“Since day one, this Administration has been focused on encouraging investment and job creation here at home,” Vice President Biden added. “The business leaders coming here from across the country today have looked at the facts and concluded what the President and I have been saying all along: that America is the best place in the world to do business and create jobs. We’re calling on other companies to follow their lead and bring jobs back to America—jobs that provide middle-class families not just with a paycheck, but with a fundamental sense of dignity.”The process of "out-sourcing" has for many years contributed to the off-shoring of millions of American jobs to foreign companies and the shuttering of businesses coast to coast. The practice has hit U.S. manufacturing especially hard as emerging nations have taken advantage of an intensification of globalization, which encourages a relatively free flow of goods, services, capital and financial capital across international boundaries but maintains more or less strict immigration laws.
As a counterpoint, in-sourcing seeks to reverse the flow of jobs with government policies that encourage businesses, both U.S. businesses and foreign ones, to invest in the States. Those policies can include not only tax breaks but also tax disincentives for those who continue sending jobs overseas.
The White House announcement was made in conjunction with an in-sourcing forum that brought 14 large and small U.S. companies to meet with President Obama and discuss what kinds of policies might work to encourage the generation of jobs here instead of abroad. The 14 were Ford, DuPont, Otis Elevator, Intel, Siemens, ThyssenKrupp, Rolls Royce, Master Lock, Lincolnton Furniture, GalaxE Solutions, AGS, KEEN, Chesapeake Bay Candle and NOVO 1.
Heard in the forum were the expected calls for deregulation and a lower corporate income tax rate. Among other things, advocates say, a lower tax rate would "repatriate" profits U.S.-based companies have earned in their foreign operations but reinvested overseas to avoid paying taxes in the United States. President Obama has yet to take a stand on repatriation.
The White House also released a 16-page report [pdf] with examples and statistics on in-sourcing that has already occurred. One thing mentioned by the president that has helped to generate many new manufacturing jobs is increased productivity. In other words, companies are able to keep their costs lower by using fewer workers through automation and other means, and by paying workers less.
That, in fact, is one of the reasons General Motors has become the much-talked about success story that it is. Contracts now allow the automaker to pay new hires far less than new hires were paid several years ago. Over time, as older workers retire, the overall payroll will fall even with a similar-sized workforce. That may keep GM in business and highly profitable, and tens of thousands of its employees and hundreds of thousands of suppliers' employees working, but it plays havoc with the individual workers' lives. As Laura Clawson has written about German automaking, it doesn't have to be this way.
Whether the modest proposals being made so far can achieve their ends in the face of issues like undervalued Chinese currency and fresh free trade pacts is purely speculative at this stage. Some things that would really make a difference would be an honest-to-goodness industrial plan such as the kind every other developed nation and several developing ones have, and a focus on matters like that recently raised by Dave Johnson. The "industrial commons" has been wrecked, he said.
By sending manufacturing out of the country we have been taking apart the supply chains and abandoning the expertise and skills and culture that go with it.Johnson cited former Intel CEO Andy Grove:
The first task is to rebuild our industrial commons. We should develop a system of financial incentives: Levy an extra tax on the product of offshored labor. (If the result is a trade war, treat it like other wars—fight to win.) Keep that money separate. Deposit it in the coffers of what we might call the Scaling Bank of the U.S. and make these sums available to companies that will scale their American operations. Such a system would be a daily reminder that while pursuing our company goals, all of us in business have a responsibility to maintain the industrial base on which we depend and the society whose adaptability—and stability—we may have taken for granted.Sounds reasonable. Exactly the kind of thing Congress, in its current configuration, would be certain to reject.