Department Spotlight

As published in the Sept. 28, 2004, issue of The Seattle Times.

Candidates should embrace, not trash, the global marketplace

By Kyle Usrey
Dean of the Whitworth School of Global Commerce and Management

George W. Bush and John Kerry took plenty of verbal shots at each other during the recent Democratic and Republican conventions, but they joined forces to thrash global commerce and international diplomacy. Sound-bite attacks on outsourcing, the World Trade Organization and the United Nations played well to the crowds but betrayed a simplistic and inaccurate view of the way this newly globalized world operates.

What we need is a president with a clear strategic plan for marshalling the forces of global commerce to increase peace and prosperity both at home and abroad.

Unfortunately, in today's highly charged political culture, it's easier to offer protectionist slogans and nationalistic bromides to suggest one can deter the forces of globalism, which is about as likely as stopping the sun from rising in the east. In fact, it's likely nowadays that "pro-American" means taking the rest of the world's interests into consideration in our economic policies.

We live in an increasingly interdependent world. It's too facile to blame all of America's ills on outsourcing, "Benedict Arnold" corporations, skewed tax codes, weak multilateral organizations like the U.N., and global culture wars with radical Islamic factions.

For example, recent empirical studies show that outsourcing is neither the economic panacea promised by the economic theories espoused by Adam Smith and David Ricardo, nor is it the disaster feared by American isolationists.

Outsourcing, like globalization, is a pervasive economic reality, bigger than just the American experience. These forces can't be stopped, but they can be managed to maximize the benefits to our nation while reducing the undesirable costs and consequences to certain individuals. All that's required is to look beyond our own borders to see America as a player reliant on the global economy rather than as an isolated entity.

Outsourcing to India and China provides jobs in those countries; that, in turn, contributes economic and political stability that greatly benefits America and the world in both quantitative and non-quantitative ways. A recent report by the McKinsey Global Institute estimates that for every dollar spent in foreign outsourcing to India, the U.S. receives at least $1.12 in benefits. Another study shows that while over 90 percent of all American businesses outsource some work (usually domestically), the reality is that only about 300,000 jobs of the 140 million in the American workforce have been lost in the last three years to international outsourcing.

These statistics are nonetheless cold comfort to friends and neighbors who have lost their jobs to overseas labor markets. The loss they see is personal and immediate, while the benefits of increased productivity, competitiveness and innovation are diffuse and global.

Yet, with a larger pool of dollars from the financial benefits of outsourcing, the candidates should be focusing on exactly how we can invest in programs to best position those displaced workers in new careers that will directly benefit from the global economy. It's only when we examine the issue holistically that we can begin to understand the true costs and benefits of outsourcing.

The same kind of holistic examination is necessary to evaluate the effectiveness of protective tariffs and the WTO. The spectacular failure of last year's global trade negotiations in Cancún, Mexico, provides more evidence of a growing divide between the developing and developed world, a troubling fact that has been virtually ignored by both presidential candidates. But when we ignore the developing world, we disrespect a growing portion of our customers, suppliers, distributors and employees.

It is not in America's or the world's best long-term interests to slap tariffs on foreign steel or to increase tax breaks for American cotton farmers. Nor is it in the European Union's or the world's interests to provide subsidies for cattle producers at $2.50 daily per cow, while 40 percent of the world tries to survive on less than $2 a person per day. Rather than resist the efforts of the WTO to level the playing field, the U.S. and the EU together should be providing leadership in developing policies that not only ensure fair competition but also increase protection against gross labor abuses, unconscionable environmental damage and misappropriated foreign-investment ventures.

As the election season heats up, let's press both presidential nominees as well as candidates for Congress to face the reality of the global marketplace. Let's demand informed debate and real solutions to the challenges of international trade and diplomacy rather than accepting the pandering rhetoric of shortsighted politics. Let's seek leaders who offer an agenda for prosperity and peace in America and overseas, rather than separatists who play on our worst fears and biases.

Former Secretary of State Warren Christopher once said "distance and differences have blinded [us] to our common hopes and interests, creating distorted images of each other that drive us apart." However, Peter Drucker, the management guru, has argued that the revolutions of the Internet and e-commerce have eliminated distance, providing us with one inseparable globalized, political economy.

Who's the prophet? It depends on what kind of deliberation we expect out of the candidates over the coming weeks and the decisions they make after they're elected. The world is watching.

Kyle Usrey is dean of the School of Global Commerce and Management at Whitworth University in Spokane, Washington.

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