Exporting jobs (Walter Williams)

Townhall.com ^ | 08/20/03 | Walter Williams

[Phantom Lord]

Exporting jobs

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.

[Phantom Lord]

Walter Williams is one of my few "must read" columnists.

[LiteKeeper]

SPOTREP

[harpseal]

A repost of the Walter Williams column from a day or so ago.

On or off this ping list let me know.

[harpseal]

The solution to the lower employment numbers eight months into the recovery (a new economic phenominon).

In no particular order of importance.

1. Get rid of government subsidies for offshore investment of US companies. OPIC is the first such program which should go but support of World Bank programs that subsidize the outflow of Capital would be another.

2. Use tariffs on those nations which are engaged in unfair trade practices such as currency manipulation (China and India for example), those nations which refuse to open their markets to US products (China for example with its 50% tariffs on US consumer goods and non tariff barriers), those nations that subsidize competition to American Industry (airbus for example) and those nations which have slave conditions for their workers.

3. Use tariffs and other means to prevent the relocation of jobs offshore that are essential to the national defense. If necessary take control of the company seeking to export vital technology or industry by means of eminent domain (No I do not like this last option and I will only defend its use as an absolute last resort like say in the case of rare earth magnets essential to smart bomb technology). Provide a hardened, widely distributed infrastructure to supply all that is needed for our military units and civil defense that can be continued to be deployed in the event of any military attack.

4. An immediate end to guest worker programs. If people wish to come to the USA to work and make a life let them immigrate according to the rules.

5 Provide economic development zones where the corporate income tax is zero for operations within these zones. In order to operate in this zone a company must agree to only purchase American components if available and employ only American citizens or legal immigrants in these operations. These economic development zones shall be eventually be expanded to include every bit of every state once the benefits are shown I would like them to be totally implemented immediately but I realize4 that may be overreaching.

6. Scale back unnecessary regulation including the tort system. Institute a cap on punitive damages, limits on class action suits, and limits on liability to the actual percentage of liability with no plaintiff able to collect if said plaintiff was involved in the commission of a felony at the time of the alleged tort or was more than 49% negligent in the alleged tort. Note that the loser in a frivolous lawsuit shall pay the attorney fees of the winner. There are many other regulatory structures that also need to be included that need to be included such as repealing the Family leave mandate, getting rid of OSHA etc.

7. Increase the domestic content in purchases by the Department of defense and give absolute preference in non-domestic content to proven allies of the USA over say the French or Germans. The only reason any content for DOD purchase may come from non US allies is that content is not available elsewhere and is essential.

8. Do not allow expense involved in moving operations overseas to be included in business expenses under the IRS code.

9. Prosecute for perjury anyone who has made a false statement in order to employ an H1B or L1 visa worker. I will be lenient on the actual perjurer if he/she was ordered to make this false statement and he/she provides testimony to aid in the conviction of the person ordering the perjury. Just because a person is a CEO does not give them a pass on criminal behavior.

10. Prosecute anyone who orders the transfer of vital defense technology or funds a R&D project that could be of use to our military overseas except to strong allies of the USA. Make the necessary enhancements to our espionage laws so that continued support or funding of any R&D in a nation whose government has threatened the USA is guilty of espionage. The UK and Australia come to mind as meeting these criteria for being eligible for transfer of technology first. There will be other nations and a gradation of what can be transferred to which specific nation. Under no circumstances may technology be transferred to any nation whose government has threatened the USA within five years without a complete change of government or specific exemption from Congress and the administration.

11. Deport all illegal aliens immediately and take measures that prevent the entry of any more illegal aliens. Fine all companies knowingly employing illegal aliens Criminal sanctions should be imposed on anyone helping an illegal alien stay in the USA in violation of our laws.

12. Decrease the punishing levels of taxation on companies and eliminate the double taxation on corporate dividends. See effects of item 5 for how minimal this will be if item 5 covers the entire USA. Eliminate all IRS provisions that inhibit free use of independent contractors by businesses for example section 1706.

13. Eliminate the minimum wage so that the worker can be paid based on productivity. Overtime compensation will remain the same but instead of 150% of the "wage" the worker would receive 150% of the production pay. If one through 13 are enacted # 14 becomes an irrelevancy as no one will be working for that low a wage

[RaceBannon]

Yes, but he is a moron who never worked in a factory, and he has never seen his former employer shut their doors and move to China or Mexico like I have.

I think this is what is the largest problem with these armchair economists who glorify free trade: They never had a real job except in a university or radio talk show.

[dirtboy]

Already posted (and shredded) here

[dennisw]

This idiocy was posted yesterday.

[expatpat]

The point he is making is that the real problem is the combination of tort lawyers and govt. regulations, and we should be attacking that. No reason to call him a moron.

[Servant of the Nine]

3. Use tariffs and other means to prevent the relocation of jobs offshore that are essential to the national defense. If necessary take control of the company seeking to export vital technology or industry by means of eminent domain....

This is the same whiney crap that protectionists have been giving out since the '50s (Steel) and '60s (auto production).
It was nonsense then, as proven by subsequent events, and it is nonsense now.

So9

[lewislynn]

No reason to call him a moron.

Actually it goes beyond this article. He also once said that a hurricane in Florida causing a shortage and price increases on plywood was good for the whole country.

He's a moron.

[Eric in the Ozarks]

Correct. Walter's simply saying it may make more sense to hang fenders and pound hubcaps on where the labor's a little cheaper.

[Phantom Lord]

I do not remember him saying the "good for the whole country" remark. I do remember him saying that a hurricane in Florida, causing a shortage of plywood in the area, thus prices going up was not a bad thing and the market at work. And that further, it would provide opportunity for people in areas with a plywood surplus to direct that plywood to Florida and make a nice profit. That is GOOD!

[rdb3]

Yes, but he is a moron who never worked in a factory, and he has never seen his former employer shut their doors and move to China or Mexico like I have.

Okay, so now Dr. Walter Williams is a "moron." From a conservative viewpoint, your post highlighted no thinking but did demonstrate emoting.

Dr. Williams is a moron. Whew. Alrighty then...

[taxed2death]

....so I guess Ronald Reagans "protectionist tariffs" against Japan to help Harley Davidson out of a bind was all nonsense.

Dimwit, Harley Davidson would not be around today if it weren't for tariffs.

[Phantom Lord]

If Harley Davidson would have produced a quality product that people wanted to buy instead of the crap that rolled out of the plant they wouldn't have needed tariffs.

[massadvj]

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 this is true, Williams misses the biggest reason. US firms carry out operations overseas in order to gain access to overseas markets. Therefore, they are more likely to set up in areas such as Europe, where the markets are attractive, as opposed to Africa, where labor is cheap. It's the same reason BMW and Toyota operate auto plants in the US. His bigger point that jobs are not being "exported" is right on the mark.

Thanks for a common sense post on the subject of trade barriers.

[DustyMoment]

Calling Walter Williams names isn't going to solve the problem. Currently, I am seeing a lot of my jobs (Technical Writer, IT, Call Center) being shipped off-shore to countries like India and Chile. These jobs are not likely to come back for several years (if ever) and place many qualified American prodessionals out of work.

The root cause of this is the globalization movement. The solution is the end the globalization movement. Third world countries got that way because they ceased to be competitive and allowed their economies to be hijacked by leftists who value power over progress.

[Gunslingr3]

In order to operate in this zone a company must agree to only purchase American components if available and employ only American citizens or legal immigrants in these operations. These economic development zones shall be eventually be expanded to include every bit of every state once the benefits are shown I would like them to be totally implemented immediately but I realize4 that may be overreaching.

Get lost, commie. I got a plan for you, quit making plans for the rest of us! I don't want your New Deal, I don't want your Five Year Plan, and I don't want your New Economic Plan.

[Marauder]

That we're protesting the right things against the wrong people I'm OK with that for now. So how do we change the overbearing fedgov regs and predatory tort lawyer phenomenon?

My guess is that as I've been saying and posting to everyone who'll sit still long enough to listen, is that (1) career politicians (and bureaucrats) are the enemies of liberty. They view their positions in congress as a source of power and money; (2) Tort lawyers are running rampant throught the courts enriching themselves, facilitated and encouraged by liberal judges appointed by the aforementioned career politicians, and have their way with "evil" business people.

I for one have no problem accepting the fact that career politicians are at the root of basically every difficulty that we have. Where I do have a problem is not what's wrong, but how to fix it. Term Limits is an answer, but expecting congress to enact this is pure fantasy, and the only real prayer we have is getting average America off its collective butt and out to cast an informed vote on each and every election day. If that's also fantasy, we're in trouble.

[Charles H. (The_r0nin)]

Behind the curtain of every "protectionist" is a little man who really doesn't believe in capitalism. You would think, after the beating that history has given it, that mercantilism would have been thoroughly discredited by now.

The fact is that, like the famous Franklin quote implies, there are a lot of people perfectly willing to give up their economic liberty for a little temporary safety. What the fools don't realize is that the safety engendered by mercantilism is very temporary. Ask the Japanese. Or, in twenty years, ask the Chinese, when their little experiment in "directed" economics has failed, too...