Why does mankiw say that outsourcing is a good thing

Reference no: EM131478971

Question: The quote from the 2004 Economic Report of the President at the beginning of the chapter generated a lot of controversy that year, as discussed at the beginning of section 3 here. The chairman of the Council, N. Gregory Mankiw, made the following additional comments in a speech while presenting the report: "Outsourcing is just a new way of doing international trade. More things are tradable than were tradable in the past, and that's a good thing."

Those statements quickly led to reactions from both Democratic and Republican members of Congress. Tom Daschle, then the Democratic Senate minority leader, said, "If this is the administration's position, they owe an apology to every worker in America." Dennis Hastert, then Republican Speaker of the House, said, "Outsourcing can be a problem for American workers and the American economy." John Kerry, the 2004 Democratic presidential candidate, referred to businesses that offshored as "Benedict Arnold corporations." In response, Mankiw clarified his earlier comments: "My lack of clarity left the wrong impression that I praised the loss of U.S. jobs."

Although you might feel that these statements just represented a squabble between politicians trying to score points during a presidential campaign, it is still worth trying to sort out who gains and who loses from offshoring.

a. Why does Mankiw say that "outsourcing is a good thing"? Who is it good for in the United States? Are there overall gains for the United States? Explain with a diagram.

b. Later in this chapter, Paul Samuelson is quoted as saying that there is no "necessary surplus of winnings over losings" due to offshoring. Use Figure to carefully explain why Samuelson says this.

Reference no: EM131478971

Questions Cloud

The socio-political aspects of the institution of slavery : What role did the socio-political aspects of the institution of Slavery in the USA play in forming the provisions of the Treaty of Guadalupe Hidalgo

How offshoring creates opportunities for countries involved : Sudhakar Shenoy, chief executive of Information Management Consultants (IMC) in Reston, makes an effective pitch for offshoring.

Draw the structures of compounds : On the basis of this data, draw the structures of compounds A to E. Show your work for full credit.

Difference between cryptography and cryptanalysis : discussion of the difference between cryptography and cryptanalysis - comparative analysis of symmetric and asymmetric cryptographic protocols

Why does mankiw say that outsourcing is a good thing : The quote from the 2004 Economic Report of the President at the beginning of the chapter generated a lot of controversy that year, as discussed at the beginning

Identify and define the managerial leadership skills : Briefly describe the five key elements of leadership. Identify the managerial leadership skills. List ten managerial roles based on their three categories.

What do you notice about the export supply curve : In Figure, we saw that a fall in the relative price of components leads to an increase in the amount of components imported but that the amount of R&D exported.

The best research instrument for your study : Why is this research instrument the best research instrument for your study as opposed to another assessment tool?

Explain eastern religion and contemporary ethics : What are common characteristics budism have with the others religions? Discuss eastern religion and contemporary ethics.

User Account

All Pages