Outsourcers in Chief?

posted by
on July 16, 2012

There’s something about hot summers in Washington, D.C. that raises political temperatures to their boiling points, especially when certain subjects are mentioned. Like outsourcing. And if you think the rhetoric on outsourcing the 2012 presidential campaign trail is already overheated, there are some previously unreported facts to report that, because they are awkward politically, won’t necessarily lower temperatures before the Nov. 6 election. Not at Romney campaign headquarters. Not in the Obama White House. Definitely not in the Washington Post newsroom and the Washington Post Co.’s corporate suites. Not even at the State Department or certain unnamed defense and intelligence agencies which all benefit, one way or the other, from outsourcing back-office business processing operations. While the diplomats and spooks have merely been spending tax dollars wisely, their efforts are not likely to be much appreciated by some of the more insular-minded denizens of Capitol Hill.

Sorting out the unnoticed facts in the current outsourcing controversy helps illuminate the fundamental economic facts of global competition that drive outsourcing —economic realities that have been almost totally obscured in the the current hot exchange of negative television commercials between President Obama and his Republican challenger. The current heated rhetoric has been sparked by a recent investigative report in the Washington Post.

“Mitt Romney’s financial company, Bain Capital, invested in a series of firms that specialized in relocating jobs done by American workers to new facilities in low-wage countries like China and India,” reported Tom Hamburger on June 21. Hamburger’s essential facts were pinned to public-record filings pertaining to several Bain investments, when Romney was at the helm, in companies that developed successful overseas call centers. Romney howled. But he is the one who set himself for such criticism. Given his background in international business, the Republican must be presumed to understand that outsourcing helps American firms’ competitiveness — and that at Bain, he did nothing to be ashamed of. But rather than offer thoughtful explanations that would appeal to the better nature of the American public, Romney has been talking down to them. He’s been running as something of a Buy American candidate, attempting to out-flank Obama’s economic nationalist appeals by railing against Chinese and other foreigners who “kill” American jobs. One thing about ordinary Americans: they can always sense when they are being talked down to. The Post’s piece quickly resonated because it exposed Romney’s insincere-sounding double-talk.

Obama, who really does appear to believe in economic nationalism, is determined never to be out-flanked when it comes to the Buy American business. The president quickly launched a still-continuing flurry of negative television spots in key electoral battleground states like Virginia. The Obama commercials — touting the Washington Post’s report, while stretching Pinocchio-like beyond the facts that the newspaper had reported — essentially say that Romney wants to be president so he can ship as many American jobs to Asia as he can. Fearing that too many American voters are gullible enough to swallow such strained logic, Romney has shot back with his own negative commercials calling Obama’s charges “dishonest,” and typical of a president who “doesn’t tell the truth.” Lost in all the hot air: any hint from either candidate that outsourcing may be something other than scandalous — and that there are overall benefits from outsourcing to American jobs.

Just look at new fact number one, which begins with the newspaper that has sparked the current controversy. The Washington Post itself outsources its subscription services to a call center in the Philippines. So do other respected major news organizations — the Financial Times and Thomson-Reuters stand out — which understand how such outsourcing of lower-end tasks helps sustain their bottom lines (and the jobs of U.S.-based reporters, even those who go around investigating call centers in aspiring Southeast Asian tigers like the Philippines as if they were unsavory massage parlours).

A second set of facts begins with President Obama, the nation’s number one critic of outsourcing. Flying in the face of his campaign rhetoric, Obama presides over a federal bureaucracy that itself benefits from billions of dollars in outsourced contracts to process back-office services. Obama probably has never thought of it this way, but there are U.S. national security benefits, not to mention savings of tax dollars, that result from hundreds of millions of dollars in outsourced federal contracts just involving national-security agencies.These contracts are very important to U.S. agencies whose operations simply can’t be cut off from the rest of the world they deal with, whether the politicians they report to understand that or not. Here’s the story:

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