Posted on 07/24/2003 10:04:50 AM PDT by Willie Green
For education and discussion only. Not for commercial use.
What a bit of propitious timing. The day after this paper runs a column about the long-term economic hazards of outsourcing American jobs overseas come revelations that IBM executives want to accelerate the shift of white-collar jobs to India, China and elsewhere.
Just doin' my job, ma'am.
But the alarm-sounding is hardly limited to inconsequential industries like technology. Now we read, courtesy of The Associated Press, of a new threat to a long-established American production industry from lower-cost sources from China:
Garlic.
According to the AP dispatch, California garlic growers are replacing their own production with imports from China. "If you look at history, people always go for the least expensive price," said one grower.
Not everyone among the three dozen readers who wrote in about the column was concerned. One reader sniffed (if it's possible to do that in an e-mail), that such writing "panders to two weaknesses of the American consumer -- xenophobia and economic ignorance."
His contention is that overseas manufacturing "creates new jobs in areas such as shipping, trucking, railroads, freight-forwarding, to say nothing off the supporting legal and accounting professions." He adds that "every American potentially benefits if U.S. companies reduce their costs by manufacturing overseas. Companies either lower their prices to consumers or the cost savings result in higher earnings and higher share prices. In the latter case, investors and retirees benefit through the increased value of their investments and retirement savings."
Well, no, wrong, uh-uh -- and thanks for writing.
Many of those transport jobs already existed. American-made goods didn't, to borrow a term from "Harry Potter," magically apparate from assembly line to store shelf. And as we've explained before, those support jobs will, over time, migrate to where the work is actually done.
Also as we've explained before, yes there are benefits to cost cutting -- short-term cost benefits. But there are also very real long-term costs. Those investors and retirees, for example, hoping to sell their stocks -- good luck fetching the gains they're counting on when they're trying to sell their stocks to a generation whose purchasing power and wealth-building ability has been cut by the drain of better-paying jobs.
Another e-mailer in the "don't worry, be happy" camp suggested that the only thing that matters is supply and demand. No kidding -- and when companies find that American demand for the goods they're trying to supply has evaporated because people can't afford them, no one is likely to be happy with the outcome.
Some people got it. One Boeing worker (where employee-rank concern over this issue appears most acute) cited quality guru Edwards Deming's assertion that "businesses that resort to laying off workers or off-loading to the lowest bidder is a form of crisis management" -- in order to make some money for the short term. But this is not a successful way to run a business and according to Deming, such acts will only prolong their troubles and eventually kill the company completely.
And weaken an economy, to boot.
Look, for the umpteenth time, here is why this stuff matters: Outsourcing jobs, particularly overseas, means a loss not only of the immediate job but starts the erosion of support jobs. It chokes the source of product and production innovation, and transfers technology to others who will develop their own next-generation entrepreneurs, products, companies and industries.
Listen further: Concern about outsourcing and the export of jobs is not the same as a call for protectionism, a planned economy and the preservation of every job. If there were no other country outside our borders, we'd still be losing jobs every day.
Companies screw up and are beaten by competitors. New technology makes old products obsolete. Consumer tastes change.
But the jobs to replace those lost jobs do not, to use that word again, apparate out of thin air. They need a base, an economic heritage, from which to grow. Export that base, whether it's farming, manufacturing, technology or services, and ... And what you've got is a situation in which people will either do nothing or a whole lot of the wrong thing (see entry above on economy, planned).
Faulting people for being worried about this issue is fine, but if you do at least get the sin right. It's not a matter of xenophobia or economic ignorance. It's self-interest.
P-I reporter Bill Virgin can be reached at 206-448-8319 or billvirgin@seattlepi.com.
His column appears Tuesdays and Thursdays.
"But, in general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade."
~ Karl Marx, On the Question of Free Trade, January 9, 1848
I agree with taht when it comes to government regulation and excessive taxation.
However, there is a certain fashion concisciosness that is driving much of the current outsourcing. It fits the business model so logic and laws be damned.
Clearly we need to do teh following:
1. Get rid of OPIC which provides a taxpayer subsidy for offshoring.
2. Adopt a trade policy that promotes American competitiveness. There should be no tariffs on American goods and services going overseas.
3. Enage nations that have capital controls in place to develop their local economies to get those controls removed. Tariffs are the Constitutional alternative to these nations not removing these Capital controls.
4. Those nations which maintain tariffs against American products must face retaliatory tariffs.
5. Those nations which subsidize industries to compete witrh American Industries should be faced with tariffs.
6. Those nations which maintain an artifical currency peg to the US dollar that makes their products less expensive in dollar terms and american products more expensive in dollar terms should also face tariffs.
7. Strictly enforce our immigration laws. if this means a whole bunch of H1-B visa people are terminated tommorrow so be it.
8. Provide enterprise zones where capital investment in America is free from corporate income tax for their produicts produced in America by Americans.
These steps will be a start.
Yes..make the zone the entire USA.
As a man's home is his castle, so too is the home of a nation no home unless it mainatains its borders. A castle, more than any other building is a image of impregnable walls and a staunch defense against intrusion.
So when we employ the simple common-sense, individual rights upholding, wisdom of "A man's home is his castle" to our natiopn today, we see that we are in deep doo-doo. Our guard is down, the walls are rubble and there is a trojan horse in every corner with a Made in China label on it.
If you have been following my posts on the subject you would realize that I view the offshore outsourcing of Steel, Textiles Furniture and many other industries to be against the interests of the USA. I deo not have any argument with you on this.
Despite the common 'overhead' that you cited, there is not a level playing field between and among the states. For decades (centuries?) there has been a massive, coerced, and sustained transfer of wealth from states such as Connecticut, New York, Pennsylvania, et al, to the states of the West and the South. Along with massive coreced tax subsidies for industries such as giant agribusiness and oil exploration, which are concentrated in the West and the South. As a Connecticut resident, my life has been plagued by high taxes and lower real wages as a direct result of free trade with the states of the South and the West. Should I not care about that simply because some of the burdens of the federal government are shared between those states?
Article I, Section 8. The Congress shall have power to...
To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;
Article I, Section 9....
...No tax or duty shall be laid on articles exported from any state.
...No preference shall be given by any regulation of commerce or revenue to the ports of one state over those of another: nor shall vessels bound to, or from, one state, be obliged to enter, clear or pay duties in another.
Article I, Section 10.
...No state shall, without the consent of the Congress, lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing it's inspection laws: and the net produce of all duties and imposts, laid by any state on imports or exports, shall be for the use of the treasury of the United States; and all such laws shall be subject to the revision and control of the Congress.
One key element is missing. For people making the decisions it can be a very rational and lucrative. For example the predatory CEO will become a hero for improving the short term bottom line and will retire rich with a golden parachute before the company goes belly up.
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