What Conservatives Think #021304: Employment: Is Bush Trying to Push Jobs Overseas?

The Left Says:

“The economy has hemorrhaged 2.8 million manufacturing jobs since President Bush took office. And the Administration thinks that’s just ducky… The rationale, as explained by White House economist Gregory Mankiw, is that shipping jobs overseas is simply the ‘latest manifestations of the gains from trade that economists have talked about.’ Summing up the Administration’s position, the [White House economic] report said: ‘When a good or service is produced more cheaply abroad, it makes more sense to import it than make or provide it domestically.’ …The White House resorted to tacit red-baiting to attack those who are troubled by the ‘offshoring’ and want to prevent it. Mankiw said deciding that certain jobs must remain in the United States would be the equivalent of the state economic planning that ultimately brought down the Soviet Union.”

Source: The Progress Report, Center for American Progress, February 10, 2004

What Conservatives Think:

“It is not from benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest… [Man is] led by an invisible hand to promote an end which was no part his intention…” – Adam Smith, Wealth of Nations

Free-market conservatives, while cognizant of the short-term pain caused by job market adjustments, understand that economic flexibility — which at times means that jobs once done in the U.S. are now done elsewhere, or nowhere at all — increases economic prosperity for all.

Two hundred years ago, many people earned livings as hostlers, curriers, chandlers and lamp-boys. Today many people don’t even know what those professions were. One hundred years ago, 33 percent of our workers were in agriculture. Today only 2 percent are. No doubt the loss of these professions embittered some. But would Americans today be better off without a modern economy? Would most of us prefer that the economic growth of the last several decades had not happened? No.

Alan Greenspan addressed the topic in a January 26, 2004 speech to a London conference:

…in the developed world [during the mid-20th century], distortions induced by regulation were more and more disturbing. In response, starting in the 1970s, American Presidents, supported by bipartisan majorities in the Congress, deregulated large segments of the transportation, communications, energy, and financial services industries. The stated purpose was to enhance competition, which was increasingly seen as a significant spur to productivity growth and elevated standards of living. Assisting in the dismantling of economic rigidities was the seemingly glacial, but persistent, lowering of barriers to cross-border trade and finance.

As a consequence, the United States, then widely seen as a once great economic power that had lost its way, gradually moved back to the forefront of what Joseph Schumpeter, the renowned Harvard professor, called “creative destruction,” the continuous scrapping of old technologies to make way for the innovative. In that paradigm, standards of living rise because depreciation and other cash flows of industries employing older, increasingly obsolescent, technologies are marshaled, along with new savings, to finance the production of capital assets that almost always embody cutting-edge technologies. Workers, of necessity, migrate with the capital.

Through this process, wealth is created, incremental step by incremental step…(1)

The Progress Report complains that when Harvard professor Gregory Mankiw, who serves as President Bush’s Chairman of the Council of Economic Advisers, said that “deciding that certain jobs must remain in the United States would be the equivalent of the state economic planning that ultimately brought down the Soviet Union” he was “red baiting.”

Quoting again from Alan Greenspan’s January 26 speech:

The East-West divisions following World War II engendered an unintended four-decades-long experiment in comparative economic systems, which led, in the end, to a judgment by the vast majority of policymakers that market economies were unequivocally superior to those managed by central planning. Many developing nations abandoned their Soviet-type economic systems for more market-based regimes.

Red baiting? Or simply a benign and accurate observation that planned economies sacrifice desired economic growth?

Overlooked by Progress Report editors, the same Washington Post story that quoted NGW cites Senator John Kerry calling executives who outsource “Benedict Arnold.”(2) Benedict Arnold did sell out his country, apparently in part to keep up financially with his socially-prominent wife. But unlike business executives following the law of supply and demand, Arnold is not known for doing anything to lower domestic consumer prices, or to help bring unprecedented prosperity to the modern world.

Given its name, the Center for American Progress should be the first to realize that progress is change, and that with change comes an end to old ways of earning a living. The Center for American Progress disseminates its opinions on an e-mail list, using an electronics communications technology that has killed many jobs in the courier delivery service. Nonetheless, because of cost and efficiency advantages, the Center for American Progress chooses to use this technology — as it should.

Economist Thomas Sowell sums it up: “You cannot advance the standard of living by continuing to do the same things in the same ways.”(3)


(1) Remarks by Federal Reserve Chairman Alan Greenspan before the HM Treasury Enterprise Conference, London, England, January 26, 2004.

(2) Jonathan Weisman, “Bush Report Offers Positive Outlook on Jobs,” Washington Post, February 10, 2004.

(3) Dr. Thomas Sowell, “Manufacturing Confusion,” TownHall.com, January 15, 2004.

The National Center for Public Policy Research is a communications and research foundation supportive of a strong national defense and dedicated to providing free market solutions to today’s public policy problems. We believe that the principles of a free market, individual liberty and personal responsibility provide the greatest hope for meeting the challenges facing America in the 21st century.