April 18, 2004
Exporting Jobs Scam
Harry Browne has an excellent article about the “Exporting Jobs Scam” that politicians are trying to pull on us. His main point: It’s not the “greedy corporations” that are taking jobs overseas for cheap labor. Government over-regulation is pushing companies to move the jobs overseas.
Harry lists a few reasons corporations are building their factories overseas.
- Discrimination lawsuits have forced companies to hire by quotas. Not an efficient way to build a workforce. You don't have anti-discrimination laws like that overseas.
- Environmental regulations have become so burdensome you can't efficiently produce a quality product.
- Companies have been forced to make major changes to their facilities to accomodate disabled employees or customers. This drives up costs.
- And the biggest problem of all, "In addition to the
wages paid to employees, companies must collect and contribute to
payroll taxes that grow bigger and bigger over the years." Companies are being taxed out of the country!
Most politicians like John Kerry don't have any way to solve this
problem except more government regulation. That's not the answer. The
answer is to "repeal all the regulatory legislation that's driven
companies to export the jobs." When's this going to happen?
If you answered, "Never," you're probably right. At least not with the politicians we currently have in Washington.
Posted by JasonTromm at April 18, 2004 07:36 PMget rid of all the legislation…
yeah…..then they can pay us 28,000 a year for an 80.000 a year job….
regulations help stop abuses….if the corps can get an inch they will take a mile….i agree that it must be balanced out…
however, it seems that you are proposing that we should screw the disabled, screw anyone who is made fun of or fired based on gender, sexual orientation or race…..
in general….which corporation are you the spokesperson for?
Posted by: rob at April 18, 2004 08:08 PMWell, that’s not the polite kind of discourse I’ve come to expect on this blog.
I’m not proposing that anyone “get screwed.”
I have personally been hit by “reverse discrimination” I had a hiring manager tell me one time, “We’re going to hire you, but we have to interview some women and minorities before we make it final.” (Maybe not those exact words, but you get the intent.)
BTW, rob, did you even read Harry Browne’s article?
Posted by: JasonTromm at April 18, 2004 08:14 PMJason: You really need to read up on American history during the early 1900’s. Nothing happens without a reason. Understanding the historical context for the laws you dislike should be very enlightening for you.
I’ll get you started:
Environmental laws exist because people were getting sick. The water was undrinkable and the air un-breathable. The land was so badly scarred that even today it has not recovered. The river in my hometown ran bright orange every spring and nothing lived in it.
There is no point having economic prosperity if everybody dies of cancer. Because of the pollution of the 20th century my hometown gets to be designated a “cancer node” due to a statistically significant incidences of cancer (above the national norm). It’s not a lot of fun watching relative die of cancer.
So unless you are an orphan you might want to rethink your position.
Interestingly enough, china is currently learning this lesson. It was told by the Olympic committee that they could only have the Olympics if they cleaned up the air where it is to be held ( I believe its 2008 in Beijing, maybe 2006). They have also managed to destroy their major fisheries with industrial pollution.
We’re way beyond the point China is now. When we polluted the land years ago, corporations didn’t understand the consequences of what they were doing. Now they do. A non-governmental body that would monitor environmental compliance would be much more cost effective.
Environmental regulations have gone too far. There are countless examples of environmental regulations driving small companies out of business for not good reason.
If environmental organizations want to preserve certain tracts of land, then I suggest they buy it themselves. Asking the government to coerce compliance is never efficient.
I have personnel knowledge of a pharmaceutical company that is currently violating the environmental laws but finds it more profitable to pay the fine than stop the pollution.
You might also want to get a job in the industries you are defending so you can see first hand that short term profit outweighs long term liability.
PS: Ever hear of the Nature Conservancy, they buy tracts of land and protect them.
http://nature.org/
PPS: You really need to do a little background work.
I don’t have any problem with American companies moving either jobs or headquarters overseas. The only hitch needs to be that if they do, the American market place is to be closed to them, entirely.
Kerry to some extent, and Nader to a great extent will help install that hitch which will give corporations freedom of choice - work with and help Americans in this economy and society or, cease to be an American company and lose access directly or indirectly to American markets.
Sounds good to me.
Posted by: David R Remer at April 18, 2004 09:41 PMWhat pharmaceutical company are you talking about? I won’t believe you until you tell me.
I’m aware of the Nature Conservancy, but for every organization like that there’s a dozen more who file hundreds of frivolous lawsuits to coerce the government and private citizens. This results in property being tied up in litigation for years, effectively stealing it from its rightful owners.
I have done my homework, I’ve got lots of examples of environmental lunacy on my own web site: http://www.trommetter.org/log/archives/cat_environment.php
Posted by: JasonTromm at April 18, 2004 09:51 PMJason: How does the name make me more believable? I have related my life’s experiences, nothing more and nothing less. I withheld the name because I don’t want to be tracked down by a bunch of bloodthirsty lawyers and sued for every penny I have. This is a public forum after all. Believe what you want or go out into the real world and find out for yourself.
On you other point:
Your not going to find me arguing that a government agency could not do anything stupid, of course they do. Conversely to assume that a large corporation is morally responsible is absurd. Didn’t we just go through a wave of corporate scandals?
Ps: Goodnight. I have to get up early for work tomorrow and can’t spend any more time chatting tonight.
Good Topic Jason,
I don’t agree with Harry Browne’s article. Yes, this is a litigious society, but the vast majority of baseless lawsuits go nowhere.
It isn’t taxation or regulation of industry driving outsourcing of jobs. It is Government subsidy that is driving it. Jobs have been exported as transport and communications have improved in formerly third world, emerging nations. They do offer low taxation ( In fact, the U.S. allows deduction of foreign taxes encouraging offshoring). skilled labor, and laws that allow pollution and abuse of their employees, and now mostly stable enviroments.
I have a friend from India who once surprised me with a comment of how clean things are here in the U.S.( meaning air and water) He was from Bangalore and is now living in Houston. Houston Clean? Well, everything is relative I suppose.
Remember Bhopal? Would Dow be in business if that occurred here?
Our tax laws encourage exporting Jobs, and we offer econmic stability and security,and a clean enviroment. We subsidize multinational corporations, who headquarter their Execs in the Good Ole U.S.A.. while corporate taxation has diminished. Where will they run when a little instability arises? I wonder how much that is worth.
Which corporation(s) bought your representative? Will the quarterly profit up ticks be worth the long term damage they do?
Posted by: Greg at April 19, 2004 12:05 AMIn the absence of slave labor, any supply/demand dynamic of voluntary labor will only create temporary disparities between the costs of doing business in any given locality.
The problem is, China uses slave labor, and there is no beating “free” for production costs. Some of these Chinese-run companies even use the slave labor on what is technically American soil: the Commonwealth of the Northern Mariannas Islands, for example. Because those islands fly a U.S. flag, they get to sell to the U.S. market as if those products were “made in the U.S.A.” (and technically they are); BUT, because those territories are also outside of the jurisdiction of the U.S. Congress for making laws, they also don’t fall under the yoke of American regulations, hence the slave labor, hence no care for any pollution that goes on, and any female employees would count it a good day if it stops at mere “sexual harrassment” and not rape. Many of these are not even individuals FROM China kept there as slaves. They recruit heavily in the Koreas, the Philippines, Taiwan, and other parts of Asia promising high-paying jobs “in America”. Presto change-o, tricky tricky, they take away their passport and find themselves, well, slaves in places like Saipan.
Of course, continental China has a huge number of slave factories as well, but from there they have import formalities to deal with (no heavy tarrifs, but still more than products from CNMI).
I can empathize with the Libertarian desire to see American business operate in a more unfettered way so that competing with the enterprises mentioned above, can make a little bit more of a collegiate effort and make some semblance of headway in competing with them. But if we concentrate ONLY on American regulation, anything short of (re)legalizing slavery, will fall short of the mark in global competition with Chinese companies.
The solution may not be possible at all. Slavery, while immensely immoral and unethical, WORKS. After all, we were the “China” to Europe in the 19th century and used it to quickly gain a footing equal to their stature in a few short decades from the bombed-out wreckage we were, economically, in the late 18th century. But I don’t foresee any Abe Lincolns in China. Pappy Bush used to preach that if China were a Capitalist society, the infusion of imported goods and services would trickle in democratic notions, by osmosis. The “trickle in” theory hasn’t come to pass. After Tienanmen Square, the only place anyone dares to protest the Chinese system are areas outside of China. The wealthy class in China is getting wealthier, but the average Chinese set of living conditions is as if Charles Dickens decided to adapt his tales to an Asian setting.
Unlike America, China doesn’t upset enough international apple-carts to spark wide ranges of European street protests. They are diplomatically savvy, strategically careful, and they’re not going anywhere anytime soon. 100 years from now the entire world might be owned by a handful of Chinese robber-barons, U.S. military “might” notwithstanding (and you can’t call any military force “mighty” when a handful of body bags has the nation screaming for a halt to the war in question).
Learn Chinese. Fast.
LOL! I just read the Harry Browne article. I don’t think that guy is any more economically literate than the politicians he’s heaping scorn upon.
For example:
Since American wages have always been much higher than wages in Thailand, India, Indonesia, and other Asian countries, why weren’t American companies exporting jobs to those countries 30 or 40 years ago?
Duh. Could it be the types of jobs being exported there didn’t exist 30 or 40 years ago? Perhaps advances in transportation and communication have only recently made it profitable?
In any case, I think the offshoring problem is temporary. Already wages are going up in India and China. The middle classes in developing countries like that are growing and they want all the same things middle class Americans want. It’s only a matter of time before the countries with skilled labor that are currently attracting American businesses price themselves out of the “dirt cheap” range.
Also, note that we can help this progression along by requiring those countries to implement human rights reforms and expensive environmental policies. :)
Also, anyone who’s worked for companies who use overseas labor knows what a pain it is. Sometimes it’s worth the extra expense just to be able to speak English without being misunderstood.
I don’t think the problem is as bad as people are making it out to be. It’s just a convenient scapegoat for sluggish job growth, which most economists agree is the result of increased productivity. ie - People are afraid of gettin fired, so they’re working longer hours.
Wasn’t the computer revolution supposed to reduce the workweek to three days? Whatever happened to that. Oh, right. Companies laid off 2/5 of their workers instead. :)
The fact is, it’s ALWAYS going to be cheaper to do things where there aren’t as many laws. This is because corporations, not by any evil desire, but simply in the seek for money and the drive to stay alive will abuse workers, human rights, and the environment as much as they profitably can.
Ours is not a truly capitalist economy, because as others pointed out this was discovered not to work during industrialization 100-130 years ago. There is a balance between profits and standard of living which is the essential basis for our political system, (supposed to be) composed of one side arguing each end of the scale, resulting always in a middle-ground compromise.
Thus, we all lose when one side or the other gets its way. Repeal all that annoying legislation and we will see an end of Americian society as we know it, replaced by a few wealthy leaders and millions of poor, powerless slaves living in clouds of smog (ie China). On the other hand, if you pass ALL that legislation to “protect” us from “evil” corporations, you end up with an equally dismal dystopia in which the control rests not with the money-makers but with the regulators (ie 1984, Brave New World, or Terry Gilliam’s Brazil). The fact that neither side has won is a testament to democracy and that wonderful middle ground.
Posted by: Eric Lindsey at April 19, 2004 08:20 AMI applaud your passion for the issue, Jason, but I have to agree that Harry Browne’s article is an incredibly simplistic assessment of a complex issue. The criticisms he heaps on our regulatory system are, in my mind, examples of where the process is getting it right.
The regulations aren’t the problem, it’s when someone takes a noble ideal to the extreme.
I’ve also been the victim of reverse discrimination, but that doesn’t mean I believe that efforts to foster diversity in the workplace are bad.
As for the environment, Browne (and you in your web site) are clearly targeting environmental extremist groups who seem to want everything to return to pre-civilization days. What you ignore is the fact (as it was stated eloquently above) that many corporations have already proven that they’ll favor profit over environmental responsibility. Remember Love Canal? A Civil Action?
The current debate over the Bush Administration’s rollback of the New Source Review rules (with his deceptively titled “Clear Skies Initiative) is another prime example. All you need to know to illustrate it’s a bad idea is the fact that all the energy companies and their advocacy organizations support it wholeheartedly and every environmental organization (even the more responsible ones) and many state Attorneys General oppose it vehemently.
Dateline NBC aired an excellent expose on the issue last night. You can read the transcipt here:
http://msnbc.msn.com/id/4759864/
Part of Kerry’s platform is a promise to cut the corporate income tax. While his proposed cut is modest, it at least shows that he recognizes that the current rate is a deterrent for U.S. corporations. A lot more needs to be done to level the playing field for companies trying to compete overseas and to entice our corporations to keep jobs and manufacturing plants in the US. Elminating every law that is an inconvenience to US companies at the expense of our people’s health and civil rights isn’t the answer.
One thing that needs to be kept in mind is that regulation is not ALWAYS detrimental to business, and if regulation is evenly applied across a market sector, it’s seen as a wash cost by business planners—something their competitors have to deal with as much as they do.
One of the additional, quasi-hidden costs of moving operations to a “less than regulated” place is that there are new costs associated with keeping corrupt local officials happy and “on board” with the operation, and on the other side of the lawless equation, you don’t get a very stable political environment in which to operate, and guerilla type groups will fester and annoy your company to no end. Remember: those jobs that you are exporting from America which Americans see as being unfairly favorable to the target nation, are seen as EXPLOITATION by certain political circles in that target nation. And while you’re paying all that baksheesh to the new host authorities, they still won’t be very energetic in protecting you from those disgruntled elements.
For technical work, as mentioned other comments above, the language barrier is sometimes enough to completely derail project timelines.
It all amounts to a great leveler of playing fields, and ordinarily wouldn’t be something I would worry about if it weren’t for the slave labor factories in China. I’ve still yet to see any indication that that Chinese system will ever change. It’s in the interest of workers everywhere else in the world to try to enact that change, though, because no matter what is done domestically or in non-slave parts of the third world, everyone will always be competing with “zero” as a salary bid—a non-starter, even for unskilled work.
The Libertarian principles on this issue are very simple.
* Limited government is a necessary evil
* Any additional government regulations abridge our freedoms
Hard to put into practice, but very simple at the core.
“Libertarians, the party of principle”
Posted by: JasonTromm at April 19, 2004 10:14 AMSome detailed reading and stats of Chinese slave labor:
http://policy.house.gov/html/china_bills.html
How did the focus of this discussion change to China and their so-called slave labor? What business is it of ours to interfere in their affairs? That is what has gotten us into so many messes over the years. That’s why countries don’t see us as a fair trading partner.
As for the environment, can you give me a more recent example than Love Canal? Why would any company destroy it’s own property with chemical waste? Why would any company intentionally put its workers in dangerous situations? That’s not the best way to do business.
See also: The Great Libertarian Offer, Saving the environment
http://www.harrybrowne.com/GLO/Environment.htm
Jason: You have in one fell swoop managed to say, “I don’t care what happens to other people” and at the same time announce that other people will voluntarily look out for you.
As for the enviorment let me make this simple:
Corporations are run by people.
People work for money.
Money is power.
Power corrupts.
As a reference: Enron, Tyco, Global Crossing, WorldCom…………
Jason - I think my comment goes far afield of the original post topic but the environmental issue strikes a chord with me. I applaud your idealistic view of business but history — current and otherwise — is ripe with stories that demonstrate that workers — and sometimes customers — are rarely at the top of the priority list. Those that do put customers and workers above profits are usually spotlighted because they are the exception, not the rule.
More recent cases than Love Canal? How about Times Beach, MO; Hinckley, CA; Valley of the Drums, KY; Plant City, FL. The problem with your argument is that when Love Canal erupted there was no regulatory or enforcement mechanism to properly respond to the problem. Today when a site is discovered, regardless of the enormity, EPA is right there — they have first response authority if no responsible parties are there to address the issue.
And I can’t let this go without clarifying the record:
“When we polluted the land years ago, corporations didn’t understand the consequences of what they were doing. Now they do.”
It’s been said over and over that companies in the 50s and 60s just didn’t know any better. While it’s true that cause and effect weren’t always well known, for the most part, companies did what was cheapest and weren’t interested in consequences. Years ago, my dad worked with Bobby Kennedy and John Blatnik and Ed Muskie and Abe Ribicoff — and for a short period of time, Rachel Carson and Ralph Nader — to help write some of the very legislation and regulation you find excessive.
I’ve asked him for years to write a book about what was going on 40 and 50 years ago that led to many of the laws on the books today. He insists no one would be interested. So I forwarded him this string and he wasn’t sure what you mean by “years ago”. He goes back 50 years in our war against pollution and would testify on a stack of bibles that companies fully understood the consequences of what they were doing.
Here’s what else he had to say: “That’s why they fought tooth and nail to prevent passage of legislation and regulations to control the discharges of waste not on the land, but in the water at a time we were literally running out of potable water in this country. They knew EXACTLY the consequences of their actions.
What is so troubling is that these exact same people are trying to turn back the clock and undue the rules and regulations promulgated in the past 50 years to control the pollution of our land, our air and our water. They knew then and they know now what the consequences of polluting our world are and were. In the law that makes their conduct negligent, to say the least. Criminal is another word for it.”
And one last thing, as one of the few female contributors to WB, how exactly is it reverse discrimination if you got the job? So other interviews were held. Inconvenient maybe, but I don’t think it qualifies as RD :o)
Jason, the Chinese labor camps are not “so called”; they are real. And when it affects the supply and demand equation of labor in the world, it IS our business. And it’s our businessES. And our jobs.
I understand and appreciate how free market dynamics work, but when a large number of the workers participating in the markets are slaves engaged in forced labor, that’s NOT a free market. Slavery anywhere makes workers everywhere a little less free by their very existence. You may not think you feel their pain, but you do.
Hey Ciggy,
I’m actually living in Singapore temporarily (right behind a mosque full of really nice people who actually like America and Americans and Disneyland and Barbie and Spongebob Squarepants, but really hate GW Bush), so I suspect I soak up a little about Chinese business on a day-to-day basis through the local news and jawing with the locals.
The way it looks from here, there’s a growing Chinese middle class, and they’re starting to get vocal about government reform and wanting the same freedoms and protections that the middle class in America wants. The Singapore government is encouraging Mandarin language skills for students here in anticipation of fleecing the hundreds of millions of mainland Chinese who are eager to buy consumer goods and will soon have the money to do so. They’re so excited, they actually rub their hands together when they talk about it. :)
China’s state run industries can’t compete with its new private industries, so more and more state industries are being privatized (though the process is corrupt, so I wouldn’t put money into a Chinese bank that’s proping up any of those privatized businesses that are run by government cronies). China just passed laws recognizing private property and is staggering steadily towards full capitalism. This is where US foreign policy, carried on by Dems and Reps going back to Nixon, is really benefitting US business and reforming a foreign nation. It’s the kind of “meddling” we should stick with.
People all over the world want the American dream. Lets give them what they want. If we don’t end up with a bunch of little Americas, at least we don’t have a world full of closed societies like North Korea and the old China. And if some American workers get displaced, the answer is what Clinton started: a better retraining system and a focus on creating an economic environment where more Americans can become entrepreneurs and employers without having to worry about the economy collapsing.
With the acquisition of Hong Kong and all the business booming into Shanghai, and the left hand condemning Taiwan while the right hand is doing billions in business there, change is inevitable. The Chinese government is trying to slow down the transition to a capitalist democracy, but it’s going to come within the next twenty years.
Sorry, I rambled. the point is that wages in China are rising and the government is becoming more transparent (though it’s resisting).
So the human rights abuses and labor camps are declining. I’m not saying it’s not a problem, I’m just saying that the more we do business with the Chinese people (rather than the government) the faster those problems will abate.
Lee, it’s not surprising to see Pappy Bush’s vision of China’s future still endemic to Singapore’s popular notions. But let me be the one to break the news to you: this whole “democracy in China” thing is not going to happen.
They will be Capitalist, of course. But that’s not a good thing. They will flood the market with very cheaply-build goods, crack cocaine for the manufacturing sector of any economy anywhere.
The democracy which would have to be in place in order for any so-called “Chinese middle class” to enact change there, though, that’s a pipe dream.
Actually, Ciggy, I think it’s going to be the other way around. The middle class will change the government.
And sure, China probably won’t have an American-style democracy, but niether does Singapore and they’re pretty liberal and successful. The Singapore government (single party, the PAP) consistently ranks as the most honest in Asia.
Pipe dream? No. Just a matter of time.
