embrace tariff reductions as an economic positive, he should similarly embrace technology-driven trade increases an an economic positive. But instead of recognizing this change as primarily a force for good, he offers mainly hand-wringing. In doing so, he gives, perhaps unintentially, aid and comfort to the protectionists.
I wonder what the contributors and commenters on this blog think of the issue? Is offshoring somehow different from traditional trade in goods in terms of its impact on workers? Is the scope of the impact greater? Does it matter that different kinds of workers are affected?