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Mankiw under fire for defending outsourcing to India, others

T V Parasuram

Thursday 12 February 2004, by PARASURAM*T.V.

Washington, Feb 12 (PTI) A key economic advisor to US President George W Bush has come in for sharp criticism by both Democrats and Republicans for defending outsourcing of IT jobs to countries like India.

Gregory Mankiw, Bush’s Council of Economic Advisors’ Chairman and noted Harvard economist, was attacked by the Speaker of the House of Representatives J Dennis Hastert and Democratic Presidential hopeful Senator John F Kerry for suggesting that outsourcing to India and other countries in which they have a comparative advantage is a "win-win" for both the exporter and importer. "I understand that Mr Mankiw is a brilliant economic theorist but his theory fails a basic test of real economics. We can’t have a healthy economy unless we have more jobs here in America", said Speaker Hastert, the legislative leader of the Republicans. Joining the Republican Speaker in attacking outsourcing, Senator Kerry said that if he becomes President, his economic policy would be "not to export American jobs but to reward companies for creating and keeping jobs in America." In response to Hastert’s remarks, Mankiw said in a statement: "Some of my recent comments on outsourcing have been misinterpreted. It is regrettable whenever anyone leaves a job. Some would respond to the recent challenges facing the economy by erecting trade barriers. History teaches that a retreat to economic isolationism would mean lower living standards for American workers and their families".

"At the same time, we have to acknowledge that any economic change, whether arising from trade or technology, can cause painful dislocations for some workers and their families. The goal of policy sould be to help workers prepare for the global economy of the future," Mankiw said. Asked if Bush might fire Mankiw because of the views expressed by the Speaker, White House Press Secretary Scott McClellan called the idea of sacking him "laughable." "Our economic team," said McClellan, "is doing a great job helping the President work to strengthen our economy even more. The President is strongly committed to creating jobs here at home. Certainly, free and fair trade is important to strengthening our economy even more and expanding job growth here at home." Joe Lockhart, a Democratic party consultant who was Press Secretary to former President Bill Clinton, predicted that Bush’s opponents will put a lot of money in advertising to draw attention to Mankiw’s statement. "I guarantee you," said Lockhart about the Council of Economic Advisors’ report which defends outsourcing or offshoring as a logical result of free trade which is beneficial to both importing and exporting countries, "will become a central element of the economic debate." Defending outsorcing or offshoring, Mankiw and two other members of the Council, Kristin J Forbes and Harvey S Rosen, said in the Council’s report: "Whereas imported goods might arrive by ship, outsourced services are often delivered using telephone lines or the Internet. The basic economic forces behind the transaction are the same, however".

See online :


Outlook India, PTI, February 12, 2004.

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