Cultural Revolutions

On Outsourcing

As a faithful reader of Chronicles, I was sorely disappointed to see Tom Piatak’s “Outsourcing Our Future” (American Proscenium, May).  Mr. Piatak takes the ridiculous but all-too-oft-repeated stance that, when Americans “lose” jobs to overseas workers, America suffers.

He appears to have forgotten one of the fundamental lessons of economics: the lesson of comparative advantage, which tells us that, when jobs are done by those who do them most efficiently, everybody wins.  If “American jobs” go overseas, this leaves Americans free to do things that they are more suited to do.

The question is, Why are engineers overseas apparently more efficient than American engineers?  Perhaps the answer is that American workers are not allowed to compete with overseas engineers.  Wage is nothing more than a term for the price of labor.  A government-mandated minimum wage is a price floor on labor.  If there are two markets for a good (e.g., labor), one with a price floor and one without, it is likely that purchasers (i.e., employers) will go to the market that offers a better product for a lower price.  In this case, purchasers have decided that overseas engineers produce better labor for a more efficient price.

Mr. Piatak appears...

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