Eduardo Porter is right about one thing: it’s election season again and therefore outsourcing is one of the main themes of the campaign.
The middle class, I’m sure you’ve heard, is under threat by cheap foreign labor. We must be having an election soon. President Obama’s assault on Mitt Romney for sending jobs overseas draws from a playbook used repeatedly by politicians of the right and left over the last two decades.
In 1992, Ross Perot ran for president on the strength of the “giant sucking sound” of jobs going to Mexico. Four years later, Pat Buchanan tried to gain the Republican nomination by promising to repeal the North American Free Trade Agreement and withdraw from the World Trade Organization. In 2004, John Kerry accused George W. Bush of providing tax breaks to outsourcers.
This year, Obama and Romney are going after one another on the issue of the foreign outsourcing of jobs. And for good reason: as I showed last year, U.S. multinational corporations—like General Electric, Caterpillar, Microsoft, and Wal-Mart—have been hiring abroad while cutting jobs at home.
What Porter is wrong about is that the outsourcing of jobs is irreversible.
Businesses are too far along in the process of globalizing their supply chains, building international production lines that draw ideas, components and resources from wherever they are best, most abundant or cheapest in the world. In 2006, intracompany trade accounted for nearly 33 percent of the nation’s imports and more than 27 percent of its exports. Raising a wall against a given import would short-circuit production lines around the world, including in the United States.
What’s more, most growth over the next decade will happen in big developing countries beyond the nation’s borders. Using barriers and penalties to bar imports and discourage outsourcing — which would surely draw retaliation from other countries — would unhitch the nation from the world’s main economic engines.
The best Porter can come up with, in the face of this “irreversible” outsourcing of jobs, is more education (for U.S. workers to better compete against foreign workers) and a better safety net (when U.S. workers lose the battle).
What Porter doesn’t consider—nor, for that matter, does either one of the main-party candidates—is a different form of corporate governance.
Instead of private capitalist boards of directors, who decide to shift production and jobs when and where they want (shrinking employment at home and abroad while increasing productivity or hiring everywhere or cutting jobs at home while adding them abroad), imagine what would happen if the workers themselves ran the corporations. With a different set of interests, and a different kind of calculation, workers wouldn’t need to outsource jobs in order to increase profits. Instead, they would utilize the surplus to create decent jobs where jobs are needed—both at home (for their fellow citizens) and perhaps also abroad (in conjunction with workers who run their enterprises in other countries). Instead of being forced to compete with workers in other countries, in a seemingly irreversible race to the bottom, the people who labor in worker-owned enterprises would be able to take the production of goods and services out of competition and create the kinds of decent, well-paying jobs they and others want.
Then they wouldn’t be forced to play the outsourcing game.