Offshoring, Outsourcing — A Distinction Without a Difference

Paul Krugman helps us through the latest Romney obfuscation as he tries to mezmerize his way to the presidency:

the [Romney]  campaign’s insiste[ed] that The Post had misled readers by failing to distinguish between “offshoring” — moving jobs abroad — and “outsourcing,” which simply means having an external contractor perform services that could have been performed in-house.

Now, if the Romney campaign really believed in its own alleged free-market principles, it would have defended the right of corporations to do whatever maximizes their profits, even if that means shipping jobs overseas. Instead, however, the campaign effectively conceded that offshoring is bad but insisted that outsourcing is O.K. as long as the contractor is another American firm.

That is, however, a very dubious assertion.

… one of the main points of outsourcing is to ensure that as little as possible of what corporations earn goes into the pockets of the people who actually work for those corporations.

Why, for example, do many large companies now outsource cleaning and security to outside contractors? Surely the answer is, in large part, that outside contractors can hire cheap labor that isn’t represented by the union and can’t participate in the company health and retirement plans. And, sure enough, recent academic research finds that outsourced janitors and guards receive substantially lower wages and worse benefits than their in-house counterparts.

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