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Alexander Hamilton Institute
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International Trade
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Exporting America: An Interview With Lou Dobbs
The CNN anchor is mad ... about offshore outsourcing and
faith-based economics.
Interviewed By Jeff Fleischer
February 7, 2005
When American manufacturing jobs headed overseas in the 1990s,
supporters of tariff-free trade argued that newly unemployed workers
could simply find jobs in the growing high-tech sector. Yet
multinational corporations soon outsourced white-collar and
service-industry jobs as well, with overseas labor fielding support
questions from computer users, programming software, and even
examining X-rays and MRI scans for American consumers.
Outsourcing has found a fierce opponent in journalist Lou Dobbs.
Since 2003, his CNN news show Lou Dobbs Tonight has featured a
recurring segment in which Dobbs and his team report on corporations
sending jobs overseas. He has compiled an online list of
outsourcers, and recently wrote a book on the practice entitled
Exporting America. Dobbs recently spoke with MotherJones.com about
outsourcing and its effects, current and potential, on the American
economy.
MotherJones.com: When did the current outsourcing trend really begin
in earnest?
Lou Dobbs: It began really with the collapse of the telecom and
communications bubble in 2000. The corporations took advantage of a
digital universe to start moving jobs overseas to cheaper labor
markets, and then expanded from there -- to what's now an estimated
400,000-500,000 jobs a year being exported to cheap overseas labor
markets.
Moving from the manufacturing offshoring to outsourcing was really a
creation of the Internet; the bandwith made it all possible. And
while the web-based companies and technology companies and
telecommunications companies were obviously first with outsourcing,
it's now expanded to nearly every industry in the country and the
world.
MJ.com: In your book, you also describe how state and local
governments are now outsourcing. How did that start?
LD: It's come about because state governments are being approached
by the outsourcing facilitators, consultants and outsourcing
companies themselves. We've reported extensively on a number of
state governments whose outsourcing contracts are based in their
unemployment divisions and departments of labor -- where, for
example, people in Indiana at one point could call up their state
unemployment office and be talking to someone in India about
unemployment benefits -- denying citizens of Indiana a job to help
citizens of Indiana. It becomes increasingly mind-boggling what's
going on.
MJ.com: Obviously, the most immediate cost of this outsourcing is
the loss of people's jobs and livelihoods. What are some of the
other long-term consequences?
LD: Among the many consequences is the pain that is being felt by
working men and women in this country, particularly our middle
class. But the other impact is the transfer of technology and our
knowledge base. We're exporting our privacy as well, because medical
and financial records are being exported so that cheap overseas
labor can work with those documents and records.
Each time we transfer knowledge bases overseas, whether it be
manufacturing or technology or research, that is a service that will
obviously be performed by a competing economy -- whether emerging or
not, a competing economy. And it is work that will not be done by
the U.S. economy and our workers. The result is -- and this is at
the margins at this point, but could grow to an increasingly larger
share of the trade-deficit problem -- the result is further pressure
on the U.S. economy.
And a further impact in terms of labor is not just the loss of jobs.
Study after study, survey after survey, shows that every job that
replaces one that is outsourced pays approximately 20 percent less
than the job that was exported overseas. So we have a continuing
downward pressure on wages in this country. That has an impact on
education because obviously that money's not available to the tax
base that pays for education. It diminishes, in point of fact, the
income-tax base for the federal government and state governments. So
the impact is broad and it is deep.
MJ.com: When asked about outsourcing during the presidential
debates, George Bush talked about workers needing more education and
more skills. But where will the jobs come from for them to use those
skills?
LD: That's a question I've been asking for two years. This
faith-based economics that seems to be the hallmark of this
administration is leading us into a no man's land of inexplicable
possibilities. This administration -- and frankly, it's both
parties, Democrats and Republicans as well as the administration --
seems indifferent to the impact of a trade deficit that now amounts
to $4 trillion in external debt. We have to borrow nearly $3 billion
a day to support it. The dollar has plummeted. And yet everyone
keeps saying, "Free trade is good for you." I cannot find anyone for
whom free trade is good.
As we go deeper in debt, we continue to lose jobs and diminish our
manufacturing base. Many people want to talk about our dependency on
foreign oil, and it's a legitimate and real concern. But so is our
dependency on the rest of the world for our clothing, our food, our
computers and our consumer electronics. Our dependency isn't just on
foreign oil; we can't even clothe ourselves. Free-trade economists
will tell you we're a technology economy, but we don't even produce
the technological components that are the foundation of a technology
economy.
MJ.com: What steps have overseas markets such as India and the
Philippines taken to attract these jobs?
LD: It's just a straightforward sales proposition: "Give us your
business, whether it is Wall Street research, call centers or
radiology, and we will provide the same service for one-tenth of
what you're paying." It's impossible for an American worker to
compete with that. It's not because the American worker is any less
educated, because he or she is not. It's not because our workers are
any less productive, because they're more productive. It's simply
the labor-cost issues. In all the talk from the U.S multinationals,
and the orthodoxy of business, government, academia and media,
they're all using code words like "competitiveness," "productivity"
and "efficiency." Those are simply code for "the cheapest possible
labor."
MJ.com: It seems there isn't as much debate about the merits of
outsourcing as one might expect in politics and in the media. Why do
you think that is?
LD: Over the course of the past 20 years, there has been an absolute
move to market-based economics. And there's a libertarian impulse to
American politics right now, whether Democrat or Republican. That
outlook, of course, means as little government as possible. What I'd
like to see is a government that would actually be responsible for
its citizens, who are workers as well as taxpayers, but that runs
absolutely counter to the prevailing political notion, which is
basically libertarian in foundation.
MJ.com: How do you respond to the free-traders' argument that
outsourcing is a short-term problem required for long-term economic
growth?
LD: Well, there's nothing short-term about 28 consecutive years of
trade deficits. There's nothing short-term about a mounting external
debt as a result of our reliance on imports -- an external debt that
has reached $4 trillion. I see no basis whatsoever for the sophistry
that's coming from some of the conservative think tanks and much of
academia that says this is a short-term issue. This is real and
present pain for literally millions of Americans, and a clear and
present danger to an economy that has generated most of the wealth
of the entire world over the past 50 years. We could be near the end
of that role.
MJ.com: Proponents of outsourcing also point to what they call
"insourcing," with overseas companies opening factories here. Does
that provide any hope?
LD: It's an interesting semantic game that has been played in the
free-trade debate. The Bush administration has created this
expression of "insourcing" to counter arguments and concerns about
outsourcing of American jobs to cheaper labor markets. When they
talk about insourcing, they're really referring to foreign direct
investment in this country. We can't even keep up with the Chinese
government on foreign direct investment in this country; China has
for the first time surpassed the United States in that regard.
The Japanese car plants are here because Ronald Reagan -- who many
of the so-called free traders hold up as a paragon of free trade --
demanded that those plants be created here if they were going to
participate in our economy and enjoy the benefits of the world's
largest consumer economy. That wasn't free trade; it was rational,
balanced, reciprocal trade -- which is the course we should be
pursuing right now, and which all of our trade partners are
pursuing. We're the only nation in the world that just mindlessly
opens our markets irrespective of the constraints on our own goods
and services.
MJ.com: You talk about the need for a balanced middle ground between
protectionism and wide-open trade. What would be an ideal balance?
LD: Overall, we're going to have trade deficits with a given country
and a given economy. But we should not be borrowing money to support
our consumption habits over the course of 28 years. The argument has
been styled by the free-traders as opposition between economic
isolationists and free trade. The fact is free trade isn't working,
and nobody's talking about economic isolationism. We're talking
about mutuality and balance in which we eliminate deficits and
maintain vigorous, healthy trade with the world. But that requires
that we have a manufacturing base and reduce our dependency on
foreign oil, clothing and a host of other goods and services that we
can no longer afford to import.
MJ.com: Do you see a tipping point where the U.S. will have
outsourced so many jobs that the economy becomes unsustainable?
LD: The Federal Reserve did a study four years ago that demonstrated
that any time a trade deficit rose above 5 percent of a national
economy's GDP, an inflection point had been created. We are now
approaching 6 percent of GDP. Obviously, I hope this does not result
in crisis. That is, a debt crisis because of the amount of money we
have to borrow from overseas to support our imports, nor a
diminishment of our tax base through outsourcing to the point that
jobs become so poor-paying that we can't maintain our tax base. But
all of that is entirely possible unless people awaken to the dangers
that are being posed. I know this is dull stuff for many people, to
talk about external debt and currency devaluations. But the fact is,
they're all in prospect if we do not reverse these mindless
policies.
MJ.com: What type of protections can the U.S. include in future
trade agreements to place the American worker at less of a
disadvantage?
LD: To make the American worker more competitive, what we should
really be talking about is preserving the American way of life.
Environmental protection. Protection for our working men and women.
That has built up over 100 years in this country, and we are simply
at risk of losing all of those protections. As we should have with
NAFTA, we should sign only agreements with protections on the
environment and on labor. Either we have that with every trading
partner, or we will be at a disadvantage.
The ultimate extension of the free-trade policies that are being
pursued is that not only will there be a race to the bottom for
wages for working men and women, but we're also going to have to
eradicate the "inconvenient" and uncompetitive environmental
protections that allow us to drink clean water and breathe clean
air. And, by the way, those nasty child-labor laws could be an
encumbrance to competitiveness; maybe we should get rid of those as
well. How far are we going to roll back the progress of the past
century?
MJ.com: If the federal government were suddenly to choose to fight
outsourcing, what should it do?
LD: The first issue is to stop the destruction of an American job.
The principal issue I have with outsourcing is that American
companies -- based in the United States, providing goods and
services to the U.S. consumer economy -- are killing jobs in this
country and sending them overseas to provide the same goods and
services back to the U.S. economy. I have no problem if they want to
invest and create a market in India or the Philippines or wherever.
That's great, but don't kill an American job and put it in the hands
of someone making one-tenth as much just to send that same good or
service back to the United States. That's what's unique and
different, and that's what has to be stopped. As far as ways to do
it, we could do it with regulation. One would hope that before that,
corporate America would find a conscience. But failing that,
regulation is entirely necessary, I'm all for it, and my apologies
to the libertarians.
MJ.com: What about those jobs already shipped overseas? Could some
of those come back?
LD: Some of those jobs are already coming back, because companies
are finding that despite whatever huge labor savings [the gain],
there are also hidden costs, including the quality of the
programming that's being done. For example, the quality of the code
work that's being done by programmers in a number of the cheap labor
markets, including India. Indian workers are remarkable people,
highly entrepreneurial and well-educated, but they still cannot
compete with American programmers where it's a matter of quality
instead of cost. There's also a bit of a backlash now on the export
of these jobs on the part of consumers. And my guess is that
backlash is going to rise, and there will be economic costs as a
result.
MJ.com: It seems like you've been more active about outsourcing than
probably any other issue during your years as a journalist. Why has
this issue gotten you so involved?
LD: Because at a time when this economy needed to be growing jobs,
we were exporting jobs. At a time of economic downturn, we were
raising the U.S. trade deficit even further. And the sophistry of
the free-trade orthodoxy -- talking about how uneducated Americans
are, how unproductive and incapable of competing -- just frankly
rankles the ... out of me. We were smart enough in the ‘90s to
generate 22 million new jobs. Did we, in the course of four years,
become so stupid, so lazy and so unproductive, or did something else
change? I maintain something else changed, and that was policies
that permitted destructive business practices like outsourcing, and
a continuation of free-trade policies that are leading to greater
trade deficits and greater indebtedness on the part of the United
States. We simply cannot sustain the path we're on.
Jeff Fleischer is an editorial fellow at MotherJones.com. |
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Promoting the
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