Exporting America : Why Corporate Greed Is Shipping American Jobs Overseas

Rating:
Summary: China fixation
Review: America has "twin deficits" - current account deficit and foreign trade deficit. Lou Dobbs has little to say about the former, even though it is just as damaging. As for trade, China is responsible for only 10% of all US trade with the rest of the world. Our trade deficit with China is a little higher, but even this doesn't justify Lou Dobbs's obsession with that country. I'd almost call him China-possessed.

Clearly, his fixation with China has more than economic reasons. Who knows what those could be?

Rating:
Summary: Paranoid obsession with China
Review: Dobbs complains about American companies manufacturing in China. First, goods made in China are of a poor quality. Second, goods made in China breed counterfeits of such good quality that sometimes even the manufacturers themselves have trouble distinguishing the real from the fake. So, can the Chinese make good-quality products or not? (I think Wal-Mart has an opinion on this!)

I think most of us have some idea of the quality of "Chinese products." So many things we buy are now made in China that we can't escape from them. Yet they work well, most of the time. Dobbs is upset by something else: US companies are "shipping" jobs to China. Yet he also likes to remind us about companies that make little profit in China. So it is a financial mistake for them to outsource into China. But if they don't make money, how come so many companies are moving their factories over there? CEOs that don't turn out profits are fired regularly. So somebody is mistaken here, and I don't think it's the CEOs. If companies don't make money in China, then why is Dobbs insisting that they are driven by "corporate greed" to outsource? In any case, if they don't make money in China, sooner or later they'll stop going there. So what does Dobbs have to worry about?

The truth is, for every company that fails to make money in China, 99 others make huge profits. The secret, if it's still a secret, is the costs of production in China, which are unbelievably low. If you make a $50 CD-player in America, and it costs you $25 to make it, you make $25. But if you make it in China, the quality will be 95% as good, but it only costs you $5 to make, shipping included. Your profit comes to $45. Now, one doesn't have to be an Einstein to know that going to China is the only way to make money. Besides, if you don't go to China, all your competitors, at home and abroad, will. And they will drive you out of business. There are occasionally a handful of companies that don't make money in China. But the reasons can vary from case to case. Sometimes it's the just the inability to adjust to a new environment.

Dobbs can't seem to make up his mind: he likes to highlight the fact that some companies don't make money in China (the better to discourage others), yet he keeps harping on the fact that it is "corporate greed," the genuine profits, that force American companies to go to China. So do companies make money in China, or don't they? Counterfeit goods make a slight dent in profits, yet if the dent had really been big enough American companies would have stopped going there long ago. Dobbs points out that those huge profits are made at the expense of American workers. But the profits go to American companies, benefitting the shareholders, who are after all Americans. Most of these shareholders are also the American workers. Dobbs likes to call made-in-China goods "Chinese goods." But most of these so-called "Chinese goods" carry American labels. So they are really "China-made American goods." If the trade deficit is an eye-sore, think about countries that don't have a trade deficit with the rest of the world: Japan, Germany, Russia. Except for Russia, which is dependent on oil exports, neither Japan nor Germany has healthy economic growth. America leads the industrialized world with over 3% GDP growth. Bear this in mind lest we become fixated on the trade deficit, as Dobbs is.

At the end of the day, American consumers drive this economy forward while Japan and Germany are stuck in the mud. But consumption comes with a side-effect - high trade deficit. That's the price to pay so long as manufacturing doesn't stay home. But the US has been losing manufacturing jobs for decades. That's hardly the fault of corporations or China. In part this is due to an educational system that is not geared towards turning out competent graduates. With a per capita income just 10% that of the US, China manages to produce far more engineers of reasonable quality. The average Chinese worker is almost as educated as the average American worker, but works much harder, longer hours, for much less pay. Should we keep blaming the corporations for making a clear choice, an inevitable choice that is forced on them by reality? Dobbs heaps blame all around on China and Corporate America, while he ignores the fact that we Americans created this whole structure ourselves. If I'm fat, dumb and lazy, it's the fault of McDonald's, my parents, my schools, my boss, my colleagues at work, my friends, my spouse, and everyone else but me. That's the attitude adopted by Dobbs.

The notion that profits made in China cannot be taken out of China is ludicrous. I've never heard of such a case. Like investing in Russia and seeing your money detained by Putin? But China is not Russia, which is why NOBODY is investing in Russia and everybody is investing in China. If companies can't get their profits out of China, the least they should be doing is stop putting more money into it. But companies ARE making huge FDI in China, more and more every year. (The WTO keeps the statistics.) GE is making huge investments in China, and do we honestly believe that they are being forced into it by the Chinese government? If that were the case, we would have known it from Jeff Immelt himself. Dobbs even suggests that some corporate boards are kept in the dark about this - like some companies keep their boards in the dark about fradulent accounting. If there are such instances, they are very rare. But Dobbs has a tendency to highlight the rarest unusual cases (if any) to make them look as if they are true for everybody. Dobbs is doing investors a disservice by distorting truths and making up lies. If companies feel forced to invest in China, that has nothing to do with the Chinese government. It has everything to do with economics, efficiency, and the drive for profits. And there's nothing unusual about that. Making money is what a company is for. Dobbs has a real credibility problem. He misleads. And I suspect that he does this knowingly.

Dobbs's concern about intellectual property transfers is more on the mark (indeed this concerns him the most, for some mysterious reason). But everyday that we do trade with another country, IP transfers take place, legally or illegally. This is natural - it's part of the process. If you open a semiconductor factory in China (as Intel has done), you are teaching the Chinese how to make semiconductors. But it's been this way all the time. By trading with us, postwar-Japan and Germany acquired our technologies, everything from cars to computers. Surely we don't think the Japanese learned how to make cars, computers, satellites and rockets all by themselves? The Japanese learned almost everything from us, through trade (and the rest they stole, left and right). The way to get ahead of the Chinese, Japanese, Germans, and everyone whom you teach how to make things is simple: constant innovation. Simple economics results in offshore production. Then you plough the profits back into R & D, and improve your next line of products. That's how business is done nowadays. We're not forced by the Chinese to innovate - we innovate to beat our competitors, whether Chinese or American or Martian. Otherwise we would still be driving Model-Ts.

But for some reason Dobbs doesn't like to see the Chinese learn anything from us. But Lou, we didn't teach them anything out of charity. We teach them to make money for ourselves.

Lou keeps calling China "a communist state." True enough, technically. But in reality China is economically no longer communist. China is a mixed bag of central planning and free market. Every country is like that - a mix. The difference is in the composition. We in America have a social security system that is in principle contrary to free market. Japan has government coordination in industries. The Europeans subsidize their farms, their manufacturing, everything. We like the Brits, and they currently have a Labor government. Politically China is a indeed dictatorship, but it's also slowly liberalizing. But we have lots of allies that happen to be dictatorships: Singapore, Russia, Pakistan, Jordan, to name a few. France is a democracy (led by a right-wing president, in fact), and it's no help to us at all. The same goes for India.

If Dobbs has a racial reason for disliking IP transfers to China (and I suspect this to be the case), I would remind him first of all that the Chinese can learn 90% of the most important consumer-oriented technologies from other countries like France, Germany, Japan, Taiwan and South Korea, just as they picked up western financial techniques from the British through Hong Kong. The Chinese are already making LCD monitors and flat-screen, plasma and HDTVs that are almost as good as those made by the Koreans (and no wonder - Samsung has production facilities in China). The Germans are the most eager to trade with the Chinese, and they make better high-speed trains and cars than we do. Soon Germany is building China a national system of Mag-Lev (Magnetic-Levitation) trains that go as far and as fast as small jets. We also don't have a monopoly on civilian aircraft manufacturing. Airbus is a tough competitor, and so is Canada's Bombardier. "Dual-capables" like supercomputer designs and advanced nuclear reactor technologies are available from Japan and France respectively, for a fee. Europe has fine communications satellites to sell (and Chinese rockets are reliable enough to carry some of them...for European customers). Military technologies, including space technologies, come straight from cash-strapped Russia (and in any case China can't afford American military technologies even if they were available). In short, there is little the Chinese cannot learn from "the rest of the West," if it came to that. What they cannot learn, they buy, and then they'll learn from what they've bought. And the Chinese are extremely fast learners - as fast as the postwar Japanese, if not faster. With a low standard of living, China manages to have rocket technology as good as the Japanese. So if Dobbs wants to stop the Chinese, I'd advise him to first get these countries to coordinate their trade policies with us, and ask them to agree to stop all trade with the Chinese. Isolationism or protectionism on the part of the US alone would hurt us economically without guaranteeing political or national security in the long run.

And nuclear weapons? They don't even have to steal our most advanced designs like the W-88 warhead to build a powerful deterrence (although they may have done so in a small way): all they have to do is to mass-produce what they now have. With thousands of missiles, each armed with several MIRVed warheads (and they already have MIRVs) a few are bound to hit the targets! What they lack in quality (and it's not a complete lack anyway) they can eventually make up for in massive quantity. They do lack operational ballistic missile subs, but these they will buy from the Russians eventually.

Running an artificial balanced trade (as Warren Buffett sometimes advocated) would require a sea-change in political awareness among Americans. This can only be done through tariffs or something equivalent, and that amounts to a huge tax on the consumers. Politically, this is unacceptable, unfortunately.

It's nice to think that we can control our economic destiny. This would certainly be possible if we can BOTH control the rest of the world AND change the basic attitudes of American consumers. It can't be done if we can't do both, because external realities impose immediate and paralyzing limits on how much we can change internally. Dobbs may think he is making a difference to public awareness with his rhetoric. I doubt it. Even if he succeeds in this modest goal, nothing will come out of it so long as the the rest of the world accounts for 80% of the world's gross income - a percentage that is rising everyday.

Actuall there WAS a time when America almost controlled both our own economic destiny and the economic destiny of half the world - right after World War II. With 7% of the world's population, America produced 43.5% of its electricity, most of the world's industrial capacity, 62% of its oil, 75% of the world's gold bullions, 80% of its cars, 100% of the world's atomic bombs and the secrets to make them, and America was also self-sufficient in energy. No wonder President Truman said: "We have emerged from this war the most powerful nation in this world - the most powerful nation, perhaps, in all history." We could have chosen free trade, isolationism, or a mix of both, as we pleased, in our relations with any country in the world. Yet we adopted economic policies which in the end raised up powerful competitors. Why? Political considerations forced our economic hand. The need to counter the Soviets was too great.

Now, 60 years later, we have smaller but more numerous political threats to worry about: terrorism. But we are also far smaller than our former self in 1945, relative to the rest of the world. Back then, we were so far ahead that nobody else was even close. Now the distance between us and the rest of the world is much smaller. So this time around, economic considerations force both our political and economic hand, and we have to make do with the hand dealt to us. Meanwhile, political considerations reduce what little room there is for maneuver. It is forgotten that the Chinese gave us their word they would not exercise their veto at the UN Security Council over war with Iraq. They did so twice, once in 1991 and again in 2003. The Chinese have huge influences over the Pakistanis, the Iranians, and the North Koreans. The Chinese provide valuable intelligence to us about Islamic terrorists operating in Central Asia, which includes Afghanistan. The Chinese work alongside with us in helping to defuse tensions between India and Pakistan - and prevent a potential nuclear war. The Chinese never oppose us at the UN, and thanks to their skyrocketing consumption of Arab oil the Chinese have significant relations with Arab states neighboring Iraq and Israel. The Arabs respect the Chinese like they don't respect us. And the Chinese have increasing stake in political stability in the Middle East because they are becoming as dependent on oil as we are. Politically America and China are on a converging, not conflicting, path. Economically America and China are interdependent, with the Chinese a little more dependent on us than the other way around. But it's a symbiotic relationship. In the long run, China will benefit more than we do from this relationship and become stronger everyday. This is, as Dobbs sees it, a zero-sum game in the long run. But do we want a China that's poor, angry and isolated, armed with nukes and WMDs, or do we want a China that's rich and stable like Japan? I think the answer is clear, or we would not have helped Japan and Germany succeed either. If we adopt isolationist or protectionist policies, only the Europeans and the Japanese would benefit, and the Chinese would still have made it - only it would take them a little longer, that's all.

Right now, the Chinese are still much smaller than us. But we are not nearly so big as Lou Dobbs likes to think that we can do what we like. We simply cannot. We could get our way with China all the time if China were the only country we have to deal with. We forget that great as we are Americans make up less than 5% of the world's population. We are far, far from all-powerful. We don't even have energy self-sufficiency any more. Today, America produces just 10.7% of the world's oil (with proven reserves much smaller than this), one-third as much steel as China does (China's steel production - 273 million metric tons last year - is equal to those of Japan, US and Russia, the next 3 largest producers, put together), 25% of the world's electricity, and a total of 20% of world's GDP. All these figures in percentage terms are falling, that is, even if we keep up the absolute rates at steady levels, in percentage terms they are still dropping because the rest of the world rises much faster in all categories. And our absolute rates are not rising much either: steel production is down every year, while oil consumption rather than production is up. We have no monopoly on WMDs, and our military is stretched thin on manpower. On the other hand, we weren't omnipotent even back in 1945, so it's time to get real.

Dobbs now has a regular segment on his show called "The China Syndrome," whatever that means. But as I see it, it's Dobbs himself who suffers from a China syndrome. It's downright paranoia. Anyway, selective presentation of the facts can prove anything. Dobbs is misleading the public - and he knows it, one suspects. It's like telling you day and night how hundreds of Americans die every year from aspirin-overdose. And if that's not lurid enough, he presents one individual case after another - a little toddler here, a gentle grandma there, bloody noses, foaming at the mouth, etc. But what about the MILLIONS of Americans saved from heart attacks by aspirin? This other side of the story, he ignores. If there are two sides to an issue, and he doesn't like one of them, no matter how relevant, he ignores it and presents the other side with mechanical monotony. This is the way Dobbs treats his pet peeves. But prudent CEOs concerned with the bottom line make precise calculations and they are not taken in by sensationalism. I know, because I'm one of them.

Rating:
Summary: A must read
Review: Dobbs is a long term thinker who brings up many issues with long term consequences that far too many short-sighted politicians and business leaders ignore or can not answer.
As Dobbs points out, blind unquestioning faith in free trade is as bad as blind, unquestioning protectionism. We live in a world that Adam Smith and David Ricardo never imagined.

Rating:
Summary: Not a perfect world
Review: Dobbs is right, outsourcing will have negative consequences for the US. I read in many of these reviews that outsourcing is good because it encourages people to "upgrade" their skills. Come on people, you can't keep going to school or training seminars forever. On the other hand and off topic, just as communism failed, so capitalism too will fail. That's just due to the fact nobody can predict the economic future. Just comes to show, this is definitely not a perfect world.

Rating:
Summary: Interesting Arguments at Best, Ranting at worst
Review: In perhaps one of the more attention-grabbing books on the subject (thanks to name recognition from a TV show), Lou explains the current state of outsourcing of US jobs in a variety of sectors. This discussion (well-presented) is interspersed with his own opinions on what is good or bad for US labor force. While his arguments, at first glance, seems nothing more than ranting of a patriot unsure of what capitalism means to his own country, they do pose significant questions for the general public, opinion-makers, self-styled pundits, and lawmakers. Very often, Lou's passion in his beliefs prevents him from seeing that his own logic can be applied by any country (including China which seems to be the favorite target for Lou's concerns) to seek its own interests. That logic can be then merely extended to corporations, which as he correctly points out, have economies bigger than some countries. He discounts the validity of his arguments by making claims such as outsourcing can be stopped in a day if need be. Only a person too naive can make a statement like that. In addition his observations on H1 and L1 visas are based on incomplete information. The US does require employers to prove that these visa applicants are given the prevailing wages in the US and that a proper search for citizens did not provide the sufficient skill sets. He does make fleeting reference to educational infrastructure problems, trade deficit, and budget deficits...all of which are arguably bigger problems for the US, but explained away too lightly by the author.
In short, if you are looking for an objective analysis of outsourcing's impacts, this is the wrong book. If you want a passionate patriot's loud (and sometimes not sound) thinking, this is it! Nevertheless, the book is written in a clear, narrative format and hardly takes 1-2 hours to read.

Rating:
Summary: Transport - Internet created ONE universal, worldwide Market
Review: Lou Dobbs is a Nationalist and cares about the welfare of the American workers.

After reading the book, I feel sympathy for the American worker, but sympathy cannot buy you a Big-Mac at McDonald or change the mighty law of SUPPLY and DEMAND.

Well, Mr. Dobbs the, One World, Global Economy is here to stay.

Unless the USA becomes like North Korea, a hermit in rapidly changing world or Cold War II breaks the world into two camps, half-half globe, the world economy is here is to stay, now and forever.

How did this come about? 1. The end of the Cold War and demise of Ideology based regimes in USSR, India, China, and Eastern Europe. HALF the world was closed off to either buying, selling, trading or commerce.

Marx-Lenin is garbage. Once this ignorance was discarded, China is now growing almost at 10% a years.

At the rate, the size of the economy doubles every 7 years. 2. the improvement, in transportation and communications means you can reach anywhere on Earth in 24 hours physically in person or electronically by Internet or Voice, in a quarter of a second.

The end of the Cold War and the universal Internet have created a One Market World. As the Internet gets faster better cheaper, it will be a Universal Knowledge Base (KB) and Universal Market-Place.
The Universal Knowledge-Base and Universal Market-Place

There will be universal, worldwide access to knowledge and a universal marketplace in the buying, selling, and trading of goods and services. Unless Americans want to be like an ostrich, the worldwide market is here to stay. All the books, rallies, protest, denunciations will not make the world market go away.

We learn in School are in in most basic form three types of commercial activity.

#1. Manufacturing
#2. Merchandising
#3. Services.

In short, the Making, Sellling, Service (MSS) of goods and services is what economic activity is about. In making shoes, jeans, computers, can we pass a law that you cannot make shoes or jeans. In writing software, can we pass a law that says you cannot write software or provide legal services to customers?

Of courses NOT. Even if the U.S. becomes a hermit, workers in China will continue to make shoes, and Indians will continue to write software. If Wal-Mart disappeared tomorrow, another retailer will come along and offer lower prices on goods and services.

The basic law of economics says producers of goods and services will succeed if they are able to provide #1. Quality #2. Price. If two shoes are identical, who would not want the pair of shoes that cost $50 less.

The one world economy is here to stay and Americans better get used to it. It's the basic law of economics of Supply and Demand. The world demand goods (shoes, hardware) and services (banks, insurance), whoever can produce at the highest quality at the lowest price will be the winner in the global marketplace.

Unfortunately, in the free market system, employees do not mean much, what really matters are the customer and the owners of the enterprise.

Customers want quality at low prices. Owner want a return on their investment. Unless the world returns to communism, the needs of the customers and owners will not go away.

Folks, it's all about global Supply and global Demand of goods and services. Americans better get used to this and innovate, invest, plan, and adopt for the now and future one global economy.

Lou Dobbs book is great and Lou Dobbs is a patriot for writing the book. However, one book will not change the mighty, universal law of SUPPLY and DEMAND.

Rating:
Summary: Dobbs will be proven right over time
Review: Lou Dobbs performs a valuable service with this book in pointing out the long-term structural damage to the US economy when using outsourcing. The problem with most economists (especially those who work for President Bush), is they fail to look at the other side of the outsourcing equation; mainly, what happens to the workers who were outsourced and what is the impact to the entire economy? Under the model referenced by many economists (Liquid Economy Model), workers 'replaced' by cheap, foreign labor will eventually move to other areas of the economy that are growing to fill that employment need. In the 1980-2000 period, this model had some relevance during the loss of all those manufacturing jobs, because those workers could be 're-skilled' and move into growing sectors like health care and information technology at a competitive or better salary. Or, those workers could move into the growing service sector at relatively the same salary, thus not impacting tax rolls or government programs. But, the current trend of replacing highly-skilled white collar workers with cheap foreign labor is a MUCH bigger structural problem for the US economy. That is because the Liquid Economy model no longer applies to these workers because a) they are already highly-skilled and b) there is NOWHERE for these dis-placed employees to go that will pay anywhere close to their current salaries. Here is where all the economic models fall apart that tout outsourcing as a good for the country; they fail to factor in a) wage depression, b) lower tax collections and c) increased government spending for these previous white-collar employees who are pushed down near the poverty level (until the next supposed economic boom). As Lou correctly points out in this book, outsourcing is part of a larger trend in American business to operate for a few (corporate executives) while burying the many (rank and file workers). Also, this book points out that EVERY sector of the US economy is subject to outsourcing, so keeping your current career for life is more due to luck than skill. Time will show that outsourcing was a contributer (along with corporate executive greed and short-term thinking) to a drastically lower standard of living for the US middle class.

Rating:
Summary: Lou says....WAKE UP AMERICA!!
Review: Lou hit it on the mark with this one. GREAT information here, for those of you Walmart followers, and the Companies that have closed the US Plants and moved to Mexico....this book tells it like it is. I now buy only American Made, (when I can find it).

Rating:
Summary: Boom for Wall Street, Bust for Main Street
Review: This book is based on his show on CNN. The power of big business is at its peak, the state of national welfare is in the dumps, due to jobs exported overseas. The welfare of people has been sacrificed to benefit Corporate Businesses. After Lou Dobbs started to cover the outsourcing of jobs on his CNN show, he received insults, slurs, and personal attacks. His critics could not refute his facts and reasons (p.3). Lou Dobbs is a "free enterprise ... Republican" (p.5). If Big Corporations prosper at the expense of the middle-class and wage-earners, then any plea to Corporate America is a joke.

Chapter 1 tells of the assault on middle-class Americans by Corporations. Domestic automakers are cutting back, foreign automakers are investing. If most production is offshore, who will buy these products (p.19)? Chapter 2 asks if there is any limit on Corporate greed (p.22). Does criticizing "out-sourcing" make Lou Dobbs an "enemy of the state" (p.26)? Dobbs exposes the fantasy that paying people less "will result in a higher standard of living for all of us" (p.32)! Outsourcing reduces tax revenues for local, state, and federal governments. Chapter 3 reminds us that corporate management has defrauded investors and fired employees (p.42). The "Free Trade" agreements resulted in $500 Billion trade deficits. Chapter 4 asserts that multinational companies are far too influential in American politics (p.53). They control the "knowledge base" used by Congress to make laws (p.53). "Free Trade" is a slogan used to promote the interests of multinational companies. Is investment in China a long-term good? Page 61 explains how the transfer of assets is used to hide profits; page 62 explains how to avoid paying a fair share of taxes.

Chapter 5 notes the high costs that result when American companies build foreign factories to produce products for the American market (p.71). Dobbs complains about the failure to improve fuel efficiency (p.72), but doesn't mention how this benefits Big Oil. Most jobs lost through NAFTA were in manufacturing; most clothing is now imported. Asia owns half of US Treasury bonds (p.79). Chapter 6 tells of the effects from exporting jobs (p.82). Ross Perot warned us (p.90). Patient diagnoses, radiology, legal research, financial analysis, and call centers have all been outsourced. Will this kill off professions (p.97)? Chapter 7 asks if there is any proof that outsourcing is good for the country (p.102). Dobbs lists twelve myths of outsourcing. Adam Smith favored free trade where there was a mutuality of benefits (p.106). Protectionist policies create trade surpluses (p.109). When jobs disappear, they are not replaced (pp.110-4). [No mention of the benefits to merchant bankers who finance this trade.]

Chapter 8 condemns state governments that outsource government services (p.120). Corporations have shifted taxes to ordinary citizens, but these earn relatively less (p.136). Chapter 9 says America is the largest debtor nation in the history of the world (p.138). America has lost the ability to produce the goods it needs (pp.140-1). Almost every benefit that workers enjoy in this country is directly attributable to the efforts of labor unions. Their decline since 1981 was followed by a decline in living standards for ordinary Americans (pp.144-5). President Bush has not enforced the trade laws (p.146). Chapter 10 says our free trade policies do not serve our national economic, social, and political interests. Nothing can be done as long as political parties are owned and controlled by Big Corporations (p.152). Dobbs' cure is: ban outsourcing, adopt balanced trade agreements, change out relations with the WTO to raise the standard of living. Unless there is "an honest public debate" the destructive economy will continue. What will you do?


Rating:
Summary: Calling Inspector Clouseau
Review: When I saw the cover photo, I immediately thought of the Pink Panther movie, in which, several times throughout the movie, Inspector Clouseau (Peter Sellers) would put his hand on a globe in exactly the same way as Lou is doing, and lean on it slightly, so the globe would spin and he'd fall on the floor. How appropriate, given the poor understanding of economics on display in this book.