Friday, December 31, 2010 - The Mistaken Attack on Outsourcing - Opinion: The Mistaken Attack on Outsourcing


Since his presidential campaign, Mr. Obama has repeatedly said that the global operations of U.S. companies harm the country because they drain the American economy of jobs. His rhetoric about "tax breaks for companies that ship our jobs overseas" has populist resonance at a time of economic uncertainty, but it is also at odds with the available evidence about how globalizing firms affect the American economy. Moreover, it harms the popular understanding of our opportunities and challenges.

When American firms grow abroad, they also grow domestically…

The data do not support the crude, fixed-pie intuition that firms either invest abroad or at home. Ten percent growth in American firms' foreign investment is associated with 3% growth in their domestic investment. And when firms grow abroad, their domestic exports and R&D activities grow especially, contrary to Mr. Obama's rhetoric.

Vilifying or penalizing American businesses for their global operations will only lead them to consider leaving the U.S.—or consider being bought by foreign companies. Such moves would hurt America by removing valuable headquarter jobs. Instead, Mr. Obama should emphasize how Americans succeed when our firms succeed world-wide. That formulation better captures reality and offers a more sensible way to engage businesses in a new spirit of cooperation.






Sunday, December 26, 2010 - Tea Partiers and the Spirit of Giving - Opinion: Tea Partiers and the Spirit of Giving

It is common to hear that the popular uprising against the growth of the welfare state, with rising taxes and deficits, is based on a lack of caring toward those who are suffering the most in the current crisis.

Few would disagree that free enterprise is grounded in one's self-interest. But self-interest is not the same thing as selfishness in the sense of unbounded consumption or disregard for the less fortunate. In fact, the millions of Americans who advocate for private entrepreneurship and limited government—whether they are rich or poor—may be stingy when it comes to giving away other people's money through state redistribution, but they are surprisingly generous when it comes to giving away their own money privately.

Americans in general are very charitable, by international standards. Study after study shows that we privately give multiples of what our Social Democratic friends in Europe donate, per capita. But not all Americans are equally generous. One characteristic of givers is especially important in the current debate: the opinion that the government should not redistribute income to achieve greater economic equality.

Contrary to the liberal stereotype of the hard-hearted right-winger, opposition to income-leveling is not evidence that one does not care about others. Quite the contrary. The millions of Americans who believe in limited government give disproportionately to others. This is in addition to—not instead of—their defense of our free-enterprise system, which gives the most people the most opportunities to earn their own success.

Tuesday, December 21, 2010 - Not Really 'Made in China' - Not Really 'Made in China'

The iPhone's Complex Supply Chain Highlights Problems With Trade Statistics


"What we call 'Made in China' is indeed assembled in China, but what makes up the commercial value of the product comes from the numerous countries," Pascal Lamy, the director-general of the World Trade Organization. "The concept of country of origin for manufactured goods has gradually become obsolete."

Mr. Lamy said if trade statistics were adjusted to reflect the actual value contributed to a product by different countries, the size of the U.S. trade deficit with China—$226.88 billion, according to U.S. figures—would be cut in half.

The value-added approach, in fact, shows that sales of the iPhone are adding to the U.S. economy—rather than subtracting from it, as the traditional approach would imply.

Based on U.S. sales of 11.3 million iPhones in 2009, the researchers estimate Chinese iPhone exports at $2.02 billion. After deducting $121.5 million in Chinese imports for parts produced by U.S. firms such as chip maker Broadcom Corp., they arrive at the figure of the $1.9 billion Chinese trade surplus—and U.S. trade deficit—in iPhones.

If China was credited with producing only its portion of the value of an iPhone, its exports to the U.S. for the same amount of iPhones would be a U.S. trade surplus of $48.1 million, after accounting for the parts U.S. firms contribute.