Daniel W. Drezner:

Earlier this month the Bureau of Labor Statistics reported that offshore outsourcing was responsible for 2.5 percent of jobs lost through mass layoffs in the first quarter of this year--not exactly a large number. Studies at the state and local level buttress this finding. In Colorado, one study found that to date offshoring's impact on IT jobs was exaggerated by media reports. In Detroit, another study concluded that outsourcing's effect on manufacturing jobs had been "overemphasized." The net creation of over a million new private-sector jobs since January has also demonstrated that the effect of offshoring on the national economy is insignificant...

But don't hold your breath waiting for public attitudes to follow suit. For one thing, there is a significant lag between the reporting of good economic news and the internalization of that news by Americans. Earlier this month, an Associated Press poll found that 57 percent of respondents believed the nation has lost jobs in the last six months, even though 1.2 million jobs had been created during that span.

More importantly, however, even before the last recession, Americans did not have warm and fuzzy feelings about trade. Kenneth Scheve and Matthew Slaughter catalogued hostility to free trade policies in Globalization and the Perceptions of American Workers. Throughout the late 1990s, majorities of Americans repeatedly affirmed their belief in two things: that the costs from more imports always outweighed the benefits of more imports; and that the costs from more imports exceeded the benefits from more exports. Go back to the early 1950s--when the U.S. was running a massive trade surplus--and a plurality of Americans still supported import restrictions over import expansion. Americans are mercantilists in the sense that they support trade liberalization only when they believe it will improve export opportunities with no threat of increasing imports.

Given the widespread support among economists for trade liberalization, are Americans just stupid? Not really--they're merely responding to how politicians talk about the topic. Both advocates and opponents of freer trade talk about the issue using the language of how policy change will affect the trade deficit--even though there's no correlation between the balance of trade and income. Even politicians who advocate trade liberalization do so by focusing on increasing American exports and downplaying imports. This ignores the fact that trade is not a zero-sum game; the gains of other economies can also benefit our own. For instance, imports help to lower consumer prices and increase consumer variety. Former Treasury Secretary Robert Rubin observed in his memoirs that when he mentioned this fact in Congressional testimony, a representative told him that he was the first government official to praise the virtues of imports in public...

But there is one silver lining to this phenomenon, which is that Americans are massive hypocrites. People may believe in mercantilism, but they don't act on those beliefs in large numbers. Consumer lender E-loan conducted an interesting experiment this spring--it gave customers a choice between having their loan paperwork processed in ten days overseas or twelve days in the United States. In the first three months of the experiment, more than 85 percent of customers chose the overseas option. This corresponds with the May AP poll showing that while a majority of Americans think that offshoring is bad for the economy, a plurality of Americans do not bother checking the label to see if a product is made in this country. As citizens, Americans think of economic policy in mercantilist terms. But as consumers, they are quite content with free trade.