In typical pre-election-time fashion, the
pulse of the national economy has been wired to a hypersensitive
political heart-rate monitor. The slightest fluctuation of the Dow,
a bounce in the Consumer Price Index, a marginal hike in crude oil
futures — any economic hiccup — can immediately become
partisan mortar fire for the field guns of both contending parties.
And with disconcerting growth reports streaming from Washington and
whispers on Wall Street of a monetary slowdown, the president has
begun receiving his share of the shelling.
- Sam Singer
For closing his eyes to a pending transfer payment crisis,
allegedly neglecting Social Security and other pension programs in
lieu of more immediate discretionary spending, he has been called
shortsighted. For his part in accumulating what is in nominal terms
the largest budget deficit in this nation’s history, he has
been called a fiscal loose cannon. And for his short term stimulus
package, a consumer-friendly bundle of tax relief initiatives and
interest rate cuts, he has been labeled an economic chiropractor
— accused of squeezing the budget in order to bring fleeting
reprieve before November.
But of all the inside-the-Beltway name calling, no single
disparagement has spilled more presidential blood than the
Left’s most frequently launched pseudonym — the
“insensitive outsourcer.” You’ve heard it
everywhere. From the Sunday morning talk shows to the John Kerry
stump speeches, President Bush is sending jobs overseas by the
thousands, and middle-class America is paying the cost.
But does it really come as a surprise that this issue was so
eagerly politicized? Think about it, the logic is consistent,
evidence seemingly watertight and the impact — well, the
impact is heartrending. With a little help from the media, the
outsourcing debate has been transformed into a saga of the
modern-day labor struggle — a Michael Moore documentary
waiting to happen.
Spearheading the campaign is CNN commentator and self-proclaimed
guardian of the working class, Lou Dobbs. In his nightly
“Exporting America” diatribes, Dobbs tells a poignant
story of social dislocation at the hands of a free-trade-happy
White House. In a typical segment, Lou will fume over the
unemployment rate and the “jobless recovery,” share an
upsetting anecdote about a middle class family now void of a
primary source of income, then run a brief clip of a Dell call
center in India to shore up his case. In spite of his earnest
demeanor, swaying rhetoric, and compelling reasoning, there is one
concept Lou never fails to overlook — causality.
Though Dobbs and his big-labor allies would like you to believe
otherwise, outsourcing and high domestic unemployment figures are
two ships that passed in the night decades ago. In the two sectors
most vulnerable to competition from foreign labor markets,
manufacturing and information technology, the numbers do all the
talking.
By the most alarming of estimates, over the next decade, U.S.
corporations will send an annual 220,000 IT jobs offshore. Sounds
scary right? Sure, until put in the context of a 130-million-strong
labor market. And when you account for the Labor Department’s
projected internal generation of 22 million jobs in the next five
years and an additional four million to be insourced, Lou’s
horror stories start to become less frightening. Those numbers also
don’t consider outsourcing’s positive effects on
corporate profit margins — revenue windfalls that usually
prompt more efficient capital reallocation. Take Delta. After the
airline exported 1,000 call center jobs to India in 2003, a new $
25 million savings cushion allowed the company to add 1,200 new
reservation and sales positions in domestic locations.
What about the manufacturing sector? Democratic Party leaders
can’t seem to remind us enough of manufacturing’s
abysmal employment outlook. But were those jobs simply displaced
overseas with a tacit wink and nod from Bush? An Alliance Capital
Management study says no. According to its findings, between 1995
and 2002, the U.S. manufacturing witnessed an 11 percent decrease
in employment levels. In the same span of time (and here’s
the kicker), the report found that the global share of
manufacturing employment rates suffered an identical 11 percent
falloff — a rather damning piece of data for any outsourcing
adversary. But wait, it gets better. While factory workers across
the globe were scampering for severance pay, productivity levels
were skyrocketing (the same seven-year period saw a 30 percent
increase in global output).
You see Lou, your enemy was never the president’s free
trade agenda, or the globalized labor market, it was technological
innovation. Productivity growth, Lou, not outsourcing, holds the
bulk of culpability for the plant closings and overcrowded
unemployment offices you so love to document. The next time you
attack outsourcing, Lou, be upfront — tell ‘em what
you’re really condemning: a firm’s ability to
efficiently allocate labor and capital, a company’s capacity
to shed uncompetitive sectors in order to generate further profit,
a perpetually expanding and productive economy — the tenets
of global capitalism.
Singer can be reached at
“mailto:singers@umich.edu”>singers@umich.edu.