3.07.2004

Toward a Progressive View on Outsourcing The Nation (3/04)
Democrats have rightly seized on the issue. They are touting an array of anti-outsourcing proposals, mostly focusing on national measures, such as elimination of taxpayer subsidies. For example, John Kerry advocates banning foreign outsourcing of state and federal government contract work and would also eliminate tax breaks for firms that outsource, while giving tax credits to those that do not. Other US policies that encourage overseas investment could also be targeted. For example:

§ The relatively weak requirements for US firms, compared with European counterparts, to pay severance or negotiate with unions over plans to move jobs overseas.
§ Overseas Private Investment Corporation insurance for corporations investing abroad.
§ Treaties that protect US investors against host-government actions--including public interest laws--that diminish profits.

Changes in these and other areas could help chip away at the incentive to outsource. However, such domestic remedies do not address the main driving force: the extreme gap in wage levels.

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