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Business process outsourcing (BPO) and politics

41 Comments · Business outsourcing

The election year of 2004 is shaping up to be one of many issues, with jobs and their apparent flight to offshore labor markets one of the central ones.

Both major political parties have staked out positions on the issue in a manner that is in line with their overall economic platforms.

Democrats stand in favor of some type of regulation, although most are staunchly opposed to anything that smacks of overt protectionism.

Republicans defend free trade and hail the unimpeded flow (if goods and services around the world. They favor allowing the short-term pain to subside before leaping to any policy decisions with respect to outsourcing.

The Republican perspective on outsourcing was summarized by noted economist N. Gregory Mankiw.

Speaking in his role as Chainman of President Bush’s Council of Economic Advisers, he noted that outsourcing is a positive thing for the U.S. economy.

Of course, in the midst of some painful displacement of workers who paid a lot of money for educational credentials, the remarks rang rather hollow and created a small tempest for Mankiw.

He quickly backtracked, stating that his remarks were poorly worded. Nonetheless, it does reflect the basic conservative position that outsourcing is a component of their free-trade platform plank and unlikely to be modified.

Shortly after Mankiw’s comments, Secretary of State Colin Powell visited a group of young workers in India and assured them that the United States was not going to enact policies that would jeopardize their newly lavish lifestyles.

For their part, liberal politicians have also supported free trade over the past decade. In fact, the North American Free Trade Agreement (NAFTA) was supported by and ratified under the first term of the Clinton administration.

Still, as a matter of political leverage, there is room for inconsistency on the free-trade issue, and the growing anxiety over job security by middle- and tipper-middle-class workers is a potential voting bloc worth waffling over.

In act, a December 2003 Zogby poll noted that 25 percent of Americans earning at least $75,000 were worried about job security. That is the largest percentage in any income bracket.

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