Outsourcing, China and the Presidential Campaign
NEW YORK (TheStreet) -- President Obama and Governor Mitt Romney each claims they would do better standing up for American workers against unfair trade with China. However, when it comes to outsourcing both have sins to repent.
Just about everyone who has had a choice between buying an American-made product or an import -- a car, a dress or bottle of wine -- must admit international trade based on national differences in knowhow, labor costs and natural resources can help us live better.
If Americans expect to sell Boeing aircraft and Microsoft Windows abroad, then they must be prepared to outsource some of what they buy directly, or through firms assembling goods here.
The problem is not outsourcing but importing products that could be made as or less expensively in the U.S. That happens when: U.S. policy throws up unnecessary barriers to domestic business; foreign governments subsidize inefficient production or simply keep out competitive American products; or U.S. firms have an inappropriate bias toward foreign sourcing.Those swell the trade deficit, imposing great costs, and both President Obama and Governor Romney each share some guilt. President Obama's tough restrictions on oil and gas development in the Gulf, off the Atlantic and Pacific Coasts and in Alaska do not reduce U.S. petroleum consumption but merely shift exploration and production to costlier and riskier locations abroad. Environmental Protection Agency limits on CO2 emissions encourage manufacturers to locate in China, where similar regulations do not apply. Both kill U.S. jobs without an environmental benefit. China keeps its products artificially cheap and encourages U.S. manufacturers to locate production in the Middle Kingdom by suppressing the value of its currency, imposing high tariffs and throwing up administrative barriers to U.S. goods and services. In the wake of the financial crisis, Beijing required its stimulus money be spent in China, and yet President Obama permitted billions of U.S. stimulus money to be spent in China and similarly protectionist regimes. For example, GE (GE), whose CEO heads the President's Job's Council, used stimulus grants to purchase components for U.S. wind turbines from the Chengxi Shipyard -- a state-controlled company that builds vessels for the Chinese Navy -- even though an American supplier offered to match its price.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV