Evidently, sauce for the goose is not sauce for the gander.
We’ve become accustomed to the breast-beating and recriminations that accompany decisions by American businesses to manufacture goods in other countries, or to move existing operations overseas. In the latter case, the loss of jobs is a genuine “hit” and efforts to retain them are understandable–although, as we’ve seen with Trump’s Carrier deal, often costly and counterproductive.
We almost never hear about the other side of the equation, however. Indiana, in particular, has benefited mightily from outsourcing decisions made by foreign companies. According to the Indiana Business Research Center at Indiana University, in 2015, Indiana had 152,700 workers employed by foreign-owned firms. (Think of the Honda plant in Greensburg, the Isuzu plant in Lafayette, etc.) Of the jobs created by foreign companies located in Indiana, 97,900 were manufacturing jobs that accounted for 3.1 percent of the state’s private employment.
Similarly, automation–not trade– accounts for most of the job losses in the United States. Trade actually creates jobs (although often the jobs created are different from those that are lost, and that does make for winners and losers). According to a January 2010 report from the Business Roundtable, at that time, 761,500 jobs in Indiana depended on trade.
In 2008, 20.5 percent of jobs in Indiana depended on trade, up from 10.0 percent in 1992. Indiana’s trade-related employment grew more than five times faster than total employment from 2004 to 2008.
This is not to minimize the issues raised by job losses; the impact on workers who find themselves unemployed–and often, due to age or lack of other marketable skills, unemployable–is very real. The impact on communities when a major employer closes or downsizes are equally real, and challenging. But addressing the consequences requires an accurate understanding of the causes.
To use a medical analogy, prescribing the proper remedy requires a correct diagnosis of the disease being treated.
The globalization of the economy has proceeded too far to be undone, even if we wanted to mount a retreat. History teaches us–or should teach us–that erecting trade barriers, punishing companies with tariffs on their foreign operations, and the other measures Trump has threatened–simply invite retaliation that hurts everyone.
It’s comforting to have a target for our economic frustrations, a “bumper sticker” solution to a problem. Unfortunately, modern life is more complicated than such “solutions” recognize. Automation has multiple virtues, but it does cause troubling job losses. There are good trade agreements and bad ones. Losing jobs as a result of American outsourcing is painful; gaining jobs as a result of Japanese or Canadian or British outsourcing is gratifying.
The world is a complicated place.