- The Washington Times - Saturday, September 11, 2004

Jobs have become a big issue this election year: It would be optimistic to expect a rational discussion.

Nothing is discussed more irrationally than “outsourcing.” It is obviously completely misleading to discuss how many jobs American companies are sending to other countries without even mentioning how many jobs foreign countries are outsourcing to Americans.

Yet those making the most noise about outsourcing seldom say a word about the in-sourcing of jobs from other countries. But it is the net balance that matters.

Maybe those statistics are hard to get. But you won’t get them if you don’t even look for them and avoid even mentioning them.

Official statistics published last March in the Survey of Current Business showed an increase of 2.8 million jobs outsourced by American-owned multinational corporations in a quarter-century ending in 2001. Over that same time, there was an increase of 4.7 million jobs outsourced to Americans by foreign-owned multinational corporations. These numbers go back and forth over time. But they don’t even exist in the rhetoric of those denouncing outsourcing.

Any laws passed to stop the outsourcing of American jobs to other countries will almost certainly bring laws in other countries to stop outsourcing jobs to Americans.

We had something like that during the Great Depression of the 1930s, when international trade was restricted to save jobs during record unemployment. Countries around the world did the same, and international trade sharply declined and the Depression was needlessly prolonged.

Many policies designed to “save jobs” have effects opposite their intentions. Germany has some of the strongest job protection laws in the world — and double-digit unemployment rates are common in Germany.

Job protection laws add to labor costs. These laws may save the jobs of those already employed. But in time new job applicants come into the labor market and high labor costs give employers incentives to substitute machines for workers or shift output to products requiring less labor.

European Union countries as a whole have stronger job protection laws than the United States — and higher unemployment because their job creation is much slower.

At the other end of the spectrum, there has probably never been any place with a more unrestricted labor market than Hong Kong when a British colony. Unemployment of 1 or 2 percent was at that time common in Hong Kong. After China took over, it created various new worker benefits — and unemployment hit 7 percent, not high by European standards, but a multiple of what it had been for years.

All this says, in various ways,there is no free lunch — not even during election years.

Sen. John Kerry says he would create 10 million jobs if he were president. But presidents don’t create jobs. The most a president can do is have policies that allow private employers to create jobs. Foolish policies can destroy jobs and prolong a recession or depression but presidents cannot “grow the economy,” no matter the political rhetoric.

Of course, government can hire more people or favor a particular industry one way or another and thereby increase employment in that particular industry. But the government has no money of its own, and the money it takes from the private economy to increase its own hiring or to promote hiring in a favored industry reduces the money available to hire people elsewhere in the economy.

President Bush’s tariffs on imported steel may have saved some steel-industry jobs. But the resulting higher steel price is estimated to have cost several times as many jobs in steel-using industries.

With jobs, as with anything else, it is the net result that counts — and there is no free lunch, not even in election years.

Thomas Sowell is a nationally syndicated columnist.


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