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 Richmans' Trade and Taxes Blog

Who's the real outsourcer, Romney or Obama?
Howard Richman, 7/9/2012

The Obama campaign has been running a series of campaign ads which call Romney an "outsourcer." According to Glenn Kessler in the Washington Post (4 Pinocchios for Obama’s newest anti-Romney ad), they create a false portrayal.

First, the Obama campaign ads claim that Romney regularly outsourced jobs when he was head of Bain capital, a generalization based upon a single instance. Kessler writes:

The Obama campaign rests its case on three examples of Bain-controlled companies sending jobs overseas. But only one of the examples — involving Holson Burns Group — took place when Romney was actively managing Bain Capital.

The Obama campaign also claims that Romney outsourced jobs as Governor of Massachusetts. Again, this generalization is based upon a single instance. Kessler writes:

The claim that Romney outsourced jobs as governor is equally overblown.

This concerns Romney’s veto of a bill that would have prohibited Massachusetts from contracting with companies that outsourced the state’s work to other countries. Lawmakers were especially concerned about a $160,000-a-month contract with Citigroup to operate a system of electronic food-stamp cards that included a customer phone service center in India.

On CNN last Sunday, Candy Crowley challenged one of Obama's campaign advisers on the campaign's decision to continue to air these adds even though they were basically untrue. You can watch the interview on The Blaze.

So why is the Obama campaign making a mountain out of this mole hill? Perhaps they are doing so in order to hide the real mountain. President Obama has been outsourcing on a grand scale. Take China, for example.

Under Obama's stewardship, Chinese factories sell to America freely without restraint, but should American factories sell to China, they face barrier after barrier. By permitting this unequal trading arrangement, Obama prevents American manufacturing jobs from coming back.

As we related in the May 9 American Thinker (Here Comes the Made in China Cadillac), when President Obama let the Chinese government raise tariffs upon GM's large-engine made-in-America cars from 25% to about 47%, he helped the Chinese government force GM to build factories in China and give away its Cadillac technologies to Chinese competitors simply to have access to the Chinese market. American workers not only lose present jobs, but they lose the future jobs that innovative technologies could produce.

Similarly, by letting China place a 30% tariff on all excavators, Obama virtually forces Caterpillar to build its new crawler factories in China in order to access the Chinese market, as my father and I pointed out in the October 4, 2010, American Thinker (WTO Helping China Loot Caterpillar).

Then there are American meat products. China lets in American raw grains, but not American meat. It uses a variety of subterfuges to keep out American meat, including a tariff of up to 105.4% on U.S. chicken exports. as my son, father and I pointed out in the Feb. 15, 2010, American Thinker (Playing Chicken with China).

And tariffs are only one of the tools China uses to keep out American products. It simply makes it impossible for American meat to be imported. It manipulates currency exchange rates so that American products are about 25% to 40% more expensive in China than they would otherwise be. It publishes catalogs of goods that exclude American products from those that can be procured by China's huge and growing government sector.

And the Chinese government excludes exports from purchase by its 1.3 billion people simply by moving its economy back toward socialism. In March 30, 2011, testimony before the U.S.-China Economic and Security Review Commission, Dr. Derek Scissors, a senior fellow of the Heritage Foundation, explained the mechanism. He wrote:

In most sectors [of China's economomy], there is no market of 1.3 billion. Instead, there is what is left after the SOEs [State Owned Enterprises] are handed the bulk. This applies, of course, to American companies looking to serve the Chinese market. It is no surprise that official data indicate the foreign investment share has plummeted in the past few years. The truncated market extends to U.S. exports. The various forms of subsidy provided to SOEs are far bigger barriers to American goods than the yuan’s peg to the dollar. Subsidization has been and can be increased to offset currency changes.

The following chart tells the same story through statistics. Under Obama's stewardship, every month for the last 27 months, U.S. net exports (exports minus imports) in goods to China have fallen steadily due to the Chinese government keeping out made-in-America products:

In terms of jobs, negative net exports of $305 billion per year represent about 3 million productive American manufacturing workers (at $100,000 product per worker) that would have come back had Obama required balanced trade by invoking the WTO rule for trade deficit countries that Nixon invoked in 1971,

But instead, President Obama continued to give China American manufacturing jobs. Since January 2010, net exports to China have declined by about $3 billion per month. That's 30,000 good paying middle class manufacturing jobs that Obama has outsourced to China each month.

President Obama criticizes Romney for having outsourcing a handful of jobs several decades ago, meanwhile he outsources 30,000 jobs to China each month, and that doesn't count the jobs that he outsources to America's other trading partners. President Romney promises to get tough with China. He couldn't possibly be a worse outsourcer than Obama.

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  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

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