Policy Study

Offshoring and Public Fear

Assessing the Real Threat to Jobs

Executive Summary

During the 2004 presidential campaign, pollsters found widespread public support for measures designed to impede outsourcing. State and federal lawmakers paid attention, and quickly penned over 200 anti-outsourcing proposals. Now that election year has passed, one might have expected anti-outsourcing momentum to slow. Yet the opposite has happened-legislators are now crafting anti-outsourcing bills at an even faster pace.

Policymakers must step back and separate the outsourcing’s mythology from its reality. Contrary to hyperbolic stump speeches, workers have little to fear from outsourcing. Greater threats may come from shortsighted attempts to stymie outsourcing, and from allowing outsourcing to distract lawmakers from addressing lingering problems.

Outsourcing is not a newly created threat to jobs. It is merely a version of trade, and like previous versions of trade it brings some pain-but it brings even more promise.

The public debate about offshore outsourcing suffers from many misconceptions:

Misconception Reality
Everyone is offshoring Few companies offshore.
Foreign workers are taking American jobs. Most American jobs are lost to other Americans or
absorbed by new technology.
Outsourcing destroys jobs. Job loss from outsourcing has been grossly overstated.
The American worker has nothing to gain from
Outsourcing is a form of trade, and trade creates more
jobs than it destroys.
Outsourcing destroys high-end jobs. Few high-end jobs are at risk, and outsourcing will help
create more high-paying jobs than it destroys.
Outsourcing is a one-way street. Millions of Americans have jobs thanks to “insourcing.”
Companies could simply refuse to go offshore. Refusing to offshore can mean foregoing expansion or worse.
Outsourcing is driven by businesses looking for cheap labor. Where a company decides to do business is determined by many factors.
Government sector offshore outsourcing is widespread. Government sector offshore outsourcing is especially rare.
Only Republicans defend offshore outsourcing. Many well respected voices across the political
spectrum have defended offshore outsourcing.

Fight the Real Threat of Outforcing

Some jobs leave town because the natural evolution of the market allows them to be done somewhere else; others get chased out by costly policy decisions, that is, they are outforced.

In the United States, federal, state and local tax policies, convoluted labor laws and policies, outdated licensing and permitting requirements, unduly burdensome land use and environmental regulations and many other layers of the regulatory apparatus have driven up the costs of doing business and thus creating jobs, making other nations more competitive at producing some goods and services. Increasingly this suite of policies raises costs to the point of outforcing jobs to other nations.

And like outsourcing, outforcing is mostly a domestic phenomenon. Some jobs get forced overseas, but even more get pushed from city to city and from state to state.

Outsourcing absorbs much negative publicity, but actually does more good than harm. Outforcing, on the other hand, is not the source of national outrage even though it makes more mischief. Policy should not fight outsourcing, it should fight the real threat-outforcing.

Ted Balaker is an award-winning filmmaker, journalist, and founding partner of Korchula Productions, a film and new media production company devoted to making important ideas entertaining.

Ted is the director of Can We Take a Joke?, a Korchula Productions feature documentary about the collision between comedy and outrage culture featuring comedians such as Gilbert Gottfried, Penn Jillette, Jim Norton, Lisa Lampanelli, and Adam Carolla. Ted is producing Little Pink House, a Korchula Productions feature narrative about about Susette Kelo's historic fight to save her beloved home and neighborhood. The film stars two-time Academy Award nominee Catherine Keener (Capote, Being John Malkovich, The 40-Year-Old Virgin) and Emmy nominee Jeanne Tripplehorn (Big Love, The Firm, Basic Instinct).

Ted produced the award-winning shorts The Conversation and Cute Couple. He is an executive producer on the feature documentary Honor Flight, and produced the film's first trailer, which attracted more than 4.5 million views. The Honor Flight premiere attracted an audience of more than 28,000 and set the Guinness World Record for largest film screening in history.

Ted is a founding member of ReasonTV, where he produced hundreds of videos and documentary shorts, including Raiding California, which introduced a nationwide audience to the Charles Lynch medical marijuana case.

Ted is co-creator of The Drew Carey Project, a series of documentary shorts hosted by Drew Carey, and creator of the comedic series Don't Cops Have Better Things to Do? and Nanny of the Month.

His ReasonTV contributions have been featured by The Wall Street Journal, MSNBC, Fox News Channel, and on the he John Stossel Special Bailouts and Bull, a first-of-its-kind joint project between ABC News and ReasonTV.

During Ted's tenure, ReasonTV received the Templeton Freedom Award for Innovative Media and in 2008 Businessweek recognized his short Where's My Bailout? (created with Courtney Balaker) as among the best of bailout humor.

Prior to joining Reason, Ted spent five years producing at ABC Network News, producing hour-long specials and 20/20 segments on topics ranging from free speech to addiction.

Ted's written work has appeared in dozens of publications, including The Los Angeles Times, The New York Times, The Huffington Post, Reason magazine, The Washington Post, and USA TODAY. He is the author or co-author of 11 studies on topics ranging from urban policy to global trade, and his research has been presented before organizations such as the Mont Pelerin Society and the American Economic Association.

Ted is co-author (with Sam Staley) of the book The Road More Traveled (Rowman & Littlefield, 2006), which Chapman University's Joel Kotkin says "should be required reading, not only for planners and their students, but for anyone who loves cities and wants them to thrive."

Ted has appeared on many radio and television programs, including ABC World News Tonight and the CBS Evening News, and has interviewed hundreds of thinkers and innovators, ranging from X Prize recipient and private spaceflight pioneer Burt Rutan to Templeton Prize-winning biologist and philosopher Francisco Ayala.

Ted graduated Phi Beta Kappa from the University of California, Irvine with degrees in political science and English.

Adrian Moore

Adrian Moore, Ph.D., is vice president of policy at Reason Foundation, a non-profit think tank advancing free minds and free markets. Moore leads Reason's policy implementation efforts and conducts his own research on topics such as privatization, government and regulatory reform, air quality, transportation and urban growth, prisons and utilities.

Moore, who has testified before Congress on several occasions, regularly advises federal, state and local officials on ways to streamline government and reduce costs.

In 2008 and 2009, Moore served on Congress' National Surface Transportation Infrastructure Financing Commission. The commission offered "specific recommendations for increasing investment in transportation infrastructure while at the same time moving the Federal Government away from reliance on motor fuel taxes toward more direct fees charged to transportation infrastructure users." Since 2009 he has served on California's Public Infrastructure Advisory Commission.

Mr. Moore is co-author of the book Mobility First: A New Vision for Transportation in a Globally Competitive 21st Century (Rowman & Littlefield, 2008). Texas Gov. Rick Perry said, "Speaking from our experiences in Texas, Sam Staley and Adrian Moore get it right in Mobility First." World Bank urban planner Alain Bartaud called it "a must read for urban managers of large cities in the United States and around the world."

Moore is also co-author of Curb Rights: A Foundation for Free Enterprise in Urban Transit, published in 1997 by the Brookings Institution Press, as well as dozens of policy studies. His work has been published in the Wall Street Journal, Los Angeles Times, Boston Globe, Houston Chronicle, Atlanta Journal-Constitution, Orange County Register, as well as in, Public Policy and Management, Transportation Research Part A, Urban Affairs Review, Economic Affairs, and numerous other publications.

In 2002, Moore was awarded a World Outsourcing Achievement Award by PricewaterhouseCoopers and Michael F. Corbett & Associates Ltd. for his work showing governments how to use public-private partnerships and the private sector to save taxpayer money and improve the efficiency of their agencies.

Prior to joining Reason, Moore served 10 years in the Army on active duty and reserves. As an noncommissioned officer he was accepted to Officers Candidate School and commissioned as an Infantry officer. He served in posts in the United States and Germany and left the military as a Captain after commanding a Heavy Material Supply company.

Mr. Moore earned a Ph.D. in Economics from the University of California, Irvine. He holds a Master's in Economics from the University of California, Irvine and a Master's in History from California State University, Chico.