Overseas Jobs For Americans

Surprise surge in trade deficit bodes ill for jobs, growth

The large 4.4 percent increase in the trade imbalance, to $53.1 billion in June, was reported Thursday by the Commerce Department. It was the second straight month of worsening trade numbers.

"It appears that one of the last fully functioning engines of growth may be faltering," said Gregory Daco, an economist at IHS Global Insight, in a note to clients.

The trend is worrisome, and not only because increased sales of U.S. manufactured products abroad had helped fuel the early stages of recovery from the recession; President Barack Obama and many others have pinned their hopes for a return to prosperity in significant part of a revival of Americans "making things."

Even the slumping dollar, which has made U.S. goods cheaper and more competitive in foreign markets, wasn't enough to blunt the effects of slowing sales.

Investors still largely brushed aside the trade data, instead taking heart in another, more-immediate report on unemployment: New jobless claims filed last week dipped below 400,000 for the first time since early April.

That report, along with better-than-expected earnings news from companies such as Cisco Systems, helped trigger a strong rebound on Wall Street.

Yet the implications of the new trade data may outlast current fluctuations in the market by casting a cloud over future profits of major exporting companies, including Cisco, a producer of computer networking systems.

Overseas sales of America's stalwart manufactured goods - heavy engines and machines, computer chips and parts - shrank in June, as did industrial materials such as cotton and food products. U.S. exports of consumer goods were up slightly over the month, and auto shipments were up slightly. Exports of services were flat.

Total U.S. exports of goods and services in June, seasonally adjusted, dropped 2.3 percent from May to $170.9 billion.

American imports also dropped in June, thanks to lower oil prices, but the monthly decline was just 0.8 percent to nearly $224 billion.

"The sharp widening in the trade deficit in June is a stark reminder that the U.S. cannot rely on a sustained boost from overseas to offset the weak domestic economy," said Paul Dales, an analyst at Capital Economics, in a research note.

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In December of 2003, President Bush signed in to law the Healthy Forest Restoration Act which allowed the timber industry better logging access in our nation’s forest. The premise was that if the logging industry removed the layer of dead trees and plants under the forest, forest fires would be much less likely to happen without all that potential fuel. Environmentalist were up in arms about the proposal claiming it was merely a pat on the back to big business and that the act would be detrimental to the environment, but eventually logic won out and the logging industry was allowed to move in. With all the underbrush gone, the forests are now safer from forest fires, and they are growing to even bigger sizes without all the underbrush interfering. 

Outsourcing presents us a similar situation where American jobs are represented by the wood and underbrush of the trees. The trees themselves are the jobs that Americans can do well, due to our highly educated workforce and our geographic location. The underbrush represents jobs which exist in the United States, but our country is not competitive at due to U.S. law and geological features. If we remove the underbrush, we have more room for the trees to grow. Then the forest, which represents the global economy, will grow exponentially. 

Outsourcing, defined as when one country moves some of its operations to another country that has lower cost, has been an extremely hot topic as of late. Many workers believe they are losing their jobs to multi-national firms who can hire cheap labor overseas. While, outsourcing caused the loss of millions of jobs in the manufacturing and information technology sectors, corporations claim that they have to outsource to remain profitable and avoid bankruptcy. This leads America to a difficult conundrum: Should the protection of American jobs be placed above the free-market economic benefits of out-sourcing? 

It would be very easy to side with the proletariat since many Americans have lost their jobs to overseas manufacturing plants which have much lower labor cost than those of the United States. Workers who have had their job outsourced are suffering economic heart ache, but they will bounce back. 4,633 workers had their jobs outsourced in the first quarter of 2004 (Isdore). This may seem like a small number, but remember that each one of these people is a person. They have mortgages, mouths to feed and education loans, which they will not be able to pay for anymore. However, outsourcing is more than just American jobs disappearing overseas; it’s a complex issue which in the end is better for the U.S. and global economies than protectionist economic policies.

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