Well, after all the back-and-forth political ads, somebody had to bring up the tires in China. Toward the end of Tuesday's debate, the focus shifted in a decidedly economic direction, with both candidates responding to an undecided voter's question, "What plans do you have to put back and keep jobs here in the United States?" Although such debate answers tend to be ambiguous and diluted, I was pleasantly surprised by the clarity of both candidates' answers, as well as some references to global economic principles. While both occasionally ventured into some vaguely-worded speech, it was fairly clear from their responses how each proposed to bring jobs back to the United States.
The main issue Obama and Romney addressed was the offshoring of jobs within the U.S.--particularly manufacturing jobs going to China. As we have discussed many times in class, China is becoming a major worry for the United States because of its productive labor force, ability to produce cutting-edge technologies, exponential economic growth, and holding of many previously-American manufacturing jobs. Both candidates have addressed this issue in their ads, although both have done so somewhat differently. While the end goal is the same--bringing jobs back to the United States as well as creating new ones--the way in which each candidate would go about it seems to be quite different.
When asked how he would combat outsourcing of American jobs, Romney responded with an answer that was comprehensive, firm, and exactly what one would expect from a staunch fiscal conservative. Acknowledging that nearly half a million jobs have been lost overseas within the last four years, Romney stated that we need to be "tougher" on China in a variety of ways. Though this "tough on China" business is a common refrain on both sides of the aisle when it comes to job creation, Romney drew on some of the points in his China ad and took the country to task on its intellectual property theft, currency-pegging, and other "unfair" practices.
Both the Obama administration and the Romney camp agree that the U.S. has lost many valuable manufacturing jobs, and that the lionshare of these have gone to workers in China. Romney's solution to this problem, however, seems to be markedly different from Obama's. Clearly working within his policy strengths, Romney donned his "private sector" hat and spoke about the importance of small business to economic growth. He noted the importance of private sector innovation, as well as investment in new technologies and the interplay of governmental policies and small business success. The key to increasing jobs in America and halting the outflow of jobs, Romney asserted, is making the U.S. a more attractive business environment, which would create incentives for firms to set up and expand. In his depiction of the current state, he noted that domestic business taxes are almost double what they are in Canada, and that government regulations have increased drastically within the past four years. In order to bring jobs back into the U.S., Romney stated, these need to be reduced, reconsidered, and restructured so that companies have even more of an impetus for using American labor.
When his turn came to respond to the question, Obama did not take quite the same tack on job creation policies. While he may have mentioned small businesses and the private sector, his points focused much more closely on how to keep jobs within U.S. borders. In other words, I found his remarks to be decidedly anti-outsourcing or offshoring. Obama bashed his opponent for wanting to "expand tax breaks for companies overseas" and for having a plan that will create new jobs, but only in China, India, and other Southeast Asian countries. Instead, he promised to close loopholes in taxes, and focus on creating jobs by doubling exports. Though I applaud his desires to attract and create more opportunities for high-skilled, high-wage jobs domestically, I was surprised by his firm stance against anymore outsourcing.
Without injecting too much bias, I have to respect Romney for his points on this topic and for his discussion of small business. Point for point, I found that he gave a much clearer idea of how he proposed to fix the job crisis in the U.S. and allow private businesses of any size to bring the economy back onto its feet. Perhaps my favorite aspect of his response, however, was his avoidance of language that implied a strong-arming approach to the problem. Said differently, never once did he hint at policies that would artificially retain U.S. jobs and provide a quick fix for what is truly a manifestation of market forces (policies like tariffs, subsidies, and the like). Instead, his approach provided a way to work within the complex web of incentives, competitive costs, and benefits. By constructing policies that do not de-incentivize offshoring, but rather incentivize inshoring, the U.S. would be working to its benefit without introducing destructive protectionist policies. Unfortunately, Obama did not appear to do the same. With his championing of tariffs--notably in the ad about Chinese tire manufacturing--there is every reason to believe that these would continue to be his job creation policy of choice. In my views and understanding of macroeconomic principles, the answer to stopping offshoring in the long run is not to force jobs to stay here, but rather to step back and allow companies to choose locations with the best business environment.
As Romney stated several times over at the end of this segment, "The government does not create jobs." Along this same line of reasoning, the government's role is to devise the best policies for private businesses to thrive. By doing this and focusing on working within a free market, private companies can expand, grow, and employ more people within a more profitable American environment.
One thing that was discussed quite vaguely, however, was an aspect of the prevalent China-bashing. Both Romney and Obama spoke about the problems currently arising with this country, such as the counterfeit of technology IP, hacking of computer systems/data theft, and currency pegging, yet disappointingly, neither candidate offered specific solutions to stop them. Instead, both claimed they would be "tougher on China" and would call the country out on its unfair trade practices. While this may have been convincing enough for some, I felt that this aspect of the debate turned into empty political showboating. Frankly, I was left wondering what that all meant, and how simply calling for change would effect any beneficial changes at all. Though Obama spoke about his administration putting pressure on Chinese currency, causing the devaluation to become less severe, I would be very interested to see the specifics of any of these strategies. While I do agree that China ought to trade "by the rules" and on a level playing field, I wished that both candidates went a bit deeper than just accusations and promises.
Overall, I was pleased that IPE topics got significant airtime in this debate, and that both Romney and Obama took the trade and job issues quite seriously. Although I found Romney's strategy much more specific, practical, and economically-sound than Obama's with respect to job creation, I am interested to see how pivotal their respective stances will be in the upcoming election. Certainly, this is one of the more important issues facing the U.S. today, and it will be quite interesting to see how the next administration addresses the challenges of the global economy.
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