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Blinder on Offshoring

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Here’s a letter that I sent yesterday to the Washington Post, in response to this op-ed [2] by Alan Blinder.  (Be sure also to check out Greg Mankiw’s remarks [3] on Blinder’s essay.)

Editor, Washington Post

Dear Editor:

Alan
Blinder worries that as technology opens up pools of low-wage labor in
poor countries, the gains to American workers from free trade will be
slow in coming ("Free Trade’s Great, but Offshoring Rattles Me," May
6).  He forgets that the world’s stock of capital expands quickly to
take advantage of profit opportunities.

If American workers
today produce enough output to justify their high pay, any transfer of
capital from America to China or India opens up profit opportunities
for new investments in America.  Skilled, motivated workers in a
commercial environment of secure property rights will not long remain
unexploited by capitalists.

Want evidence?  Foreign direct
investment in the U.S. from Latin America was $87.3 billion in 2004

114 percent higher than 1999’s figure of $40.8 billion

Sincerely,
Donald J. Boudreaux

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