“Look, I love international trade,” he continued. “I love India so much I’ve taken my family there on vacation. The fact is, does one transfer a job to a foreign country to provide services and products to the home market? The answer is no. This is the first time it’s ever been attempted, and it’s idiotic.
“Henry Ford understood that if you pay high wages, people can afford to buy the cars they’re making—and if they can’t, unpleasant things are going to occur. If we look at wages, they are basically stagnant in this country for 30 years while profits have soared, and there has been very little participation in this growth for the working men and women in this country.”
…
“I’ve never been able to rationalize a social structure that does not honor work in any form,” he said. “I was always told to honor hard work, no matter what. That’s a value structure that has dissipated, perhaps, over time. I’m not sure what we honor now as a society, other than C.E.O.’s and senior management who make extraordinary sums of money not necessarily related to performance.
“We are desperate in this country for a countervailing power to that of corporate America politically,” he said. “If you’re not willing to protect the American middle class in the values that make the American dream possible, you’re not going to get my vote. And I don’t care what your party says.”
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Although I disagree with them, it’s one thing for lay people to complain about outsourcing. On the surface, it’s easy to view international trade as a competition or war between countries, especially given today’s political climate. Understanding the mutual gains realized from specialization in areas of comparative advantage requires a deeper analysis than most people are likely to devote to the subject.
It’s a sad commentary on “economic journalism” when its brightest stars are 200 years behind the curve: apparently Dobbs hasn’t caught up with David Hume, Adam Smith, and David Ricardo, let alone Mises or Rothbard.
Howener, Dobbs’ ignorance is only apparent. He is a trained economist and businessman who should and does know better. He simply realizes which way the political winds are blowing and is willing to throw economic theory out the window for ratings. Luckily, those of us who both know better and are willing to take the heat don’t have to depend on the statist/mercantilist/protectionist/Keynesian babble spewed forth by the news networks.
Well, how’s this for a great message for an enterprise to give to its customers: “Our business is just soooo crappy that we can’t afford to hire Americans anymore! But we sure do hope you’ll be there to buy our product!”
Or, how about “We won’t hire anyone your age to work here–you’re too old! But we sure do hope you’ll keep buying our product!”
Perhaps I’ll be forgiven for a follow-up.
Perhaps Dobbs and others rightly perceive that there is something perverse and foolish about a business blackballing its home clientele when it seeks to “buy” labor.
But perhaps he’s wrong about the electoral process or government being an effective solution. If the “Americans need not apply”, then perhaps the solution is for the blackballed customers to organise, seek to gather sympathisers and seek to freely serve their own self interest by returning the favor. The power of selectively applied consumer boycotts could be effective to end and deter offensive, short-sighted corporate behavior.
To whit: if the foremost outsourcers were to feel the pain, they would have to decide whose goodwill they really desire–that of Indians, or that of their customers.
Likewise, government is not the solution to age discrimination–the aggrieved consumers taking appropriate countermeasures could be. If (for example) elderly folks were to pull their assets out of accounts with financial services providers where there are no grey-haired employees in the office, for example, then….
Let’s see, if somebody out there were to organise a national nonprofit boycott clearinghouse, and perhaps….
If Mr. Dobbs assesses that outsourcing is “idiotic” then surely he concludes it will fail and therefore has nothing to worry about – the jobs will return to the United States. And as there are no contradictions, he will also condemn the “idiotic” idea of companies outsourcing to other companies in the USA. But then of course he is a mercantilist in my view and believes that trade is a zero sum game. He is no capitalist.
He may also be a “trained economist”, but then so was Keynes…… Get my drift?
Business people have to abide by objective reality and reason. This requires them to do that which is in their own rational self-interest. Any way else and they will fail.
Whether this be outsourcing or transferring production to another country or importing skilled labor to the United States, ONLY successful countries take these actions.
And despite the general hatred of capitalism in the United States and around the world, and the rising tide of statism, and the corrosive finger of interventionist government, whatever remains of capitalism still manages to achieve.
Mr. Dobbs should not complain about wages remaining static. He ought to read Murray Rothbard and understand that it is the debasing of the dollar that is the real problem.
I apologize for this long winded brief and trust it makes economic sense.
I’ve always wondered: Is there any evidence that Henry Ford actually believed that he could make money by selling cars to employees, or is this just an old urban legend?
Brandon: Henry Ford certainly claimed that he raised employee salaries so that he could sell them more cars, but it’s doubtful that he actually believed it. Henry Ford put a lot of effort into cultivating popularity with the public.
Doug: Are you suggesting that it’s discrimination against Americans if an employer would rather hire an Indian to work for $10,000 than an American for $100,000? If so, that’s completely ridiculous. Your analogy to age discrimination is not at all persuasive.
The Dobbs reference to Henry Ford is the old “enough to buy back the product” fallacy that was dealt with by Henry Hazlitt in “Economics in One Lesson”, but it is not original with Hazlitt. It is Say’s Law, which goes back to classical economics.
My take in all of this madness, is that the eventuality of Global Outsourcing is imminent for US profitability. What seems to be the horrendous practices lie NOT in “Global Outsourcing”, but in American Outsourcing. This is when the American Worker is under-employed at ridiculous salaries, given heavy financial burdens and NO compensations. For instance, a professional. degreed with expertise hired at $7.50 an hour while the Outsourcing Company bills for $20 an hour. This will bankrupt a whole generation,Companies and lead to a new Workers Revolution! http:your_hiring_program.tripod.com, its time to recognize American Failures.
HaHa…
There is actually a Lou Dobbs quote on the site that Pablo suggests we all visit to “recognize American Failures.”
I am sorry, sir, but the economics of your argument hardly hold up.
What amazes me most about this issue is the fact that interventionist Statism has made it impossible to buy American labor at profitable rates and so business turns elsewhere. What’s the mystery? Perhaps Mr. Dobbs needs to be an advocate for ending Statist intervention in free-markets instead of worrying about the effects of jobs leaving.
C’mon, I’ve seen dear ol´Lou duking it out with some more informed friends of his, and he comes out as an economics iliterate. He just rolled his eyes when one businessman and economist reminded him of the concept of comparative advantage. I dismissed this joker from my tv viewing schedule a long time ago.
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