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March 19, 2004

Protectionism from Protectionism

Maybe someone (an international labor economist, ideally) can help me with this one. I can understand the IEEE acting like a labor union in responding to offshore outsourcing. They should be lobbying against tax loopholes, for government contracting to corporations that pay US taxes, encouraging R&D and education.

What I can't understand is how banning H-1b and L-1 visa emmigration is consistent with fighting against offshore outsourcing.

If you prevent US companies from acquiring good talent on their own soil they have no choice but to go abroad. Further, having the job be here creates jobs around it and local economies benefit from their consumer spending. Sure, additional competition for jobs within the US effects wages and unemployment, but I believe the effect is less over time with the geography of trade.

Protectionism self-replicates. If there is a solution to the offshoring it has to be one of openness and consistency.

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