ABSTRACT
In every presidential election of the past two decades, the state of U.S. manufacturing has been a campaign issue. In the most recent election, John Kerry repeatedly accused the Bush administration of sending American jobs overseas. The furor began when the head of the president’s Council of Economic Advisers, N. Gregory Mankiw, said that outsourcing is “a good thing”, is simply “a new way of doing international trade”. Sensing an issue, Democrats immediately proclaimed that the Republican administration was pushing firms to send offshore significant parts of their U.S. business. Campaigning in the upper Midwest, candidate Kerry most often referred to this outsourcing as a decline of American manufacturing, but most of the actual news about outsourcing featured service sector jobs, such as call centers, which were moving to India. While the Democrats continued to pound the issue, most economists and business analysts dismissed the claims. Following the standard line, Daniel Drezner (2004) called the controversy “the outsourcing bogeyman”. Even economist and diehard anti-Bush New York Times columnist Paul Krugman said the outsourcing issue was a non-starter.
