With former Vermont Governor Howard Dean dropping out of the race for the Democratic Party's Presidential nomination, the battle is now between two US Senators -- John Kerry of Massachusetts and John Edwards of North Carolina who have made outsourcing of jobs to countries like India a major issue in the election year.
Both see outsourcing of white collar jobs and offshoring of capital to create blue collar jobs a major issue and they are using India, China and Mexico as attractive targets to whip up votes.
Outsourcing and India: Complete Coverage
Leading NRI economist Jagdish Bhagwati doesn't think they are serious about it, as it makes no sense in this irreversible age of globalisation and competitiveness but the two are using the issue for what it is worth.
Edwards said during a debate in Milwaukee: "I will stand up and fight every way I know to protect these (US) jobs."
Economists point out that American companies will lose their shirts to foreign competitors if they do not outsource some jobs and offshore some capital, but in the din of the election battle their voices of sanity are being drowned.
Larry R Langdon, former head of the Internal Revenue Service's large and mid-size business division, pointed out that well-educated English-speaking workers, improving infrastructure, growing political stability, rapidly improving Internet, and telephone and transportation links are some of the reasons why US jobs are getting increasingly outsourced to these countries.
Langdon and others see no reason as to why American business and industry should be at a disadvantage and lose business to foreign companies by not utilising these facilities.
Both Kerry and Edwards have charged that tax law rewards expansion overseas. Both have said they would cut taxes for domestic manufacturing and offer temporary tax credits for hiring manufacturing workers in the United States.
Many economists and some business officials, The Washington Post notes, agree that companies are reaping tax benefits from overseas expansion.
However, said the paper, "virtually no one would say that taxes are a primary -- or even a significant -- factor in the movement of as many as 300,000 white collar and many more manufacturing jobs abroad in the past several years."
No matter how sweet the tax incentive is to expand in India, for instance, it could not be more enticing than lowering a software developer's pay from $60 to $6 an hour, a figure cited by the consulting firm McKinsey and Co.
"I don't think you can say it's the tax code that is pushing jobs abroad," said Michael J Murphy, a tax laywer.
Kerry said government contracts, when possible, should go to US-based businesses, and call centre phone operators should at least be required to identity what country they are in.
"Outsourcing," a Kerry aide told the Post, "is a new phenomenon. We don't really have a clue what is going on."
Roger C Altman, chairman of the Wall Street investment firm Evercore and a Kerry economic adviser, said some jobs for which the wage differences are vast can't be saved.
But, he said, an "integrated response focused on taxes and lowering business costs will save certain jobs that are susceptible to a competitive response."
