Morning Bell
07/19/2012

 

Let's Be Honest About Outsourcing

Both candidates in the presidential race have been accusing the other of "outsourcing." It's one of those words that is loaded with negative meaning, implying that the perpetrator is un-American. But does America have an outsourcing problem?
What is popularly referred to as "outsourcing" is the practice of offshoring business functions, including building facilities and employing workers in other countries. Liberals often argue that "sending jobs overseas" is harming America's economy.
They are missing two important truths: The reality of jobs in America, and the ways to bring even more jobs to the home front.
Jobs in America

  • The U.S. actually leads the world in manufacturing. Yes, you read that correctly. We produce 21 percent of global manufactured products, while China comes after at 15 percent. According ot the National Association of Manufacturers, "manufacturing supports an estimated 17 million jobs in the U.S.—about one in six private sector jobs."
  • Big manufacturers are building new plants here. BMW is adding 300 new jobs to its South Carolina plant this year, and Airbus recently announced it will employ 1,000 at a new plant in Alabama. (Both South Carolina and Alabama are right-to-work states, meaning that workers aren't forced to join unions.)
  • Multinational corporations still employ more Americans. U.S.-based multinational corporations employ 22.9 million Americans—more than twice as many people as they employ in China, Mexico, and all other countries combined.
  • There is no "giant sucking sound" of jobs and money fleeing the United States. According to the U.S. Bureau of Economic Analysis, the total value of foreign investment in the United States exceeds the value of U.S. investments in other countries by more than $4 trillion. Foreign-owned multinational corporations employ 5.5 million people in the United States.
  • "Insourced" businesses are a tremendous boon for the U.S. economy. "Insourced" jobs—jobs brought to America by foreign-based companies—account for nearly 5 percent of private-sector employment. These businesses buy more than $1.8 trillion in goods and services from local suppliers and small businesses in the areas where they locate.

How to Boost American Jobs Even More
With an 8.2 percent unemployment rate, America still needs more jobs. There are many steps policymakers could take that would make locating—or relocating—in the U.S. more attractive to businesses.
A quick look at the Index of Economic Freedom, produced by The Heritage Foundation and The Wall Street Journal, reveals America's competitive disadvantages.
Hong Kong, ranked No. 1 in the Index, has an economy that has been growing at 7 percent. That's astounding. In contrast, U.S. GDP growth in the first quarter of 2012 was a paltry 1.9 percent.
There are several reasons why Hong Kong is No. 1 and America is No. 10. Hong Kong's top corporate tax rate is only 16.5 percent, compared to the U.S. rate of 35 percent. Hong Kong's trade regime is one of the world's most competitive and efficient, with a zero tariff rate. And its regulatory environment is "highly supportive of business efficiency."
Meanwhile, in the U.S., runaway regulations growing by the day make doing business vastly more expensive and difficult. The government is holding back the economy through regulation and its nonstop deficit spending, as Heritage's Bryan Riley explains:

Excessive federal spending and the resulting budget deficit continue to be a problem. Foreign investors spent more than $400 billion on U.S. Treasury securities in 2011. This is another way to say that the government borrowed more than $400 billion from foreign investors. Those dollars could have been invested otherwise in the private sector of the U.S. economy or spent on U.S. exports.

While concern about outsourcing is misplaced, there are many ways the U.S. could attract even more jobs than it already does. Increasing our own economic freedom would spur growth in the economy, bringing greater prosperity and new enterprises to our shores.

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Comments

  • @DanielCBrownJr: Well said."American Made" and cars don't go together anymore. A few may be put together here but it is few. Ford, supposedly number 1, uses a huge automated palnt in Brazil. Why??  To avoid the large cost of lazy union workers....and teh list goes on and on. Right now I th ink we ahve more foreign made cars actually manufactured here than "American".

  • The Heritage Foundation, (once a noble organization) is using statistics to tell lies here. The manufactories that are increasing in size are well heeled and easily able to work their way aroung the bureaucracy. Here in MD the county council  is trying to give $900,000 to Lockheed Martin as a grant. LH made a 13 billion dollar profit in the first quarter. Governments bend over backwards for glamorous favored businesses. Meanwhile businesses are closing because of government interference, taxes and regulations. Heritage has been taken over by RINOS.

  • With unions and taxes sucking the life blood from a company how can anyone blame them for trying to find a way out? When a union goes out on strike, the company should just fire every damn one of them and hire new people in. As for taxes...we keep electing new people when the OLD one's won't do what we ask of them!

  • If it makes more money for the company and keeps more tax money from the hands of these bastard politicians to steal, I say more power to you for outsourcing!

  • I have a suggestion!  Throw out all the unions, so that more people can get jobs.   I blame the unions for the outsourcing.  It's the only way some companies could make some money, get back in the 'black'.  After all, unions just continue to 'suck' more and more expenses.  At some point, a company has to take drastic measures to make money.  The once friend of the abused worker, has now become the enemy!  Especially politically.  And those union workers don't even realize how much of their 'dues' go to lining the pockets of union bosses, and politicians!

  • Well -- then how about if we buy our Olympic uniforms from a USA company, and our flags, and our tee shirts with the flag or American Eagle picture on it not from Viet Nam or Pakistan, but with the Made In USA label .. and the material they are made from originating from one of our factories too?  Maybe bring NIKI shoes and Wrangler jeans back home?  Now that would be an investment.

  • I love the Heritage Foundation.

    The message Washington" Back off and let the American make and keep most of their money!

  • Finally a reputable analysis of 'Outsourcing' (a term Bastardized by The Left and the paranoid on the Right).  Nobody Owes you a job !  Not The Corporation and Not The Government !

  • Where do these #s come from. Lets start w/ the lie of 8.2 unemployment rate. Still DC lies & the media repeats the lie. Remember the new recalculation formula by DC to make unemployment look better than what it is. Leaving out folks that their benefits ran out now on welfare folks that just gave up.Remember about a month ago folks here at the Tea Party added much to this list. DC can take all of these #s & stick it. The topic here is lets be honest. I read this by the Heritage Foundation & replied. I wont fall for any more of DC lies. God Bless the Tea Party & GOD BLESS AMERICA

  • The Heritage Foundation is a very reputable, Conservative organization and has a great deal of positive influence on Congress,  mainly Republicans of course.   This article basically shows how it's the Federal Government with it's regulations, fees  and other costs that make it hard for corporations to do business in the U.S., causing many of them to leave.  Some of these companies in other countries also have plants here as well.  If we had a better business climate here more foreign companies would also produce items here in the U.S. with our vast market and create more jobs.   Liberal Democrat policies of most of the last half-century has caused much of the problems with our economy, and with Obama's class-warfare and anti-business attitude against wealth & success,  contribute even more to this problem.

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