In the race for the White House this year, the debate on the domestic front is shaping up as a debate about jobs, job creation and outsourcing of jobs. President Bush is being portrayed by Democratic candidates John Kerry and John Edwards as being in the pocket of business, destroying jobs and - even worse - exporting American jobs abroad. Edwards, for example, rants about entrepreneurs and business owners who, he says, "only care about profits, they have lobbyists everywhere, and they own this White House." John Kerry has taken to calling Americans who invest overseas "Benedict Arnolds."
It makes me think the Democratic Party candidates for president love labor and hate capital, praise the worker but attack the employer.
Edwards goes further in attempting to drive a wedge between employees and employers in his "Two Americas" stump speech. He tugs on the voters' heartstrings with his story of the little girl whose father lost his job because the factory closed. "This is a moral issue," he says. "America should never enter into a trade agreement that allows an American corporation to pick up, leave America, go to another country and hire children to make their product. It's wrong." Talk about attacking a "straw man."
Of course, stripped of the smooth, trial-lawyer rhetoric, what Edwards is advocating is nothing less than economic autarky, a mindless economic isolationism and misguided self-sufficiency that ignores everything we have learned since Adam Smith first wrote about gains from trade, comparative advantage and division of labor. Rather than building walls to keep American businesses from going overseas, it makes more sense to eliminate the policies that drive them to do so. The enemies of American workers are not Mexico, China or India; the real enemies are the stupid tax and regulatory policies in Washington, D.C., that make it tough to do business in America.
As economist Bruce Bartlett points out, the Democratic candidates criticize the president for taking unilateral action in foreign policy to do what he feels is required to defend America, but they turn right around and demand that he take unilateral protectionist action without regard to how it affects our trading partners and our global economy.
Bush believes the combination of lower tax rates on capital and labor, i.e., on work and saving, coupled with reasonable regulations and more open and liberal trade policies, will both spur strong economic growth and create more new jobs. It should be clear to most people that you can't create employees without first creating employers and that you can't reward labor with good wages absent policies that encourage capital formation and investment.