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Corporations & Global Sweatshops                                                                                                                                                                                                                                                                                                                        

The Republican Economics of Outsourcing


F. David Shelene




In the 2004 Economic Report of the President: "Out-sourcing Makes Sense", President Bush said that, "When a good or service is produced more cheaply abroad, it makes more sense to import it than make or provide it domestically," (Washington Post 2/13/04).  N. Gregory Mankiw, Chairman of Bush's Council of Economic Advisors also said, "The movement of U.S. factory jobs and white-collar work to other countries is part of a positive transformation that will enrich the U.S. economy over time, even if it causes short-term pain and dislocation. Out-sourcing is just a new way of doing international trade," (Los Angeles Times, 2/10/04). In other words, if you are supporting your family with a job that can be done cheaper overseas, don’t expect any help from the current President.


If we look at Supply-and-Demand only, then yes, that argument has some merit.  There will always be people willing to work for less.  We must compete against companies whose employees are living in shacks, have no plumbing, no vehicle, and are getting paid at third-world rates.  Logically to compete, the US standard of living must someday decline to theirs.  There will not be enough high paid citizens to buy the goods that we buy now with our higher wages, so corporate profits will fall. Such is the global economy.  Maybe we will find new products to produce so the U.S. can still be a leader in the world and not just another country competing with everyone else. If not, we will be just like those nations whose citizens live in shanties; a nation of rich and poor, and no middle class.


The fact is, the rest of the world has caught up with the US in manufacturing. Relocating our factories and our technology to their soil is part of the reason for this.  For example, according to DuPont’s web-site, in 2003, DuPont had revenues of $27 billion and is the 67th largest U.S. Industrial/Service Corporation.  DuPont operates in 70 countries worldwide with 135 manufacturing and processing facilities.  The company has more than 40 research and development and customer service labs in the United States and more than 35 labs in 11 other countries.  DuPont recently announced it is constructing a $15 million corporate research and development facility near Shanghai China to support growth in the Asia Pacific region.


Steel is just one of the commodities many countries produce that compete with U.S. manufacturers.  If we have a conflict, however, we will have to make sure we are not at war with a country that we purchase our steel from, because, of course, they will not sell it to us.  We must also make sure the conflict isn’t against the country that provides our computer chips, or high-tech magnets for our smart bombs, recently moved to China.  Those countries will be able to demand and receive anything they wish from us.  Not a very pleasant thought.


I believe our nation is at a very dangerous crossroad.  Already, there are some products we no longer manufacture or can’t produce enough of.   If all of our steel mills are running 100% producing every ounce of steel they can, they are capable of producing only 80% of the steel we use on a daily basis in peacetime!  If we ever find ourselves in a large-scale war, a war even one-third the size of World War II, we will be in the position of having to buy foreign steel just to go to war.  Before things become worse, we should subsidize our steel industry in so much as it is a major part of our national defense.


At this time, the countries we purchase from need our money more than we need their product.  If we continue on the road we have been traveling, that situation will reverse.  We will no longer manufacture many of the commodities we must have to survive as a nation.  We will require their product more than they need our money. At that point, the United States will truly be a second rate power.  Our once powerful industry will be gone.


I am not a total protectionist.  I believe we must co-exist with other countries.  I also believe in fair competition. Americans can out-produce anyone when on a level-playing field.  The playing field is far from level.


When our corporate leaders move a plant or product to a country that has no minimum wage, no environmental protections, and no laws or benefits protecting workers, they are assisting in keeping those people in poverty or worse.  When a factory dumps hazardous waste into a stream where a few yards down people without plumbing are obtaining drinking water it doesn’t take a rocket scientist to see they are killing these people.  Who’s responsible?  When we buy that product, knowing these conditions exist, we are!  With our dollars, we are personally helping keep the people of that country in poverty.  We are also giving countries legitimacy that don’t deserve it.


When will we realize we are in the catbird’s seat!  Those nations crave the billions of dollars Americans spend on their products like drug addict craves a drug.  We must exercise our economic clout now to drive a harder bargain. Before we compete with anyone, we must demand that they adhere to the accepted standards most of the industrialized world recognizes.  Only then will there be real competition in the world economy.  And, we will be assisting the people of those countries by bringing their standard of living up to ours, not seeing our standards decline to theirs.

 


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