I found this article on another blogger's site, but I honestly don't know which one it was now. If you do know, please let me know, and I'll give proper credit where it's due.
The interesting thing is the discussion of how other countries see the United States' growing offshoring of high-paying jobs. This quote is very illuminating, "A senior Chinese official drew silence at a dinner last week when he asked Americans at the conference how their country planned to finance its economy when both blue-collar manufacturing and white-collar service jobs were leaving the country." This is in addition to the article's claim that the PRC's economy will eclipse that of the U.S. by 2041.
The PRC having a growing and dynamic economy is a good thing for everyone, especially the Chinese, unless it comes at the expense of our own. In that case, we need to take measures to ensure the vitality of our economy, while at the same time finding ways to promote economic growth around the world. This is particularly true if you accept the post-WWII rhetoric (as most Americans do) that free markets make free people.
The question of how we are going to maintain our economy while sending both industrial and office (or knowledge) jobs to other countries. Can we continue to reinvent the national economy quickly enough to replace the jobs lost? Consider this: people have lately been replacing their old $45,000 per year jobs with $35,000 per year jobs. This means less money goes into our economy. This is bad enough, but what about professionals who lose their $60-80,000 per year jobs and can't replace them at all. What impact does that have?
In addition to sending the textiles jobs from the Carolinas overseas, jobs making furniture, cars, aircraft, electronic components, and steel, we are now sending office and professional jobs to less expensive locales. Call centers, software engineering, biotech, architectural, engineering, and IT Help Desk positions are bein reloacted out of the country. In some industries the moves are made to avoid "high" U.S. corporate income taxes by sending manufacturing out of the country. In others the impetus is the lower wages offered in the developing world. The most prominent example is still in IT. A software engineer in the United States makes an average salary of around $60,000. A similarly educated and experienced software engineer in Bangalore, India makes $6-8,000 per year. The cost savings are obvious.
What is not so obvious is the real impact to the companies gathering in these short term cost savings. If enough jobs are lost in the U.S., only to be replaced with low-end service and retail positions, who exactly are these companies going to sell their products to?
This issue affects all industries equally. If Americans suffer permanent loss in income, who will buy cars, houses, clothes, computers, televisions, cell phones, gaming consoles, or vacations? Who will go to movies, buy CDs, visit restaurants, or attend college? If we continue to allow significant proportions of our decent paying, middle-class jobs to be shipped to other nations, the very companies that are now using offshoring to boost their profits will find they have destroyed their primary market.
So how do we keep this from happening? The first step is to close the accounting and tax loopholes that make it so profitable to move manufacturing offshore. This removes a major incentive for many companies to go outside the United States to make products that will be consumed here.
The second is to ensure that the FTAA agreement dies a quiet death, and that NAFTA is repealed. Strangely enough H. Ross Perot was almost prescient when he warned that the sucking sound we heard was American jobs leaving the country.
A third is to institute reasonable tariffs on imports. By reasonable, I mean no higher than the traditional 15% duty. This kind of tariff will generate revenue and adda slight amount of protectionism that further reduces American businesses incentives to go offshore.
A final step is to make sure that the income American companies earn from people located in the United States is always taxed, regardless of the location the good or service is produced in. Again, this will generate revenue and create further disincentives to go offshore.
All of these steps require beating cheap-labor conservatives at the ballot box and mobilizing American workers. Neither task will be easy, but both are possible and necessary.
Posted by Chris at January 30, 2004 03:24 PM