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Outsourcing according to Paul Samuelson

I just found this interesting article as referenced in Slashdot and the NY Times online. The background on Mr. Paul Samuelson is quite distinguished. He is a Nobel Prize-winning economist and professor emeritus at the Massachusetts Institute of Technology. According to economists, he is quite respected. Anyway, I just thought his quote was quite an eye-opener and looks like he isn’t afraid to tell it like it is.

“The new labor-market-clearing real wage has been lowered by this version of dynamic fair free trade,” Mr. Samuelson writes. But doesn’t purchasing cheaper call-center or programming services from abroad reduce input costs for various industries, delivering a net benefit to the economy? Not necessarily, Mr. Samuelson replied. “To put things in simplified terms, he explained in the interview, being able to purchase groceries 20 percent cheaper at Wal-Mart does not necessarily make up for the wage losses.”

Reference: An Elder Challenges Outsourcing’s Orthodoxy – Steve Lohr

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