Outsourcing has been demonized
often by the Kerry campaign -- but does John Kerry know what
outsourcing really does for the economy?
Outsourcing, The Non-Issue
Issue of Election 2004
[July 13, 2004 evote.com]
founding, its campaigns for public office have featured a common
practice ubiquitous among all democracies—and quite an ugly and damaging
one to boot. That during campaign races, a period where each candidate
must distinguish himself from what may be a group of very similar office
seekers, certain issues or arguments get injected into the election that
may be incorrect, unimportant or misleading.
Although a particular
argument is invalid, candidates will often take advantage of the
public’s ignorance of the subject by pushing that issue to appear as the
best choice. Perception is reality; which can help especially if the
issue is easily “understood” and makes voters feel good.
An erroneous knee-jerk
explanation to a problem can often go further for a candidate than a
valid argument, especially one that damages rivals or requires long
pedagogic explanations to the electorate, many of whom do not have
enough interest, intelligence, education or time to understand complex
Indeed, candidates will
sometimes not even try to fully explain their support of a self-damaging
campaign issue, even when the world’s scholars strongly support their
side of the argument, because doing so either barely helps or makes
How Did “Honest
Abe” Get Elected?
In politics, honesty is often the worst policy for getting elected,
which partially explains why virtually all politicians are continually
mendacious. Trying to successfully explain to vacuous or disinterested
reporters or the masses the esoteric details of environmental or
biological science, economics, foreign policy, psychology, or social
science can be a very frustrating or impossible endeavor.
Quick and easily
understood “explanations” are often the ones most believed, especially
if it is heard first and seems to explain the problem clearly. And with
all the special-interest and lobbying groups feverishly marketing their
self-enhancing propaganda to the world’s ignorant reporters and media
outlets, knowing the truth about an issue can be almost impossible as
the journalists are often tricked into retelling misinformation.
Political correctness can
also block the truth from surfacing. Issues supported by erroneous
information can make choosing the best candidate for public office
almost impossible. And this campaign is no exception with the “issue” of
outsourcing, or American businesses hiring foreign employees for work
that could be done by the home team.
When Bush's chief economic advisor
laid it out plain about outsourcing, Bush sidestepped an
Good for Everyone, So Help Us, God.
If one is looking for a great example of how simple honesty, telling the
truth, has no business in politics, then just look at what happened
recently to poor Gregory Mankiw, President George W. Bush’s chief
economic advisor. He got burned for simply stating how economics works.
In response to a
question, he answered in the same way virtually every college economics
graduate (unless he spent the whole four years getting juiced), erudite
scholars of manifold disciplines, historian or Indian chief would
respond. That sending American jobs to foreign countries “is probably a
plus for the economy in the long run.”
Mankiw also reportedly
said recently “outsourcing is just a new way of doing international
trade…More things are tradable than were tradable in the past, and
that’s a good thing.”
Granted; some Americans
have been fired because some shoeless guy living in an insect-ridden mud
hut far away in a jungle is willing to work ten years for five bucks and
a raw fish. But the fact is the standard of living for all Americans
will improve because of that unfortunate fellow’s labor. And that fired
American will eventually find a more productive job, one which is more
efficient and better for both him and the U.S. economy.
Dean got a lot of mileage out of
'evil' outsourcing... not to mention offshoring.
Money Making Outsourcing an Issue
And in the meantime, because of that foreigner’s labor, the American can
go to a Wal-Mart and buy quality clothing for what amounts to a few cups
of coffee at Starbucks. And with low prices in American stores,
inflation is stifled, allowing for lower interest rates, lower cost for
borrowed money, and subsequently another boost to the U.S. economy.
But don’t tell that to
the myopic American unions who are quite satisfied in stifling American
business and other workers for their own selfish employment gains,
forcing companies to raise prices and lose business. Self-interested
unions then contribute campaign dollars to their local elected
representatives who are happy to sing the union song for votes and cash.
It can be quite hard for
elected officials to ignore the selfish pleas of people like Dave
Doolittle, a shop steward for the United Auto Workers, who recently
stepped up to a podium on Capitol Hill with a placard proclaiming, “Stop
Exporting American Jobs.” He spoke against Electrolux AG’s decision to
shut down its Greenville, Mich. refrigerator plant and head to Mexico.
And get this; the company Doolittle (a perfect name) chose to complain
about is not even American. It is headquartered abroad, so it has been
insourcing in America for years, taking jobs out of their own country. I
guess according to Doolittle this company can’t do anything right.
And to some it is quite
bothersome that relatively wealthy Americans need to find a scapegoat
and complain about the labor of some foreign folks who live in abject
poverty. For Christ’s sake, they need crumbs to live on too. And by the
way they will take those crumbs or dollars and then buy American
products, thereby generating jobs in the United States. As the dollars
and jobs are circulated, everyone benefits.
New—If What You Call New Is Thousands of Years Old
Need proof that outsourcing is good for the American worker? Just look
at history. For thousands of years countries have benefited from
engaging the best and most efficient workers for certain jobs, wherever
they may be, whomever they may work for. It just wasn’t called
outsourcing but is essentially the same economic principle.
Craftsmen around the
Mediterranean supplied the ancient Romans with products of all sorts,
and hundreds of years ago the Dutch took the wool grown in England and
supplied finished textiles to the British (with complaints from English
workers)--and all that has happened since then is great improvements to
the world’s standard of living, despite the continual spreading of
technical knowledge and capital throughout the world.
And the common perception
that globalization, an issue closely tied to outsourcing, is a new and
powerful force that is erasing national borders and linking the world in
an unprecedented web of trade and investments, is one of today’s
greatest economic myths. Globalization at today’s levels is NOT new.
By some measures, its
peak occurred about a century ago, making the 20th century’s retreat
from globalization a significant aspect of its economic history. In some
ways, only now is the planet’s economy becoming close to being as
connected as it was in the 19th century. Without many of today’s
restrictive laws, goods and labor on the great Clipper and steam ships
flowed more easily among countries.
Reich, the shortest guy in the
Clinton Administration, told the economic truth.
If You Are Good
At It, Do It.—If Not, Do Something Else
Americans must do what they do best and efficiently, such as working in
technology or industries with high capital costs—and poor foreign
countries must do what they do best, such as creating textiles or
working in businesses with low capital costs. All sides will benefit, as
it is not a zero sum game.
If a person is really
good at fixing cars, for example, but a lousy plumber, then for him to
work as a mechanic would be better for both him and the country. It
works similarly and profitably for all when expanded to business on the
world’s stage. It is called the “law of comparative advantage.”
Just hear the fiscally
liberal Robert Reich, who was labor secretary under President Bill
Clinton, put it in his own words to the New York Times, "Outsourcing
does not reduce the total number of jobs in America. If other countries
can do something cheaper, we ought to let them do it and concentrate on
what we can do best.”
And that is the economic
But for poor Mankiw to
state this truism, that outsourcing is probably a plus for the economy,
in an election year when jobs are an important issue, is unfortunately
just dumb politics. Democrats, and even a few Republicans, pounced on
him like a lioness on a gazelle. Republican Speaker of the House Dennis
Hastert, a staunch supporter of fellow GOP member George Bush, retorted,
“An economy suffers when jobs disappear.” Bush deftly side-stepped
Mankiw’s comment. So much for stating the truth.
Becomes an Issue Just In Time for E2K4
So how did outsourcing become an issue during the 2004 campaign when it
shouldn’t have? It all started with the economy.
After business began to
slow down from its feverish acme at the end of Clinton’s administration
in 2000 and the subsequent terrorist attacks, by 2003 the financial
gurus in New York and Boston skyscrapers were again buying stock and
talking about their companies making a profit. They were saying the
economy had rebounded and soon firms would start hiring more.
But with the stronger
economy the unemployment rate still hardly moved, so some academics
said, “don’t worry, companies will start hiring, but it will just be a
little later than predicted.” And this continued month after month as
companies showed little interest in increasing personnel expenses. As
2003 became 2004, with the economy still strong (except accelerated
hiring), stupid television charlatans and other “business journalists”
began to push the absurdity that somehow this job loss was permanent.
It was a knee-jerk
explanation for something they could not correctly explain. Some even
said it was the result of a new kind of economy where outsourcing would
permanently keep jobs in America from returning.
they looked at include corporations in California such as Oracle
Corporation of Redwood Shores that more than doubled its Indian staff to
4,200 since 2002; PeopleSoft Inc. in Pleasanton recently said it will
hire 1,000 more in India, tripling its numbers there by the end of 2004;
Hewlett-Packard Co., founded in Palo Alto, now has 8,000 Indian workers
and Cisco Systems Inc. of San Jose employs another 600.
Many of these television
charlatans were the same type of morons, hired not for their brains but
for their beauty, who said during the economically strong late 1990s
that America had also reached a new kind of economy, where significant
economic cycles were gone forever because of computer and internet
That business cycles were
gone forever despite the fact that economic downturns and upswings have
been occurring for thousands of years. It was just overpaid television
models saying stupid things, about subjects they are ignorant of, and
that has not changed. It was not based on science, but rather a
simple-minded knee-jerk reaction to short-term events.
outsourcing was blamed for poor American job creation was the internet
itself. Now the world seemed much smaller, as extreme amounts of
information were much easier to access and letters now flowed across
oceans in seconds. A guy with little more that a patch of grapes and a
barrel in France could now easily peddle his wine worldwide, with
up-to-date pictures and prices on American computer screens in seconds.
The internet made it
appear like outsourcing was more likely today, which in some
circumstances it probably is. But the fundamentals of outsourcing have
We're sure Teresa outsources both
the lawn and the laundry. How bad can outsourcing be?
Affects the Upper Castes
Outsourcing also became a particularly effective topic of discussion
because it packs a powerful new wallop. Concern for outsourcing spread
from the textile mills of North Carolina to the programming departments
of Silicon Valley. That is because it hits middle-and-upper income
employees, such as software engineers, telephone customer service
representatives, financial analysts and X-ray readers who had thought
they were immune to the great job exodus to China and Mexico that has
decimated blue collars since the early 1970s. These are folks who
thought they were safe in a global economy because they worked with
their minds, not with their paws.
complaints coming from the more educated classes, the brainless beauty
broadcast queens convinced some voters the stagnating unemployment rate,
despite the overall strong economy, was a result of companies hiring
foreign workers, which they have been doing for centuries when it was
not called outsourcing.
The politicians joined
with the union mouthpieces and television idiots and created an issue
out of nothing. Everyone needs a scapegoat. Everyone needs to blame
somebody for everything that is not perfect. Time magazine also got into
the act with a March 1, 2004 outsourcing cover story. A computer
magazine this year pictured the names and faces of dozens of tech
workers who were fired because of overseas workers, some of whom trained
those replacing them.
And with the media
increasingly talking about outsourcing, soon the people did too.
Recently Republican Sen. Charles E. Grassley of Iowa complained during a
hearing: "I don't have a single town meeting where something isn't
brought up about outsourcing."