Penny wise and dollar foolish.(outsourcing and its effect on the US labor market)

The Administration's top economists now claim that the outsourcing of America's service jobs is good for the U.S. economy. They say that consumers benefit when low paid foreign workers, operating overseas, provide America its software, engineering, architectural, data management, finance, and radiological services.

In the 2004 Economic Report of the President, the Council of Economic Advisors also maintains that consumers benefit when lower-priced foreign made imports replace domestically manufactured goods. The Council projects that the U.S. economy will create an additional 2.6 million new jobs this year.

We think the Council is wildly wrong in its trade positions, even in its numbers.

Specifically, the Council's economists predicted that the United States economy would gain 3 million jobs in 2002. But it lost 400,000. They predicted the U.S. would create an additional 1.7 million jobs in 2003. It lost 147,000.

America's job problem is linked not with the competitiveness of U.S. business and workers, but with U.S. trade policies that actually encourage the export of U.S. jobs and production.

The linkage between jobs and trade is clear. Lower paid foreign workers are now doing the work once done by Americans. That work is reflected in the excess of U.S. imports over U.S. exports. This is the root of America's job losses.

The U.S. Department of Commerce, for example, has long reported that each $1 billion of traded goods represents 10,000 or more jobs. Is it surprising, therefore, that ...