Ignorance Regarding Outsourcing in a Global Economy

by Bill O'Connell on February 7, 2011

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I received an e-mail from my congressman touting his efforts to fight outsourcing. In a global economy, it escapes my why this is a good thing and why we need more businessmen in Congress and fewer professional politicians and academics. So I penned the following response.

February 7, 2011

Congressman Tim Bishop

306 Cannon H.O.B.

Washington, D.C. 20515

Dear Congressman Bishop,

I recently received your e-mail update regarding your ongoing battle against outsourcing. I must confess that I am confused as much by your efforts here as I was during your successful reelection campaign. You say, “That is why I am fighting so hard to reduce job-killing outsourcing.” I find that to be an oxymoronic statement. According to the American Heritage Dictionary, outsourcing is defined as, “The procuring of services or products, such as the parts used in manufacturing a motor vehicle, from an outside supplier or manufacturer in order to cut costs,” which implies that it would create jobs.

Do you, Congressman, make all of your own clothes or do you outsource that to others? Do you grow all of your own food, or do you outsource that to others? And if you do outsource these and many other things, for if you don’t how would you have time to be a Congressman, what steps do you take to make sure none of your clothes are made overseas or that none of your lettuce is picked by illegal immigrants?

Is it your goal to make America a nation of lettuce pickers, or seamstresses? Is it your goal to make our clothes cost twice as much as they do today so that working families have to spend more of their take home pay on clothes because you insist that clothes only be made in American factories that would have the double edged effect of raising the cost of the clothes and not paying very high wages. Or should we focus on jobs for engineers to design computer controlled looms that we can sell to these counties?

In a study by Matthew Slaughter of Dartmouth University, he found that when companies increased overseas employment by 2.8 million jobs, these same companies increase domestic employment by 5.5 million jobs. In other words, for every job outsourced overseas, two jobs were created here and those jobs were higher skilled with higher pay. So if your claimed objective is to create jobs in the U.S. why are you opposed to one of the most effective ways to do that?

Okay, let’s assume that you don’t believe any of the foregoing and that any company that creates jobs overseas is evil and anyone who supports it is dead wrong. Then perhaps you can explain how you supported the bail outs of GM and Chrysler? After getting taxpayer money, both companies increased their outsourcing. Chrysler built a $570 million engine plant in Mexico, and GM increased its share of cars it builds overseas by 35%. If it is bad for private companies to be global enterprises, and therefore unfit to receive any government contracts, why is it alright to take taxpayer money and give it to companies so that they can create jobs overseas? Isn’t that hypocritical?

Let’s say further, that you are successful in your campaign to end outsourcing. What do you think will be the reaction of Toyota, Honda, BMW, Volkswagen, and other companies who employ tens of thousands of workers here in America because outsourcing was a good idea? Do you tell all of these workers that their jobs should really go back home to workers in the headquarters country?

So where do you really stand on outsourcing in a global economy? Is it bad for private enterprises to outsource, but it is okay for the government to take taxpayer money, take over a private company and then outsource jobs? I would appreciate it if you could clear that up.

Sincerely yours,

 William R. O’Connell

Thankfully, his efforts were defeated in the House.

That’s my opinion; I’d like to know yours.  Please comment below.

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