'Bestshoring' or Outsourcing?

Sept. 1, 2004
In case you haven't noticed, this is an election year and a particularly nasty one in terms of everything from who did what in the military 35 years ago

In case you haven't noticed, this is an election year and a particularly nasty one in terms of everything from who did what in the military 35 years ago to what's wrong with the economy and how to fix it and create more good jobs. It seems everyone has an opinion on that one, whether they are running for president now or later.

"Outsourcing," for example, has become a term to start duels with. Sending jobs — manufacturing jobs as well as service jobs like computer programmers and call-center work — overseas has been going on for decades. So has "insourcing" — foreign companies hiring Americans to work for them here at home. I've read that there are far, far more jobs delivered to our shores by non-American companies than American companies send in the other direction.

Still, if it's your job that's just been shipped ( outsourced) to India or China, then statistics becomes especially irritating. Here's something else I read recently in the world's leading business newspaper, The Wall Street Journal. The author, a guest editorial writer, said that our own industrial managers don't realize how "exaggerated the cost savings are from outsourcing and that America is more competitive than most realize."

The writer then noted that when all the costs of hiring a $10,000-per-year computer programmer, say in India, are added up, the $100,000 annual salary of the American looks more competitive. Those other costs include capital spending overseas, new vendors, offshore management and other corporate infrastructure expenses. I've written on this before and called some top managers to task for acting like dogs chasing the tail of cheap labor around the world. Maybe this other writer is on to something. The writer then goes on to suggest more industry/academe/government cooperation, more encouragement of young people to major in science and engineering, and using tax policy to give businesses extra incentives to expand in the United States. The writer says we have lots of workers who need help in adapting. "We need to expand the Trade Adjustment Assistance Program to include not just manufacturing workers but computer programmers, call-center workers and other service jobs," the guest editorial writer claimed.

Finally, the author notes that we are 11th in the world in terms of per-capital broadband penetration. She adds that she has introduced legislation in the Senate to enhance access to the Internet for "rural and underserved areas that would accelerate the transformation to a digital economy."

"With a smarter national strategy and better information on 'real' costs, many companies would rethink offshore sourcing." She calls what might come out of all this change "bestshoring."

Well, if you've read this far, you know it's a lady senator. It's the one from New York, Hillary Rodham Clinton. Why am I noting her ideas here? For one thing, I think some of them are pretty good and worth discussing. For another, I'm delighted to see that the politicians of our country, from left to right, are educating themselves about business, free enterprise and, especially, the central importance of manufacturing to the economy and the country's standard of living and position in the world.

The fact that Senator Clinton took the time to present some ideas about modern industry in a journal not known for its sympathy to her party or partner in life says something about the nation's current discussion about economics and manufacturing. The very fact that the WSJ ran a guest editorial by Senator Clinton ( Monday, July 26, 2004) suggests that my favorite topic — the central importance of industry to America — has been embraced by the whole political spectrum. Now if we can just agree on the details.

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