The nuances surrounding outsourcing


It’s easy to forget after the uproar of the last week, but the near-scandal about Mitt Romney’s Bain Capital background started with an Obama campaign attack on outsourcing.

The president’s team ran ads blasting Romney for being an outsourcing “pioneer,” but instead of defending the tactic, Romney instead said the outsourcing in question doesn’t count – it happened after February 1999. Soon after, we entered the realm of “retroactive” retirements.

But some, including Matt Yglesias, have made the case that outsourcing need not, on its face, be considered problematic. After all, it makes sense for a business to be as efficient and profitable as possible, and if it can save money through outsourcing, it can, in theory, lower prices, sell more goods to customers, grow, and hire new workers. Instead of making a ridiculous case that the CEO of Bain Capital had no idea what Bain Capital was up to, maybe Romney could have just defended the underlying complaint.

So, why didn’t he? Because the debate over outsourcing isn’t that simple. As Jonathan Cohn explained, “The question isn’t whether outsourcing can be a sound, legitimate business practice. The question is how we, as a society, react to it, given that outsourcing inevitably causes a lot of very real, very serious human pain.”

One response is to minimize outsourcing, by, for example, creating financial incentives that discourage it. An example would be industrial policy that subsidizes domestic manufacturing. Another response it to let the economy operate as freely as possible, with minimal interference, but then intervene after-the-fact to help those who lose their jobs – by redistributing income through the tax code or by creating universal programs that provide economic security and opportunities for new work. […]

Liberals have argued amongst themselves over which combination of these strategies makes the most sense. But the conservative answer to outsourcing – the answer Romney has long espoused – is essentially to do nothing.

Exactly right. Romney could make the case that outsourcing is just a fact of modern business, but he supports generous benefits for those hurt by the practice, and ambitious job-training programs. But Romney strongly opposes these ideas – he fully intends to shred the safety net.

Indeed, this is systemic in Republican politics. Last week, National Journal talked to Senate Minority Leader Mitch McConnell (R-Ky.) about his economic worldview, and he sketched out a vision of inaction – government should do nothing, and eventually, the market will adjust.

With Romney and outsourcing, it’s an identical dynamic. Part of the problem is the business practice itself, but the real problem is his disregard for those adversely affected by the practice.

It touches on the notion of transactional politics that we discussed a couple of months ago – there’s no trade to be made. The problem isn’t just Republicans’ awareness of the problems; it’s also their indifference towards addressing the problems.

Mitt Romney

The nuances surrounding outsourcing