Outsourcing as Urban Myth

Remember when worry about outsourcing was all the rage? Remember when John Kerry was ripping George Bush over his alleged insensitivity to American workers? Remember when that Bush economic adviser got into hot water with some members of Congress for saying that outsourcing was "the latest manifestation of the gains from trade that economists have talked about at least since Adam Smith?" Whatever happened to that guy?

In today's New York Times, David Leonhardt (one of my favorite business and economics reporters) writes that some of the scare stories were, well, just stories:

A FEW years ago, stories about a scary new kind of outsourcing began making the rounds. Apparently, hospitals were starting to send their radiology work to India, where doctors who make far less than American radiologists do were reading X-rays, M.R.I.'s and CT scans.

It quickly became a signature example of how globalization was moving up the food chain, threatening not just factory and call center workers but the so-called knowledge workers who were supposed to be immune....

But up in Boston, Frank Levy, an economist at the Massachusetts Institute of Technology, realized that he still had not heard or read much about actual Indian radiologists. Like the once elusive Snuffleupagus of Sesame Street, they were much discussed but rarely seen. So Mr. Levy began looking. He teamed up with two other M.I.T. researchers, Ari Goelman and Kyoung-Hee Yu, and they dug into the global radiology business.

In the end, they were able to find exactly one company in India that was reading images from American patients. It employs three radiologists. There may be other such radiologists scattered around India, but Mr. Levy says, "I think 20 is an overestimate."

A good reminder that, in the public discourse, anecdotes can sometimes overtake the facts.