Bhagwati and Blinder: Offshoring of American Jobs

Jagdish Bhagwati and Alan Blinder discussed “Offshoring of American Jobs: What Response from U.S. Economic Policy?” at a Harvard symposium in 2007, with comments from Richard B. Freeman, Doug Irwin, Lori Kletzer and Robert Z. Lawrence. Those papers now appears as a book edited by Benjamin Friedman. Bhagwati and Blinder discussed offshoring last week on Bloomberg Radio (mp3).

Richard Cooper summarizes:

This stimulating collection, like the Harvard symposium that led to it, is built around Blinder’s strong and much-debated thesis that within two decades, 30-40 million U.S. jobs, mainly those in the services industries that require no direct contact between the provider and the customer, could be sent offshore — especially to India, where wages are low and English-speaking university graduates are plenty. Blinder argues that the United States should adapt its educational and labor policies to prepare for this possibility. Bhagwati, for his part, points out that offshoring is just one more dimension of an open trading system, which will produce higher living standards for Americans — and Indians. The contributors observe that this possibility will be similar in proportion to the adjustments that the U.S. economy has already made in past decades, particularly to the decline in manufacturing employment; that for a variety of reasons, not nearly so many jobs will move offshore; and that other countries will offshore some of their jobs to the United States.

The latter comment echoes Richard Baldwin’s argument that offshoring is more likely to be a two-way, intraindustry exchange than a one-way departure of jobs.