Evil liberal or conservative politicians did not send American jobs overseas. Free enterprise capitalism, American corporations, sent millions of American jobs overseas.
Free enterprise capitalism sent millions of american jobs overseas.
Politicians of both stripes complied with demands that the government become more “business friendly.” Businesses make business decisions for business reasons not social or patriotic reasons.
Business sent thousands of jobs overseas and business will continue to do so whether Trump likes it or not.
First, trade agreements don’t spring to life because politicians want to make trade deals. Trade deals happen because businesses want the government to make trade deals allowing businesses to make more money.
Trade deals are made for the benefit of business supposedly so the nation can benefit from the economic stimulation. This is free market capitalism working in the same ways many conservatives claim their fiscal polices will “raise all boats.”
And sometimes trade does benefit the nation and the world, making nations more reliant on one another less likely to fight.
But sometimes free trade may benefit the nation but not in ways that reward large number of individuals across the nation by improving their overall standard of living. Free trade benefits businesses. Businesses make decisions based on enriching the business not on the needs of their employees, communities, nations or humanity.
An MBA or accountant will probably tell you the fastest and easiest way for a business to become more profitable is to reduce labor costs, either by having fewer workers, paying workers less, outsourcing or all three. This is the approach used by most large businesses and many small ones.
During the past six decades followers of Ayn Rand, (born Alisa Zinov’yevna Rosenbaum to a well-off Jewish family in St. Peterburg, Russia in 1905 she fled to the US in 1926), such as Nobel Prize-winning economist Milton Friedman, have risen to positions of power within the financial and legal communities.
Author of thick tomes of polemic fiction, Rand styled herself a philosopher. She preached “Objectivism,” the idea that only responsibility a person has is to enrich yourself, the individual, to the exclusion of all else under the guide of “rational self-interest.”
Friedman, for example, rose to prominence and applied Rand’s social theories to actual economic policies. This gave rise to the Friedman doctrine, the intense focus on quarterly profits as businesses were told that their only responsibility was to enrich ownership and/or shareholders.
Improving shareholder value at all costs has become the exclusive financial mantra of big business. Managers don’t make decisions for the benefit or their employees or even customers. They make decisions based on what is best for the business, often guided solely by data from spreadsheets.
Businesses are not people, despite what the US Supreme Court may have ruled.
Free enterprise capitalism in its current form gives business zero incentive or reason to create new jobs in the US or move jobs back from overseas as long as someone else can do it cheaper and maybe better.
Jobs are created in the US when and only when a demand arises and those jobs cannot be located somewhere cheaper. Even then, business will often shuffle off from wherever they started out to a state with lower wages leaving those in their hometowns high and dry.
Ball Corp.’s abandonment of Muncie, Indiana, is a good example of how this process works.
Ball Corp., a company originally built on glassmaking, its famous jars that made home canning of fruits and vegetables more practical, was once the corporate core of Muncie. However, it slowly but it steadily withdrew from Muncie as the city and region around it rapidly deindustrialized.
Ball spun off its canning business in 1993. In 2016 Newell Rubbermaid acquired Jarden, the company that owned the Kerr and Ball trademarks and produced the glass jars, $15 billion in cash and stock. Fewer than 120 jobs related to what was once the Ball’s glass business remain in Muncie.
Essentially Ball Corp. left a shattered community behind for greener pastures in states with better-trained workforces. It could have chosen to stay in Muncie, but that would not have been a prudent business decision and would be counter to improving shareholder value and quarterly results.
Ball Corp. now calls Broomfield, Colorado, home.
United Technologies, the defense contractor conglomerate that owns air conditioning manufacturer Carrier, shows how this process is happening in real time.
Avowedly anti-corporate welfare Trump makes an example of the company on the campaign trail for sending jobs to Mexico. A few weeks later after the election Carrier claims Trump’s stump statements were a factor that the company said made it change its mind about sending 1,000 jobs in Indianapolis to Mexico. Carrier also received a $7 million tax break to keep the 500 jobs in Indiana. However, Carrier is moving ahead with plans to send 500 other jobs from its Indianapolis plant to Mexico.
Reuters reported that United Technologies would proceed with plans to close its United Technologies Electronic Controls plant in Huntington, Indiana, that employs 700.
In this case, appearing to save a few hundred jobs at one plant in Indiana netted Carrier the cost-savings on the 1,200 jobs it will still send to Mexico AND $7 million in corporate welfare from fiscally conservative GOP-controlled Indiana. Add in the significant value of the free media and publicity both parties received during the news cycles the incident lasted and the value of this move for Carrier rises considerably.
Public opinion let Carrier off the hook for sending American jobs to Mexico by saying it would “save” 700 jobs, taking $7 million in state-supplied subsidies and allowing a major Trump photo opportunity that helped boost both brands.
The entire Carrier episode is a prime example of an excellent free enterprise capitalism business decision based in the Friedman doctrine. It is also just one of thousands of possible examples of why business won’t be creating large numbers of good paying jobs in the US for people who do not have specific skills or education.