Rules requiring firms to restrict employment to their country of origin would be hideously inefficient if applied on a global basis, and they would be every bit as devastating to American employees of foreign firms as offshoring by American firms is to workers who lose their jobs here. (One might also ask where the borders of corporate patriotism ought to be. If it’s wrong for a Michigan-based car company to have a supply chain that extends to Mexico, why is Ohio OK? After all, it hardly makes a difference to a laid-off worker where exactly his job went—the bad news is that he lost his job.)
Over the long run, we’re all going to be more prosperous if we live in a world where firms are allowed to locate work where it’s most efficient to locate it. This is exactly why, despite some tough ads
, the Obama administration has not proposed any policies to restrict firms’ freedom to shift work across state or national boundaries.
Romney’s unwillingness to make the case for outsourcing reflects, in part, political timidity. But more broadly, it underscores that although he’s been an eager participant in contemporary capitalism, he’s not willing to mount a policy response to its vicissitudes.
It’s surely true that rules requiring firms to restrict employment to their country of origin would be hideously inefficient if applied on a global basis, and they would be every bit as devastating to American employees of foreign firms as offshoring by American firms is to workers who lose their jobs here.
But, to my knowledge, the only one who’s equated the absence of* government policy (of necessity on this issue, statutes) that would restrict corporate employment to the country of the corporation’s origin, and a private equity firm’s investment in companies that specialize in assisting American corporations with offshoring employment, is Yglesias. Even Romney apparently recognizes the distinction. Not sure why Yglesias doesn’t.
It’s one thing to argue that utterly unfettered globalization of employment by corporations worldwide ultimately has a positive effect on the American economy—as Yglesias does. But it’s another thing entirely to actually convince a majority of the public that this is so even in light of current trends and actual facts.
And it’s one thing to argue that laws that forbid companies from relocating jobs from the company’s home country to another one would have a negative side to it because of possible retaliatory laws in other countries, and another thing to equate that with decisions by corporations themselves about whether to offshore or not. (And, setting aside the obvious constitutional bar to prohibiting a corporation’s relocation of jobs from one state to another, it’s a lot easier for families to relocate from Michigan to Ohio than from Michigan to Mexico.)
The thing that Yglesias doesn’t get is that Romney’s claiming that his private-sector career demonstrates his ability to create not just wealth for investors but jobs en masse for the public. There’s really no way for him to make that claim persuasively, because it plainly isn’t true. He can defend offshoring as a corporate strategy, but corporate strategy is a different matter than economic strategy.
Unless, of course, Romney wants to argue that encouraging offshoring by American corporations is good government policy. Hope he does. But then, I’m a Democrat.
*Sentence corrected to insert the words “the absence of”.
Also there is quite a difference between statutes requiring all hiring to be within a company’s country of origin and statutes providing inducements to companies to create employment within the country. Tax policies come to mind.
To my knowledge, Romney has never described how his policies (the Ryan budget) would encourage domestic employment.
I agreed it would definitely be inefficient. But economic efficiency is not the sine qua non of public policy. Sometimes efficiency is no compatible with the public welfare. Allowing unfettered exporting of employment has turned out to be pretty hideous. Doing something to restrict it would, it seems to me, be less so, even if inefficient.
Yup, companies can chase the efficiency of money all they want if they think that really is to their long term benefit, but government (and most asurely our’s)purpose and charge is to chase the efficiency of its citizens lives.
This puts government’s actions and policy creation in conflict with business…at times. Unfortunately, at these times of conflict since Milton baby came into the picture the resolution has been to believe that all policy which favor’s money efficiency also favor’s the efficiency of people’s lives.
Also, I mean really, have we not had globalization to some degree since humans came upon another group of human outside of their territory? This “globalization” is nothing more than a one word name for the promotion of a world organized based on corporate structure and function. That is what Yglesias more completely misses.
Its a question of choosing the right model. If each country focused on developing and using their own labor force, much like a family taking care of its own members, there would be more meaningful trade amongst countries. The excess of one country (knowledge, products, services, other capital) can then be traded with those of another country that can use it.
I’m afraid that the real problem here is that Yglesias has saddled up for a job that burdens him with the usual pundit problems. His has rehashed a canned story about gains from trade as a part of his story about Romney and Obama. He has told a(nother) story about Romney and Obama that fits with Slate’s standard contrarian editorial policy. He has felt the need to publish something (I would guess) because he gets a paycheck, and once he started down this particular contrarian path (about Romney’s behavior being just dandy, so why all the fuss), it is pretty easy to squeeze a couple more stories out of it. Put your intellectual feet up and let the money roll in as the words roll out.
Yglesias has gone from being one of those clever young people to one of those disappointing also-wrotes. Sad, because he has the little grey cells to do better, if he’d just quite Slate and quit writing economics.
Any argument for efficiency must be heavily qualified in light of the implicit subsidy provided to transoceanic shipping. Every industrialized nation limits the emissions produced by surface transportation within its own borders, yet there is no regulation of emissions on the high seas. This acts as a subsidy that inefficiently promotes imports and exports, which, in the US penalizes domestic manufacturing employment.
Exactly, Jack. I just inserted the words “the absence of” in the sentence that begins “But, to my knowledge, the only one who’s equated …”, so that the sentence says what I meant it to say. Equating a government prohibition and a government disincentive is ridiculous—especially since the U.S. government could do the latter but could not constitutionally do the former.
And, about the Ryan budget, I can’t wait ‘til the public finally finds out what’s actually in it—and that Romney supports it.
Btw, did you see this post of Yglesias’s: http://www.slate.com/blogs/moneybox/2012/07/17/romney_s_tax_returns_is_the_2009_swiss_bank_account_amnesty_what_he_doesn_t_want_us_to_see_.html
I think that will be the next big thing everyone will be discussing.
PS: I guess the reason that Romney so blithely turned over to the McCain campaign 23 years of tax returns in 2008 is that the offshore bank accounts weren’t disclosed in his tax returns until the return for 2009.
“Over the long run, we’re all going to be more prosperous if we live in a world where firms are allowed to locate work where it’s most efficient to locate it.”
That depends upon the distribution of any gains from outsourcing. If they are siphoned up to the top, then the people at the top will benefit at the expense of those who lose jobs to outsourcing. We cannot even say that the average person will be better off (as recent history has shown).
Yglesias may be right. Who knows? What is clear is that as long as Romney withholds his returns, anyone can speculate as to why and will. Many, if not most, people will assume that whatever it is, it’s awful and he’s ashamed of it.
I have to admit that I really, really, do not understand this discussion. Not from so called liberals at least.
Assume that everything that is said about offshoring is true. That jobs get packed in a box in Detroit and unpacked in Shanghai.
The effect is to marginally lower incomes in Detroit and massively increase them in Shanghai.
Over the past 35 years incomes in Shanghai have gone from $600 a year or so to $6,000 a year or so (yes, after inflation).
We’re told that US working class incomes have stayed static, possibly fallen a little bit, for 35 years.
I would dispute many of those numbers but that is the story we’re being told, isn’t it?
OK, well, isn’t this the liberal wet dream? The poor are getting rich and we’re not even make the rich poorer. We’re just making the poor rich while stopping the rich getting any richer.
I mean I am a liberal (classical branch) and I think it’s absolutely fabulous. We’re killing off absolute poverty around the world one globalised factory at a time. What’s not to like about this?
And we liberals are supposed to be internationalist aren’t we? You know, all men are my brother sort of thing?
Sure Tim,until one looks at the very top around the world.
If I remember rightly, the motto was raise ALL boats.
It’s not just that incomes are flat or decreasing; it’s that the jobs that provide them are ceasing to exist, resulting in no income.
I’m not a total-protectionist person, Tim. I supported NAFTA in the 1990s, for example, and I agree with you that it’s good that the standard of living for millions of people (mostly) in Asia has risen substantially. My main objection to Yglesias’s article is his equating of Bain’s investing in companies that specialize in offshoring itself (as opposed to companies that themselves offshored) with U.S. government policy that doesn’t forbid U.S. companies from offshoring (even if permitted under the Constitution), for fear of retaliation by foreign companies that offshore in this country.
But I also disagree with Yglesias’s blanket statement that “[o]ver the long run, we’re all going to be more prosperous if we live in a world where firms are allowed to locate work where it’s most efficient to locate it.” I’ll repeat min’s comment:
“That depends upon the distribution of any gains from outsourcing. If they are siphoned up to the top, then the people at the top will benefit at the expense of those who lose jobs to outsourcing. We cannot even say that the average person will be better off (as recent history has shown).”
Re Jack’s comment to Tim: Exactly.
Tim Worstall says that he does not understand the discussion. If what he then says were accurate, there would be no complaints about offshoring, would there? It does seem as if he is missing something.
Apparently, liberalism is whatever Tim needs it to be in order to make straw-man arguments. There can be no divergence of opinions or interest among liberals. There can be no self-interest or national interest among liberals. Liberalism is homogenous in a way that allows Tim to understand liberalism with a minimum of effort.
Oh, here’s an idea. Why don’t we discuss real views, instead of views we impose on other people for the sake of phony argument?
Tonight I am lazy and your comments are a non sequitor in nature. Anyhoo, here is a c&p
“A huge share of the nation’s economic growth over the past 30 years has gone to the top one-hundredth of one percent, who now make an average of $27 million per household. The average income for the bottom 90 percent of us? $31,244.” http://www.currydemocrats.org/american_pie.html