“The reality is we have to change what we’re doing”

So said John Edwards, the REAL reality is that no we don’t, and we certainly shouldn’t.

One of our most deep-seated philosophical differences here on Blogcritics is the concept of globalization, and in particular the “outsourcing” of jobs to other countries.

I am sympathetic to those who are concerned about job loss because the pain is real, not just some abstract theory. But there has always been individual pain in fluid economies as new technology squeezes out old, and more efficient ways of doing business replace those less so. In this regard, Edwards (and to a lesser extent Kerry) is just plain wrong:

Edwards collected the endorsement of the Milwaukee Journal Sentinel, the state’s largest newspaper, and flew to appearances in four cities Monday as he sharpened his differences with rivals on trade issues important in the industrial Midwest, particularly the North American Free Trade Agreement.

“I was against NAFTA,” said Edwards. “Governor Dean and Senator Kerry were for it. There are differences.”

….In making his case, Edwards was seeking to focus on trade in a state that has lost more than 74,000 industrial jobs since President Bush took office, and where trade is blamed for much of that loss. Critics see free trade agreements as encouraging American companies to ship jobs overseas, even as they put downward pressure on wages in this country.

Edwards was not in Congress when NAFTA was approved, but said he opposed it when he ran for the Senate in 1998, and was using it as a key difference with both Kerry and Dean. He argues that his working-class background gives him a special understanding of issues like trade and jobs.

“The reality is we have to change what we’re doing,” said Edwards.

….During his campaign for Wisconsin’s primary, Edwards has stumped hard among workers who have lost jobs to foreign competition and sought to make the primary a referendum on free trade agreements, While his rivals have criticized the way the trade deals have been implemented, they voted for them at crucial times, Edwards argues.

“You and I can change it,” said Edwards. “We can do something about it.” [AP]

Not likely, thank goodness.

Jagdish Bhagwati, a senior fellow at the Council on Foreign Relations and professor at Columbia University, lays out the case for globalization:

John Kerry, the presumptive Democratic presidential nominee, described executives who import services – such as using lower-paid workers in foreign countries to handle customer-service calls and Internet queries from American consumers – as “Benedict Arnold C.E.O.’s.”

In objecting to moving service jobs overseas, Senator Kerry is wrong on two counts. First, his economics is faulty: the practice only adds to the overall economic pie and improves the competitiveness of American companies. In a world economy, firms that forgo cheaper supplies of services are doomed to lose markets, and hence production. And companies that die out, of course, do not employ people.

Second, Mr. Kerry is making a political error. By playing to the understandable but incorrect fears of American workers that outsourcing is “taking away” jobs from Americans, he is painting the Democratic Party into the wrong corner on trade issues.

As Bill Clinton showed the country, there is a way for politicians – even Democrats – to explain the benefits of free trade. They could start by explaining that service imports fall broadly into two types. The first is made up of the simple, labor-intensive services like answering complaints, solving basic computer problems by taking customers through defined steps on the phone, or interpreting results of routine medical tests.

Putting these jobs overseas is, in economic terms, no different than importing labor-intensive textiles and other goods. In the 1980’s and 90’s, labor unions warned that imported cheap goods from the Far East would depress our wages and labor standards. But, as virtually any economist who has studied the empirical evidence of the last two decades knows, the overwhelming cause of wage stagnation in manufacturing has been automation within America, not pressure from cheaper imports. The same dynamic applies today – with the technological change affecting service jobs rather than manufacturing.

The second, newer type of outsourcing involves American companies that do highly skilled research and development work abroad. Craig Barrett, chief executive of Intel, has said that American workers face the prospect of 300 million well-educated people in India, China and Russia who can “do effectively any job that can be done in the United States.” But such concerns seem exaggerated. There is little evidence of a major push by American companies to set up research operations in the developing world. I have taught hundreds of fine foreign students in the last few years, but only a small fraction are at the level of proficiency that Intel looks for in its research programs. And a cursory look at American immigration shows that the best students in high-tech fields come from just a handful of world-class institutions in those countries.

….The fact is, when jobs disappear in America it is usually because technical change has destroyed them, not because they have gone anywhere. In the end, Americans’ increasing dependence on an ever-widening array of technology will create a flood of high-paying jobs requiring hands-on technicians, not disembodied voices from the other side of the world. [NY Times]