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Not Always to the Swift

Shibboleth of Fools

"Well that's it: you see what you want to see and hear what you want to hear."
-- The Rock Man, in Harry Nilsson's The Point

Via Virginia Postrel -- Texan by residence, Californian in her heart -- comes a link to this Daniel Weintraub article reporting that Democratic legislators in Sacramento commissioned, but are seemingly working to bury, a study by the Public Policy Institute of California on outsourcing. The results of the study were apparently not what they wanted or expected as they push for legislation to penalize California companies that try to contain costs by hiring overseas:

A new analysis commissioned by the Legislature suggests that sending American jobs overseas, far from being a blow to employment, can actually help preserve existing jobs and create new ones.

The paper, prepared by the Public Policy Institute of California, warns lawmakers against trying to stem the practice by prohibiting offshoring in state contracts, noting that such a ban would drive up the cost of services and take money away from other programs in the budget.

* * *

[Response to the draft report] is not likely to be warm from the Democrats who control the Legislature. Many of them have jumped on the outsourcing issue, hoping to demonstrate their affinity with working people.

The last thing they want is a study done in their name that claims shipping jobs overseas is not only good for the economy, but for workers as well.

The report cites examples from other states in which prohibitions on outsourcing government work did create in-state jobs, but in which the opportunity costs -- the amounts of state money that weren't saved by sending the work to less expensive foreign vendors -- resulted in a state investment of over $100,000 for each domestic position that wasn't "lost." Adds Weintraub:

Even if these examples are extreme, it's clear that in virtually every case, prohibiting offshoring in state contracts would add to the cost. That cost is hidden, buried in dozens of agreements signed by various state agencies and departments. The consequence, however, is that money spent this way is no longer available for other programs. And that's a trade-off that lawmakers who support the ban don't want to acknowledge.

"Part of the policy calculation should consider whether, in an era of tight budgets, workers at risk of being displaced by offshoring have a more important claim on state resources than other state residents," the report said.

The bottom line, though the researchers don't put it this bluntly, is that politicians, either from ignorance or malevolence, are trying to scare Californians into believing that offshoring is bad for the economy, and bad for them. The reality is that the opposite is true, and that the proposals seeking to freeze the economy in place will do far more harm than good.

I will take it as a given that "malevolence" is not the actual explanation, and that the legislators bottling up this report are not doing so out of an actual desire to harm their fellow Californians. Rather, there is a sort of magical thinking at work, in which results that disagree with preexisting assumptions "cannot" be true. The same reactions kick in whenever reality threatens to contradict an accepted premise, such as the central chestnut in discussions of global warming -- "the US is the major problem, and if we seriously reduce our carbon output, the problem will be mostly licked" -- which Megan McArdle recently roasted on an open fire.

While my examples here pick mostly on Democrats, there are abundant comparable cases among Republicans -- such as the apparent belief that public largesse can be spread about via lower taxes and higher entitlement payments at the same time. These patterns of thought are apparently a product of public life in general, not of any particular party affiliation.

UPDATE: On his weblog, Dan Weintraub points out that the Public Policy Institute report is now available on the Institute's website.

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