March 21, 2004

Ins and Outs of Job Sourcing Controversy

Oh, wurra, wurra moans Presidential Wannabe John Kerry! Scads of American jobs are being "out sourced" to other countries -- and it’s all President Bush’s fault. Doom is hard upon us.

One can understand the desperation of Kerry, the Democratic National Committee and neoliberals. Despite sustained anti-Bush bias by so-called mainstream media, the president continues to outdistance his hysterical critics in the polls.

American labor unions and their allies have worked themselves into a fine tizzy over a loss of manufacturing jobs to overseas competitors.

Their favorite straw demon is NAFTA – more formally known as the North America Free Trade Agreement.

The first President Bush was elected as a One World philosophy became a major concern. Now we call it globalization.

Jetliners, television, satellite communication and computers made it possible for corporations here and abroad to diversify and expand as "conglomerates."

Trade with our two largest trading partners – Canada and Mexico -- declined as they also shopped elsewhere.

The elder Bush had to deal with two, big problems – Iraq’s invasion of oil-rich Kuwait, and aggressive marketing by foreign competitors.

With a coalition of United Nations partners, he managed to drive Saddam Hussein out of Kuwait. However, globalization problems persisted.

He and Congress negotiated the NAFTA agreement with Canada and Mexico to be effective Jan. 1, 1994, the start of a new presidential term. This was to be a referendum on the agreement.  

Labor unions strenuously objected to the possibility that cheaper products from our nearest neighbors – particularly Mexico – would result in U.S. companies setting up shop there.

Ross Perot, an ardent capitalist, predicted that "the shoosing sound would be jobs rushing to Mexico."

Bush was defeated for a second term largely through the efforts of third-party candidate Ross Perot who siphoned 19 percent of the popular vote from Republicans.

When Bill Clinton took office he renegotiated the bill to include some union work rules and environmental concerns. Now, Mexico and Canada once again are our largest trading partners.

However, other foreign competitors -- such as Japan, India, China, Taiwan and Philippines – have cut themselves into the gigantic American market.

The manufacture of automobiles for example -- once an American near-monopoly – was challenged after World War II by such Japanese companies as Toyota, Honda and Nissan.

They paid their workers less than the U.S. union scale. Thousands fewer "new" jobs were needed in the U.S. to meet domestic and foreign demand. In effect, American auto jobs were "exported."

Then, the technological revolution in automation and communication enabled Japanese companies to open plants in the U.S. that hired American workers at American wages.

This was out-sourcing jobs by Japan but in-sourcing jobs for the United States. Interestingly, Japanese automakers pay their American workers 16 percent more than do General Motors and Ford.

Simultaneously, U.S. companies opened businesses throughout the world to better serve local markets there. It takes two to tango.

Like it or not, we are becoming one world.

The U.S. Treasury Department says insourcing in 2001 – low point of the economic downturn not quite an official recession – accounted for 6.4 million jobs.

Outsourced jobs exceeded insourced ones by 3.4 million, but the gap is closing as American firms restructure under the impetus of lower taxes and mortgage rates.

The American economy has started to boom with a whopping 5 percent growth rate (3 percent is average), a declining unemployment rate, and greater emphasis on high-tech consulting services.

It is self-defeating to chase low-wages around the globe. Sooner or later they level off to par.

The advantage will be to accept export of low-wage labor and low-skill services (out sourcing) in exchange for high-paying jobs requiring high skill and knowledge (in sourcing).

Key to success in a global economy is education – the ability to adapt, innovate and manage rapidly changing technology.  

Our future depends upon good schools and a culture that rewards knowledge skills – plus good doses of representative democracy and aggressive capitalism.

PARTING SHOTS

Kerry challenged Bush to a debate a month, but the president declined. Kerry says he will debate Bush’s empty chair. Look out!  The chair might win.

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Georgia police arrested a woman at Wal-Mart who tried to pay with a fake million-dollar bill. There wasn’t quite enough money in the cash register to make change.

By Lindsey Williams, columnist for Sun Coast Media Group newspapers