Faced with an 8.2 percent unemployment rate less than four months before the election, President Barack Obama is trying to deflect attention from his record by undermining Republican opponent Mitt Romney’s major selling point: that he’s an experienced businessman who knows how to create jobs.
The Obama campaign is running ads claiming Romney is a “pioneer of outsourcing,” a reference to his work at private-equity firm Bain Capital. One such ad closes with the question: “Does Iowa really want an outsourcer-in-chief in the White House?”
Never mind that academic studies have found private equity’s effect on employment to be mixed. Or that there’s “no evidence to support the claim that Romney — while he was still running Bain Capital — shipped American jobs overseas,” according to .
Facts aren’t the issue here. Image is. Romney needs to seize the day and start wearing his outsourcing stripes as a badge of honor instead of accusing Obama of the same. Here are a few suggestions on how to change “outsourcing” from a pejorative to a positive.
1. Cheap goods guarantor
Mitt, you have been accused of failing to connect with the common man. Get off your Jet Ski and get behind a shopping cart at Wal-Mart, the perfect milieu for a teaching moment. While you’re cruising the aisles, grabbing a pair of jeans here and a box of Cheerios there, you can explain how a market economy works; how companies compete with one another to provide the goods and services that consumers want at a price they are willing to pay. For that reason, business strives to become more efficient, replacing labor with machines. Often it behooves companies to produce low-end products in developing countries where labor is cheap. This is called “outsourcing.”
It’s also called Wal-Mart, and it ensures that American consumers have a wide variety of affordable goods to choose from. When Iowans realize that “outsourcer-in-chief” is synonymous with “cheap goods guarantor,” they’ll be clamoring to have you in the Oval Office.
2. Made for big business
To encourage domestic hiring, Obama has proposed a tax credit for “insourcing,” for companies that bring jobs back to the United States. This is just plain silly, and you can explain why. Any attempt to offer more favorable tax treatment for new jobs than existing ones creates a range of unintended consequences, including an incentive for companies to game the system.
“Made in America” is the equivalent of “Made for Big Business.” It’s tantamount to mercantilism, a system that favors producers over consumers. Small businesses, the real job creators and the ones you claim to want to help, aren’t going to assume a long-term expense in exchange for a short-term subsidy.
3. Real-world model
A study on the effect of private equity on employment found that the decline in existing jobs at buyout targets is offset by the creation of new jobs at new establishments. The net change from leveraged buyouts is insignificant.
Mitt, you’re a numbers guy. The paper’s authors created a data set of private-equity transactions from 1980 to 2005 and analyzed 3,200 firms and 150,000 establishments before and after acquisition. The same public that bought into some bogus, model-driven number of “jobs created or saved” from Obama’s $831 billion fiscal stimulus in 2009 — and a promise of full employment by now — will appreciate hard data from someone like you.
4. Comparative advantage
Last year, on NBC’s “Today” show, Obama tried to explain why companies were reluctant to hire in the face of record profits. The president said companies were becoming more efficient, substituting ATMs for bank tellers.
This is the oldest myth in the book, that automation kills jobs. Innovation and new technology raise living standards, lower prices and create new classes of higher-paying jobs. It’s the way societies advance and become rich.
Obama managed to spend 12 years as part of the University of Chicago Law School faculty without ever learning how an economy works. This is an area where you have a clear comparative advantage, Mitt. Use it, to explain why outsourcing isn’t a dirty word, or lose it in November.
