The Real Cost Of Offshoring

[babylonsister]

http://www.businessweek.com/magazine/content/07_25/b4039001.htm?campaign_id=nws_insdr_jun8&link_position=link1

The Real Cost Of Offshoring
U.S. data show that moving jobs overseas hasn't hurt the economy. Here's why those stats are wrong


Whenever critics of globalization complain about the loss of American jobs to low-cost countries such as China and India, supporters point to the powerful performance of the U.S. economy. And with good reason. Despite the latest slow quarter, official statistics show that America's economic output has grown at a solid 3.3% annual rate since 2003, a period when imports from low-cost countries have soared. Similarly, domestic manufacturing output has expanded at a decent pace. On the face of it, offshoring doesn't seem to be having much of an effect at all.

But new evidence suggests that shifting production overseas has inflicted worse damage on the U.S. economy than the numbers show. BusinessWeek has learned of a gaping flaw in the way statistics treat offshoring, with serious economic and political implications. Top government statisticians now acknowledge that the problem exists, and say it could prove to be significant.

The short explanation is that the growth of domestic manufacturing has been substantially overstated in recent years. That means productivity gains and overall economic growth have been overstated as well. And that raises questions about U.S. competitiveness and "helps explain why wage growth for most American workers has been weak," says Susan N. Houseman, an economist at the W.E. Upjohn Institute for Employment Research who identifies the distorting effects of offshoring in a soon-to-be-published paper.

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[Demeter]

1. It's Like Digging a Hole To China Without Proper Shoring

the people in the hole are going to get smothered. Our economy resembles a hollowed out eggshell, just waiting for some careless accident to crush it.

[papau]

2. Gains from trade - better products - called better US productivity -Faked GDP increase of 0.5%?

interesting - add in the other inflation calculation problems - and we get meaningful economic statistics from the government again - like employment growth without pretend "birth/death" job growth.