Sending jobs overseas has never sounded good to most Americans, especially now. In the State of the Union address, President Barack Obama spent a surprising amount of time attacking companies who outsource jobs, specifically in manufacturing. American voters need to understand the holes in this argument because 90 percent of economists agree that the government should not prevent companies from outsourcing jobs.
Consider Apple Inc., an American corporation often scrutinized for employing so many people in China. Apple designs its products in California and manufactures them in China because of lower labor costs. If government forced Apple to manufacture with higher labor costs in the U.S., their products would be significantly more expensive. Students and middle-class workers would not be able to afford their popular laptops and mobile devices.
With higher prices, Apple would have fewer sales, forcing it to downsize. This would inevitably result in job losses. These layoffs would hit engineers, designers and computer programmers who are at the forefront of technological innovation.
The higher input costs would lead to a less successful business model and bleak growth in the companyâÄôs net worth. AppleâÄôs share price has exploded from less than $84 in February of 2007 to more than $420 as of Tuesday.
Without successful American corporations to invest in, pension plans would not be able to ensure a secure, comfortable retirement for middle-class workers. Political praise and union lobbying continue to encourage these damaging proposals.
The benefit of lower prices, which leads to more job creation, far exceeds the cost of the jobs lost. The only way to stop politicians from attacking outsourced jobs is to dispel the myth that it harms the economy.