A Dissenter on Outsourcing States His Case

At 89, Paul Samuelson, the Nobel laureate in economics and professor emeritus at the Massachusetts Institute of Technology , still seems to have plenty of intellectual edge and ample ability to antagonize and amuse.

His dissent from the mainstream economic consensus about outsourcing and globalization will appear this month in a distinguished professional journal, cloaked in clever phrases and theoretical equations, but clearly aimed at the orthodoxy: Alan Greenspan, chairman of the Federal Reserve; N.Gregory Mankiw, chairman of the White House Council of Economic Advisers; and Jagdish Bhagwati, a leading international economist and professor at Columbia University.

These heavyweights, among others, are perpetrators of what Samuelson terms “the popular polemical untruth.”

That untruth, Samuelson asserts in the article for the Journal of Economic Perspectives, is the assumption that the laws of economics dictate that the U.S. economy will benefit in the long run from all forms of trade, including the outsourcing of call-center and software programming jobs abroad.

Sure, Samuelson writes, the mainstream economists acknowledge that some people will gain and others will suffer in the short term, but they quickly add that “the gains of the American winners are big enough to more than compensate for the losers.” That assumption, so widely shared by economists, is “only an innuendo,” Samuelson writes. “For it is dead wrong about necessary surplus of winnings over losings.”

Trade, in other words, does not always work to all parties’ advantage, according to Samuelson.

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