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Free Market Project

3/4/2006 10:20:12 PM

Updated 02/24/06

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‘World News Tonight’ Criticizes Outsourcing
ABC’s ‘Closer Look’ takes one step forward, two steps back on trade debate.

By Charles Simpson
August 26, 2005

     Even though ABC’s “World News Tonight” drove a long way off the beaten path for a “Closer Look” at outsourcing, its coverage still came up a few miles short. In an August 25 report, Barbara Pinto took a trip to rural Minnesota, “Hardly the place computer programmer Dave La Reau expected to find work.”

Before finding work for a computer company in the sleepy town of Sebeka, La Reau lost his job in Chicago when it was outsourced to a foreign country. Anchor Terry Moran’s introduction to Pinto’s report warned that some “3.3 million service jobs are expected be shifted overseas between now and 2015 to countries where wages are relatively low.”

Like most reports on the topic, ABC failed to mention that the number of jobs outsourced from the United States is miniscule (0.1 percent, according to the Kansas City Federal Reserve Branch) when compared to the total U.S. job market. It’s also small compared to the number of jobs insourced to the United States from foreign countries. Those insourced jobs pay 31% more than all domestic companies.

But, at least ABC acknowledged that there’s some rationality behind the process. Toward the end of her report, Pinto stated that “Analysts predict there will be more companies moving their high-tech operations to rural areas as they reconsider the costs and the risks of doing business overseas.”

The most basic reason companies outsource is because free trade is a solution to the “costs and risks of doing business” incurred by the price of unionized labor and corporate taxes at home. When a product can be made cheaper, and with better quality, in a foreign nation, those savings are reinvested into the U.S. economy and create better paying jobs. That means a small town in Arkansas has just as much of a chance at providing a competitive labor environment as a hamlet outside Bombay.

While Pinto did note that this type of “outsourcing” might be good for rural America, she didn’t really explain why it has, for years, been good for all Americans.

ABC’s handling of the topic was nowhere near as biased or dramatic as CNN’s “Lou Dobbs Tonight.” A Free Market Project Special Report, “Trade Secrets,” found even insourcing was bad news to business journalist and CNN host Lou Dobbs.


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