ALEXANDRIA -- Part of tonight’s Presidential candidate debate, and Wednesday’s debate on domestic policy, is likely to focus on U.S. jobs and competition from abroad - - a topic tackled in a study on the "offshoring" phenomenon recently released by the 350,000-member National Taxpayers Union (NTU). [The study, There They Go Again: The Truth About Exporting Jobs is available online at the NTU website.]
"Periods of lackluster economic and employment growth tend to produce convenient bogeymen for office seekers to blame, and offshoring is their choice to explain the latest slump," said NTU Economic Policy Analyst and study author Tad DeHaven. "Blaming offshoring for today’s weaker-than-expected jobs report is a knee- jerk reaction that ignores other more likely factors such as the decline in the world economy, higher rates of domestic labor productivity, and the bursting of the technology bubble."
Marshalling an impressive array of research and analysis, DeHaven shows that the rhetoric of "populist politicians and protectionist pundits" over offshoring has been misleading. For example:
-- Globalization may fuel offshoring, but the U.S. still maintains a large trade surplus in private services ($74.3 billion in 2002) with the rest of the world.
-- Anti-offshoring advocates often cite gross job loss figures and ignore net job gains from services importation. One analysis found that offshoring could lead to a net increase of 317,000 IT-induced jobs in the U.S. by the year 2008. One reason: businesses here can re-invest savings from services importation into new development activities that create other employment opportunities.
-- A global research firm determined that every dollar of U.S. labor cost redeployed offshore adds 12-14 cents of net value to our own economy (exclusive of the benefit the host country and the rest of the world receive). This outcome, according to the author, "is a win-win situation for all countries involved, as cheaper and newer products flow back and forth."
DeHaven also noted that misguided notions about offshoring have crept onto the campaign trail. John Kerry has complained about foreign automakers possibly capturing the hybrid-car market from America, in apparent ignorance of the fact that European and Asian companies (along with their suppliers) employ nearly 25 percent of the U.S. auto industry. Meanwhile, the Bush Administration’s promotion of steel and agricultural protectionism has created employment hardships for American manufacturers that need affordable raw materials.
-- The author suggests that job-creation policies should stress tax, regulatory, and trade barrier reductions rather than restrictions on how firms operate. "Indeed, the savings from offshoring government services can facilitate tax relief," DeHaven concluded. "It’s time to go beyond the platitudes about offshoring and discover its true potential for making America a more prosperous nation."
