They’re Killing Jobs, Not Saving Them

Frenzy over outsourcing

What if California could administer state services for free? Imagine the taxpayer refunds. Imagine what entrepreneurs would do with all that extra cash in hand. Wouldn’t we welcome such a proposal as one of the greatest efficiency innovations ever?

Unfortunately, lawmakers would likely mislabel the proposal a threat to state jobs and promptly squash it.

The Democrat-controlled Senate just passed a bill that would forbid California from sending government work to foreign lands. Offshore outsourcing often saves governments money, but many in our Legislature – even in the face of record deficits – see no need to slim our beefy government.

So firm is their resistance to reform that Senate Democrats passed the outsourcing ban just as a study – commissioned by their Democratic Assembly colleagues – found that outsourcing would likely be good for job creation. The study, by the Public Policy Institute of California, suggests that outsourcing’s productivity gains could increase living standards at home.

Unfortunately, state lawmakers muddy the issue by treating all jobs – whether government or private – the same. Forget all that nonsense about protecting life, liberty and the pursuit of happiness; today many lawmakers use government as a jobs program. So where most of us see efficiency gains that allow for private sector job creation, the political class sees job-killers.

But just how many jobs would be “killed”? Although specific figures are hard to come by, an anti-outsourcing group recently documented roughly $75 million worth of government work sent overseas by the 50 state legislatures. (Our Legislature can spend that much during a coffee break.) Although the report was intended to stir fears about the rise of offshore outsourcing, it actually revealed how infrequently states make use of the practice.

Still, dozens of state legislatures have decided to beat up on the tiny amount of offshoring done by governments. New Jersey sent about a dozen unemployment assistance call-center jobs overseas, but after politicians took turns registering their outrage, the jobs came back – costing taxpayers $100,000 per job. New Jersey could have doled out tens of thousands in severance pay and job training for each outsourced worker, and still delivered savings to taxpayers. Instead, lawmakers decided to ride the wave of outsourcing paranoia.

It’s time for California to sober up, and remember that government exists to provide services, not jobs. Outsourcing – like technological advancement – allows governments to do things better and more efficiently. A wasteful private company will hurt itself by sinking into bankruptcy. However, a wasteful government will just keep sinking, dragging others down with it.

Only a wealthy nation can purchase the services of software engineers and orthodontists. But a fatter government slows the private sector because a society forced to pay for more government workers has less ability to pay others to make software or straighten teeth. The real threat to jobs isn’t from foreigners, but from homegrown politicians who make it more inviting for companies to set up shop beyond California’s borders.

If we choose to regard government as a jobs program, there will always be plenty of opportunities to “create” jobs by promoting wastefulness. California could expand upon the New Jersey model. After bringing government jobs back to American soil we could create even more jobs by, say, eliminating computers. For each destroyed computer we could employ dozens of human bookkeepers. Want to create more jobs for human scribes? Just dump every copier in every government office. Feel that? It’s the unemployment rate shrinking.

Of course, each concession to inefficiency makes our state less competitive and makes future job growth – in areas that actually improve living standards – less likely.

The governors of Maryland and Massachusetts understand that a wasteful government hurts job growth. Each state recently endured the same crusade against the same manufactured bogeymen. However, when their frantic statehouses passed anti-outsourcing legislation, each governor coolly broke out his veto pen. Here’s hoping our governor stays just as cool.

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

Ted Balaker is an award-winning filmmaker, journalist, and founding partner of Korchula Productions, a film and new media production company devoted to making important ideas entertaining.

Ted is the director of Can We Take a Joke?, a Korchula Productions feature documentary about the collision between comedy and outrage culture featuring comedians such as Gilbert Gottfried, Penn Jillette, Jim Norton, Lisa Lampanelli, and Adam Carolla. Ted is producing Little Pink House, a Korchula Productions feature narrative about about Susette Kelo's historic fight to save her beloved home and neighborhood. The film stars two-time Academy Award nominee Catherine Keener (Capote, Being John Malkovich, The 40-Year-Old Virgin) and Emmy nominee Jeanne Tripplehorn (Big Love, The Firm, Basic Instinct).

Ted produced the award-winning shorts The Conversation and Cute Couple. He is an executive producer on the feature documentary Honor Flight, and produced the film's first trailer, which attracted more than 4.5 million views. The Honor Flight premiere attracted an audience of more than 28,000 and set the Guinness World Record for largest film screening in history.

Ted is a founding member of ReasonTV, where he produced hundreds of videos and documentary shorts, including Raiding California, which introduced a nationwide audience to the Charles Lynch medical marijuana case.

Ted is co-creator of The Drew Carey Project, a series of documentary shorts hosted by Drew Carey, and creator of the comedic series Don't Cops Have Better Things to Do? and Nanny of the Month.

His ReasonTV contributions have been featured by The Wall Street Journal, MSNBC, Fox News Channel, and on the he John Stossel Special Bailouts and Bull, a first-of-its-kind joint project between ABC News and ReasonTV.

During Ted's tenure, ReasonTV received the Templeton Freedom Award for Innovative Media and in 2008 Businessweek recognized his short Where's My Bailout? (created with Courtney Balaker) as among the best of bailout humor.

Prior to joining Reason, Ted spent five years producing at ABC Network News, producing hour-long specials and 20/20 segments on topics ranging from free speech to addiction.

Ted's written work has appeared in dozens of publications, including The Los Angeles Times, The New York Times, The Huffington Post, Reason magazine, The Washington Post, and USA TODAY. He is the author or co-author of 11 studies on topics ranging from urban policy to global trade, and his research has been presented before organizations such as the Mont Pelerin Society and the American Economic Association.

Ted is co-author (with Sam Staley) of the book The Road More Traveled (Rowman & Littlefield, 2006), which Chapman University's Joel Kotkin says "should be required reading, not only for planners and their students, but for anyone who loves cities and wants them to thrive."

Ted has appeared on many radio and television programs, including ABC World News Tonight and the CBS Evening News, and has interviewed hundreds of thinkers and innovators, ranging from X Prize recipient and private spaceflight pioneer Burt Rutan to Templeton Prize-winning biologist and philosopher Francisco Ayala.

Ted graduated Phi Beta Kappa from the University of California, Irvine with degrees in political science and English.