Senator Clinton's "Bestshoring"

First: I know a lot of you use the free OpinionJournal.com site to avoid paying money for the Wall Street Journal. One hates to insult one's readership, but you are all crazy!

Today Michael Barone has a great piece on why technology and telecommunication have changed the party conventions from the smoky, stormy, tendentious affairs of old to today's infomercials.

If that ain't worth it, we get a guest Ed from Sen. Hillary Clinton. Mirabile dictu, I start out agreeing with her:

WSJ.com - 'Bestshoring' Beats Outsourcing

You can't turn on the news without hearing about offshore outsourcing -- the shipping of jobs overseas to take advantage of lower wages. This trend has spread widespread fear among working families around the country. Although these fears are legitimate, I believe that the savings from such outsourcing are exaggerated and that America is more competitive than most realize.

I don't always agree with the Junior Senator from New York, but here she is spouting good economics -- contradictory to the chicken-little-protectionists in her party. Well done Madame Senator. Or, to use the colloquial, "You Go Girl!"

You're probably asking, "How can we compete against countries where a computer programmer's wages are $10,000 per year while the equivalent U.S. wage is $100,000?" The explanation is that additional costs must be added to the offshore wages themselves to get the complete picture on costs. Companies have to spend money for planning, offshore transition, vendor selection, technology, communications, offshore management, travel and security. Many employers do not take every one of these costs into consideration. Add up all the costs and suddenly a call-center worker with a raw wage of $5 an hour offshore has a true cost of $17. And that's why we have the potential to be competitive.

But to realize that potential we need a strategy that focuses on critical areas -- innovation, new job creation, workforce development, connectivity expansion, and collaboration between industry, academia, labor and government. We have to equip businesses and workers to become even more competitive, further develop the digital economy, and work to end trade and tax practices which undermine competitiveness.

Astute readers are probably starting to see where she is going here: Gosh, do you think government has an important role in getting these workers competitive?

Er, yes!

First, what helps us most against offshoring is our leadership in innovation. To maintain our advantage, we need a national agenda that promotes research through tax credits and further direct investments in science. We should provide new tax incentives for jobs, and eliminate perverse ones which actually reward businesses for sending jobs offshore. That's why I have co-sponsored legislation to create a 10% tax cut for manufacturers, and to close loopholes for companies that move HQs abroad solely to avoid taxes. And John Kerry has proposed an overhaul of the corporate tax system to eliminate the so-called deferral advantage which rewards foreign profits at the expense of domestic profits.

We also must help our workers to adapt. This means attracting more people into the science, math, engineering and tech disciplines through grants to universities and special loan programs to students. We cannot afford to fall behind India and China, who graduate far larger numbers of scientists and engineers. The Trade Adjustment Assistance Program, which provides wage assistance and retraining only to manufacturing workers who have lost jobs due to trade, should be expanded to include computer programmers, call-center workers, and other service jobs.

Uh, oh Things are going in the pisser here, if I may be so coarse. How bad can this get? She only has a handful of paragraphs left...

We also need a national broadband policy. It is inexcusable that the U.S. ranks 11th globally in broadband penetration per household. I have introduced legislation to enhance access for rural and underserved areas that would accelerate the transformation to a digital economy.

NO, NO, NO!!! Here is why politics is fun. I have whined about the 11th in broadband number, just like Senator Clinton. But the trouble is not that we lack "a national broadband policy," the trouble is current price controls on last-mile access and antiquated, market-unfriendly, federal ownership and price regulation. Less Government, Senator, not more.

Still, she ends nicely enough

Where do we have the talent, resources, and cost structure coming together to enable us to compete? The answer is regions like Upstate New York, with unmatched educational and research institutions; proximity to the financial center of the world; and a talented, educated workforce. It also has a high quality of life, and with the recent expansion of discount carriers, it's a lot cheaper to fly inside America than any flight you'd find from New York to New Delhi.

With a smarter national strategy and better information on real costs, many companies would rethink offshore sourcing. The choice they would make might be described as "bestshoring." It would keep more good paying jobs in America and replace the ones we have lost with even better ones.

I don't like it, but it is MUCH better economics than anything you'll hear at the convention in Boston this week. And it, sadly, makes me wish that Senator Clinton was the Democratic nominee -- she's more palatable to me than Senator Kerry.

Yes, I said that. I'll stand by it, just don't rub it in...

Posted by jk at July 26, 2004 10:18 AM