Outsourcing Jobs and the Federal Reserve Are the Entire Problem
Since the Federal Reserve is dedicated to a 2% inflation target instead of willing to target higher nominal GDP in order to bring down unemployment, this cartoon speaks volumes.
It used to be that economists argued that outsourcing wouldn’t be problematic here in the US as long as we had enough growth in spite of the outsourcing that Americans would still have jobs. In order for that to happen, we would need to stimulate the economy – preferably through monetary policy. As it is, fiscal policy is crippled because of politics and monetary policy is crippled because of an overly conservative Federal Reserve unwilling to bend to the need of the unemployed.
Therefore what economists said would be required to happen to make outsourcing a plus-plus for Americans (cheaper products, more productivity) is instead a plus-minus because while we may have better products at the same nominal price, more and more Americans are without jobs and the job growth is so paltry that we’re going to end up with weaker human capital and lower growth level. We’ve lost an entire two decades of growth and jobs because of conservative ineptitude and recalcitrance and we’ve got very little (for ourselves) to show for it.