“PROTECT AMERICAN JOBS FROM GOING OVERSEAS” – ANOTHER POLITICAL JARGON
Here’s another gnat that is often spotted on the campaign trail. It is some variation of: “I will protect American jobs from going overseas.” It is truly sad to drive past old mills and factories that once were the lifeline of the local economy. All that is left are locks on the gates, graffiti on the walls and “for sale” signs in the front. It is even sadder to talk to those who used to work in them. They remember the day when they were called to the front office and told that they were no longer needed and that they should learn some new trade. One told me with tears in his eyes, “That machine was all I ever knew. I am too old to start all over.”
Why did this happen? There are several reasons for what is called “offshoring.” Cheap labor is the first. For example, the minimum wage in East China’s Zhejiang Province is $200 a month. That may be enough by Chinese standards but how can an American family live on that? At one time collective bargaining was the answer but now it is a sure way to drive away any business. Another reason is the excessive regulations in our country. The recent raid at the Gibson Guitar factory is just one example. Apparently, Gibson had violated the Lacey Act of 1900 that prohibited the export of wildlife, especially bird feathers. No – they don’t use bird feathers to make guitars but in 2008 the Lacey Act had been amended to include plants. Since Gibson uses a special blend of wood from India, they were in violation! Such regulations are frustrating for our businesses. Those that try to save the jobs from going overseas have to face the high corporate income taxes. Some companies are now focusing on the global market. They claim that they are moving their jobs where their new consumers are located. We can argue with these reasons but those are the facts.
So what can the government do about this problem? First, government should not prop up mediocre companies. In other words, our taxes should not be used to reward inferior products. Customers should be allowed to vote with their wallets. Second, government should not make vain promises to the people. Those jobs are gone and some others might follow. That is the sad reality of the new world in which we live. Third, government should not penalize offshoring companies. Cheap labor allows these companies to keep the cost down for the American consumers. We live better than the rest of the world because we can afford cheap products from overseas. If the product is too expensive, Americans will stop buying. Not only our standard of living will collapse but our economy will as well. Businesses will shut down and more job losses will follow.
So what is the solution? First, the tax system against American goods in foreign markets needs to be challenged. Although American companies are welcome to hire in foreign countries, they have to pay exuberant taxes to sell in those markets. Hence, most American products are being dumped back in American markets. This is an unfair burden against the American economy and our government should stand up against this. Second, Americans need to wake up. While we slept, the world was catching up. Remember the race between the turtle and the rabbit (I prefer the Bugs Bunny version!). For too long we have tolerated a culture of mediocrity and entitlement in our nation. American workers will have to prove that they can deliver higher quality and ingenuity with the least griping. We used to call that our “Puritan work-ethic.” Our education system will have to prepare our children and grandchildren to face this new economy. According to Robyn Meredith, “American fifteen-year-old olds are tied for twenty-first place in average academic performance globally.” (The Elephant and the Dragon: The Rise of India and China and what it means for all of us.) Thirdly, we need to be patient and ready. Cheap products made by cheap labor with cheap ingredients will work only so long. Remember that phrase – “you get what you pay for.” The same wind that blew our jobs overseas will blow them back to us.
Next time someone promises an easy solution to this problem, swat that gnat.