When off-shoring occurs in a context of high aggregate demand, adequate tax levels, and effective rules which allow governments to coordinate, it may indeed have a positive impact on nations and communities. On the other hand, when it occurs in a context of low aggregate demand, destructive economic and political competition, and the absence of effective rules, off-shoring can have a significant negative impact on workers in home and host countries.
However, off-shoring itself (and globalization more generally) reduces citizens' bargaining power, making it difficult for the majority to gain from off-shoring. At the same time, it undermines the ability of governments to provide the social investments that would enhance the competitiveness of these countries in the global economy.
Proponents in the U.S. of a more efficient and equitable approach to off-shoring should support a moratorium on all future trade and investment agreements until solutions are implemented to the taxation, social investment and aggregate demand problems identified in this paper. In short, the presumption should be that globalization should not be allowed to undermine the bargaining power of citizens or the social investments of society. Until globalization can proceed without doing so, future movement in that direction should be halted.
