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  • New Report Shows Outsourcing Fears Are Misplaced

    While fears of “outsourcing” continue to make headlines, the facts show there is no “giant sucking sound” resulting from dollars fleeing the United States to be invested in other countries. Outsourcing occurs when companies close facilities in the United States and invest in new operations in other countries. Some people believe that the ability of people to invest anywhere in the world is bad for the United States, since jobs will be outsourced to low-wage countries.

    In fact, the opposite is true. The United States benefits greatly from “insourcing” as global investors send their dollars to the United States, creating millions of jobs here.

    The U.S. Bureau of Economic Analysis (BEA) just announced that the total value of foreign investment in the United States exceeds the value of U.S. investments in other countries by more than $4 trillion. New foreign investment in the United States in 2011 alone exceeded U.S. investment in other countries by $556.3 billion.

    However, the news was not all good. The BEA data showed that excessive federal spending and the resulting budget deficit continue to be a problem. Foreign investors spent more than $400 billion on U.S. Treasury securities in 2011. This is another way to say that the government borrowed more than $400 billion from foreign investors. Those dollars could have been invested otherwise in the private sector of the U.S. economy or spent on U.S. exports.

    Americans should not be concerned about outsourcing, because there are many more dollars being invested in the United States than vice versa. However, Americans should be concerned about excessive federal spending. Deficit spending encourages our trading partners to buy U.S. Treasury securities to finance our government’s budget shortfall, instead of buying U.S. exports or investing in our private sector.

    Posted in Featured [slideshow_deploy]

    3 Responses to New Report Shows Outsourcing Fears Are Misplaced

    1. George Lawrence says:

      Off shoring is the description of the above – which is a subset of outsourcing. Outsourcing is done both domestically and globally i.e. a US company outsources its payroll processing to a firm located nearby that may be a company such as ADP.

    2. Bobbie says:

      It's our freedom to invest our money by choice, not the government's freedom to take taxes to risk on government's personal investments. Businesses wouldn't outsource if they didn't have reason to and new businesses would establish had they not face government controlled conflicts of interest (government rules, government regulations, government mandates) all intentional government abuse as Americans did it for themselves following necessary rules up until this unconstitutional governing overload. Overseas outsourcing does come with dispute, language barriers and where incompetence for some reason is overlooked.

    3. Frank says:

      The amazing thing is that the Federal Reserve, now wants to increase its QE3, creating more "outsourcing" (by curtailing the money available to the private sector again)

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