Reason Writers Around Town: Shikha Dalmia on Obama's Insourcing Follies


Writing in The Daily this morning, Reson Foundation Senior Analyst Shikha Dalmia notes that President Obama's pitch to bring lost manufacturing jobs back "home" in his State of the Union address is wrong both on patriotic and economic grounds. "Tonight, my message to business leaders is simple: Ask yourselves what you can do to bring jobs back to your country, and your country will do everything we can to help you succeed," he thundered.

But there is nothing patriotic, she notes, in selling out the interests of 300 million American consumers by forcing them to buy more expensive "Made in America" goods in order to protect the jobs of a few American workers.

Besides, American manufacturing jobs are disappearing not because of China's low-cost labor but automation.

She notes:

The fact of the matter is that even though manufacturing employment has declined — America has lost roughly 6 million manufacturing jobs since the sector's peak in the 1970s — manufacturing output has been going up. Indeed, total output today is 2½ times its 1972 level in adjusted dollars. In 2010, America produced $1.8 trillion in goods (in 2005 dollars) — about $100 billion more than China, but with only about a tenth as many workers, thanks to automation and technological advances that have vastly increased American productivity. Goods that took 1,000 American workers to produce in 1950 now take 177.

The choice for American companies, then, is not between American workers and Chinese workers, but between American machines and Chinese workers.

Read the whole thing here.


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  1. insourcing is a no-brainer when one realizes that american manufacturing, even downsized, remains the largest employeer of engineers & scientists.

    1. american [sic] manufacturing, even downsized, remains the largest employeer of engineers & scientists.

      Yes, that why we should make it easier for the engineers and scientists that American manufacturing needs to immigrate to this country, right?

      1. ur unclear thought thread needs some re-engineering

        1. ur unclear thought thread needs some re-engineering

          What the fuck does an ancient Sumerian city-state have to do with anything?

          1. add another “r” then we’ll talk

    2. Okay, I have read this comment many times. I even went and RTWFA.

      I still can’t figure out what the hell you are talking about.

      1. derp de derpity derp

    3. Perhaps if I phrased it in the form of a question…

      Why does a prevalence in manufacturing of engineers and scientists — whose job it is to find less expensive ways to do better things — imply in any way that government should mandate or subsidize US labor over lower cost foreign labor?

      1. we no need no stinkin scientists

        1. What the hell?

          In the limit, shorter mike is actually saying “we need only stinkin scientists” because labor is a cost that can be engineered away. That does not not make US manufacturing go away: That makes US manufacturing the most productive in the world — as it already is!

          Perhaps it’s a vocabulary problem. I take “insourcing” not as meaning “manufacturing in the US”. The US already leads the world in manufacturing. I take “insourcing” as meaning “manufacturing jobs in the US”. Forgive me if I’m mistaking the definition of the term.

  2. Ask yourselves what you can do to bring jobs back to your country

    that’s a very good question President Jobkiller.

  3. Using Obama’s reasoning, the solution to creating jobs in America is simple: spend shitloads of money on infrastructure projects, but instead of digging ditches using backhoes and dump trucks, give everyone a spoon and bucket.

    1. did you actually use ‘obama’ and ‘reasoning’ in the same sentence?

      1. I see your point. Perhaps I should have qualified the statement by saying, “Using Obama’s form of reasoning…” or by simply putting “reasoning” in quotations.

        I agree wholeheartedly that the POTUS seems to be

        1. …incapable of rational reasoning as we know it.

  4. “In early 18th century France, on Earth, the manufacturing workers felt threatened by the machines that were taking their jobs. So they threw their wooden shoes, called ‘sabot’,into the machines to break them. Hence the word ‘sabotage’.” Kim Catrall in some Star Trek movie
    Sounds like the AFL-CIO needs to read up on their history and follow the exemplary lead of their French forbears….whose decendants’ attitudes apparently haven’t changed much in 200 years.

    1. take heart then since those defective chinese shoes would barely effect RPM

  5. Even if many jobs have been lost to automation I’m not sure it follows that other jobs haven’t been lost to China and other nations.

    I think it shows just how much the center has shifted that reforming the tax code to eliminate advantages for companies that outsource and disadvantages for companies that insource is so controversial…I think this could be a key issue for Obama politically, bigger than the payroll tax thing which he came off well on: make the GOP stand up and vote for defending tax cuts for outsourcing and relatively high burdens for those that employee Americans.

    1. What tax code advantages are there for companies that outsource and what tax code disadvantages are there for companies that insource? I hear Obama claiming this all the time, but I’ve never heard about the Outsourcing Tax Credit.

      1. Good question. I am not clear on this either.

      2. It’s a myth.

        1. That’s what I suspect. But since MNG is claiming they exist, I’m sure he’ll chime in soon to tell us what they are.

      3. As I understand it, foreign earnings for US companies are taxed at the foreign tax rate — which is universally lower than the US tax rate — so long as those earnings stay where they were earned.

        When the earnings are brought back to the US, they are again taxed at the full US rate. Thus US operations overseas — i.e., exports — are among the most expensive for any source country in the world.

        To call this incentivized misallocation of resources a “tax advantage” is ridiculous.

    2. Cut the corporate tax rate?
      Cut the capital gains tax?

    3. It’s crazy to think that people working and shopping overseas should be paying taxes here. If you insist on taxing USA companies for overseas operations, USA companies will simply stop having overseas operations. Which means all the back office jobs designing things for manufacture and sales overseas will go away.

    4. If everyone is going to college, who want manufacturing jobs?

  6. Americans make too much, in order to get the economy going, we need to outsource all jobs.

  7. I work in the logistics industry; read an article in one of our trade mags that in the next few years they estimate it will only be about 10% more expensive to manufacture goods in the US or Mexico than in China, due to fuel costs, rising wages in China, etc. If the economy does not markedly improve anytime soon, people might be willing to pay a bit more to give an American (or a Mexican) a job – a lot of people still like to see Made In USA on the things they buy, after all.

    1. agree except the gop pushed thru regs to render the country of origin in microfont

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