The Commander in Chief has labeled his opponent “Outsourcer in Chief”. Oh what a profound strategic error that would be if the consumer could only see below the surface. The labeled “Outsourcer in Chief” vows to slap tariffs on China (day-one) should he win. Oh what a profound strategic error that would be if only the consumer had a clue. But oh (in reality) what masterful maneuvers for both. Politicians placate their corporate contributors (exporters) and the misinformed populace in one fell swoop.

The Upside to Outsourcing

There’s no more pernicious and politically abused fallacy existing today (save for all the other pernicious and politically abused protectionist fallacies) than the notion that outsourcing is bad for the outsourcer’s home economy. Unless however, making the goods the home country consumer demands as cost-effectively, and therefore as inexpensively, to that consumer as possible is a bad thing. Unless directly increasing that consumer’s discretionary income, and therefore improving his or her lifestyle, is a bad thing. Unless creating jobs in the industries that capture that discretionary income is a bad thing. Unless unleashing capital to invest in innovative, life-improving, economy-advancing products is a bad thing.

Yes, we can name the citizens who lose their jobs due to outsourcing. And that’s where the politician enters to exploit virtually everyone’s misconception. The fact that it’s impossible to immediately quantify the ultimate (numerous) macro benefits of efficiency gains (whether they be employing cheaper labor or technology) makes an easy case for the politician more concerned with gaining votes than gaining real advantages for the voter.

Oh, almost forgot; if you can’t get passed the trade deficit fallacy (my previous efforts notwithstanding), you should then applaud all manner of foreign investment. For it indeed puts downward pressure on the so called trade deficit. Why? Because those investment (U.S.) dollars (which don’t increase the trade deficit because they’re not being used to import items) will have to find their way back to the U.S.. And to the extent they buy U.S. stuff, they lower the “deficit”.

From Michael Kinsley’s LA Times Article Oursourcing’s Bad Rap:

“But most economists believe in the theory of free trade, which holds that a nation cannot prosper by denying its citizens the benefit of cheap foreign labor. It’s a hard sell because the victims are concentrated and easy to identify, while the benefit is diffused through the whole economy. That’s why so many politicians pay obeisance to free trade in the abstract but oppose it in the particular.”

And here’s Don Boudreaux bringing it home by analogizing the utter lunacy of protectionism:

“If restricting competition were a wise policy for periods of high unemployment, government should curb not only auto imports, but also domestic sales of used cars. (Doing so would spur domestic auto production.) If raising tariffs on foreign goods is appropriate when unemployment is high, then it