Nancy Folbre is an economics professor at the University of Massachusetts, Amherst.
During Mitt Romney’s time at its helm, Bain Capital cleverly invested in, and made enormous profits from, companies that The Washington Post describes as “pioneers in the practice of shipping work from the United States to overseas call centers and factories making computer components.”
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Where pioneers have gone, settlers have followed. Today, outsourcing by the country’s largest multinational corporations has become routine.
The consequences for American workers and taxpayers have become increasingly visible. President Obama’s television campaign ads now dramatize job loss resulting from relocation of investment to other countries. Regardless of whether these ads prove politically effective, they are likely to raise public awareness of an important economic trend.
Globalization has been under way for centuries, in fits and starts. The process included the development of new trade routes and vast migratory flows to what Europeans termed a New World. For many years national policies shaped globalization’s impact by restricting immigration. Today, however, technological agility threatens to render national borders almost irrelevant.
The result is a process of strategic investment that often yields high profits without generating employment or tax revenues in the United States.
Many American companies rely heavily on subcontractors in other countries, minimizing both their production costs and their tax liabilities.
As Professor Gerald Davis of the Ross School of Business at the University of Michigan put it in a recent book, “Managed by the Markets,” production has literally become dis-integrated.
The very qualities that American capitalism prizes most – innovation, flexibility and single-minded pursuit of profits – have set it increasingly free of regulatory constraint. Paradoxically, this very freedom makes it increasingly hard for ordinary Americans to get a grip on the benefits.
In a paper presented at the recent meetings of the American Sociological Association in Denver, Professor Davis illustrated this point with a tongue-in-cheek guide to an instant start-up based on a marketing plan to sell imaginary (to date, at least) iPhone-based Remote Drone Assassins to neo-mercenary companies and other interested parties.
A bright student could follow this seven-step guide using a laptop computer from the back seat of a large lecture hall while pretending to listen to an introductory economics lecture:
1. Rent a desk in a shared office and garner a great-sounding business address at a “global accelerator,” like the Plug and Play Tech Center (no need to actually sit there).
2. Incorporate in Liberia by e-mail for $713.50 (further details at the Low Tax Global Tax and Business Portal).
3. Crowd-source funding on a platform such as Kickstarter.
4. Hire programmers at an agency like ODesk to develop the application software.
5. Contract with an overseas drone manufacturer using a service such as Alibaba.com.
6. Set up a payment system with a company like Square.
7. Arrange shipping through a company like Shipwire (which describes itself as specializing in “outsourced e-commerce order fulfillment and logistics services for business”).
I would add one more step:
8. Renounce American citizenship and move to Singapore, as did the Facebook co-founder Eduardo Savarin. That would end your obligation as a citizen to pay income tax to the United States.
Perhaps we should admire the brilliant entrepreneurs who are creating this brave new world.
But we shouldn’t depend on them for job creation, and it seems unlikely that the recent Jump-start Our Business Start-ups Act will have much employment impact.
What we really need is some new economic software that could link technical innovation to decent jobs, investment in the next generation and environmental sustainability.
Maybe we should try outsourcing a plan for economic reintegration, since we don’t seem to be able to come up with one on our own.
Article source: http://economix.blogs.nytimes.com/2012/08/27/our-dis-integrated-economy/?partner=rss&emc=rss
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