A 35% outsourcing tariff?
Donald Trump wishes to impose a 35% tariff if multinational companies engage in outsourcing. He wishes to bring jobs back to America which is a noble cause. Donald claims that China engages in currency manipulation. Additionally, for years, China has been dumping cheap products into the United States which creates brutal competition which local companies can’t normally survive.
3.2 million American jobs were lost during the trade deficit with China betwen 2001 and 2013 mostly coming from the manufacturing sector. Trump’s policy could reverse thirty years of U.S. trade policy. Having an outsourcing tariff could stop the outflow of American jobs overseas. But, the reason American jobs go overseas is because there is such a shortage of quality labor here, that it stops being cost effective to do business here. If the cost of labor would be lower and the quality higher, jobs would be flowing to the United States from other countries. In fact for those of you who wish that labor would flow to the United States — the only way that would happen is if America turned into a semi 3rd world country with shanti-towns and slums everywhere. In that consdition, we could accommodate the cheap labor that would make us the industrial king of the world. But, don’t despair, because America is already halfway through the conversion to 3rd world. Just take a drive through Central California. You will see less than 5% of the population is American and half of the population doesn’t even speak English or have a High School Degree.
I personally feel that outsourcing is good because it makes it easier for American businesses to have choices for who they hire. Although there is unemployment in the United States, it is very hard to find qualified and talented individuals to work for you as employees, or outsourced help. It is also hard to find quality people in foreign countries to help. Taxing outsourcing would put many overseas service providers out of business. The result would be that local companies would have less competition and be even more overloaded than they already are making it even more difficult, expensive, or in many cases impossible to find quality help anywhere in the world.
I feel that Mr. Trump understands many things about economic theory and currency manipulation. However, I don’t think that he sees the situation from the point of view of American companies who are forced to outsource because they can’t find reliable help on the home front. It is almost impossible to find a decent programmer anywhere in the world these days. If anything, creating artificial taxes and boundaries disrupt the nature of the economic ecosystem. What would help the world is to create more supply in the United States of critical jobs so that companies would not need to outsource in the first place. Proactive solutions make more sense to me as they make the United States strong in the long run.
Imagine if our government helped programming companies and call centers in the United States become more competitive? I propose huge outsourcing centers to be built in Arkansas and Oklahoma where land is ultra-cheap. Labor and other resources are also very affordable based on international standards in that area as well. By creating ultra-efficient systems and companies there offering the highest quality of service at really low prices, the United States could put foreign outsourcing companies out of business and possibly even import many of their staff members to the United States. I favor winning the competition by fighting smart and not by imposing artificial dampers to the flexibility that American corporations deserve!