EDUARDO PORTER reports on The Bright Side of Sending Jobs Overseas:

... while debate is raging over globalization's costs and benefits, Mr. Mankiw's comments are based on solid, age-old economic arguments. Most economists agree that higher productivity - whether it comes from trade, outsourcing or technology - is good, even when it creates pain for many workers.

"Outsourcing does not reduce the total number of jobs in America," said Robert Reich, who served as labor secretary under President Bill Clinton. "If other countries can do something cheaper we ought to let them do it, and concentrate on what we can do best."

Indeed, despite the hemorrhage of jobs since Mr. Bush took office, the past performance of the American economy - particularly the pattern of job creation and destruction over the past several years - supports Mr. Mankiw's case.

In many ways, the economists' argument for outsourcing is as straightforward as the case for importing products. If an Indian software programmer is paid a tenth of an American's salary, a company that develops software in India will save money and - provided competitors do the same - the price of its software will fall, productivity will rise, the technology will spread, and new jobs will be created to adapt and improve it.

...

A report released last December by Catherine L. Mann of the Institute for International Economics, a Washington research group that backs free trade, calculated that lower costs due to globalized production accounted for 10 percent to 30 percent of the decline in hardware prices during the technology boom of the second half of the 1990's, when computer prices fell 10 percent a year.

...lower prices also muted inflation, allowing interest rates to be lower than they otherwise would be - thus boosting investment and growth. And the Asian countries that made computers and chips spent some earnings buying other American services - like legal and financial assistance.

Catherine L. Mann's pdf article here.

STEVE LOHR writes:

Senator John Kerry, the front-runner for the Democratic presidential nomination, castigates "Benedict Arnold companies and C.E.O.'s" for moving jobs overseas.

...

Senator Kerry introduced federal legislation last November that would require call center operators to disclose where they are located.

...

These steps, some economists warn, are part of a misguided drift toward protectionism that would increase costs to consumers, make American businesses less competitive and risk more trade conflict.

"This anxiety about outsourcing is not a bad thing, as long as it forces you to make the right choices," said Jagdish N. Bhagwati, a professor of economics at Columbia University. "You have to move on and upgrade your skills. We have no choice. And America, as probably the most innovative society in the world, does a pretty good job of it."

Kerry's lost my vote.