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Exporting American Jobs

MGV Staff Report

There is no doubt that an increasing number of U.S. firms are shifting production and service jobs overseas. Most of these jobs are out-sourced to countries, like China and India, with cheap labor markets where it costs American firms a fraction of what it costs back home to make the same products.

Is this a sign of the waxing strength of a new global economic system under American leadership, or is the U.S. economy in danger of losing its dominant position with these other economies?

Depends on whom you ask. Corporate America whose profits are increased by the practice sees it as ultimately beneficial not only to the corporations but for the competitive advantage of the U.S. economy.

The U.S. government has a similar understanding. The Bush administration sees the job situation from the broader perspective of a free trade policy. Faced with pressures from segments of the American public and critical political rivals, the administration has presented a consistent defense of both free trade and out-sourcing. About 3 million jobs have been lost since the Bush administration took office in 2001. The administration freely admits that some of the job losses (about 15 per cent) are caused by U.S. companies moving jobs overseas, but insists its goal is to do what is best overall for the nation's economy.

In an address to the Detroit Economic Club earlier this year in March, White House economic adviser, Stephen Friedman was quoted by Reuters as saying that despite job losses to oversea markets, free trade remains the best formula for economic growth in America.

Critics of government policy and corporate behavior in America see it differently. They argue that it is because of generous government incentives and U.S. involvement in WTO and other international trade agreements that corporations find it easier to export jobs overseas. Such government policies and unpatriotic corporate behavior weaken the economy and may lower American standard of living, the critics argue.

Defenders of Corporate America blame over-regulation and tough government standards for why many companies must move some of their production overseas to remain competitive. In their view, unemployment and outsourcing of American jobs are the results of the high cost of American labor brought on by stringent environmental and workplace safety standards, licensing requirements and tax codes. Even conservative critics of American social policy have found fresh fodder here; they blame "invasive affirmative action and equal employment standards" for part of the reasons driving American companies into foreign labor markets.

The number of U.S. corporations involved in job out-sourcing is just under 700 including some of biggest and best known companies, according to CNN's Lou Dobbs' ongoing tabulation of corporate exporters of American jobs. Even that number may suggest that the problem has reached crisis proportions. But how true can that be?

Globalization has other economic and political benefits for America. What has happened is that some of these economies are moving up due to good planning (China) and well husbanded manpower (India). They are making inroads in terms of quality of products and services that they can provide and their prices are well below what can be had in the United States. American industry and consumers are taking advantage situation. It is all part of the new world order of globalization.

A lot of sober Americans are bothered that the issue is becoming too political while the United States may not be meeting the challenge posed by the situation.

Senator Ernest "Fritz" Hollings (D-SC) believes the U.S. Congress is as guilty as the Bush administration for failing to take the necessary measures to protect U.S. economic interests by letting the job out-sourcing situation reach the current stage. He likened the situation to a state of war. "Let me tell you, fair and square, we are in a trade war," he said. The Senator wants Congress to "start working out a good jobs policy." He recommends government stop funding firms that move jobs overseas, not let such firm retain their profits made overseas and begin to tax them. Profits from oversea operations of these firms should be payed out to manufacturers that use domestic labor. The senator also wants to see more money put into customs to provide for more officers and more effective anti-dumping law enforcement. He wants to see the U.S. get tougher with international trade organizations like the WTO; get them to go along with U.S. policy or quit.