Tag Archives: outsourcing

If Jobs Were Really What Mattered….

I’m one of the people who watched with disbelief as the GOP tax “reform” bill was loaded up with provisions that any sentient human would know to be counterproductive. There are two possible explanations why lawmakers might support this disastrous legislation, and they are not necessarily incompatible: the sponsors of this piece of excrement really believe–in the face of overwhelming evidence to the contrary–that it will spur economic growth, or they are obeying the demands of their donors/masters.

I say the two explanations aren’t necessarily incompatible because humans have an infinite capacity for self-delusion. It is entirely plausible that our elected Representatives and Senators prefer not to acknowledge, even to themselves, that they have been bought and paid for, and instead have convinced themselves of the merits of policies that have ushered in disaster every time they’ve  been tried.

In fact, as I have watched members of a once-responsible political party disintegrate into delusion and corruption, I’ve noticed their growing preference for make-believe rhetoric over reality. Ryan and McConnell, especially, have been displaying a decidedly Trump-like belief that assertions can shape reality–that saying it will make it so.

Increasingly, Republicans in both the legislature and Administration live in La La Land.

Case in point: the repeated Republican refrain about job creation. Listening to the rhetoric, you’d think that the retention and creation of jobs was really an important focus of GOP policy. (Of course, if you’d been listening to Republican rhetoric since well before Reagan, you’d have thought deficits were a concern– in the wake of the tax bill, we can see how bogus that was.)

So–how’s that “jobs focus” thing working out?

Well, here in Indiana, Carrier Corporation is continuing its move to Mexico, despite Trump’s boasts about preventing the move, and despite the company’s extraction of some seven million dollars in “economic development” money from the state.

And from The Hill, we learn

An analysis of Labor Department data by the labor coalition Good Jobs Nation found that more than 93,000 U.S. jobs have been eliminated since Trump’s election due to foreign trade.

That’s roughly on par with the previous five years, which saw an average of 87,500 jobs per year eliminated.

The coalition’s analysis also found that the number of jobs outsourced by federal contractors has actually risen since Trump was elected. Since November 2016, some of the biggest federal contractors have offshored some 10,269 jobs, making up 11 percent of trade-related layoffs, compared to 4 percent in the previous five years.

It is becoming more apparent by the day that Trump’s loyal core–around 30% of the electorate–desperately wants to believe even his most obvious and embarrassing lies. They’re like the boyfriend who really does realize that his lover is cheating, but who nevertheless talks himself into believing her increasingly unlikely alibis. Trump loyalists desperately want to believe that this pathetic buffoon can reverse global realities, make “great deals” in which business enterprises and other countries will miraculously ignore their own interests, and–most important of all– take the country back to a coal-fired past in which white Christian males were dominant (and could grab p**sy with impunity).
Just like that boyfriend, they want him to keep lying to them.

Sauce for the Goose

Evidently, sauce for the goose is not sauce for the gander.

We’ve become accustomed to the breast-beating and recriminations that accompany decisions by American businesses to manufacture goods in other countries, or to move existing operations overseas. In the latter case, the loss of jobs is a genuine “hit” and efforts to retain them are understandable–although, as we’ve seen with Trump’s Carrier deal, often costly and counterproductive.

We almost never hear about the other side of the equation, however. Indiana, in particular, has benefited mightily from outsourcing decisions made by foreign companies. According to the Indiana Business Research Center at Indiana University, in 2015, Indiana had 152,700 workers employed by foreign-owned firms. (Think of the Honda plant in Greensburg, the Isuzu plant in Lafayette, etc.) Of the jobs created by foreign companies located in Indiana, 97,900 were manufacturing jobs that accounted for 3.1 percent of the state’s private employment.

Similarly, automation–not trade– accounts for most of the job losses in the United States. Trade actually creates jobs (although often the jobs created are different from those that are lost, and that does make for winners and losers). According to a January 2010 report from the Business Roundtable, at that time, 761,500 jobs in Indiana depended on trade.

In 2008, 20.5 percent of jobs in Indiana depended on trade, up from 10.0 percent in 1992. Indiana’s trade-related employment grew more than five times faster than total employment from 2004 to 2008.

This is not to minimize the issues raised by job losses; the impact on workers who find themselves unemployed–and often, due to age or lack of other marketable skills, unemployable–is very real. The impact on communities when a major employer closes or downsizes are equally real, and challenging. But addressing the consequences requires an accurate understanding of the causes.

To use a medical analogy, prescribing the proper remedy requires a correct diagnosis of the disease being treated.

The globalization of the economy has proceeded too far to be undone, even if we wanted to mount a retreat. History teaches us–or should teach us–that erecting trade barriers, punishing companies with tariffs on their foreign operations, and the other measures Trump has threatened–simply invite retaliation that hurts everyone.

It’s comforting to have a target for our economic frustrations, a “bumper sticker” solution to a problem. Unfortunately, modern life is more complicated than such “solutions” recognize. Automation has multiple virtues, but it does cause troubling job losses. There are good trade agreements and bad ones. Losing jobs as a result of American outsourcing is painful; gaining jobs as a result of Japanese or Canadian or British outsourcing is gratifying.

The world is a complicated place.



When is Private Public, Redux

Federal News Radio (I’m sure you have this station on your Pandora playlist…) reports

Government contractors and subcontractors may have a new avenue to report wrongdoings at federal agencies, if a new rule being floated by the Office of Special Counsel is put in place.

OSC announced Thursday that it was seeking input on a possible revision to regulations covering the disclosure by employees working under federal contracts of wrongdoings taking place at federal agencies.

File this under “We noticed that damn few actual employees currently do the government’s work.” If oversight is going to occur, it needs to occur in places where government work is being done, and that is increasingly in the private and nonprofit sectors.

Contracting is so pervasive–and its problems so numerous–that In the Public Interest sends out a periodic “outsourcing scan.”

The most recent included dozens of entries, from prison riots in Texas protesting inadequate medical care in that state’s privatized prisons, to Pro Publica’s documentation of the lack of accountability and oversight of charter schools (conclusion: “Bad schools have been allowed to stay open and evade accountability”), to a recent report from the Federal Accounting Standards Advisory Board warning of risks to the public from “public private partnerships.”

Just more evidence–as if any more was needed–that the fervent belief in the superior performance of the private sector has more in common with religion than with evidence.

In both cases, questioning is confused with blasphemy.

The Cost of Saving Money

Last year, In the Public Interest released a report that highlighted a harmful but frequently overlooked way in which our tax dollars are fueling income inequality.

Every time a city or state outsources a public service to a low-wage contractor, the community loses. Taxpayers have to make up the difference in the form of nutrition assistance, healthcare coverage, and other programs designed to help people working for minimum wage and living in poverty. The report included examples from across the country, including public servants in Costa Mesa and Fresno, CA, who either lost their jobs to – or were at risk of being replaced by – low-wage contractors.

There are a number of problems with government outsourcing–aka “privatization”–and a copious academic literature documenting those problems. When government provides services through surrogates–via third-party contracts–it needs different management skills (skills that are relatively rare in government agencies, meaning oversight is hit or miss). Mayors and governors often give in to the temptation to reward their cronies with lucrative contracts. (Indeed, privatization has become the current form of patronage). And the promised savings are rarely realized, even without accounting for the problem identified by the report.

There are certainly times when outsourcing makes sense, but far too often the decision has been made on the basis of a near-religious belief in the superior performance of the private sector. As this report suggests, those perceived “efficiencies” can end up costing us in less visible but no less expensive ways.

There really is no such thing as a free lunch.


Bring Back Government

Washington Monthly recently reported on a new book by Francis Fukuyama, Political Order and Political Decay, and its review by John DiIulio.

Neither of them can be considered politically liberal. Fukuyama is best known for his book The End of History and his association with the rise of the neoconservative movement. DiIulio, late of George W. Bush’s Office of Faith Based and Community Organizations is, as the Monthly noted, a

scholar of government as an institution, and it is in that capacity that he expands on Fukuyama’s critique of modern governments, including that of the United States, as increasingly ineffective not because of excessive size, but because their bureaucrats serve too many masters, including client groups and private interests. And both Fukuyama and DiIulio hold that Americans’ distinctive mistrust of government has kept it from redeeming the hopes and plans of the Progressive Era reformers who sought to give the public sector its own sense of mission and esprit de corps.

DiIulio is concerned that “third party government”–the outsourcing of federal government responsibilities to state and local governments and to private contractors– is making government less accountable as well as less effective.

I have been making this point for years, along with many other scholars, so it shouldn’t surprise anyone that I agree with this diagnosis, and with DiIulio’s prescription:

There are many steps on the path to reversing America’s political decay by proxy. We need to reinvent federal grants-in-aid to the states, drain the federal for-profit contracting swamps, and wring more public value from grants to nonprofits. But we also quite simply need to hire more federal bureaucrats. The federal bureaucracy is more nearly the solution than the problem. In Bring Back the Bureaucrats, I crudely calculated that we need about one million more full-time federal workers by 2035 in order to serve the public, stop draining its purse, start improving performance, and create an actual system of national public administration.

Most reasonable people can see the problem that DiIulio describes very clearly:

America’s political decay is fed daily by public disdain for public servants and fueled each election season by bovine congresspersons in both parties who score points with voters by bashing “the bureaucrats” and “running against Washington.” The first step toward slowing or reversing America’s political decay is to recognize how for-profit contractors and other administrative proxies have rigged the system in their own interest, expand the federal civil service, and start treating federal bureaucrats as if our public well-being depended on them—for it does.

Unfortunately, the “bovine” folks in charge of Congress are so deep into batshit crazy territory, I doubt anyone will listen.