Prof. Alan Blinder: Offshoring Is Disrupting U.S. Life

Professor Alan Blinder was interviewed by Charlie Rose last night. One of his great concerns is what outsourcing is doing to the U.S. middle class and what is needed to correct the impact. ---BBB

Princeton Economic Prof. Alan Blinder Warns Offshoring Is Disrupting U.S. Life
Written by William Chirolas
Monday, 16 April 2007

Alan S. Blinder

Princeton's economics professor Alan S. Blinder is warning about disruption of U.S. life by offshoring -- anyone listening?

(Editor's Note: Chirolas submitted this story March 29)

William Chirolas -- World News Trust

April 16, 2007 -- For the last few years we had Nobel Prize-winning economics professor Paul Samuelson of MIT reversing his analysis on trade and saying that free trade may not be a win-win and indeed may be contra-indicated -- and being ignored by the GOP, but perhaps influencing Democratic Party menbers like Hillary Clinton who voted against CAFTA.

There has also been another famous economics professor, Alan S. Blinder of Princeton, who while still in favor of free trade, has for the last few years been warning of the current pain, and the coming tremendous agony, that will be cause by free trade. The solution he wants -- more extensive government programs for displaced workers than the few months of retraining it offers today, a U.S. education system revamped so it prepares workers for jobs that can't easily go overseas, and changes to the tax code that would reward companies that produce jobs that stay in the United States -- have all been ignored by the GOP. With the Democratic Party now in control of Congress the question that comes to mind is will the Democrats as a party listen to either man?

In mid-2005 Blinder said, "Tens of millions of additional American workers will start to experience an element of job insecurity that has heretofore been reserved for manufacturing workers." Responding to the urging of former Clinton Treasury Secretary Robert Rubin, Mr. Blinder wrote an essay, "Offshoring: The Next Industrial Revolution?" published last year in Foreign Policy and reprinted in the American Prospect . "The old assumption that if you cannot put it in a box, you cannot trade it is hopelessly obsolete," he wrote. "The cheap and easy flow of information around the globe...will require vast and unsettling adjustments in the way Americans and residents of other developed countries work, live and educate their children." His estimate of 42 million to 56 million jobs were "potentially offshorable" has been refined over the years by ranking 817 occupations, as described by the Bureau of Labor Statistics, to identify how likely each is to go overseas, deriving a new estimate of 30 million and 40 million jobs being vulnerable.

Perhaps economist David Ricardo's 200 year old idea of "comparative advantage" will make us all richer - eventually, but until then Samuelson and Blinder's warnings need to be translated into US Government policy and actions. Indeed trade treaties that include minimum wage laws, human rights, environmental protection, and union rights would be an excellent immediate reaction as we work on the longer term solutions proposed by Blinder.

"Free Trade," in D. Henderson (ed.), The Concise Encyclopedia of Economics, The Liberty Fund, is soon forthcoming from Blinder. "How Many U.S. Jobs Might Be Offshorable?" CEPS working paper no. 142, March 2007. http://www.princeton.edu/~blinder/papers/07ceps142.pdf "Outsourcing: Bigger than You Thought," The American Prospect, 17 (11, November 2006), pp. 44-46.. http://www.princeton.edu/~blinder/papers/06wpPreparingAmericasWorkforce.pdf

http://www.prospect.org/web/page.ww?section=root&name=ViewPrint&articleId=12150

"Offshoring: The Next Industrial Revolution?" Foreign Affairs, March/April 2006, pp. 113-128. (A longer version with footnotes and references is: "Fear of Offshoring," CEPS Working Paper No. 119, December 2005). http://www.princeton.edu/~blinder/papers/05offshoringWP.pdf