In another post someone mentioned Mankiw’s comments about outsourcing jobs to China. I thought this editorial was a timely and appropriate response.
This is from the Wall Street Journel, written by Carly Fiorina the CEO of Hewlett Packard:
Be Creative, Not Protectionist
By CARLY FIORINA
Nineteen years ago, a group of leaders from American business, labor, government and academia issued a report that raised alarm bells in Washington. The report argued that America’s ability to compete in world markets was eroding in the face of emerging industries and low-wage workers in Japan and other Pacific Rim nations.
The President’s Commission on Industrial Competitiveness, as the group was called, had a simple message: America’s workers have always been the best, most creative workers in the world, but they needed a national strategy for competitiveness that was as innovative and creative as they were. Rejecting arguments for protectionism, the commission called on the public and private sectors to invest in keeping America strong in the world-wide economy – by promoting R&D of new technology, improving education and training, and lowering deficits to improve the cost of capital for business. If that formula sounds familiar, it should. It’s exactly the strategy America pursued in the late '80s and '90s, creating more than 35 million new jobs and producing the longest period of economic expansion in our history – including a whole new IT sector, whose jobs pay, on average, 75% higher than other jobs.
That commission’s message seems more relevant than ever as the debate over the outsourcing of white-collar tech jobs heats up in this election year. Once again, our leadership is being challenged – not by Japan, but by emerging nations like India, Russia and China. What makes this challenge different is that these nations not only share rich educational heritages, but they are investing heavily in innovation and R&D to help drive the next generation of growth. In China, IT spending is increasing at an annual rate of more than 15%.
Not only do our competitors have increasingly knowledgeable work forces, but they can compete for jobs that were once the sole province of the developed world. There is much outcry over this new reality, but not much constructive action. That’s why I tried to provoke debate last month when I said, “There is no job that is America’s God-given right anymore.” Now, more than ever, other nations are developing the skills to compete for jobs that would have historically been done by Americans. We shouldn’t assume that they won’t make an effort to win them. But we should work to keep America what it has always been: the world’s most resourceful, productive and innovative country.
Thus far, attention has focused on a handful of companies, like HP, which have sourced some jobs to other countries. As happened with Japan in the late '80s, everyone from presidential candidates to unions to state legislatures to Congressmen are offering protectionist proposals to limit or prohibit the practice. Jobs are a gut-wrenching issue. And there’s no question that companies that source jobs overseas have an obligation to help workers left behind get the tools they need to find jobs and succeed. But let’s not forget the lesson that Japan itself learned in the '90s: when you build walls to protect your own workers, in the long run you end up hurting them.
Any job losses to foreign countries are particularly painful when the U.S. economy is failing to produce net job gains. Every job is important because each one represents an American’s livelihood and ability to raise a family. Yet spending our time building walls around America will do nothing to help us compete for the millions of new jobs being created. Instead, we must focus on developing next-generation industries and next-generation talent – in fields like biotechnology, nanotechnology and digital media distribution; around issues like IT security, mobility and manageability – that will create long-term growth and jobs here at home, while raising all of our living standards in the process.
That’s why the eight member-companies of the IT industry’s think tank, the Computer Systems Policy Project, have invested $80 billion in R&D, capital expenditures, education and employee training here the past three years alone. We’re betting on – and investing in – America. It’s why HP, with a market presence in 178 countries, will always be based here, and why we have 60,000 workers here – because America is the most innovative country on earth. It won’t stay that way if we run away from the reality of the global economy. We must do what Americans have always done – work to keep our country in the lead, by making it the most competitive and creative of all nations. We don’t have a second to waste. The rest of the world isn’t waiting.
Ms. Fiorina is chairman of Hewlett-Packard.