2013-06-04

Cato: Romney’s Chance to Embrace Outsourcing

There is a story, perhaps apocryphal, that Milton Friedman was touring the Chinese countryside when he came upon a government project where workers were digging a canal. Friedman was surprised that instead of bulldozers and modern earth-moving equipment, the workers were using shovels and wheelbarrows. Thinking this was remarkably inefficient, he asked the bureaucrat in charge of the project why this was so. “You don’t understand,” the bureaucrat responded. “This is a jobs program.” “Oh,” Friedman replied, “I thought you were trying to build a canal. If jobs are all you care about, take away their shovels and give them spoons.”
One wishes that Mitt Romney would display a bit of Friedman’s common sense in responding to the silly controversy over outsourcing at Bain Capital companies. Instead of defensive technical explanations about when he left the active management of Bain Capital, Romney should point out the central fallacy of Obama’s argument. Contrary to the president’s complaints, outsourcing is generally good for America.
As Friedman pointed out, economic policy is not about preserving every single job that currently exists at any cost. Rather, it should be about creating general prosperity. The United States once had a thriving buggy-whip industry. Would we be better off if we had blocked development of the automobile in order to preserve those jobs?
That’s not so farfetched. After all, President Obama has already blamed ATMs and self-service gas stations for unemployment.

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