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In Defense of Outsourcing: Hiring Abroad is Both Economically Practical and Morally Upright

It’s an election year and the economy and jobs are at the top of the agenda. Many fear that outsourcing is causing unemployment. Consequently, Obama has attacked Romney for outsourcing manufacturing jobs to China (while he was the CEO of Bain Capital, Inc.), saying: “We do not need an outsourcing pioneer in the Oval Office . . . . We need a president who will fight for American jobs and fight for American manufacturing.” Instead of defending outsourcing as a legitimate business practice, Romney argued that Obama has acted as the “outsourcer-in-chief” by subsidizing energy companies which produce their products overseas. While Obama and Romney may disagree about the means, both agree on the end: that the government should do something to “protect” American jobs from outsourcing.

But is it true that outsourcing leads to unemployment? No. The truth is that outsourcing enables American companies to thrive and hire more people. Consider the case of Apple. Apple has outsourced approximately 290,000 manufacturing jobs to China, allowing Apple to produce and sell iPods, iPhones and iPads at affordable prices for the masses. This has made Apple into one of the most successful companies in the world, enabling them to hire more employees in the US too. (Apple employed fewer than 10,000 workers in 2002, but more than 47,000 in 2012.) Since outsourcing enables consumers to spend less on iPhones, it also means they have more to spend on Apps for those iPhones (and for many other things). Indeed, according to studies by Analysis Group and TechNet, Apple’s booming business has created an additional 450,000 American jobs in manufacturing, transportation, and software development.

It’s true that some people have lost their jobs due to outsourcing. It’s also true that, as a result, some have had to accept jobs which pay them somewhat less than they used to earn, at least temporarily. But even these people are benefitting: while their wages may have gone down, outsourcing has kept prices low. To see this, visit any Walmart. And there is nothing stopping those who are displaced by outsourcing from gaining the skills or the education they need to get a new job, where they may earn as much as they used to, or even more, while still reaping the benefits of the lower prices on goods and services generated by outsourcing.

Outsourcing is practical in the long run. But is it moral? Many people view outsourcing as morally suspect; some even morally condemn businesses for outsourcing. Why the moral outrage? The answer is indicated by Harry Reid’s reaction to the news that the uniforms to be worn by American athletes during the opening ceremony of the Olympic Games in London were to be made in China. Reid said: “I am so upset. I think the Olympic Committee should be ashamed of themselves . . . .  We have people in America, in the textile industry, who are desperate for jobs. What the Olympic Committee did is absolutely wrong.” This statement reveals the implicit premise in the moral argument against outsourcing: People have a moral claim on the jobs and income they need. Therefore, it’s wrong of businesses to outsource the production to other countries.

The premise that need entitles people to a job is, however, not only incompatible with justice and freedom. It’s also thoroughly un-American.

Would you, in the name of justice, pay higher prices than necessary, merely because the businessmen need the money? Justice is not determined by what one needs; it’s determined by what one deserves. You only deserve what you earn, i.e., what people are willing to pay you for your goods or services. And what people are willing to pay you for your goods and services depends on how much they believe those goods and services will benefit them. It is, therefore, unjust to suggest that businessmen have a moral obligation to provide jobs merely because job-seekers might need one. Needing a job doesn’t mean that you deserve it; it doesn’t mean that you can demand something for nothing. If you can’t provide something others are willing to pay for, then you can’t expect others to hire you.

Indeed, if justice is your concern, then you shouldn’t condemn businessmen for outsourcing. Instead, you should praise them for raising our standard of living by offering us more, better and cheaper goods—made possible through outsourcing.

The United States of America is—as explicitly stated in the Declaration of Independence—based on the principle of individual rights: the rights to life, liberty and the pursuit of happiness. The implicit premise of the principle of individual rights is that your life belongs to you, not to your needy neighbor, and that your own happiness is and should be your primary moral concern. Therefore, the Founding Fathers concluded, you should be free to pursue the values which make your life and happiness possible, by creating things of value and voluntarily trading them with others. That means, for example, that you have the right to move from Manhattan to Brooklyn in order to lower your living costs. For the same reason, businessmen have the right to move their manufacturing from America to China to lower their production costs.

The principle of individual rights also means that you have the right to determine with whom and under what terms you will deal with others. This is the freedom of trade and association. Therefore individuals—on their own or as members of a corporation—have the right to outsource, as a consequence of that freedom.

Basing a social system on individual rights is what makes justice possible, since nobody is forced to sacrifice what they have earned to anyone else. Businessmen have a right to outsource, even if doing so would put their employees out of work. Likewise, customers have a right to shop around, even if that would put companies out of business. In America you are not your brother’s keeper.

If America stands for a morality of rational self-interest under which people are free to pursue their own happiness, then opponents of outsourcing stand for a morality of self-sacrifice under which people are required to serve the needs of their neighbors.

Outsourcing is not only a right, but often a profoundly productive activity which benefits everyone in the long run. Rather than “protecting” Americans from outsourcing, the government should be encouraging and protecting our right to do so. Most importantly, we must recognize that outsourcing is not just a practical undertaking, but a moral manifestation of the pursuit of happiness itself. We should, therefore, demand that the government recognizes and respects the right to outsource.

Image courtesy of Flikr user mandiberg.

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