Recent comments made by Chairman of the White House Council of Economic Advisers regarding the shift in jobs from the American service sector to countries that provide cheaper labour have met with hostile responses from members of both the Democrat and Republican parties.
Gregory Mankiw sparked the heated political backlash last week when he referred to the outsourcing of American jobs as “just a new way to do business,” and said it “is probably a plus for the economy in the long run.” Republican Speaker of the House, Dennis Hastert, who was quoted in the Financial Times, said, “I understand Mr. Mankiw is brilliant economic theorist, but his theory fails a basic test of real economics. We can’t have a healthy economy unless we have more jobs in America.
Senate Democrats signed a petition last week urging the President George W. Bush to denounce the statements made by Mankiw and called for actions to create more jobs in the manufacturing sector. With coming November elections the Democrats have been criticizing the administration for slow job growth in the US.
However, many economists warn that efforts to control the ability to create or send jobs to other countries could actually hinder the countries economy, spurring higher domestic taxes and prices.