I briefly mocked this controversy a few days ago, but the impacts of outsourcing/offshoring are so misunderstood that I think it deserves a closer look. A couple weeks ago we learned that the US Olympic uniforms produced by Ralph Lauren were manufactured in China. This upset a lot of people, including some Democratic senators like Harry Reid, who thinks they should “burn them and start all over,” and Chuck Schumer, who wants to require Olympic uniforms to be made in America. Conservative columnist Peggy Noonan is also upset.
These reactions are silly. Do we care if the athletes eat fruit from South America or grains from Asia? Does Chuck Schumer care if his clothes are made in America?
You don’t even have to believe widely accepted economic theories about comparative advantage to see that free trade works for everyone, even within the Olympics. Mark Perry points out that “the Brazilian Olympic equestrian team is using saddle pads produced by Wilker’s Custom Horse Products in Cool Springs, Tennessee.” Daniel Ikenson at Cato observes:
As our U.S. athletes march around the track at London’s Olympic stadium wearing their Chinese-made uniforms and waving their Chinese-made American flags, the Chinese athletes will have arrived in London by U.S.-made aircraft, been trained on U.S.-designed and -engineered equipment, wearing U.S.-designed and -engineered footwear, having perfected their skills using U.S.-created technology.
If you like it when other countries buy stuff from America, you can’t complain when America buys stuff from other countries. But the chief point is that even if only one of those transactions existed, it would still be a win-win for both countries.
It’s good that Americans – specifically, the Olympic teams – can get cheaper uniforms from China, giving them more resources to spend on training or whatever else they need. Ikenson wryly mocks the Congressional objections, noting that “the U.S. Olympic team is privately funded, and that the funders—unlike Congress—feel obligated to stay within budget.”
You don’t have to worry about lost jobs, either. Economic theory says offshored jobs free up labor to work on more valuable things. As I noted a few months ago, somehow two million jobs were offshored between 1994 and 2007, while the unemployment rate dropped from 6.6% to 4.4%. (And as Steve Horwitz notes on BHL, global trade is also why severe drought in the US won’t make us starve.)
It’s no surprise that the nationalism of the Olympics stirs up concerns about American manufacturing, but there is no excuse for promoting protectionist policies. The Olympics should be a time for celebrating the explosion of global trade that is enriching all of us, from China to Brazil to the United States of America.