Shooting the messenger

Gregory Mankiw, head of Bush’s Council of Economic Advisors, is taking a beating. His offense? Having the gall to piss on the parade of bipartisan criticism of outsourcing service jobs overseas. Mankiw pointed out a simple truth you don’t even need to study economics to see–buying cheaper services from overseas is good for consumers just like buying cheaper imported goods. Meanwhile House Speaker Dennis Hastert gets the “Dumb line of the week” award for “I understand that Mr. Mankiw is a brilliant economic theorist, but his theory fails a basic test of real economics. An economy suffers when jobs disappear.” Helloooo. McFly! Anybody in there? Outsourcing jobs to lower costs does just that, lower costs. It doesn’t make jobs disappear, it lower’s the cost of producing things and the savings shift to other production–i.e. other jobs. It ain’t a zero sum closed system, dig?!