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Saturday, July 10, 2010

Exporting America: Why Corporate Greed Is Shipping American Jobs Overseas

Uninformed and Self-Righteous

It looks like a book. It’s priced like a book. It’s sold in bookstores and carried by libraries. But it’s not really a book. Exporting America is merely an extended, furious yelp by CNN’s Lou Dobbs. It has no index and no bibliography. Nor does it have a single citation to any of the alleged facts that he throws at his readers—which would be worse if he threw many facts at his readers. Truth is, this “book” is short on facts, and long on invective.

Dobbs spits his vituperation at two groups. The first is “Corporate America” (the capitalization is his): rich, greedy, heartless bigwigs who fire workers in America and replace them with low-paid workers in the Third World. This strategy is driven by the bigwigs’ need to maximize short-run profits. The second group is free-trade advocates: ideological, heartless eggheads and politicians whose “blind faith” in free trade and the market provides intellectual cover for the greedy bigwigs to continue to “export jobs.”

Dobbs loathes this alliance, for it means that our “blind” adherence to free trade might go on long enough to rid America of her middle class. Sounding very much like the leftist Thomas Frank, who argues that the many middle-class Americans who vote for cutting taxes, reducing regulation, and increasing their freedom to trade have been duped, Dobbs just knows that “outsourcing” of American jobs is destructive and wicked. He is outraged at outsourcing and astonished that more Americans don’t share his rage.

He cries: “We should be worrying about the prospect of more jobs and more businesses being wiped out by cheap foreign labor, and even more worried about those who blindly advocate free trade for its own sake—well, actually for the sake of powerful U.S. multinational corporations.”

He uncovers ominous developments: “And corporate logos in many cases have more powerful symbolic importance than national flags.”

He puts matters in perspective: “I don’t think helping consumers save a few cents on trinkets and T-shirts is worth the loss of American jobs.”

Mostly he fulminates: “But the simple truth is that our multinationals and our elected officials who support them without reservation are callously and shamelessly selling out the American worker.”

No coherent theory underlies Dobbs’s concerns and accusations. He’s as naive on matters of trade as one can possibly be. In Dobbs’s view, when Americans buy foreign product or services, other Americans are harmed because expenditures abroad mean less demand for American output and, hence, less demand for American workers. The result is unemployment and lower wages. This downward spiral in American prosperity won’t stop until most American workers are paid wages equal to the paltry wages paid in Third World countries—unless, of course, Congress steps in.

Dobbs never stops to ask, “Why are foreigners so eager to earn U.S. dollars by exporting goods and services to Americans?” Nor does he ask why private investment in the United States has been so much higher over the past few centuries—continuing to this very day—than it is in Third World countries.

In a marvelous, if unintended, testament to the success of free-trade ideas, Dobbs nevertheless rejects the label “protectionist.” (This rejection is dishonest, for a protectionist is exactly what he is.) He describes himself as a “balanced trader.”

By “balanced trade,” Dobbs means trading relationships in which the United States runs neither a trade surplus nor a trade deficit with the rest of the world or even with any individual country. Even I, who wasn’t expecting much real analysis from Dobbs, was surprised that he is completely unaware of what “trade deficit” means and that there’s an inherent balance in trade accounts. Any trade deficit (more precisely, any current-account deficit) is exactly balanced by a capital-account surplus. That is, if the United States runs a $500 billion current-account deficit this year, it runs a $500 billion capital-account surplus—which means that foreigners are investing at least this amount in American assets.

Dobbs’s obsession with what he mistakenly identifies as “balanced trade” is especially annoying because he declares that Adam Smith would agree with him. That is unlikely, given that Smith declared in The Wealth of Nations: “Nothing, however, can be more absurd than this whole doctrine of the balance of trade . . . ”

Friends of free trade will find no arguments or data in this book to challenge their presumptions or theories. Opponents of free trade will find no arguments or data to support their presumptions or theories. All that anyone will find is ranting and raving, as uninformed as it is self-righteous and as hysterical as it is mistaken.

  • Donald J. Boudreaux is a senior fellow with the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University, a Mercatus Center Board Member, and a professor of economics and former economics-department chair at George Mason University.