America’s Outsourcing Epidemic

Outsourcing is a huge problem for the United States economy. Allowing companies to shift jobs across national boundaries in a search for cheaper labor, and wider profit margins, has been at the vanguard of economic reform for more than a decade. Unfortunately, the U.S. has yet to take a tough stance on companies that move jobs overseas, and it has never officially discouraged the practice as many other nations have.

According to AmericanEconomicAlert.org, not only is the U.S. not taking a stance against outsourcers, in some cases we are actually encouraging them. Alan Tonelson believes that President Obama’s decision to put the chairperson of an outsourcing giant on a bipartisan debt/deficit commission is a clear signal that we are not nearly tough enough on companies that take jobs away from the U.S.

Tonelson, a Research Fellow at the USBIC and former Associate Editor of Foreign Policy, has long been a proponent of discouraging outsourcing. During the presidential campaign, then Senator Barack Obama talked about putting penalties on outsourcing and doing all it could to bring jobs back. Now, after having been smothered by the health care debate, the administration has taken no steps to stop the job losses.

President Obama has even appointed Honeywell Chairman David Cote to a new commission in Washington, D.C., aimed at solving America’s trade and debt shortcomings. Under Cote’s leadership Honeywell has maintained its place as one of the largest manufacturing outsourcers in the U.S. From 2002 to 2008 the American share of the workforce at Honeywell has fallen from 55 to 45 percent. According to Tonelson’s figures the company just shed 2,000 domestic employees while at the same time hiring 21,000 foreign replacements.

How can the president, or for that matter the American people, rely on Cote to solve our national woes when his company takes an active part in making the situation worse?

It should be noted that Honeywell, or any other multinational, is not the problem. It is part of the problem. The United States has a system of hands-off economics in which we do not encourage corporations to put national goods ahead of bottom line profits. Given our lax system, and the huge rewards doled out by foreign nations in exchange for outsourced facilities, it would be fiscally irresponsible not to outsource.

The U.S. gives no penalties for outsourcing, and foreign nations lavish rewards on those who take part. Since the companies have no loyalty to workforces or regions, just to profits and shareholders, they cannot be expected to act with national interests in mind.

A proponent of outsourcing may point to the fact that the U.S. itself “insources” facilities from foreign companies. They might say that BMW and Toyota produce right here in the United States just as Nike and Honeywell produce in China or India.

However, this argument fails to mention the main problem of outsourcing. When BMW produces cars in the U.S., none of those vehicles are sold in Germany. When Nike produces shoes in China the great majority are sold in the U.S. The German labor market suffers nothing when BMW opens a plant in the U.S.; the American labor market suffers greatly when Honeywell opens a shop in India.

We cannot allow our companies to shift more and more labor overseas only to turn around and sell goods to their recently unemployed American workers. It is time for the United States to finally get tough on outsourcing, and take one small step toward saving this economy from itself.

Craig Harrington — Economy In Crisis