The Debate Over Offshoring: Are Economists Scared of Free Trade?

Abstract

In the debate over offshoring (or international outsourcing), most economists have given the economically correct answer—it is no different from any other form of trade. Therefore, offshoring leads to greater economic efficiency and growth. This view is accompanied by the standard expressions of concern for the losers, which usually means support for adjustment assistance and retraining.While economists can reliably be counted in the camp that professes support for “free trade,” in reality, the vast majority of economists are completely comfortable with protectionism— as long as the beneficiaries of this protectionism are people with whom they can identify. Specifically, economists, with almost no exceptions, have been entirely comfortable with protectionism in the form of professional and licensing restrictions, which keep highly educated workers from having to compete in the global economy.