Outsourcing has its benifits

Bush insists outsourcing to India has its benefits

By Jim Puzzanghera; Mercury News

To people in Silicon Valley and around the country concerned about the outsourcing of jobs to India, President Bush on Wednesday offered something to make the practice more palatable.


It’s just one of the U.S. products that India’s rapidly growing middle class is developing an appetite for, Bush said in a speech to the Asia Society as he prepares for a trip to India and Pakistan next month.

While acknowledging the individual trauma of Americans who lose jobs when companies move operations abroad, Bush said India’s economic growth is an overall plus for the U.S. economy.

“India’s middle class is buying air-conditioners, kitchen appliances and washing machines, and a lot of them from American companies like GE and Whirlpool and Westinghouse. And that means their job base is growing here in the United States. Younger Indians are acquiring a taste for pizzas from Domino’s, Pizza Hut,” Bush said to laughs from the audience at a Washington hotel. “Today, India’s consumers associate American brands with quality and value, and this trade is creating opportunity at home.”

But Henry Rowen, a senior fellow at the Hoover Institution in Palo Alto, said economic growth doesn’t exactly balance the drawbacks of outsourcing.

“Certainly there’s some positives and some negatives.

The net is a little tricky,” said Rowen, who co-edited an upcoming book titled “Making IT: The Rise of Asia in Information Technologies.” “The consumer benefits from all of this, but there’s an impact.”

Outsourcing is a delicate issue for the Bush administration. Its top economic adviser came under fire in 2004 for calling it “just a new way to do international trade,” comments that Democrats often cited during the presidential campaign as evidence Bush didn’t care about workers.

Bush acknowledged the difficulty of the outsourcing debate Wednesday.

“It’s true that a number of Americans have lost jobs because companies have shifted operations to India.

And losing a job is traumatic. It’s difficult. It puts a strain on our families,” he said. But instead of responding with “protectionist policies,” Bush said the United States needs to improve education and job training for displaced workers.

He lauded the U.S.-Indian economic relationship and the benefits of outsourcing for both countries. Bush also praised cooperative efforts to fight terrorism, promote democracy worldwide, and address health and environmental issues.

The speech, which also addressed U.S. relations with Pakistan, wasn’t all complimentary. Bush urged India to do more to open its markets. And he called on India to separate its civilian and military nuclear programs, bringing the civilian portion under international safeguards.

India and the United States announced an agreement last summer to share civilian nuclear technology and are trying to finalize details before Bush’s trip.

India’s ambassador to the United States, Ronen Sen, said Tuesday that he was optimistic the nuclear issues could be resolved. Sen also praised the growing economic relationship between India and the United States. Trade between the two countries increased to about $27 billion last year, but Sen said that was “way below the potential of our two economies.”

Bush made the same point Wednesday as he prepared to become the fifth U.S. president to visit India.

President Clinton traveled there in 2000.

“More than five centuries ago, Christopher Columbus set out for India and proved the world was round. Now some look at India’s growing economy and say that proves the world is flat,” Bush said, referring to Thomas Friedman’s bestselling book about globalization, “The World Is Flat.”

Bush said U.S. exports to India increased 30 percent in 2005, and asserted the growing economic ties between the two countries are making American companies more competitive while helping stabilize South Asia.

In touting the benefits of India’s economic growth, Bush noted that the Indian middle class is estimated at 300 million people, larger than the entire U.S.population.