Outsourcing and Patriotism By Bill Moyers, Posted August 21, 2004. Lou Dobbs talks about how American businesses are putting their interests ahead of the national interest with the outsourcing of jobs. Following is Bill Moyers inteview with CNN's Lou Dobbs on the PBS program NOW. Moyers starts the interview by discussing Dobbs' new book, "Exporting America : Why Corporate Greed Is Shipping American Jobs Overseas." Bill Moyers: This book is more than an economic argument, it's a political manifesto. Let me read you the opening paragraph. Quote, "The power of big business over our national life has never been greater. Never have there been fewer business leaders willing to commit to the national interest over the selfish interest for the good of the company over that of the company's they head." Are you saying that these companies are unpatriotic for outsourcing jobs? Lou Dobbs: I'm saying not that they're unpatriotic but they're absolutely indifferent to the national interest, that they have given other interests primacy over the national interest. They've done so because, in my opinion, of a cultural shift over the last three to four decades in this country. The absence of a countervailing political influence to the power of corporate America. Lobbyists, think tanks, across the board the power of corporate America is unparalleled in Washington, DC. Moyers: It's not just corporations that are outsourcing jobs though. I mean in your own book you report 40 state governments, hospitals, even the non-profit Smithsonian Institution... Dobbs: Right. Moyers: [is] sending jobs abroad looking for cheaper labor and for skilled workers. Dobbs: And in each instance the enablers are corporate America. They are businesses whose business it is to kill American jobs and to ship those jobs overseas. This is insidious, it is spreading, it is absolutely dangerous in ever respect. Moyers: I'm no economist. Made only a B in economics by sitting next to my wife who was very helpful to me. She made an A. But even I know that services are now so much a part of any advanced economy that it seems inevitable that some service jobs will go to where they can be performed more cheaply. Dobbs: I think that's right. And I think that international trade is a reality of our modern existence. And it should be. I believe however that the idea that our middle class should be forced to compete on a price basis with those workers in an emerging market who are making in many cases cents, while our workers are making $15 to $20 an hour is totally unfair. We're talking about not an economic judgment but a political judgment, a social judgment. What kind of country do we want? Do we want to destroy the middle class? Because if we do let's continue outsourcing jobs. Moyers: But the law of classic comparative advantage... Dobbs: Sure. Moyers: ...has an affect. If a car if can be made more cheaply in Mexico that's where it should be made. Dobbs: Right. Moyers: If our telephone bill can be processed more cheaply in India that's where it should be sent. Dobbs: Actually Ricardo did not suggest in any way.... Moyers: The great economist. Dobbs: The economist who is the father of the comparative and absolute advantage. He did not in any way suggest that you should have the middle class of any country competing with 30 million unemployed Chinese. He never dreamed about the portability of the factors of production, capital and labor, our knowledge base, our technological advantages, which are being exported and sent to these countries for no other reason than the fact that their labor is cheaper than ours. And the idea that we would put our labor force in competition with the labor force in the case of India that's basically double our size, most of whom speak English, and work for about a tenth of our wages, is a political judgment. It is not an economic judgment. Moyers: A political judgment? Dobbs: Absolutely. Moyers: But libertarian economists like Lew Rockwell, who's been on this show, says it's government that's driving these jobs overseas by their high taxation, by regulation, by the big cost of lawyers. Dobbs: And I think there's a good case to be made that regulation, tort law, healthcare adds about, according to the U.S. Chamber of Commerce, about 22 percent to the cost of goods. So what. It's part of the cost of a better life. That's what this society is. We're a democratic free enterprise society. Unparalleled in our success. Are we to absolutely turn back the clock on every achievement that we've made to improve the lives of our citizens in order for a U.S. multinational to get cheaper labor in Romania or the Philippines or India or China? I don't think so. Moyers: But isn't it an economic fact that people who's skills are obsolete or who don't seek the requisite education and training will be left behind in the worlds changing markets? A world that Adam Smith and David Ricardo never could imagine. Dobbs: I think that that is probably a fair statement. But not necessarily relevant to outsourcing. They're not sending those jobs overseas because the labor force in this country is not capable of conducting a business operation of actually doing those job. Not because they have an inferior education. They're doing so because they, the financial institution, can pay cents on the dollar for labor in India, or the Philippines, or Romania and have to pay a living wage that provides a meaningful improvement in the quality of life for an American employee. And that's – that's damnable to me. Do you remember through the 1980's and the 1990's when you heard corporate leaders and some of the best management consultants in the world talking about the empowerment of the employee. The importance of empowerment to provide the basis for innovation. The importance of having a happy, satisfied, educated, striving, aspirational employee in order to drive the successful corporation. That talk has disappeared. Corporate America through its own devices over the course of the past decade has created an adversarial of relationship between the employee and the corporate leaders. And that's unfortunate. And so, yes, I think you not only can be sentimental, and I think there's room for it, but in driving a business you have a responsibility to a variety of stakeholders. You have a responsibility not only to your investors, you have a responsibility to the marketplace, you have a responsibility to your customers, to the community in which you work. You have a responsibility to the country that makes your business possible in the first place. Moyers: Heresy. Are you a traitor to your class? The investor class. Dobbs: Well, I'm, you know, I think most of us are investors. And I hardly think I'm a traitor. I think it's traitors and treasonous and absolutely ignorant for these people to be out ballyhooing double digit returns on equities when first we have to get our house in order in this country. And bring back integrity, principle, leadership to our business enterprises, to our markets. And try to do a lot better for the people who count. That is the middle class. Moyers: The powerful editorial page of The Economist says, Lou Dobbs has embarked on an anti-trade tirade. And that you greet each new announcement of outsourcing, like the one in the New York Times this morning, as akin to a terrorist assault. Dobbs: Right. Well, the excess I assure you is not on my side. Those critics, whether it be The Economist, a number of other writers, using language like that, it's silly. And they're not dealing with the arguments that I'm putting forward. The argument I'm putting forward is – is simple, don't put our middle class at risk by forcing only one element of our society and our economy to compete against the world. Particularly the cheap foreign labor. I'm not on a Jihad. I'm trying simply to wake people up. Trying to point out that we deserve far better representation in Washington than we're getting. And corporate America deserves somewhat less representation in Washington. Some proportion, some balance. Moyers: You say in your book that quote, "Corporations have overwhelmed government in the borderless global economy." How so? Dobbs: They've overwhelmed it because they have had the maximum influence in lobbying, the creation of international trade agreements in the direction of this economy. The World Trade Organization and NAFTA it now turns out are really outsourcing agreements. They give corporate America an opportunity to move plant, production and yes jobs to Mexico, to any part of the world and ship back into this market. Moyers: But your book is somewhat pessimistic on this. Because as you say this didn't just happen, this is the result of political decisions over the last quarter century. And you say big business all but controls the knowledge base on which Congress usually makes decisions – Dobbs: Absolutely. Moyers: – affecting economics and business. And that corporate interests spend more money on lobbying than the federal government spends on the staff of congress. Dobbs: That's right. We need a counter veiling influence to corporate America. One time it was organized labor. Labor has been so weakened in this country by both the force of corporate America and also by it's own missteps and misjudgments and weaknesses. We need to find a role for institutions that can provide a countervailing influence. What concerns me deeply though is that academia, our universities, many of them who resisted funding by the CIA or the federal government in the '60s and '70s are more than quick to embrace those dollars from corporate America. Understandably they want the money. But the fact is we're beholden at all cross purposes to corporate America. The independence of thought in this country, a countervailing influence is just not there. Moyers: Aren't both parties, in effect, wholly subsidiaries of the big corporate donors? Dobbs: Absolutely. And to watch the hundreds of millions of dollars that have moved into this campaign, Bill, has to make you sick as it does me. Because after McCain-Feingold it turns out there were one or two minor loopholes through which about a half billion dollars managed to move. Yes, both parties are absolutely loathe to offend corporate America. They're loathe to look out and say, "You know, we're a government of the people, by the people and for the people," because I don't think the people, based on the reaction from my viewership, feel like they're being adequately represented. Moyers: You begin with a stunning quote. I'll read it. Quote, "The 20th century has been characterized by three developments of great political importance: the growth of democracy, the growth of corporate power and the growth of corporate propaganda as a means of protecting corporate power against democracy." Dobbs: Absolutely. Corporate America has at this time taken – controls the national media. It controls nearly every avenue of – an American citizen's access to information about the way he or she lives, about those forces that are influencing our lives. And corporate America is protected in Washington by the dollars it spends. It is protected in the media by some virtue of ownership. Moyers: Do you see any sharp differences between the two parties in this campaign on this issue? I mean, John Kerry has been calling the CEOs you write about Benedict Arnolds. But do you see in the platforms and the performance and the history of these two parties any profound difference on it? Dobbs: Unfortunately, no. The Democrats brought us WTO. They brought us NAFTA in concert with the Republicans. John Kerry – has come up with some good ideas on how to incentivize corporations not to outsource. But Roger Altman, his advisor on economics, says he's not opposed to outsourcing itself. We can't have it both ways. I want to hear one of these candidates sharply and clearly say this country is about the people who live in it. That it's about your quality of life and we're going to do everything in our power, irrespective of our party's ideology, our party platform, we're going to examine carefully and thoughtfully our future. And we're going to understand what works and doesn't for the people. Not just the efficiency, the – productivity, the competitiveness of US multi-nationals which is really another code word for "you're going to work cheaper and you're not going to be able to buy as much." And you're not gonna be able to provide for your children and give them that opportunity. I want one of them desperately to say, "I'm all about America and I'm going to make it work, damn it." Moyers: Capitalism has so many contradictions. Dobbs: Absolutely. Moyers: I'm involved with foundations that are out to save the environment, that nonetheless invest in the energy companies that pollute. Dobbs: Right. Moyers: Because that's where the money is. I mean we're all caught in these contradictions. There's a website run by the Columbia Journalism Review called CampaignDesk.org. If you go there and click in you'll find a long article put up there recently called the two faces of Lou Dobbs. Have you seen it? Dobbs: Sure I have. Moyers: Is there a contradiction in denouncing these companies on the air and then recommending them as a financial advisor? Of saying this company is good even though it's outsourcing? Dobbs: I don't think so. But that may be – and I do now include the fact that they're outsourcing on – in investment judgments. But I've never suggested anyone they make an investment judgment based on whether a company outsources or does not outsource. I suggest people make investment decisions based on the value of the company, the importance, the relevance, the success of its products. And the commitment of its management. The commitment of its management to being a better corporate citizen.
That was a damn fine read, No Worries. It's something I wouldn't have seen anywhere else except here, in D&D. Dobbs is quite a interesting guy. I used to think his show, on CNN, was just about "business news" and the like. It wasn't something that grabbed my interest. But I find myself watching it often, now. He's very consistent about his views on this subject on his program. I have mixed feelings about the outsourcing. I spent enough time in developing countries, like Bangalore in India in the mid-'60's, to imagine how much good outsourcing is doing to their economies. I think we need some more balance there. Dobbs has some good points.
I don't have time to read the entire article right now, but I also believe that a moderate approach needs to be taken. Where would our companies be if we tried to protect all manufacturing jobs when they started moving overseas many years ago? You cannot fight natural evolution of a market or the global economy. It would be logical for the feds to intervene in a limited way in particular instances, but to do so in a major way, thinking that we can swim upstream would be expensive in a multitude of ways ... and ultimately futile.
American citizens are expected to support our country unconditionally, or we're literally labelled traitors and supporters of terrorism. American corporations ship hundreds of thousands of jobs and billions in tax revenue to communist regimes and dictatorships linked to terrorism, and we call it outsourcing.
Where would our companies be if we tried to protect all manufacturing jobs when they started moving overseas many years ago? What happens to the people who lost their manufacturing jobs and retrained as IT professionals just to see those jobs go overseas as well? How reluctant would these people be to retrain again? How irresponsible would it be for the US government to suggest that retraining is the way for outsourced workers to maintain their Amercian Dream(tm)? Losing low paying, low skill manufacturing jobs is one thing. Losing high paying, high skill white collar jobs is another. The truth is that China and India both have a huge surplus of highly educated and skilled workers who can work for 20% of the pay for an American worker. There are very few white collar jobs that are NOT at risk. I don't see offshore outsourcing trend reversing itself ever. Market forces will not be denied. But there will be a HUGE cost to our standard of living, while we wait for our middle class to sink and the Indian/Chinese middle classes to rise. In my lifetime, I have already seen the average family needing one breadwinner to get by change to needing two. I suspect that in the near future things will not get any easier on the Amercian middle class.
What do you propose? You absolutely cannot expect an American firm to compete if they are forced to pay factors more for labor. Say these companies didn't move any jobs overseas, then went bankrupt in a few years when they were beat by European or Japanese (or whatever) firms who did use some overseas labor? Then you not only don't have the jobs, but you don't have any company. No admin or remaining local IT jobs, no corporate income taxes, no retirement programs, no stock value. Nada. That sounds foolish to me. As for the one ot two bread winners, there's nothing that could have been done about that. We were essentially the only functioning (sizable) economy after WWII. It was destined to be temporary. As for what to do with the workforce, THAT is the question. Again, fighting the current is going to be a losing battle. You can soften and/or delay the economic blows to individuals, but you cannot change the inevitable. Time and money should be spent on a longterm solution instead on wasting all of it fighting the inevitable.
This argument all boils down to what you think corporations are about. If you believe that corporations solely exist to provide jobs, you will hate outsourcing. If believe as I do corporations exist solely to make profits for their shareholders, you have no problem with it. Our govt. saddles corporations with too many onerous regulations that make it cheaper to go somewhere else with less strictures. People here act as if it is the worst thing in the world that...heaven forbid, corporations outsource so they can make bigger profits, but jeez, that is why they exist! And besides, for every job sent overseas, the economy another job in some specific area. This is not the govt. where jobs for life are the norm and not the exception.
No, it does not boil down to a simplistic, two option choice about corporations - one of which is implictly and explicity better than the other. No, not even close, not by a long shot. Ask any economist that studies this and they would tell you the same. If only international economics were that simple. But it's not.
What is the long term solution? Our old long term solution was to transform our work force low skill to high skill. Wages for American workers could then remain high. The stand of living of our middle class could also remain high. When countries like India and China have workforces whose skill level matches our own, what do we do? Do we all train to be brain surgeons and hope the others can not follow (sucker's bet)? The only solution that I see is a non-solution. Do nothing. The US middle class takes a huge hit (driving the disparity between "the rich" and the rest of us). The purchasing power of the middle class is the engine for our internal economy. A significant drop in middle class wages will hurt our economy in the long term.
Due to my line of work I should hate outsourcing but honestly I'm not worried about it. Many CPA level jobs are being moved to India from the big 4 firms now (a friend of mine is working on an initiative for one of the big 4 now), but I offer my clients something they can't do as well, personal service. Granted if I never left my office and never worked at (or at least visited) my clients locations then I could easily be replaced in theory by a CPA (although in India I believe they have another designation) in India. So if you're only selling on price then be worried about being outsourced. But business is about quality, service and price. The issue does become what happens to the entry level CPAs at teh large firms. They've always incorporated a big front door (hire a lot) and big back door (get rid of a lot when you find out they aren't right) mentality. Will that change if more of the entry level work can be done in India for cheaper? Probably, but I have no idea to what extent. Also it will be interesting to see how the workers in India advance vs. their American counterparts. So I'm curious to see how it turns out. But right now I'm not worried about it. PS - You may want to bookmark this thread in case I am out of work in a few years complaining about outsourcing!
Actually, I think you can further boil it down to what you think society is about. If you believe that economic efficiency is the best means toward some form of utopian ideal, then you will support outsourcing by corporations. If you believe that protecting jobs of people is the better path toward that utopia, then you won't support outsourcing.
In some ways, the rate of innovations we (western world) have been pushing is part of the problem. Especially with the current communication changes, the geographical boundary is not longer a problem. A project manager can manage a project from New York with a team of people in India/China/UK. Online collaborations, sharing of documents/source codes/ is simple. The availability of information on demand makes most companys to compete globally. (most of the big companys have assets around the world anyways) When it comes down to it, captial will flow to the place where resources are the cheapest, and human labor is just another resource in this big equation. I am not sure is regulations curbing outsourcing would necessarily change anything.
When a plant closes its doors in Houston to open a facility in Mississippi, does it ever help Houston? Somehow, I doubt it. Securing American jobs and stable tax revenue are much more important to me than some vague idea of what my high school economics teacher said about the mythical, non-existent "free trade." We're the biggest, richest, most diverse economy in world history -- but we can only survive if we send our jobs overseas? I'm not buying it.
This is a really interesting subject to me because Clutch and I own a business where we could very easily outsource a fair amount of the work for markedly less than it would cost to pay someone here to do it. When you think about what it costs to pay a developer in the US per hour versus one overseas per hour, it is hard to argue the benefits as a company. This is particularly true when your business is very small and is in a fairly competitive environment. We are a corporation, but certainly not a big business and have yet to outsource any work to a foreign company. However, as much as we resist, there is the real possibility that we may have to do it in order to stay in business because this is simply a very competitive industry. I'm not fond of outsourcing on a huge scale, but I would be lying if I said it wasn't a consideration for a small company like ours that needs to keep costs low but still provide quality work for our customers. The truth is that, while we haven't done it yet, the day may come soon when it becomes inevitable in order for us to survive. So, it is either outsource or lose the business you worked your ass off to build. Which would you choose?
Originally posted by GreenVegan76 When a plant closes its doors in Houston to open a facility in Mississippi, does it ever help Houston? Somehow, I doubt it. If the plant was destined to close it's doors in Houston anyway... Securing American jobs and stable tax revenue are much more important to me than some vague idea of what my high school economics teacher said about the mythical, non-existent "free trade." Nothing at all mythical about market efficiencies. Jeff provides a case in point. We're the biggest, richest, most diverse economy in world history -- but we can only survive if we send our jobs overseas? I'm not buying it. That begs the question: why are we the biggest, richest, most diverse economy in world history? I can guarantee that it's not because of any restrictions that the government has put on companies that keep them from competing with foreign competitors.
Business is the ultimate in survival of the fittest Companys can be loyal to employees but customers will not, as they say, it's all about the benjamins The issue, as I see it, is keeping the workforce skilled enough to keep the high paying jobs in the US. The era of huge manufacturing bases in the US is over and if we want to keep the workforce employed, we must have the best education and training. You can't outsource something that isn't available elsewhere...
