This is the Cato Daily Podcast for Monday, July 16, 2012. I'm Caleb Brown.

Outsourcing is a divisive buzzword meant to conjure visions of factories dismantled

and reassembled across the border. But that idea... of Trade Policy Studies argues that outsourcing is about lowering costs and improving the lives of customers around the world.

Some of the people complaining about President Obama's record on trade are people who ought to be his political allies,

but as was pointed out by you and others the Washington Post last week reported that President Obama's inability to clamp down on unfettered

trade, I believe it would believe that actual was part of the term used, was a discredit to him as president thus far.

The article really was about outsourcing and there was just vast misunderstanding in the United

States about outsourcing.

Outsourcing is a term that, it's a derisive term that really refers to foreign direct investment abroad.

Now if you talk to people in the outsourcing industry

they're upset that that term has been co-opted by trades to tractors.

Because outsourcing refers to me hiring somebody down the block to do something that I otherwise would do.

Right.

So offshoring was the term that we used to apply to U.S. companies that performed functions

abroad for their broader operation.

Then there was a time when we talked about offshoring as just referring to manufacturing

outsourcing and then outsourcing referred to sort of services and IT jobs and things like that.

Anyway, now we're talking about outsourcing in this

broader context referring to companies performing some of their functions abroad.

This is just a reflection of globalization. I mean, 230 years ago, Adam Smith talked about the virtues of

specialization. This is specialization writ large. The factory floor has broken through its walls

and now spans borders and oceans.

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