Final Economic Hearing Project

FINAL PROJECT: Should Congress pass legislation protecting American jobs from outsourcing? Economics- Gustafson

The United States of America and Canada share many commonalities historically, geographically, and economically. Canada is the USA’s largest trading partner, and vice-versa. For example, over 7 million U.S. jobs are directly supported by trade with Canada, including 1.3 million in the northern border states alone, and Canada is the number one export market for 35 states. Additionally, $1.9 billion in two-way goods and services are traded a day, almost $2 million every minute.

Within the automobile industry, over 1,300 suppliers in 38 states ship auto parts to Canadian assembly facilities, supporting over 360,000 American jobs. On the investment side, Canadian auto parts firms have over 60 facilities in the U.S. that employ thousands of Americans.

Canada is also America’s largest supplier of energy providing oil, gas, electricity and uranium- more than any other country. Canada has the second largest oil reserves in the world and in 2004 displaced Saudi Arabia as the largest supplier of crude oil to America.

However, the “Buy America” provision (the Buy-American clause requires that stimulus-financed public works projects use American materials) within both the Bush and Obama adminstrations’ economic stiumulus packages is having negative effects on American-Canadian trade and economic and political relations. This has become a contentious issue in light of America’s free trade agreements.

"Buy American has created a trade chill," says Jayson Myers, president of Canadian Manufacturers & Exporters, the country's largest trade and industry association, noting some U.S. companies are dropping Canadian suppliers to avoid filing waivers that prove they are playing by the new rules. (Read more: http://www.time.com/time/business/article/0,8599,1915402,00.html#ixzz0X2Ifh7N0)

Why would Congress enact protectionist policies instead of making use of the law of comparative advantage, first postulated by David Ricardo two centuries ago and demonstrated to astonishing effect since?

Why, indeed? Well certainly the thinking is neither revolutionary nor radical. The law of comparative advantage has been the accepted notion of economic thought on trade since Ricardo. It asserts that companies should specialize in the good or service they can produce at least opportunity cost, and should trade for everything else. Conventional wisdom states that if something can be made more cheaply by someone else, we’re better off to buy it from them than to make it ourselves. If “we” and “they” live in New York and Chicago, the statements tends to draw yawns. Ho-hum. So what? But many of the least-cost producers that companies look to today live in India – as well as Canada, and that seems to be an entirely different matter.

“Outsourcing” and “offshoring” are used to describe the practice of American firms lowering costs by contracting with workers or companies in other countries for the labor to produce a good or service, and/or by building capital – factories or research facilities- in other countries.

The practice is not new; many US apparel and manufacturing firms have outsourced production for years- much to the dismay of significant numbers of low-skilled American workers. In recent years outsourcing has spread to research and development (R&D), information technology (IT), computer programming, and medical and financial services. Forrester Research consultancy estimates that 3.3 million American service-industry jobs will have gone overseas by 2015. The new wave of outsourcing is affecting American workers in high skill/high salary jobs, and they aren’t taking it quietly.

The question under debate is whether outsourcing, or trading in resources like labor and capital, are “just a new way of doing international trade,” as Gregory Mankiw (former chief economic advisor to President Bush) put it to Congress. Or, is outsourcing something to fear as fundamentally damaging to the U.S. Economy? (Foundation for Teaching Economics) In this project, you will work with a group of students to make a recommendation to the Federal Government about the future of outsourcing. In your group, you will be asked to assume the role of a stakeholder in the outsourcing debate and “testify” before a Senate committee. The Senators will be members of our community, building administrators, and/or other teachers within our school. Please see the required elements of your presentation listed below.

I. ROLES: You will need to choose a role to research and represent during the hearing. It does not have to match with your personal views of the issue.

 Multinational Corporations  Domestic Information Technology/Manufacturing workers  American Consumers  AFL- CIO Labor Union  Embassy team from India

II. TESTIMONY: Your group will be asked to give testimony to the Senators so that they can draft future legislation. You will receive daily details for each requirement to help you prepare your presentation (ex:what does an excellent PowerPoint presentation look like/include/etc.). In your presentation, you need to include the following:

 Powerful and Persuasive Argument (logic, emotion, and credibility)  Describe your role and your position on issue  Research supporting your position based upon your role  Address other alternatives and perspectives- why is your view still the best?  Core democratic value  Future implications  PowerPoint  Some other form of visual aid (poster, flyer, skit, music, etc.)  Professional and well-versed in your presentation  Prepared to answer questions from Senate Committee

SENATE HEARING DATE: ______

III. EVALUATION This project is worth 80 project points plus additional daily homework points! You will be evaluated as a group AND you will individually evaluate all members in your group. This information will be kept confidential. Please see attached rubric for specifics. Your final grade will be based on your group evaluation AND an average of your peer evaluations.

IV. HELP We will be working on this project during class where you will be responsible for meeting daily objectives. It is your responsibility to ask for help if you are having trouble! I am available after school, but you will need to make an appointment. GOOD LUCK! Outsourcing Research (10 points individually) Should Congress pass legislation protecting American jobs from outsourcing? -Gustafson

Your Role ______View of Outsourcing Debate ______

You will need to conduct research in order to develop a persuasive and powerful argument for your presentation. Your job (each person individually) is to find FIVE different sources with information that will enrich your case and create evidence “cards.” This will mean your group should have access to at least thirty different evidence cards! You will need to check in your evidence with Mrs. Gustafson to receive homework points.

I. Create a word document where you will cut and paste your research. This is where you will record details, facts, parts of the article, or a summary of the article that will help you persuade the Senators you are correct.

Example of Evidence “Card” 1. Colvin, Geoffrey. “Think your job can't be sent to India? Just watch,” Fortune, Dec 13, 2004 v150 i12 p80

* “The overriding reality isn't that manufacturing jobs are being exported but that they're evaporating everywhere, including China, as makers of everything become more productive.” * “The briefly flaring media supernova about call centers in Bangalore at least illuminated a significant issue: Service jobs can be exported too, especially as global telecommunication increasingly becomes nearly free. Even more important, though not nearly as media-friendly, is the torrent of college graduates, hundreds of thousands of them in engineering, from Chinese and Indian universities. Earning $18,000 a year, they're often just as good as an $85,000 Westerner.” * “In a global labor market, pay levels will equilibrate. That is what markets do, and the advance of infotech means that ever more Americans are part of a global labor market in which they are the high-cost option. That uncomfortable fact, which many Americans are trying to wish away, means inescapable forces will be pushing their pay down (while pushing up the pay of Chinese, Indians, Thais, Filipinos, and others).”

II. Begin Research – Locate relevant information. Mrs. Gustafson will show you how to access the school’s database in class. On the computer go to:

Media Center Applications Student Resource Center - FHS Search full text for “Outsourcing” Click different tabs/articles to  look for quotes, facts, statistics, or general information to support your argument.  Make sure to include quotation marks if a direct quote

Remember primary sources are always best; however secondary sources will be allowed for this presentation. III. Cite your source - For each evidence “card” record your source (website, author, publication, date, etc.) If you are using Infotrack Student Edition, the citation will be listed at the bottom of the article. Just CUT AND PAST into your work document.

If you are investigating another source, watch for  Credibility and Reliability (Who is the author? What authority do they have? The Star versus The New York Times)  Date (within the last five years versus twenty years ago) Check bibliography details on the back of this sheet. You may follow the “writing it right” criteria.

DO NOT PRINT ANYTHING UNTIL MRS. GUSTAFSON CHECKS YOUR WORK!!!!!!!

Writing it Right: Sample Documentation