President Obama's Disingenuous Attack on Outsourcing

His populist critique of free trade and outsourcing is a cynical pander. Just look at the economic leaders with whom he surrounds himself.

In recent weeks the Obama campaign has revealed how it intends to portray Mitt Romney in the upcoming election: as a greedy, dishonorable, unpatriotic member of the international business elite. They're taking advantage of the gulf in values that separates the average Harvard M.B.A., who regards it as his or her duty to contract for labor abroad when it maximizes shareholder value, from the average American, who sees outsourcing as a distasteful, mercenary act. These attacks are likely to be successful precisely because the lives of business elites are so different from the lives of ordinary Americans. Among business elites, for example, drawing a large executive salary from a firm where you're little more than a figurehead is common enough. For the average worker, that sounds like a creepy, dishonest scam.

Some of the ways big business evolved during the era when Mitt Romney was making his fortune are in fact distasteful -- the lobbying for regulatory advantage; the focus on tax arbitrage rather than creating value; whatever portion of executive compensation is attributable to insiderism. Other critiques are wrongheaded. Take outsourcing. It's absurd to think that the American worker wouldn't face pressure from foreign labor if only America's CEOs were less greedy.

Whether right or wrong, these critiques are difficult to rebut. Doing so involves explaining the global perspective of the ultra-rich business elite to the struggling U.S. worker. They're also disingenuous attacks for President Obama, of all people, to make. They're disingenuous because Obama isn't a consistent, principled critic of the business elite. He is an inconsistent, opportunistic critic.

He started playing this game during the Democratic primary in 2007, insisting that if elected president he would renegotiate NAFTA. To no one's surprise, he wasn't in office a month before he reneged on that promise. He was pretending to be someone who believed the populist critique of free trade agreements, but like the academic and business elites with whom he staffs his administration, Obama buys into the conventional case for free trade and never wanted to renegotiate NAFTA. He still doesn't, no matter how many times he complains that "Romney's firms shipped jobs to Mexico." In the long run, capital and labor mobility either benefit us or make us no worse off, insofar as global competition cannot be escaped. I tire of Obama pretending his position is different, and feel especially sorry for the voters he's misleading.

How credible is it that Obama actually thinks there's something unethical about sending jobs to China? Well, here's what Obama said about another ultra-wealthy entrepreneur who outsourced jobs: "We celebrate somebody like a Steve Jobs, who has created two or three different revolutionary products. We expect that person to be rich, and that's a good thing. We want that incentive."

And who heads the President's Council on Jobs and Competitiveness? Jeffrey Immelt, CEO of General Electric. "Since Immelt took over GE in 2001, the company has lost 37,000 American jobs, and added 25,000 jobs overseas," Cole Stengler writes in a Huffington Post article titled "Obama Jobs Council Packed With Outsourcing Companies." I don't think there's anything wrong with that. Competition from foreign workers is going to disrupt labor markets for the foreseeable future; a company that foreswore outsourcing would be neither efficient nor viable in the long run. If Obama simply disagreed that would be one thing; instead Obama pretends to think Romney is malign for his indirect complicity in outsourcing years ago, even as he praises and elevates various business elites who are directly responsible for massive outsourcing right now.

Forget what Obama says.

Look at what he does and ponder who he is. Were America divided into two economic tribes, the "American protectionists" and the "Acela corridor elites," Obama would belong to the latter. He surrounds himself with guys like Tim Geithner and Larry Summers, who recently said, "There are those today who would resist the process of international integration; that is a prescription for a more contentious and less prosperous world. We should not oppose offshoring or outsourcing."

Obama's present strategy is so pernicious because he is misleading the tribe of "American protectionists" into thinking that he shares their populist attitudes. Nonsense. If reelected to another term, he's no more going to stop outsourcing or end offshore bank accounts (though some of Romney's seem shady) than he's going to renegotiate NAFTA. He's going to keep staffing his economic team with establishment elites from Wall Street and Ivy League universities. Any blue-collar populist who votes for Obama is going to be and feel betrayed. They're going to have less faith in politics. Told that a pol shares their perspective, only to find out that they were misled, some of them will wind up radicalized.

They'd be better off if Obama were just honest with them: Free trade, outsourcing, and Swiss bank accounts aren't going anywhere, regardless of who is elected in November and sworn in next year. In America, the left has no champion on these issues. Obama would be within his rights to claim that he has a plan to marginally reduce outsourcing, but that plan is premised on the notion that bad policy presently creates an incentive for companies to shift their labor abroad; it's therefore at odds with the idea that a CEO whose company outsourced is a pernicious man or bad leader. By the logic of Obama's own plan, tax policy is the problem, not guys like Romney. Do you know what figure I'd love to see? The number of Obama staffers and advisers who've outsourced a job at some time versus the number who've ever had one of their jobs outsourced.