Importing Labor the Flip Side of Offshoring

By James R. Edwards, Jr. on December 17, 2010

Liberal economist Harold Meyerson isn't my cup of tea. I find I usually disagree with him, that he's too much of a Keynesian rather than a Smithian. But his recent column decrying offshoring to China and elsewhere in the Third World by big international corporations made an excellent point. If Big Business really does regard America as a global asset that directly benefits them, then they should stop shipping jobs abroad. They should sprinkle the field with the seed and fertilizer of capital, sufficiently so as to attract native-born labor.

Meyerson quoted Intel founder Andy Grove in making his case against offshoring. Grove has become quite a celebrated advocate for investing capital in America and creating jobs here. In fact, Grove has been featured making this argument – compellingly – in prominent media such as Bloomberg. Interestingly, in the past Grove has been supportive of the importation of cheap foreign workers, a la the H-1B visa prominently used and abused in the high-tech arena.

It's altogether true that shutting down factories in Ohio, Indiana, and Pennsylvania and replacing them with plants in China and India destroys our competitiveness and risks our intellectual property. It proves the folly of the "free trade uber alles" mantra so many on the Right parrot. As David Landes reported in The Wealth and Poverty of Nations, "[T]he Japanese reply [to criticism of 'mercantilist' policies] that the end of economic policy is not low prices and discount distribution. The goal is market share, increased capacity, industrial and military strength."

But it would continue the net competitive loss for the United States if temporary work visas like L-1 and H-1B for skilled workers and H-2A and H-2B for unskilled workers were too readily available. After all, inshoring labor poses the same zero-sum economic competitive loss as a shuttered factory here. American workers are denied the opportunity to improve skills, gain knowledge, and contribute their native-born know-how in real-world economically competitive situations.

The Indian or Chinese may well return to his home country, where his government will expect him to pour out for the benefit of the state the knowledge and experience packed inside his head. It's not like we don't already know that China and India aggressively engage in economic hardball and don't especially care for America.

Like Landes' take on the Japanese mindset, these countries unabashedly put their own country's economy first: "Producers are more important than consumers. Anyone can buy, but not everyone can make." China and India get it. Too many in the halls of American power don't. Nor do they appreciate that these foreign workers gain invaluable experience, training, and insight working in these American jobs – and they can and will use that experience against us.

Of course, imported cheap labor depresses wages and makes it ever more difficult for Americans to compete for those jobs. What good does it do to build a factory in Michigan if management ships in a workforce of foreigners instead of hiring Americans?

As Meyerson notes, Germany proves that high native labor costs don't necessarily translate into uncompetitiveness. If German jobs at German wages yield German economic success, why won't the same model work here? It absolutely would work the same here.

We need to get it through the heads of the powers that be that we can't afford, as a matter of national economic interest, to displace American workers in their own homeland with a foreign-born workforce.

And did I mention that U.S. unemployment is nearly 10 percent, about twice that if you count the underemployed and discouraged American workers? Offshoring factories, no! Inshoring a foreign workforce, also no!