LSA freshman Justin Cuellar says curtailing job outsourcing tops
his list of economic reasons for supporting Democratic presidential
candidate John Kerry. “Jobs are going overseas with Bush, and
I think less would go overseas with Kerry.”

According to a Zogby International poll released last month, 71
percent of Americans believe outsourcing is bad for the U.S.
economy.

But economists say the idea that Kerry can alter the tides of
the global economy may be one of the most pervasive misconceptions
in this presidential campaign. For all the attention given to job
outsourcing this election year, most economists maintain that it is
an inevitable part of global trade and a relatively small factor in
the economy and in the loss of jobs.

“When you think of all the other problems the economy is
facing, (outsourcing) has gotten attention out of all proportion to
its significance,” said Gary Saxonhouse, a University
economics professor.

Saxonhouse cited recent reports by the General Accounting Office
and Department of Labor, which found in a survey of 2003 mass
layoffs that only 13,000 job losses — less than 1 percent of
the 1.5 million lost in layoffs of more than 50 workers —
were due to offshore relocation.

“While it’s extremely painful for the 15,000 people
who, in a year, might lose their jobs to a company moving its
operations overseas, it’s not an important economic issue for
the economy as a whole,” Saxonhouse said. “Probably any
economist that doesn’t work for a union has a similar
view.”

But if Kerry’s economic team and economic plan are
substantively almost identical to Clinton’s, his campaign
rhetoric on trade has been nearly the opposite.

While Clinton routinely expounded on the benefits and potential
of free global trade, Kerry has slammed “Benedict Arnold
CEOs” for exporting jobs and repeatedly stresses his plan to
eliminate tax breaks for companies that move their operations
overseas. The issue is rarely mentioned by Bush and other
Republicans.

Despite all the emphasis Kerry has given his plan on the
campaign trail, however, economists say — and even the Kerry
campaign concedes — that it would do little to curb job
outsourcing.

When asked in a television interview last month whether
Kerry’s proposals would stop outsourcing, Rubin said;
“No, I think that outsourcing is part of a much larger issue.
It’s part of trade liberalization, and trade liberalization
… is very much beneficial to our economic
well-being.”

“Kerry is not against outsourcing,” Kerry
spokeswoman Stephanie Cutter told the Associated Press in August.
“It’s not about whether outsourcing should or should
not happen, but the federal government should not encourage
that.”

When American operations are moved overseas, the reasons are
typically lower labor costs and proximity to foreign markets, both
of which contribute to more efficient production. Tax savings,
economists say, are a relatively minor factor in those
decisions.

And, Saxonhouse noted, sometimes operations are outsourced for
reasons that have nothing to do with low wages. When Kraft Foods
Inc. moved its Life Savers candy plant and its 600 jobs from
Holland, Mich., to Canada in 2002, it cited high American sugar
prices — that ironically was a byproduct of agricultural
tariffs and subsidies designed to protect domestic sugar
manufacturers.

Saxonhouse suggested that Democratic politicians are willfully
exaggerating the issue of job outsourcing for electoral gain.

“Twenty years ago there used to be a lot of discussion
from the right about people abusing the welfare system —
people on welfare driving Cadillacs,” he said. “The
number of people who might have done that was extremely small, and
the idea that people were living fat and happy on welfare was just
a gross exaggeration. … Unfortunately much the same can be
said about outsourcing.”

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