Raising the Standard.

The Truth About Outsourcing

On October 3, POLITICO published an article disclosing the transcripts of a 2005 deposition in which businessman David Perdue spoke of his experience outsourcing jobs to Asia and Africa. Since that day, Michelle Nunn has unleashed a wave of attacks that use Perdue’s artless words to undermine his private sector experience. These attacks have significantly tightened the race.

It should come as no surprise that Nunn has resorted to such attacks or that the attacks have been successful in swaying voters. Over the years, candidates on both sides of the aisle have treated “outsourcing” as the dirtiest of swear words, pinning it to candidates like a scarlet letter. Yet what has been noticeably absent from the public discourse is whether or not such claims are fair or even relevant to the election at hand.

First it must be said that opposing outsourcing is akin to being an anti-trade protectionist. Basic economics teaches us that all countries have comparative advantage in certain industries, and that when countries are allowed to trade freely specialization in these industries tends to benefit everyone. Today, many developing countries have a comparative advantage in labor, as their wages are only a fraction of those in the U.S. When American firms outsource to these countries, they are able to produce more goods at lower cost — a move that ultimately provides value to the American consumer.

THE EDITORS: “That which is seen, and that which is not seen.” —Bastiat

Additionally, classical economics says that outsourced wages will eventually make their way back to American soil, as foreign workers have more money to buy American goods, creating new American jobs to replace the old. In condemning Perdue as an outsourcer, politicians like Nunn are ignoring these fundamental principles of economics.

Yet Perdue’s hands are not totally clean in this matter. He, like so many candidates before him, has built his candidacy on his experience in the private sector and boasted of his deep understanding of the global economy. He seems smitten with telling voters how many jobs he created during his business career. The issue with these claims is that they imply that the primary job of a CEO — or anyone in the private sector — is to create jobs or improve the economy as a whole. On the contrary, the job of a CEO is to create value and long-run profitability for his firm. When Perdue brags about his job creation history, he opens the door to these kinds of attacks, as he has made clear through his actions that evaluations of his business career are fair game.

Instead of running on jobs created or an understanding of the greater economy, Perdue should narrow his approach and run on laurels he can more rightly claim. For instance, it’s clear Perdue has a deep understanding of the way taxes and regulations on businesses impact economic performance. He should advertise his experience on the other side of the economic fence, as a CEO forced to deal with the ever-growing volumes of regulations that legislators seem so eager to pass. Furthermore, Perdue should highlight his managerial expertise, experience working with high-level officials, and ability to work effectively in a wide variety of contexts. These are skills afforded by the private sector that would serve him well in the senate.

Voters on both sides of the aisle would benefit from a more clear-eyed, logic-based discussion of the role of outsourcing in American life. Too often, politicians use it to divide the electorate and engender irrational animosity toward the opposition. It’s about time that came to an end.

Davis Parker is Manager of THE ARCH CONSERVATIVE.

(Like what you see? Support THE ARCH CONSERVATIVE!)