Exporting American Jobs   October 23, 2012

Every election season I am amazed at the nonsense that gets tossed around. I am not taking sides here because it happens on both sides. This is just the topic that has irked me from the last debates.

Of the jobs that go overseas, the vast majority don't go there because an American company ships them offshore. They leave because a foreign company that has a competitive advantage increases their market share and the American competitor lays off or closes. Look at the industries that have been the most effected over the last 50 years like machine tools, an industry that used to be huge in this area. Did we lose machine tool jobs because American manufacturers shipped their jobs overseas? There are barely any American manufacturers left! How many of the American electronics companies that used to be household names are still around? How many American steel companies went into bankruptcy?

There are a lot of reasons to do something in a particular place and it is not always cheap labor. Toyota and Honda make cars here even though the labor is higher here. Sometimes it is better to be closer to the consumers. Sometimes it is good to be close to resources. There are a lot of factors for American companies to do some things in other places also. Hopefully not all of their consumers are in this company.

Our tax policies have in many cases rewarded foreign companies for performing some of their operations here even though most of their operations are overseas. Now we are going to punish American companies for having some of their operations overseas even though most of their operations are here? We want to reward foreign companies and punish American companies for doing the same thing? Does that make sense to anyone? Really?

To me this demonstrates an utter lack of understanding of how the global economy really works. When an American company moves an operation to another company some jobs are moved. That is correct. But a lot of jobs stay here. If an American company closes due to foreign competition all of the jobs are lost. Every single one of them. Is that really better? We talk about other countries that will not allow American companies to compete on an even playing field but sometimes we don't have a level playing field for our own companies. Maybe it is good politics but it is awful economics.