Jewish World Review April 27, 2004 / 6 Iyar, 5764
Outsourcing the jobs debate
The issue of whether U.S. multinationals will continue to export American jobs to cheap overseas labor markets is critical to the well-being of millions of working Americans, and I believe to the future health of our economy and society.
Advocates of unbridled free trade first defended the practice of shipping American jobs offshore by saying the practice wasn't widespread and that few jobs were lost to outsourcing abroad. But the University of California at Berkley last fall revealed that as many as 14 million American jobs are potentially at risk over the next decade. Then the advocates of exporting America claimed that outsourced jobs would be replaced by high-value jobs. Instead the economy has lost millions of jobs.
The Bush administration, corporate America, business groups and their surrogate think tanks contend that corporate America must be able to kill American jobs and move them to cheap foreign labor markets in order to be more productive, more competitive and even more innovative.
How competitive are our great American multinationals in the global marketplace? We now have a half-trillion dollar trade deficit, and our surplus in services is falling like an anvil - one most likely not manufactured in the United States. We're exporting jobs senselessly and importing debt held by foreigners that now amounts to $3 trillion - and is rising fast.
Outsourcing advocates, including many in the Bush administration, are trying to change the language of the debate, and they've introduced a new term: insourcing. They now claim that the jobs created here by foreign companies counterbalance those outsourced to cheap foreign labor markets by American corporations.
The White House cites the 6.4 million Americans employed by foreign firms in the United States as evidence that jobs lost to outsourcing are offset by what they now call insourcing. But even by this seriously flawed standard, outsourced American jobs outnumber those "insourced" by nearly 4 million. And this is only a small part of the whole outsourcing versus insourcing issue.
Former Assistant Treasury Secretary Paul Craig Roberts says: "This notion of insourcing is a propaganda device. What they're calling insourcing is nothing but standard foreign investment."
Foreign automakers are among the largest so-called "insourcers." Many non-U.S. auto manufacturers have plants employing workers here in America. These plants, however, were simply a way around import quotas set up by the Reagan administration. Rather than accept restrictions on the number of vehicles that they could import into the U.S. market, automakers like Toyota and Honda opened plants in America to ensure access to American consumers. The investment was certainly worthwhile. The United States now has an enormous $11 trillion economy. And Toyota now makes a third of its profits from U.S. car sales.
Insourcing also consists of foreign companies purchasing previously established U.S. assets. According to the Economic Policy Institute, most U.S. investment by foreign companies is the acquisition of already-existing American companies. As a result, just 6.2 percent of the job growth by foreign firms in America is in newly created jobs. Roberts says, "It concerns me that we receive so little direct foreign investment in the form of new plant and equipment."
Foreign investment into all aspects of the U.S. economy is on the rise. Nearly half of U.S. Treasury bonds are now owned in Asia. We are quite simply, as never before, dependent on foreign capital to sustain our appetite for imports and our exploding private national and trade debt.
Outsourcing definitely robs Americans of jobs, but it also compounds this already out-of-control imbalance of trade. Foreign companies with operations in America generally sell products manufactured here to American consumers. But U.S. companies, which outsource jobs to cheap overseas labor markets, then re-enter the goods and services they produce into the U.S. market. As a result of these trends, the U.S. current account deficit hit a new record of more than half a trillion dollars.
The debate over outsourcing American jobs to cheap overseas labor markets is sure to become more pointed, and I hope more honest as the November presidential election approaches.
Every weekday JewishWorldReview.com publishes what many in Washington
and in the media consider "must reading." Sign up for the daily JWR update. It's free. Just click here.
Lou Dobbs is the anchor and managing editor of CNN's "Lou Dobbs Moneyline." Comment by clicking here.
04/20/04: Revisiting the final frontier
04/11/04: The source of terror
03/22/04: Our new consumer economy
03/15/04: Finding a balance between free trade and protecting our national interest
03/09/04: Choice between Bush and Kerry isn't much of a choice
03/02/04: Election stakes are getting higher
02/24/04: Help wanted: Free trade policies hurt working Americans
02/17/04: All the news that's fit
02/04/04: American jobs must be protected
01/03/04: Dangerously dependent
01/27/04: Who's working for working Americans?
01/20/04: U.S. selling itself short with "free" trade
01/12/04: Bush on the wrong track with immigration idea
01/05/04: Business leaders should resolve to lead by example in 2004
12/29/03: Immigration needs stricter, not looser, controls
12/11/03: Trade deficit with China a big problem
12/09/03: Let our children be children
12/01/03: Broken borders pose a serious health risk
11/25/03: Free trade costs plenty
11/18/03: European Union is playing a dangerous game
11/10/03: This time, it's not the economy
11/04/03: Overseas outsourcing is an alarming trend
10/28/03: Spending so much time 'making a living', we don't live
10/21/03: As population soars, U.S. faces tough choices
10/14/03: Schools need to re-emphasize math and science
10/07/03: It's lonely at the top
09/30/03: Is America over-medicating?
09/23/03: Corporate execs need to stop selling out U.S. workers
09/16/03: The scandals just keep on coming
09/09/03: Let's get real on energy
09/02/03: Is free enterprise the answer to education woes?
08/26/03: Building the road to recovery
08/12/03: War on drugs is still a war worth fighting
08/06/03: An attack on progressive thought
07/29/03: Prosperity begins at home
07/22/03: Real earnings, or really creative earnings?
07/15/03: Flirting with disaster
07/08/03: It's good to be the king
07/01/03: Border disorder
06/24/03: Prairie dogs and mosquito bogs
06/17/03: Bullish on America
06/10/03: Retirement realities: we need new solutions soon
06/03/03: Curing what ails us
05/27/03: America's export problem
05/21/03: Wall Street's new imperative: Integrity
/13/03: Losing sight of the dangers in creating further fiscal stimulus
05/06/03: Optimism is unfashionable, but here's some anyway
04/29/03: Nuclear nightmare
04/22/03: Naysayers ignore signs of economic recovery
04/15/03: Game over--but for whom?
04/08/03: No more fool's games
03/31/03: United States must seriously review foreign economic and political relationships
03/24/03: Delusional Chirac may be a thorn in coalition's side, but new alliances are forming in response to 21st-Century threats without him and UN
03/18/03: Bush critics offer little more than hyperbole
03/11/03: Geopolitical visibility
03/04/03: Freedom: Our best export
02/27/03: Guns, butter and greasing the way
02/18/03: Looking for a silver lining
02/10/03: Space program remains a valuable investment
02/04/03: Hi pal, come back
01/28/03: Bush address a chance to bolster confidence
01/22/03: Here we go again!
01/14/03: Bush's bold bid
01/07/03: The only thing certain is uncertainty
12/30/02: No need to be so negative as new year approaches
12/23/02: NY's AG deserves credit for settlement
12/18/02: Critics of Bush nominees should tone down rhetoric
12/09/02: A lot rides on prez's Treasury pick
12/04/02: A fast fix for corporate credibility?
11/26/02: Urge to merge is hard to resist
11/19/02: Are we really so bad off?
11/12/02: Bush's lucky week bodes well for recovery
11/05/02: Wall Street firms treat investors as fools
10/29/02: Earnings estimates offer some hope
10/22/02: Economy's strength tied to national security
10/17/02: Harvey Pitt, get real!
10/08/02:Are we experiencing the fall before the rise?
10/01/02: Concerns about earnings are justified
09/24/02: Business leaders must abandon stall tactics
09/17/02: Wall Street's reality check
There's no better time for leaders to show resolve
© 2003, TMS