Catherine L. Mann, economist at the Institute for International Economics, Washington

Washington : A unique idea to help high-tech American workers at risk of losing their jobs to countries like India and China may provide policymakers with a practical way to solve the hot political issue: provide tax credit for businesses willing to invest in training its workers, suggests economist Catherine L. Mann.

Top officials and business leaders feel that the only viable long-term answer to the outsourcing phenomenon is to improve the education and training of American workers and focus on the next generation of high-tech goods and services so that they can compete effectively with cheaper overseas labor, the San Francisco Chronicle reported.

But government job retraining programs have had a poor record of success, while efforts to improve the quality of secondary education and encourage more young Americans to study mathematics and science are at best a long-term goal, the rteport said.

So Mann, a senior fellow at the Institute for International Economics in Washington, D.C., has come up with what many see as a more practical remedy: a tax credit for business investment in so-called human capital, modelled on the popular investment tax credit and research-and-development tax credit used to encourage firms to invest in capital goods and research. The report said Mann, who presented her idea before Washington policy experts in March, argued that company training programs are often very effective.

“Having retraining and skill upgrading done in the firm is known to be a far more productive strategy for both the firm and the worker. But firms don’t necessarily have an incentive to do it,” she was quoted as saying.

“A tax credit that is ultimately for the benefit of the worker is one strategy. We use them all the time for companies to do research and development and buy equipment. Shouldn’t we also consider using them to ensure that workers keep their skills matched to jobs that are available in this country?”

Several high-tech trade groups are looking at the proposal, along with several members of both the House and the Senate, to see if the idea has any political viability, the report said.

Mann also defended outsourcing ---- hiring high tech workers in India and other countries to do increasingly sophisticated work that historically was done domestically ---- saying it has substantial benefits for the economy as a whole.

That is because buying cheaper software and services abroad lowers their cost and increases their availability to more businesses, diffusing information technology more widely through the economy, the Chronicle report said.

Lower costs for information technology account for more than half the increase in productivity growth in recent years in the U.S., adding substantially to overall economic growth, Mann was quoted as saying.

She said contrary to conventional wisdom, the end result is actually an increase in the number of information technology jobs in the U.S.

as more and more businesses adopt new technologies.

Lower prices also allow U.S. technology firms to lower their costs and gain a competitive advantage in exporting higher-level information technology products, she said.

Mann also predicted, like so many other economists, that routine information technology work will increasingly go overseas. Those workers who lose their jobs as a result are in essence bearing the cost for society’s greater benefit, she argued.