February 15, 2004

Exporting Dobbs

Those of you who used to watch Moneyline and now watch Lou Dobbs Tonight may have been as amazed as me to see him turn into a rabid protectionist with his "Exporting America" segments. Watching the show, and the scrolling list of companies that are "exporting American jobs", the cynic in me presumes that his demagoguing and fear-mongering is about ratings – making outsourcing/offshoring his issue.

This transcript of his interview with James Glassman is worth reading (if only for the animosity). Obviously, I side with Glassman on this one. Our goal should be in easing the transitional pain for those workers whose jobs are lost (both through technological change and free trade) rather than striving for some kind idealized "balanced trade" that will most likely simply either lead to slow growth down the line or further entrench companies that can exploit the new rules.

Drezner, from whom the links come, has more on outsourcing here.

Anyway, here's the transcript:

DOBBS: Well, my next guest takes a decidedly different view. James Glassman wrote an article this week that begins by asking, "What Has Gotten Into Lou Dobbs?" In it, he takes issue with our extensive reporting here on "Exporting America," our conclusions and positions.

Glassman says our list of companies sending American jobs overseas, which we update here every night and post on our Web site, include some of America's most innovative companies. James Glassman is a resident fellow with the American Enterprise Institute and joins me here in New York.

Jim, that was quite a little article.


DOBBS: OK, let's start with the accuracy.

The fact is that we are seeing hundreds of thousands of jobs being outsourced on the basis purely of a corporation's interest in achieving the lowest possible price for labor. Does that make sense to you?

GLASSMAN: Lou, that is called trade.

And we have been doing it for hundreds of years.


GLASSMAN: You majored in economics at Harvard. You understand that Adam Smith, David Ricardo showed that trade is good for both parties.

DOBBS: Absolutely.

GLASSMAN: So outsourcing, offshoring, whatever you call it, it is always called by something different during different generations -- those are the words right now. But it's trade. And it's good for the Indians and it's good for Americans.

DOBBS: OK. Let's assume that trade is good, because here no one has argued otherwise.

But what we have argued is that trade that is not mutual, mutually beneficial, doesn't make a lot of sense. We're looking here -- since you brought up trade, we'll go back to outsourcing those American jobs. We are looking at a half-trillion a year current account deficit.


DOBBS: How good is that?

GLASSMAN: It's not good. It's not bad.

We have, for the last 20 years, run a trade deficit. And by coincidence, for the past 20 years, we have had by far the greatest economy in the world. We've got an $11 trillion economy. We're bigger than the next five countries combined. We've got a 5.6 percent unemployment rate, compared to 10 percent in Germany. I think we're doing fairly well.

The reason we have such a large trade deficit is, we're doing a lot of importing, while the rest of the world, which has a worse economy, is not able to buy. That's the problem.


GLASSMAN: If you want to have a trade surplus, Lou, the best way to do it is to plunge the United States into a recession. If we don't buy anything, hey, we don't have a trade deficit anymore.

DOBBS: What is it with you people?

GLASSMAN: You people? What do you mean?

DOBBS: You people who seem to think there's only way for trade to work. Why in the world are you so opposed to the idea


DOBBS: Please, Jim, I let you finish.

GLASSMAN: Yes. Well, go ahead.

DOBBS: Thank you.

You could not conceive of the idea of restoring a manufacturing base to this country to actually manufacture products and export them?

GLASSMAN: Lou, over the last 10 years, we have manufactured 40 percent more than we did 10 years ago. Manufacturing is doing well. Jobs change. This is a dynamic society.

Now, the thing I'd like to -- the thing I would like to say is, free trade is much better than the alternative, which is no trade or obstructed trade.


DOBBS: Wait, Jim, you are far too smart to do something like that. There is not simply a Hobson's choice between free trade and no trade. I just offered you one, a mutuality of interest, mutual trade.

GLASSMAN: That's the idea of the World Trade Organization.

DOBBS: It may be the idea of some in the World Trade Organization. It is not the practice.

We have got 11 years experience with NAFTA. We have 10 years experience under WTO. It isn't working, Jim? What part of that don't you get?

GLASSMAN: It's not working?

DOBBS: It's not working.

GLASSMAN: Then why is the American economy as robust as it is?

DOBBS: Tell people it's robust.


DOBBS: Tell those 15 million people out there who can't


DOBBS: No, look in the camera, tell those 15 people out there who can't find a job right now...

GLASSMAN: I prefer to look at you. And let me say this.

This is a huge economy. I have tremendous sympathy for people who lose their job and are in pain. And for those people, we need to concentrate on helping them. How do we do it? We do it through job retraining. We do it through...

DOBBS: What are you going to retrain them for, Jim? You're a smart guy.

GLASSMAN: What do you mean what I am going to retrain them


DOBBS: What are you going to retrain them for? We're exporting many, many jobs.


DOBBS: We're exporting radiologists.

GLASSMAN: How did we retrain blacksmiths when the automobile came in?


GLASSMAN: Forty percent of Americans worked on the farm. Today, it's 2 percent. We produce far more agricultural goods than we ever did. We export agriculture.


DOBBS: Do you want to go back to policies of the 1850s in this country?



DOBBS: Well, then why are you quoting these metaphors?

GLASSMAN: Because I'm trying to tell you, this is a dynamic economy.

DOBBS: Well, I think we understand that.

GLASSMAN: Every week, Alan Greenspan, in his testimony...

DOBBS: There's no fool here again, OK, no fool watching, no fool here listening.

Let me say this to you. David Ricardo, as you well know, never considered a world in which you were exporting American jobs to produce services and goods for reexport to the United States. It was never considered.

GLASSMAN: I really object to this term exporting American jobs.

DOBBS: Well, wait a minute.


GLASSMAN: It's not as though we start with 100 jobs. They have 100 jobs. We send a few. Our jobs have been on the rise for the last 20 years, enormously. We have 130 million people working in the United States.

DOBBS: Well, it's actually


DOBBS: ... million, but that's all right. GLASSMAN: Every week, as Alan Greenspan said in his testimony, a very interesting statistic for your readers.


DOBBS: They're viewers.

GLASSMAN: For your viewers and readers, right, in "U.S. News."

Every week, one million Americans leave their job, but one million Americans take a new job. It is that dynamism....

DOBBS: Jim, Jim...

GLASSMAN: It is that dynamism that drives the American economy.

DOBBS: American corporations are shipping jobs overseas for one reason.

GLASSMAN: They are not shipping jobs. And I really object to this rogue...

DOBBS: They are not shipping jobs?

GLASSMAN: I really object to this rogue's gallery of America's greatest companies: Intel, Pfizer, Amazon.com

DOBBS: Shipping jobs.

GLASSMAN: You were once a journalist. You know the accuracy.

DOBBS: Is IBM shipping any jobs overseas? Is IBM?

GLASSMAN: It's creating jobs at home and it's employing people overseas. Just as Honda, you have Congressman Brown here.

DOBBS: I've got to tell you something, if you continue to this...

GLASSMAN: there are 13,000 Honda jobs in Central Ohio. Honda is the largest private employer in Central Ohio.

DOBBS: What's that got to do with...

GLASSMAN: I was wondering whether you would like to stop, that, too.

DOBBS: If I wanted to stop that, Jim, I would say I wanted to stop it. There's no difficulty getting my opinion on something. That is a transplant in a market in which it is brought, it's factories of production. It is not analogous in any way to IBM shipping 10,000 jobs to India solely for the purpose of achieving lower wages.

GLASSMAN: No, no, no. Solely for the purpose of achieving lower costs.

DOBBS: All lower costs are I achieved by what means?

GLASSMAN: All businesses strive to cut costs. And why do they do that? In order to increase their profit so they can reinvest their profits into growth.

DOBBS: Let me review the bidding war, Jim, very quickly. What you are refusing to acknowledge, a half trillion dollar current trade deficit. We are importing capital. We are squandering our wealth on a short-term basis, corporate America and U.S. multinationals are shipping jobs for only one reason, not for greater productivity, not for efficiencies, those are purely code words for cheaper labor costs and you know it and you won't admit it.

GLASSMAN: Absolutely -- no, of course I'll admit it. Obviously any business...

DOBBS: Then, how can you support it?

GLASSMAN: ...every business is trying to lower its cost. But by finding laborers in other countries and lowering those costs, they are able to reinvest in their own business.

DOBBS: OK, I want to show you something, Jim.

GLASSMAN: And increase business at home. They have done this consistently.

DOBBS: Let me show you what Jim Glassman wrote, if we could have that, which piqued my interest when I read it. "Once a sensible, if self-important and sycophantic, CNN anchor, he has suddenly become a table thumping protectionist."

Do you think I'm a protectionist?

GLASSMAN: I do. I really do. And I think the worst thing about it. I think the worst thing about it is, that you know economics. You do know economics. And you understand comparative advantage.

DOBBS: And what is it that...

GLASSMAN: You understand Adam Smith. You understand the trade benefit both sides. You know that. I wish you would concentrate your tremendous intelligence...

DOBBS: That statement is wrong. It's flat wrong.

GLASSMAN: Lou, I wish you would concentrate your intelligence...

DOBBS: When you are carrying a half trillion dollar trade deficit, it's not benefiting both sides. That's precisely the point. If it were I would...

GLASSMAN: Of course it benefits both sides. The United States is the most...

DOBBS: Do you realize there are 3 trillion dollars in IOUs held by foreigners against U.S. assets? Does that trouble you.

GLASSMAN: The United States is the most robust economy in the world.

DOBBS: You can keep doing it.

GLASSMAN: Obviously, we have problems.

DOBBS: You talk like a cult member. There's a mantra, you say market, you say largest and dynamic.

GLASSMAN: I don't think I've said market yet.

DOBBS: And it simply removes the need for rationality.

GLASSMAN: I just wish you would devote your considerable intelligence what I think is the biggest problem with trade, which is alleviating the pain of the people who get caught. Trade definitely has more benefits...

DOBBS: I am trying to stop the pain before it continues and that's what has got to be addressed. And you are too smart to buy in as a sycophantic response to your corporate bosses and say, you know whatever you want to do, whatever the American enterprise needs to do.

GLASSMAN: To have real economists on the show to discuss these things. People like Katherine Mann who has done a study which shows that computer jobs are rising in the United States.

You talked to Katherine Mann?

DOBBS: We have talk to...

GLASSMAN: Michael Beldon at NC State...

DOBBS: Don't waste our time running through a litany of...

GLASSMAN: I'm talking about facts.

DOBBS: Here are the facts. Half a trillion dollars in a current account deficit. Hundreds of thousands of jobs being shipped overseas, as you acknowledge, by cheap labor costs.

GLASSMAN: I don't consider it shipped overseas. That's not what's happening.

DOBBS: You may not, that's my word. And the fact is, it is exactly what is happening and why you won't acknowledge that is beyond me. Where do you want the United States economy to be in ten years? You can't talk about jobs to retrain.

GLASSMAN: I want it to grow 3 to 4 percent a year as it has done in the past 20 years. Partly because...

DOBBS: And how much of the GDP do you want to be imports? How much of that GDP do you want to be imports? GLASSMAN: I really don't know. I think that's up to individual Americans to determine how much do they want in imports.

DOBBS: Mr. Market...

GLASSMAN: If they don't want to buy goods from overseas, they have that choice. If they don't want to buy Japanese cars they have that choice.

DOBBS: You don't think there should be a balanced trade approach? Balance trade, protecting American jobs.

GLASSMAN: I don't know what that mean.

DOBBS: You don't know what it means?

GLASSMAN: I really don't know what balanced trade means.

DOBBS: Watch the show some more, Jim, we're going to make it clear.

GLASSMAN: Thanks for having me on.

DOBBS: Good to have you here, Jim.

Tonight's thought is on opinion. You just heard a couple. "Few people are capable of expressing, with equanimity, opinions which differ from the prejudices of their social environment, most people are incapable of forming such opinions." We have demonstrated the truth again of Albert Einstein's words.

Posted by richard at February 15, 2004 04:55 PM

Check out http://www.economist.com/agenda/displayStory.cfm?story_id=2454530

Posted by: Mike F. at February 22, 2004 08:18 PM