Exporting Jobs

Capitalism Magazine ^ | August 19, 2003 | Walter Williams

[luckydevi]

Exporting Jobs by Walter Williams (August 19, 2003)

Summary: It'd make far more sense for Americans to start attacking the real sources that have contributed to making foreign operations more attractive to those at home. It's more effective than caving to the rhetoric of leftist and rightist interventionists who mislead us with slogans like, "How can any American worker compete with workers paid one and two dollars an hour?" when in reality our real competition is mostly with European workers earning a lot more.

[www.CapitalismMagazine.com]

Among George Orwell's insightful observations, there's one very worthy of attention: "But if thought corrupts language, language can also corrupt thought." Let's look at a few examples of corrupted language, thought and information.

Pretend you're a customs inspection agent. There's a cargo container awaiting a ship bound for foreign shores. You ask the shipper, who works for a big corporation, what's in the container. He answers, "It's a couple of thousand jobs that we're exporting overseas to a low-wage country."

What questions might you ask? How about, "What kind of jobs are in the container?" or, "Are they America's high-paying jobs?" Most people would probably say: "You're an idiot! You can't bundle up jobs and ship them overseas!"

A job is not a good or service; it can't be imported or exported. A job is an action, an act of doing a task. The next time a right- or left-wing politician or union leader talks about exporting jobs overseas, maybe we should ask him whether he thinks Congress should enact a law mandating U.S. Customs Service seizure of shipping containers filled with American jobs.

Let's turn to the next part of the exporting jobs nonsense, namely that corporations are driven solely by the prospect of low wages. Let's begin with a question: Is the bulk of U.S. corporation overseas investment, and hence employment of foreigners, in high-wage countries, or is it in low-wage countries?

The statistics for 1996 are: Out of total direct U.S. overseas investment of $796 billion, nearly $400 billion was made in Europe (England received 18 percent of it), next was Canada ($91 billion), then Asia ($140 billion), Middle East ($9 billion) and Africa ($7.6 billion). Foreign employment by U.S. corporations exhibited a similar pattern, with most workers hired in high-wage countries such as England, Germany and the Netherlands. Far fewer workers were hired in low-wage countries such as Thailand, Colombia and Philippines, the exception being Mexico.

The facts give a different story from the one we hear from the left-wing and right-wing anti-free trade movement. These demagogues would have us believe that U.S. corporations are rushing to exploit the cheap labor in places like the Democratic Republic of the Congo, Rwanda and Ethiopia. Surely with average wages in these countries as low as $10 per month, it would be a darn sight cheaper than locating in England, Germany and Canada, where average wages respectively are: $12, $17 and $16 an hour.

Let's look at a few of the reasons why some U.S. corporations choose to carry their operations overseas. Much of it can be summed up in a phrase: less predatory government and the absence of tort-lawyer extortion. While foreign governments can't be held guiltless of predation, their forms of predation might be cheaper to deal with than those of our EEOC, OSHA, EPA and IRS. Plus, tort lawyer extortion and harassment in foreign countries is a tiny fraction of ours. With each tort lawyer extortion and expansion of predatory regulations at federal, state or local levels of government, foreign operations become more attractive to U.S. corporations. Free trade helps make those costs explicit. American workers are just about the most productive in the world -- however, our government and legal establishment have reduced that productive advantage.

It'd make far more sense for Americans to start attacking the real sources that have contributed to making foreign operations more attractive to those at home. It's more effective than caving to the rhetoric of leftist and rightist interventionists who mislead us with slogans like, "How can any American worker compete with workers paid one and two dollars an hour?" when in reality our real competition is mostly with European workers earning a lot more.

[thtr]

Pretend you're a customs inspection agent. There's a cargo container awaiting a ship bound for foreign shores. You ask the shipper, who works for a big corporation, what's in the container. He answers; "It's millions of service requests from American IT companies. There are also lots of x-rays to be diagnosed, engineering projects to be designed and implemented and a heavy load of blank discs that need to be filled with just about every imaginable bit of code”.

But then the shipper says; “Don’t worry; you see that container over there? That just came in from India. It is filled with profits”.

[jpsb]

Your wit and logic escape me. Enjoy your progressive income tax.

[thtr]

Your wit and logic escape me. Enjoy your progressive income tax.

Do you really think that outsourcing will somehow eliminate the progressive income tax? Now that logic escapes me.

[ARCADIA]

Free trade helps make those costs explicit. American workers are just about the most productive in the world -- however, our government and legal establishment have reduced that productive advantage.

This is so wrong it is intellectually disgusting. Free trade serves to hide the true cost of a bad policy. If our economy were self contained everyone of us would immediately feel the cost of frivolous litigation. We would see prices rise within days of the passage of every overbearing piece of legislation. We would be forced to reform and streamline our society if we wanted to maximize our collective benefit.

Our’s is a society where you can destroy our industrial base, pass reckless legislation, unleash hordes of predatory scum, and seemingly do so while becoming ever more efficient and productive. Our entire economy is a fraud, a thin facade behind which a select few can enrich themselves on the festering carcass of a once great economy.

[ninenot]

I think Williams makes excellent points about taxation, regulation, and PI lawyers.

But the stats about "foreign investment" are faulty, at least regarding Red China.

We don't invest over there, because CHINA builds the plants, CHINA buys the machines. All we do is hire the labor.

[ARCADIA]

Just to be clear, I agree entirely with your ideas. Your points are very well stated.

[superloser]

Many of those strippers make more than $1000 in an evening, even at the "low-life" clubs.

I knew many when I was in college; would occasionally pop by the place they worked at for cheap food. They got a chance to sit down for a bit.

Its interesting talking to them about how they work the room, how they keep the regulars coming, etc. This is true unbridled capitalism on the hoof.

[raybbr]

...would have us believe that U.S. corporations are rushing to exploit the cheap labor in places like the Democratic Republic of the Congo, Rwanda and Ethiopia. Surely with average wages in these countries as low as $10 per month, it would be a darn sight cheaper than locating in England, Germany and Canada, where average wages respectively are: $12, $17 and $16 an hour.

This is what bothers him the most. That Americans want to live decently with a good wage.

[Tokhtamish]

"Libertarians don't understand that their is such a thing as a community. And a community has a moral character for good or for ill. "

Well put, Comrad!

Was that by some chance meant to be intelligent ? Are you so devoid of real world common sense that you can't see that there are such real world things as "good neighborhoods" and "bad neighborhoods" and the difference is not in property values ?

How libertarian.

[Tokhtamish]

How many of those girls understand that they can't keep doing this for long ? That the money is easy and plentiful while they are young and beautiful but there are always plenty of younger girls and the only place to go is down ?

Did any of those girls have a Plan B ?

[Tokhtamish]

Fascinating how the libertarian/WSJ editorial page brain is incapable of grasping that where labor is cheap, life is cheap and flesh is cheap. Fascinating how the libertarian brain is incapable of grasping that deindustrialization and the consequent downward social mobility of former low-semi skilled workers means a steadily expanding underclass, a greater expansion of underclass values. And that is the idiocy of libertarianism. The incapacity to understand that policies have results that cannot be measured in just dollars and cents. The utter indifference to "quality of life" considerations.

[warchild9]

Watch for the destruction of the American Middle Class. Watch for a growing criminal underclass. Watch for signs of national weakness: an inability to protect our borders, a growing credibility gap between the classes (both economic and political), watch for the U.S. to lose its next real war (and I'm not talking about fighting Third World, sixth-class countries like Afghanistan and Iraq). All these things have happened to past large countries on the decline in history, and there's no reason for us to be any different.

[Texas_Dawg]

Watch for the destruction of the American Middle Class. Watch for a growing criminal underclass. Watch for signs of national weakness: an inability to protect our borders, a growing credibility gap between the classes (both economic and political), watch for the U.S. to lose its next real war (and I'm not talking about fighting Third World, sixth-class countries like Afghanistan and Iraq). All these things have happened to past large countries on the decline in history, and there's no reason for us to be any different.

OK. Check.

I've been watching for 15 years or more (back to the days of the "Japan is going to conquer us and destroy our middle class" days). But, hey, keep me posted. Thanks.

[harpseal]

Just to be clear, I agree entirely with your ideas. Your points are very well stated.Then please communicate this plan to everyone you know and ask them to contact every politician with it. i do not give a rat's butt about any credit I want results we can get results if enough people demand this plan be enacted.

[warchild9]

Ah, I should point out that:
1. Japan was never the highest holder of U.S. public debt (China now is);
2. Japan never had nuclear weapons poointed at us, nor had they any military designs on their surrounding territory;
3. Japan has never been a COMMUNIST DICTATORSHIP (hello! remember the Soviet Union? Communism is our enemie's ideology!)
4. We've NEVER been a net exporter of capitol to Japan (ever, and my present PhD dissertation covers this in part);
5. Japan has never spied on us, overtly bribed our public officials, nor has our national security been compromised with the wholesale transferring of our industry to Japan (as opposed to a slave state).
I'm sorry, Mr. Bot, we're in deep s**t, and no amount of W worship is going to change things.

[dixie sass]

It could be said that we, the consumer are "buying" the jobs everytime we purchase something at a reasonable cost or even the stockholder who wants to make higher dividends.

[warchild9]

capitol = capital. I know the difference.

[Texas_Dawg]

Ah, I should point out that: 1. Japan was never the highest holder of U.S. public debt (China now is); 2. Japan never had nuclear weapons poointed at us, nor had they any military designs on their surrounding territory; 3. Japan has never been a COMMUNIST DICTATORSHIP (hello! remember the Soviet Union? Communism is our enemie's ideology!) 4. We've NEVER been a net exporter of capitol to Japan (ever, and my present PhD dissertation covers this in part); 5. Japan has never spied on us, overtly bribed our public officials, nor has our national security been compromised with the wholesale transferring of our industry to Japan (as opposed to a slave state). I'm sorry, Mr. Bot, we're in deep s**t, and no amount of W worship is going to change things.

Ahhh, but your crowd's screams were just as loud and paranoid. You may end up being right someday in the future, but your cries of "Wolf!" have left the rest of the town ignoring for at least a few years. Why do you think Pat Buchanan can't even get 1% of the country to vote for him?

[warchild9]

Pat Buchanan can't get votes because he has all the tact of a roaring bulldozer. And, not occasionally, he comes across as an idiot. And television hates him (teevee is 100% of politics in this country).
I give us 15 years, at the outside, before the breakup starts. California will be first, then, hopefully, Southerners will get their snouts out of sports, face reality, and realize that they are a nation again.

[ARCADIA]

"It could be said that we, the consumer are "buying" the jobs everytime we purchase something at a reasonable cost or even the stockholder who wants to make higher dividends."

Just about anything "could be said". However, both our public, and our investors, are making decisions based on what they have been told. Our government is still reassuring them that everything is fine and that all alarmist are crackpots. I expect that they when they finally realize how far we have gone they will hang their elected officials, and change course immediately.