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MONDAY, SEPTEMBER 10, 2018
Click HERE for last Friday's quote from The Christian Science Monitor
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OUTSOURCING: A BATTLE CRY
"We have got to stop sending jobs overseas."
October 15, 1992
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Editor's Note: When we began publishing these TTALK Quotes, several years ago now, the idea was that the quotes could come from any speaker and from any time period. We have gotten away from that a bit, with more and more entries being quite contemporary. We make no apology for that, but neither do we want to lose the perspective, the discipline, of looking back. And so, as promised in the last entry, here is an older one.
BACKGROUND
The were three top candidates for president in 1992. George H.W. Bush was the incumbent, seeking a second term. Trade had been a relatively large part of his first four years. In the fall of 1992, the Bush administration had largely completed the NAFTA negotiations and were still plowing forward in the Uruguay Round. Bill Clinton, the Democratic challenger, was clearly trying to navigate a course between his party's trade sceptics on one hand and the dangers inherent in any radical departure in international affairs on the other. Picking a pre-election fight with Mexico was clearly not part of his agenda. Then there was Ross Perot, the businessman running as the leader of the Reform Party, which he had established. Mr. Perot had no such qualms.
Today's featured quote is from the second of the three presidential debates that fall. It was held in Richmond, Virginia, on Thursday, October 15. One of the first questions from the audience had to do with international trade, and it was directed at Mr. Perot. Here is part of that exchange.
AUDIENCE QUESTION:
I'd like to direct my question to Mr. Perot. What will you do as President to open foreign markets to fair competition from American business and to stop unfair competition here at home from foreign countries so that we can bring jobs back to the United States?
MR. PEROT:
That's right at the top of my agenda. We've shipped millions of jobs overseas ... .
We have got to stop sending jobs overseas. To those of you in the audience who are business people, pretty simple: If you're paying $12, $13, $14 an hour for factory workers, and you can move your factory south of the border, pay $1 an hour for labor, hire young -- let's assume you've been in business for a long time; you've got a mature work force -- pay $1 an hour for your labor, have no health care -- that's the most expensive single element in making a car -- have no environmental controls, no pollution controls, and no retirement, and you don't care about anything but making money, there will be a giant sucking sound going south. So if the people send me to Washington, the first thing I'll do is study that 2,000-page agreement and make sure it's a two-way street.
I have one last part here. I decided I was dumb and didn't understand it, so I called the "Who's Who" of the folks that have been around it. And I said, "Why won't everybody go south?" They say, "It would be disruptive." I said, "For how long?" I finally got them up for 12 to 15 years. And I said, "Well, how does it stop being disruptive?" And that is, when their jobs come up from $1 an hour to $6 an hour, and ours go down to $6 an hour, then it's leveled again. But in the meantime, you've wrecked the country with these kinds of deals. We've got to cut it out.
As for the ellipses in the above, Mr. Perot made an attack on Washington's revolving door - people who move back-and-forth between senior government positions and more lucrative lobbying jobs - a key part of his critique of NAFTA and other trade agreements. We have omitted most of that, but if you click the first link below, you will find it easily enough.
Mr. Perot's argument in that debate was the most memorable, but the other two candidates both had something to say on the issue. President Bush said the key to improving U.S. employment was expanding exports, which is why his administration was in the business of negotiating trade agreements. He said:
I want to have more of these free trade agreements because export jobs are increasing far faster than any jobs that may have moved overseas. That's a scare tactic, because it's not that many. But any one that's here, we want to have more jobs here, and the way to do that is to increase our exports.
Bill Clinton, then Governor of Arkansas, wove his response from the threads spun by the other two candidates. He said:
I've actually been a Governor for 12 years, so I've known a lot of people who have lost their jobs because of jobs moving overseas, and I know a lot of people whose plants have been strengthened by increasing exports.
The trick is to expand our export base and to expand trade on terms that are fair to us. It is true that our exports to Mexico, for example, have gone up, and our trade deficit's gone down. It's also true that just today a record-high trade deficit was announced with Japan.
So what is the answer? Let me just mention three things very quickly. Number one, make sure that other countries are as open to our markets as our markets are to them. If they're not, have measures on the books that don't take forever and a day to implement.
Number two, change the Tax Code. There are more deductions in the Tax Code for shutting plants down and moving overseas than there are for modernizing plants and equipment here. Our competitors don't do that. Emphasize and subsidize modernizing plants and equipment here, not moving plants overseas.
Number three, stop the Federal Government's program that now gives low interest loans and job training funds to companies that will actually shut down and move to other countries, but we won't do the same thing for plants that stay here. So more trade, but on fair terms, and favor investment in America.
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We knew last week, of course, that we were going to share with you the above quotes from Ross Perot. It had not been our intention to include so much from Bill Clinton's response, but it was too rich to ignore, including, as it does, an emphasis on the goal of creating more American jobs but mainly through changes in domestic law rather than through trade agreements.
To repeat an earlier thought, the NAFTA issues have been festering for some time. And they are not restricted to developments in North America. Even today, as we bite our nails wondering whether Canada will join, whether NAFTA 2.0 will come together, there is a broad recognition that the bigger issues are elsewhere, most immediately in the troubled U.S. trading relationship with China. But let's break out those two thoughts: first the notion of "for some time," and then the idea of NAFTA as a bay in much wider sea of issues.
In November 2013, commentators were writing their assessments of what soon would be NAFTA's 20th anniversary, and in that month, The New York Times ran some startlingly different assessments. In her article, Laura Carlsen of the Center for International Policy argued that NAFTA had been devastating for Mexican agriculture, had led to dramatic increases in displaced Mexicans migrating to the United States and, cited a poll showing, she said, "that the majority of U.S. people favor 'leaving' or 'renegotiating' the model trade agreement."
Gary Hufbauer of the Peterson Institute for International Economics had a very different take on NAFTA. In his New York Times article of November 25, 2013, he wrote:
Real U.S. trade with its North American partners grew 156 percent in 20 years. Of course all three economies are larger: real North American gross domestic product grew 70 percent between 1993 and 2013 But we have calculated that real two-way trade grew faster than real gross domestic product, by a margin of 86 percentage points. NAFTA can claim much of the credit, and faster trade growth raised income in all three countries.
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Daniel Patrick Moynihan gets credit for the line, "Everyone is entitled to his own opinion but not to his own facts." Alas, if the last few years have taught us anything, it is that there are always plenty of fact to go around, enough to bolster almost any argument. And so, whatever the debate, each camp will use its own set of facts and ignore the rest.
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We'll leave NAFTA there for today, but with this added thought. NAFTA was and is only one of many outsourcing and relocation issues. And those issues too are a cloth with numerous threads. One we frequently find ourselves thinking about - though we are not sure we have the courage to go into it - is the changing relationship between Americans and "American" companies. For us, the touchstone of that change was a comment made by a Motorola executive sometime in the mid-1990s. This was at a meeting in Washington, and the insight, the policy that executive shared was this: "We won't say anything anywhere that we can't say everywhere." At the time, we took that to mean that, with employees all over the globe, her company would not short change or insult those in one country by overpraising or favoring those in another. The implications of that thought have only grown over the years.
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From the Second Debate. This is a link to the transcript of the second presidential debate of 1992, as published by the University of California at Santa Barbara. This was the source for today's featured quote.
A Bad Deal is a link to the op-ed by Laura Carlsen, referenced above, which was published by The New York Times on November 24, 2013.
A Good Deal is a link to the op-ed by Gary Hufbauer, referenced above, which was published by The New York Times on November 25, 2013.
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©2018 The Global Business Dialogue, Inc.
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R. K. Morris, Editor
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