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Reason Foundation

Kerry, Edwards Love Outsourcing

Candidates supporting protectionist policies

Ted Balaker
November 1, 2004

John Kerry and John Edwards love outsourcing. That is, they love talking about it.

"If you think outsourcing jobs is good, then you should vote for George Bush!" Edwards told a crowd in outsourcing-wary Ohio, the state that might be the election's most coveted prize.

He had to be enjoying himself as he bellowed, "John Kerry and I want to keep good jobs in America!"

The Kerry-Edwards rhetorical strategy is that simple: oppose outsourcing and you're the American worker's best friend. We witnessed outsourcing's equal-and-opposite effect during the chillier atmosphere of the last presidential debate.

"Mr. President, what do you say to someone in this country who has lost his job to someone overseas who's being paid a fraction of what that job paid here in the United States?"

When moderator Bob Schieffer finished his question we could almost feel the president's palms sweat. We also learned why politics will always get in the way of job growth.

Imagine a pollster standing in front of a focus group of undecided voters, proposing this: "OK, CEOs fire American workers so they can make bigger profits by giving the jobs to lower paid foreigners. Now this might sound cruel, but in the end more jobs will be created. We don't know what those jobs will be, but trust me, they'll be good!"

No focus group would side with a plan that promises vague benefits sometime in the future, particularly when it involves bringing pain to real people, right now. And yes, the talk about how outsourcing frees up money to invest in new jobs would seem fanciful, except that it follows the centuries-old pattern of job creation.

A new innovation allows some task to be done more efficiently, perhaps by using less raw material or fewer workers. The innovation shakes up the status quo, and some people lose their jobs, but when the dust settles, there are more jobs than before.

Earlier debate moderators could have replaced outsourcing with a reference to NAFTA, or to a U.S. auto worker forced to compete with the Japanese, or even to a 19th century weaver forced to compete with mechanical looms. No matter the era, any candidate unfortunate enough to field the question would probably get just as squeamish as the president.

And yet if we are truly concerned about job creation, the sweaty palms should go to the candidate who wants to slow innovation's job-creation potential. Remember the internet worried all sorts of brick-and-mortar companies, and many professions such as travel agent struggle to survive in the face of new online competitors like Priceline.com. And yet new jobs emerge. Today's want-ads offer "web design" and "internet engineering," employment categories that did not exist a decade ago.

If, during the internet's early days, President Clinton bit his lower lip, felt our pain and took up the fight against this new threat to jobs, what would have become of all of today's internet workers? Would we have been better off stalling the internet's emergence?

Whether it's new technology, trade, or outsourcing, innovation will continue to create jobs, but protectionism will always play better at stump speeches. For while it's tricky to know who benefits from innovation, the victims are always plane to see.

The outsourced worker knows who he is, and TV reporters know where to find him. The rest of us watch the news, and we see the frustration in his face. We wonder if our job might be next. Since unions organize to save today's jobs, not ones that have yet to be created, they rally for Americans jobs and against corporate greed. It's no wonder the Kerry-Edwards team can't resist taking swipes at outsourcing.

Even though today's job threat is likely to be tomorrow's job creator, the candidate can't afford to think about tomorrow—he needs votes today. If he sides with innovation, voters won't hail him as a visionary who wants to make sure our children inherit a robust job-creating economy. He'll get reamed for being out-of-touch, for locking arms with corporate fat cats, and for handing American jobs to foreigners. Indeed, a recent poll found that over 70 percent of Americans think outsourcing hurts the economy.

Politicians will probably always have a better shot of winning the jobs debate by supporting protectionist policies, which ironically, result in fewer jobs. Like any innovation, outsourcing will cause pain, but overall it will likely contribute to a better future, and why would we want protection from that?

Ted Balaker is the Jacob's Fellow at Reason Foundation.


Ted Balaker is Producer


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