President Obama is slamming Mitt Romney for heading companies that were "pioneers in outsourcing U.S. jobs," while Romney is accusing Obama of being "the real outsourcer-in-chief."
These are the dog days of summer and the silly season of presidential campaigns. But can we get real, please?
The American economy has moved way beyond outsourcing abroad or even "in-sourcing." Most big companies headquartered in America don't send jobs overseas and don't bring jobs here from abroad.
That's because most are no longer really "American" companies. They've become global networks that design, make, buy, and sell things wherever around the world it's most profitable for them to do so.
As an Apple executive told the New York Times, "we don't have an obligation to solve America's problems. Our only obligation is making the best product possible." He might have added "and showing profits big enough to continually increase our share price."
Forget the debate over outsourcing. The real question is how to make Americans so competitive that all global companies -- whether or not headquartered in the United States -- will create good jobs in America.
Apple employs 43,000 people in the United States but contracts with over 700,000 workers overseas. It assembles iPhones in China both because wages are low there and because Apple's Chinese contractors can quickly mobilize workers from company dorms at almost any hour of the day or night.
But low wages aren't the major force driving Apple or any other American-based corporate network abroad. The components Apple's Chinese contractors assemble come from many places around the world with wages as high if not higher than in the United States.
More than a third of what you pay for an iPhone ends up in Japan, because that's where some of its most advanced components are made. Seventeen percent goes to Germany, whose precision manufacturers pay wages higher than those paid to American manufacturing workers, on average, because German workers are more highly skilled. Thirteen percent comes from South Korea, whose median wage isn't far from our own.
Workers in the United States get only about 6 percent of what you pay for an iPhone. It goes to American designers, lawyers, and financiers, as well as Apple's top executives.
American-based companies are also doing more of their research and development abroad. The share of R&D spending going to the foreign subsidiaries of American-based companies rose from 9 percent in 1989 to almost 16 percent in 2009, according to the National Science Foundation.
What's going on? Put simply, America isn't educating enough of our people well enough to get American-based companies to do more of their high-value added work here.
Our K-12 school system isn't nearly up to what it should be. American students continue to do poorly in math and science relative to students in other advanced countries. Japan, Germany, South Korea, Canada, Australia, Ireland, Sweden, and France all top us.
American universities continue to rank high but many are being starved of government funds and are having trouble keeping up. More and more young Americans and their families can't afford a college education. China, by contrast, is investing like mad in world-class universities and research centers.
Transportation and communication systems abroad are also becoming better and more reliable. In case you hadn't noticed, American roads are congested, our bridges are in disrepair, and our ports are becoming outmoded.
So forget the debate over outsourcing. The way we get good jobs back is with a national strategy to make Americans more competitive -- retooling our schools, getting more of our young people through college or giving them a first-class technical education, remaking our infrastructure, and thereby guaranteeing a large share of Americans add significant value to the global economy.
But big American-based companies aren't pushing this agenda, despite their huge clout in Washington. They don't care about making Americans more competitive. They say they have no obligation to solve America's problems.
They want lower corporate taxes, lower taxes for their executives, fewer regulations, and less public spending. And to achieve these goals they maintain legions of lobbyists and are pouring boatloads of money into political campaigns. The Supreme Court even says they're "people" under the First Amendment, and can contribute as much as they want to political campaigns - even in secret.
The core problem isn't outsourcing. It's that the prosperity of America's big businesses -- which are really global networks that happen to be headquartered here--- has become disconnected from the well-being of most Americans.
Mitt Romney's Bain Capital is no different from any other global corporation -- which is exactly why Romney's so-called "business experience" is irrelevant to the real problems facing most Americans.
Without a government that's focused on more and better jobs, we're left with global corporations that don't give a damn.
ROBERT B. REICH, Chancellor's Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including the best sellers "Aftershock" and "The Work of Nations." His latest is an e-book, "Beyond Outrage." He is also a founding editor of the American Prospect magazine and chairman of Common Cause.
Follow Robert Reich on Twitter: www.twitter.com/RBReich
There is no question that “outsourcing” was involved to some extent in the administration of the stimulus and the issue is complex.
But the preliminary question is why has it taken the Republicans and their allied media so long to put this in their spotlight IF it is as simple an issue as they now claim? We posit that they held off realizing that it was a complicated matter.
In fact, there is no equality in the comparison of the Romney outsourcing to that of the 700 billion dollar stimulus. In the case of Romney it’s the simple matter of his moving his money out and moving jobs out in companies over which he had acquired direct and complete control.
While Solyndra appeared to be a government mistake, it was a lesson that had to be learned. That it does not pay to invest in a relatively small and new industrial entity which must deal with the “sweatshop” and dumping predatory practices of countries like China and Mexico.
Some of the stimulus money was invested in promoting the American wind farm industry. This has given rise to the charge that those American companies bought most of their turbine generators overseas. But industry experts have testified that this was necessary since these items were extremely difficult to purchase in the U.S. Examples of similar transactions abound.
Before achieving a huge trade balance vs. the U.S., China had to do some experimenting.
good luck with that Mr. Reich!
Capitalism for the poor and socialism for the rich.
education for workers in the US is done at the discretion of the individual workers in order to improve the attractiveness in the labor market, but too often waste their money doing so because they are not well-enough informed about the quality or usefulness of the educational services they purchase.
Actually, the tax-payers of those countries subsidize the talent these corporations hire with little return on their investment, if any.
system because for years, Americans were convinced by politicians that "We're number one (even though the data doesn't support that claim)". And that our failings in educating our children were always caused by someone else in the system. The reality is that the USA IS "number one"... Number one in deluding itself about what it takes to sufficiently educate our nation's children. And the primary failure is that too many American parents have bought into the notion peddled by the "feel good
school of self-esteem building" educators that their children are
"unique and special" without actually accomplishing things academically. And only when they get out school and
learn that their skills and training don't sufficiently prepare them for college nor prepare them to work at anyplace other than fast food joints, do they have a chance to realize that the system screwed them. Oh wait! They can always borrow lots of money from the federal government for college courses at community colleges that are often remedial given their poorly designed and/or poorly administered public K-12 programs. In the meantime, kids in other countries like New Zealand can take vocational courses as part of their public school education starting as early as the 9th grade. And while entry into post-high school institutions is very competitive, kids in countries like Germany pay VERY little to attend four-year universities versus what kids in the US pay (even with in-state tuition rates). So, really. What is
Professor Reich is totally correct: the #1 goal for business is to make profit. We can't warp this incentive, it is natural and unequivocal. What this article points out is that we can channel this impulse in ways that benefit society and grow wealth more rapidly.
Education helps. So does infrastructure development. Businesses will go to do their thing where there is the most advanced communications technology and educated populace. That way, they can reap some big gains.
That's why they go to China, the country investing like mad in infrastructure.
That's why most of the advanced technologies going into Apple products and other consumer items is made in countries with better education systems and productive capacities.
We did this before. We invested in our people and in R&D. That's why we were the world's superpower in the post-war era. We gave up on this for over 30 years.
We need to regain this once again.
Yes, but for what reason? The goal in the US is for corporate profits that feed most of those profits back to the political class in a positive feedback loop. We do not manage corporations actions or really look at the cost of those profits which go to some versus the external costs that go to everyone else.
Giving a person a job is giving support.
What do you call a person or political party that supports Communist China?
In the end there will be no war. China will simply buy us.
China will buy us with the money they have made from the jobs we
have given them.
How is it at all acceptable that that the average American must make all the sacrifices, while those who benefit the most, the actual Capitalists, have absolutely no sense of responsibility or patriotism towards the system that put them in the globally dominant position they are in.
You cannot justify the fact that they started out as American companies and were allowed to rape, pillage and plunder all of our resources, then walk away and claim they own nothing in return.
If we want this country to coninue to be seen as the "Greatest Country on Earth", we must demand that those who benefited the most from it fulfill their obligations and responsibilities to the country and people that enabled them. The same system in which every American Citizen has sacrificed (some much more than others, such as soldiers, police, firemen), yet have not duly benefited from.
The worst part is that we are expected to pick up the pieces of a country left ravaged by the race to global dominance, with only the scraps with which to do it, while the agents of its destruction run off with everything they have stolen along the way, including the trophy and all the benefits that go along with the title.
NO!