Exporting Lou Dobbs and John Kerry: Whats' gotten into Lou Dobbs?

Tech Central Station ^ | Feb 15, 2004 | James Glassman

[hotpotato]

What's gotten into Lou Dobbs? Once a sensible, if self-important and sycophantic, CNN anchor, he has suddenly become a table-thumping protectionist.

Dobbs has been running a series -- praised by the AFL-CIO's Rich Trumka as a "nightly crusade" -- called "Exporting America." Slanted and inflammatory, it decries "outsourcing" or "offshoring" -- that is, U.S. businesses using suppliers in other countries, like workers in Ghana processing New York parking tickets or programmers in India writing IBM software.

Another word for outsourcing is "trade" -- an endeavor, as economists learned early on, that benefits both parties to the exchange.

Nothing has changed since Adam Smith wrote in 1776: "It is the maxim of every prudent master of a family never to make at home what it will cost him more to make than to buy."

Still, writes Julian Sanchez of Reason magazine, "Free traders are trapped in a public policy version of 'Groundhog Day,' forced to refute the same fallacious arguments over and over again, decade after decade."

While trade can cause pain to some workers, lack of trade causes far more. Imagine if software firms did not search the world for the best labor at the best price. Consumers would pay more, and shareholders would have less to reinvest, which would mean fewer jobs for Americans.

Or imagine if Japan retaliated by taking its plants home. With 13,000 workers, Honda is the largest private employer in central Ohio. As for India, outsourcing helps lift a nation out of poverty and creates markets for U.S. goods and services. According to a study by the McKinsey Global Institute, of the $1.45 of value created from offshoring $1of U.S. labor cost, "the U.S. captures $1.12," the foreign country 33 cents.

Economists understand this, but, often the public sees only the pain. For that reason, opinion leaders have a responsibility to discuss trade in an adult way.

Unfortunately, demagogues dominate. Dobbs's website lists 250 "U.S. companies… sending American jobs overseas," as if they were wanted criminals. This rogues' gallery includes America's most innovative companies, creators of entire new industries, like Amazon.com, EMC, Google and Intel.

The outsourcing uproar is occurring as the U.S. unemployment rate last week dropped to 5.6 percent, lower than the average during the 1990s. Growth is a robust 4 percent, inflation is low (partly because trade depresses prices), and the Institute for Supply Management's closely watched Manufacturing Index is at its highest level since 1983.

Yes, manufacturing jobs are declining as productivity rises, but that's a decades-old trend. There were more factory jobs under Nixon than under Clinton. Outsourcing mainly affects tech and professional workers, whose jobs at home are now increasing as the U.S. economy recovers. Forrester Research estimates that outsourced jobs will rise to 600,000 by 2005 -- out of a total of 140 million. Hardly a menace.

In fact, the main strength of the U.S. economy is what Joseph Schumpeter called "creative destruction." Just 75 years ago, farmers were one-fourth of U.S. workers; today, they're one-fortieth, but they produce far more, and agricultural products are a big net export. Would we be better off with 30 million more farmers? It's our labor flexibility that has helped the U.S. boom. It's a big reason our GDP is greater than that of the next five countries combined.

As Fed Chairman Alan Greenspan noted last month, "A million American workers… currently leave their jobs every week, two-fifths involuntarily.... A million, more or less, are also newly hired… every week." He added, "This process is not new," and we "can be confident that new jobs will replace old ones, as they always have."

It is government's role to soften the blow through aid and retraining -- not through the restrictions pushed now in Congress. We don't want to turn the U.S. into another Germany, where rigid labor rules have helped increase unemployment to 10.2 percent.

Unfortunately, Dobbs and xenophobic politicians are out to kill the goose that lays our golden eggs. Sen. John Kerry, in his stump speech inveighs against the "Benedict Arnold CEOs [who] send American jobs overseas."

By the way, the Kerry family business, H.J. Heinz Co. of Pittsburgh, operates 22 factories in the United States and 57 in foreign countries. I don't think that Kerry should shut down The Heinz 57, but he might drop the rhetoric and talk about trade responsibly. He should support, not trade's contraction, but its expansion, like George W. Bush, Bill Clinton and every president since Herbert Hoover.

[hotpotato]

The above showed up in today's OC Register but not in their online version. I managed to find the article at Tech Central.

Part of the exchange between Lou Dobbs and James Glassman on CNN regarding the above article

Glassman vs Dobbs

[hotpotato]

I guess I should have included the "debate." Here it is below.


Editor's note: Thursday night James K. Glassman appeared on CNN to debate Lou Dobbs. They discussed the outsourcing of jobs in dynamic, global economies. Dobbs asked Glassman on his show after reading Glassman's article "Exporting Lou Dobbs and John Kerry." Read part of their exchange below.

DOBBS: Well, my next guest takes a decidedly different view. James Glassman wrote an article this week that begins by asking, "What Has Gotten Into Lou Dobbs?" In it, he takes issue with our extensive reporting here on "Exporting America," our conclusions and positions.

Glassman says our list of companies sending American jobs overseas, which we update here every night and post on our Web site, include some of America's most innovative companies. James Glassman is a resident fellow with the American Enterprise Institute and joins me here in New York.

Jim, that was quite a little article.

JAMES GLASSMAN: Well, I think it was quite accurate.

DOBBS: OK, let's start with the accuracy.

The fact is that we are seeing hundreds of thousands of jobs being outsourced on the basis purely of a corporation's interest in achieving the lowest possible price for labor. Does that make sense to you?

GLASSMAN: Lou, that is called trade.

And we have been doing it for hundreds of years.

(CROSSTALK)

GLASSMAN: You majored in economics at Harvard. You understand that Adam Smith, David Ricardo showed that trade is good for both parties.

DOBBS: Absolutely.

GLASSMAN: So outsourcing, offshoring, whatever you call it, it is always called by something different during different generations -- those are the words right now. But it's trade. And it's good for the Indians and it's good for Americans.

DOBBS: OK. Let's assume that trade is good, because here no one has argued otherwise.

But what we have argued is that trade that is not mutual, mutually beneficial, doesn't make a lot of sense. We're looking here -- since you brought up trade, we'll go back to outsourcing those American jobs. We are looking at a half-trillion a year current account deficit.

GLASSMAN: Right.

DOBBS: How good is that?

GLASSMAN: It's not good. It's not bad.

We have, for the last 20 years, run a trade deficit. And by coincidence, for the past 20 years, we have had by far the greatest economy in the world. We've got an $11 trillion economy. We're bigger than the next five countries combined. We've got a 5.6 percent unemployment rate, compared to 10 percent in Germany. I think we're doing fairly well.

The reason we have such a large trade deficit is, we're doing a lot of importing, while the rest of the world, which has a worse economy, is not able to buy. That's the problem.

(CROSSTALK)

GLASSMAN: If you want to have a trade surplus, Lou, the best way to do it is to plunge the United States into a recession. If we don't buy anything, hey, we don't have a trade deficit anymore.

To see all of the debate, visit the CNN website here:

http://www.cnn.com/TRANSCRIPTS/0402/12/ldt.00.html

[Cicero]

By the way, the Kerry family business, H.J. Heinz Co. of Pittsburgh, operates 22 factories in the United States and 57 in foreign countries.

This hasn't much to do with the article, but it may be the most important thing in it. If Kerry plans to bash Bush for sending jobs abroad, this is an answer people can understand.

[steplock]

The absolute stupidity of the majority of Americans knows NO BOUNDS.

If you do not like outsourcing - there is ONE thing you can do.

DO NOT BUY or USE non-American products.

Corporations are neither good nor evil - they are created to make money, and money has no conscience.

If you do not buy foreign made products - I guarantee you that the corporations will move factories here.

BLAME YOURSELVES!

[keysguy]

I saw that interview and Lou Dobbs ate Glassmans's lunch several times. Glassman is a complete boob. He seems thinks that free trade equals fair trade. There is a huge difference. Right now the Chinese are eating our lunch. Lou Dobbs also advocates other non-mainstream idea like securing our borders--he must be a real radical!

[LowCountryJoe]

I'm awaiting responses from the protectionists in the forum. Willie Green, A. Pole, Sarcasm,...screw it the list is too extensive!

Doesn't someone have a ping list for these people?

[ServesURight]

DO NOT BUY or USE non-American products.

It's not that simple. Even products made here in America have parts that were assembled or made by foreigners. And there are a lot of foreign companies that do business here in America, employing Americans.

[angkor]

DO NOT BUY or USE non-American products.

I closed my Amex account of 20 years due to their annoying Bangalore customer service outsourcing.

And I told them why.

Every month like clockwork they send a letter saying "please reopen you account", which goes straight to the shredder.

[hotpotato]

Doesn't someone have a ping list for these people?

Not me :-)

[goresalooza]

Correct....plus Dobbs is only towing the DNC/CNN corporate party line. He is never positive about any economic news lately, unlike several other news outlets which actually have the guts to tell both sides, good and bad, in economic news. Dobbs is all typical gloom-and-doom leftist hogwash. It will never be as good for him until a dem is in the White House and taxes are higher, unemployment thru the roof and then they can blame anyone but the dems.

[hotpotato]

Protectionists and conservatives/republicans seem odd bedfellows to me.

[jpsb]

Do bad a brain didn't come with that mouth of yours.

[steplock]

"It's not that simple"

Nope, it isn't. Was our Revolution against GB simple?
Is surgery to remove a brain tumor simple?

Just because something is going to take a little effort and forethought, Americans will simply say, "Awww, never mind." As you demonstrated.

THAT is why we outsource. Who cares? The "Nanny State" will give us our pitance to survive....


Maybe.

[syriacus]

he has suddenly become a table-thumping protectionist.

I agree.

I think he feels he has found a phantom-juggernaut he can use to flatten President Bush in the minds of superstitious people. (It's all George Bush's fault that he hasn't kept jobs here.[/sarcasm]) At the same time, I'm waiting for Dobbs and Senator Schumer to explain their workable "solutions" to the "problem."

This morning, "Chucken Little" Schumer was saying it could take 30 years for salaries in countries like India to get high enough so that their workers lost their competitive edge to the US workers. He fails to explain that he is saying (on the flip-side) that Americans will continue to receive comparitively high salaries for three more decades. He would like us to imagine we will be homeless and starving for several decades.

---

Dobbs's website lists 250 "U.S. companies… sending American jobs overseas," as if they were wanted criminals.

If Dobbs were Jesse Jackson, I'd bet he'd be asking the companies to give him money to prove they had "good hearts."

[Mr. Mojo]

He is never positive about any economic news lately,

Nonsense. I've heard Lou say several times recently that most econonmic indicators suggest that the economy is "on fire." ....And he's been very upbeat about the direction of the stock market.

Dobbs is only towing the DNC/CNN corporate party line

More nonsense. Since when does the "DNC/CNN corporate party line" advocate placing the military at our borders and deporting illegal aliens? Yet this is precisely what Lou has being doing for a long time now, far before the election season began. It's one of his two main topics of discussion. The other one, of course, is outsourcing. He's dead against it, as are countless other conservatives.

[steplock]

If a product that does not say

MADE in the USA

Don't buy it.

But I like cheap goods! I like tasteless fruit in wintertime! I like fresh vegetables that carriy e-coli from human excrememnt!

What more can I say.....

[syriacus]

He is never positive about any economic news lately

He is becoming a joke.

[contessa machiaveli]

maybe you don't worry about your job being outsourced but many americans do. and don't give me the MS about retraining for the "new economy"....in what sector are those jobs? cashiers at walmart? food servers and preparers at macdonalds?
i'm not worried about my husbands' job or mine...quite frankly we're doing fine. however, i do have some compassion for other folks and also what our country is going to be in another 20 years. i'm willing to take a little hit on my 401K if we can keep americans working and not wards of the federal government.

[lelio]

Or imagine if Japan retaliated by taking its plants home. With 13,000 workers, Honda is the largest private employer in central Ohio.

Of course they can do that in theory, but there's no way they would do that as they are making a lot of money.

As for India, outsourcing helps lift a nation out of poverty and creates markets for U.S. goods and services.

Like what? They'll just buy the goods direct from China, and as for services they're doing ours.

Would we be better off with 30 million more farmers? It's our labor flexibility that has helped the U.S. boom.

Farm employment is down mainly due to technical innovations, funded by US R&D. That's the creative destruction part of it: the increase in higher pay and higher productivity jobs in food science "destroyed" the farm jobs. Companies like Monsanto grew. Where's the constructive part in sending jobs overseas as they'll work for less than a dollar an hour?

[keysguy]

I'm not sure I see it that way. If that's the case how do you explain his stand on the border. Most Dems want open borders for the Mex vote.