Matthew J. Slaughter writes:
“President Trump has voiced a widely shared—but incorrect—belief that the global economy is a zero-sum game. “One by one,” Mr. Trump said in his inaugural address, “the factories shuttered and left our shores, with not even a thought about the millions and millions of American workers that were left behind.” In his first White House meeting only a few days later, Mr. Trump warned a roomful of CEOs that companies sending factories overseas would face a new border tax.
Mr. Trump assumes that when U.S. multinationals expand abroad, it necessarily reduces the number of people they employ in the U.S. But this assumption is wrong, and tariffs would hurt American workers, not help them.
Academic research has repeatedly found that when U.S. multinationals hire more people at their overseas affiliates, it does not come at the expense of American jobs. How can this be? Large firms need workers of many different skills and occupations, and the jobs done by employees abroad are often complements to, not substitutes for, those done by workers at home. Manufacturing abroad, for example, can allow workers in the U.S. to focus on higher value-added tasks such as research and development, marketing, and general management. Additionally, expanding overseas to serve foreign customers or save costs often helps the overall company grow, resulting in more U.S. hiring.
Over the same period, the value-added and capital investment grew faster among U.S. parent companies than in their foreign affiliates. In fact, on these two measures the American parent companies outperformed the overall U.S. private sector. This suggests that having overseas affiliates gives companies a competitive advantage that allows them to invest more at home. More than ever, jobs in America are connected to the world.
One can always find anecdotes of a company closing an American facility and moving the work it does overseas. But these anecdotes are not representative of the overall synergies between parent companies and their affiliates. Consider Caterpillar Inc., the American manufacturer of heavy machinery whose main facility for research and development is in Peoria, Ill. In recent years the company has established several research-and-development facilities outside the country. Yet Caterpillar’s engines lab in Peoria still runs two shifts a day. Before closing up for the night, the Illinois engineers send data to their colleagues in Chennai, India, who process it overnight. When the Peoria workers come back the next morning, the refined data is waiting for them.”
Read the full op-ed at the link.
Like it or not, we’re competing in a global economy. Trump’s “turn back the hands of time” rhetoric is no more realistic than the Sessions-Bannon-Miller group’s heartfelt desire to re-create the white-Christian-dominated U.S. society of the 1950s. But, that doesn’t mean that these guys aren’t going to do lots of damage to our country and our society by trying to do the impossible and undesirable. And, sadly, when it comes to the Trump Administration, there aren’t many adults in the room.