Paul Krugman, former defender of offshoring, delivers a steel-toe boot to its Smeagol-like face.

[pampango]

17. Great article. It is domestic outsourcing (to nonunion contractors) that Krugman is blasting.

"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."

"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."

Outsourcing - to a domestic contractors in the examples above - is what Krugman states is the tactic that corporations use to see that "as little as possible of what corporations earn goes into the pockets of the people who actually work". American corporations have been attacking unions but this type of outsourcing and moving factory work from the unionized North and MidWest to right-to-work states largely in the South for decades before foreign countries were involved to any significant extent.

"A country is not a company (despite globalization, America still sells 86 percent of what it makes to itself), and the tools of macroeconomic policy — interest rates, tax rates, spending programs — have no counterparts on a corporate organization chart. Did I mention that Herbert Hoover (of Smoot/Hawley/Hoover infamy) actually was a great businessman in the classic mold?"