Monday, July 05, 2004

An export or an ex-employee? 

As part of my continuing to inject more economics into this blog while keeping its SCSU and higher-ed missions in place, I would like you to consider this bit of flotsam.*
When John Kerry calls offshoring a practice of "Benedict Arnold CEOs" he hits the nail on the head. The neo-conservative ideal of a global free marketplace overlooks the basic fact that offshoring unfairly marginalizes the citizens of the exporting country.
Unfairly? Well, we see this further below.
In most cases it merely lowers business costs and is unnecessary to maintain commercial success.
So already we have someone who thinks costs and profits are unrelated, or at least that the majority of American firms have excess profits. Bruce Bartlett pointed out in Investor's Business Daily yesterday this report at the Small Business Administration that shows a majority of jobs lost as well as gained come from small businesses. Does the author wish to keep costs high for these firms?
Kerry correctly sees offshoring (offshore outsourcing) as a business-ethical issue. That's why his economic plan stops short of protectionism. But unless business leaders quickly come to see this as the moral issue it clearly is - and exercise restraint accordingly - they will give Americans no other choice but to demand that the U.S. government intervene to resurrect regressive barriers to trade.
No other choice meaning that they have to have exactly the jobs they have now, at the wage rate they currently have. Who gives them this right, or teacher of business ethics (yes, he is, as we shall see)?
Imagine if I were to decide for example, as upper-level manager of my local community hospital, to fire my neighbor, a father and radiologist whose job can now be outsourced electronically to India.

As a neo-liberal, I would not see how being American grants any greater moral claim to gainful employment than does being Indian. And since offshoring the job costs a lot less than keeping it local, I might very well see the ends as justifying the means, especially if it can be shown that, by extension, doing so also increases the value of both the U.S. and Indian economies, thereby creating more jobs at home and abroad.

But consider the difficulty of my middle-aged neighbor and parent forced to return to college for another graduate degree while living on a diminished income, then searching for a job years later, still having to pay off the college loan. These are real stresses, indeed struggles, to be incurred broadly across the middle class.
Or consider the difficulty of my middle-aged neighbor and parent whose firm is closed because he can no longer acquire that vital input to his production of new goods and services. Or consider the fifteen employees he has to lay off. Or consider the people who don't get the goods that firm used to produce. Or don't. After all, you are a business ethicist, you have already chosen which little people will be protected and which shall be enslaved.
What the pro-offshoring argument seems to forget is that our rights and obligations are rooted in a collective social contract by, for and of a community of citizens.
Gee, have you been talking to Hillary? This fellow is thoroughly wedded to statism.
The taxes we pay to fund education, infrastructure, private enterprise, etc., are provided exclusively for us - not for any other people.
And a tad nativist.
It would thus be absurd to turn any and every offshorable job - which, according to the McKinsey Global Institute, represents roughly 30 percent of our GDP - over to the citizens of another country which have not participated in the slightest in the establishment of the network of social institutions necessary for the creation of those jobs.
It is equally absurd to think that some elistist prig like you could decide where the creation of jobs should happen, either. We all receive our income through persuasion, through voluntary exchange. I do not recognize your right to impose your decisions on who deserves the fruits of trade. Those fruits belong to those who create them, the buyer and the seller, the employer and the employee.
Essentially, it would be asking Americans to sacrifice the hard-earned privileges of our productive industrialized society in order to benefit citizens of pastoral countries such as India that only recently chose to industrialize.
No, if you could possibly understand comparative advantage, you would know that trade benefits us as well as India.
If we think seriously about the economic hardships, the instability and the insecurities suffered from lives of constant retraining, it's clear no rational person would accept that proposition.
And if you disagree with him, then you're not "thinking seriously" and are "not rational". What a lovely bit of argumentation.
Capitalism is a particularly demanding social contract that implies a high degree of trust.
At last, a sentence I agree with.
When that trust is broken on a grand scale, in the corporate accounting scandals or in the current offshoring race, it compromises the people's faith in capitalism itself.
Who are "the people"? Are they the ones creating new firms and contracting with other firms? Are they the 671 thousand workers that have found jobs in the last three months? Who are you talking about?? (New rule: People who use the definite article before the word "people" to mean "millions of individuals who all think like one uneducated blob of boobs" are to be shunned. Starting with you, Maher.)
Thus, the continuing legitimacy of that system rests to a great extent on business leaders taking ethics seriously.
Well this is a small wonder, given that you are a business ethics philosopher. Not just that, but you're unemployed.
Julian Friedland just finished a visiting professor contract in philosophy at St. Cloud State University in Minnesota where he taught global business ethics. He previously lived in Boulder and taught at the University of Colorado and Metro State. He's returning to the Denver area this month.
It should be noted that the course he taught for us is required of every business student. The history of faculty teaching this course hss been one of substantial hostility towards capitalism. I can understand why AACSB accreditation would induce schools to place this course in every program, but it's not required; regrettably, its function in some cases is increasingly to shame students.

*I double-blinked on "flotsam" too! It seems like Lileks OWNS that word, don't you think?