Contributor

John Campbell

John Campbell (R-Irvine) is an Assemblyman representing the 70th District in Orange County. Mr. Campbell is the Vice-Chairman of the Assembly Budget Committee. He is the only CPA in the California State legislature and recently received a national award as Freshman Republican Legislator of the Year. He represents the cities of Newport Beach, Laguna Beach, Irvine, Costa Mesa, Tustin, Aliso Viejo, Laguna Woods and Lake Forest. He can be reached through his Assembly website and through the website for his California Senate campaign. [go to Campbell index]

Outsourcing
Partnering with the world...
[John Campbell] 5/25/04

In elections, the pendulum of success for Republicans and Democrats often comes down to which party's candidates are perceived to be on the "correct" side of a few issues that are most important to the voters that year.

One of the big issues with voters recently has been jobs. Americans want them. Californians want them. And they want better ones than they have. In the past couple of elections, Republicans clearly have been on the right side of this issue. President Bush's tax reductions have clearly proven to provide economic stimulus and jobs on a national basis. Closer to home, one of the main drivers of the recall of Gray Davis was his stance on jobs. The once great California job-creating engine had been shut down by tax increases, a nearly bankrupt state budget, workers' compensation costs, insurance costs, energy costs and rampant frivolous litigation. Gov. Schwarzenegger and other Republicans have been moving to restart that engine with a balanced budget without tax increases, lower workers' comp premiums and energy costs, and less litigation.

It is clear that the public sees Republicans as the party of jobs and economic solutions. And Democratic leadership knows it. So, what is a Democrat to do?

Well, they can't suggest limiting job-killing junk lawsuits because that would upset the trial lawyers who donate millions. They are already on record favoring tax increases so no jobs there. More government spending on new programs won't do it either.

Ah-ha! John Kerry and other Democrats proclaim. "Here's an idea. Some American companies are setting up call centers and computer programming in India and other foreign countries to serve U.S. customers. Let's call this outsourcing and say that it's costing jobs. And as a bonus, we get to blame business for costing jobs so we don't get blamed and neither do our union boss friends or trial lawyers. Of course, it's these same businesses that create all the jobs in our economy but we don't have to mention that. And we can use this to try to confuse, I mean convince the voters into believing that Democrats care about jobs too."

So, John Kerry and other Democrats think they have found an angle that will allow them to wrestle the job-creation issue away from Republicans. But the facts of the so-called "outsourcing" trend tell a different story.

A recent study by the respected consulting firm McKinsey and Company found that so-called outsourcing reduces the cost and therefore the price of goods and services to U.S. customers. By creating jobs in other countries that are better than what they had before, it increases demand in those countries for U.S. products and services. It also allows both human capital and financial capital in the U.S. to be redeployed into areas where they will be better utilized and will create whole new job categories.

OK, so maybe that sounds like a bunch of economic proselytizing. But here's the bottom line. For every dollar and every job "lost" to outsourcing, we gain $1.14 back into the economy and about the same ratio of new jobs.

So, "outsourcing" is actually the source of net job creation. How can this be, you say?

Think of what percentage of the American population was employed in farming at the turn of the 19th century. Think of how few are employed in that occupation now. Was that a bad thing? No. As farming methods gained in efficiency, those people and resources were redirected elsewhere and the economy has more jobs as a result.

Do you own a TV? Probably. Was it manufactured in the United States? Almost certainly not. Those jobs were "outsourced" years ago to places where those TVs could be built cheaper. But because TVs are so cheap, almost everyone has 1 or 2 now. Because of that, we have more channels and more advertising and more show production than ever before. So, we lost jobs in the manufacturing end of the TV business. But we gained many more high-paying jobs in cable and satellite and advertising and TV production and DVDs because the price of TVs has fallen to within the reach of so many more people. And I could go on and on with the similar stories about all the jobs in the cellular phone industry even though we don't build many of the phones here, etc. etc.

But Democratic leadership has never been interested in the facts of this issue. They aren't interested in actually creating jobs. They are only interested in the appearance of job creation. And outsourcing, as is said in the political spin business, has good "optics." But don't you fall for it.

The Silicon Valley company e-loan recently offered its customers the option of dealing with a call center outside of the U.S., or to pay extra for one here. Eighty-six percent of their customers chose the outsourced center. Those 86% will invest or spend that savings on something else they deem more valuable. And, the market will work as it almost always does.

So-called "outsourcing" more efficiently uses capital and it creates jobs. Democrats' spin doesn't' create jobs. It's that simple. CRO

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