Editors' Note: Every month, Townhall Magazine highlights some of the outstanding blogs written by users in our community. The following is an entry from Dave at Semper Libertas and appears in the April issue of Townhall Magazine.
A common refrain among protectionists, economic nationalists and other advocates of strong
government intervention in the economy is that so-called “big corporations” are “shipping jobs
overseas.” This charge is used particularly often with regards to manufacturing jobs, where the specter
of jobs fleeing en masse to China, India and Mexico is described in breathless terms.
Whether the goal is “renegotiating” (or ending altogether) free trade agreements like NAFTA,
bailouts of domestic industries or some sort of tax code manipulation to “reward” companies who
“create American jobs,” the bogeyman of choice is what Ross Perot dubbed the “giant sucking sound”
in the 1990s—particularly when a politician is campaigning in former manufacturing centers in Rust
Belt areas of Pennsylvania, Ohio and Michigan. Along with the loss of jobs themselves, the so-called
“trade deficit” is often mentioned, noting that it is at record highs and that it somehow signifies loss of
American jobs and a manufacturing base; foreign capital investment is often also a target of political
derision.
The facts, however, continue to show otherwise. As documented by the pro-trade Center for Trade
Policy Studies, foreign investment by multi-national companies tends to be focused on opening up
new markets to goods and services—to making these companies more profitable by reaching new
customers—rather than a method for shipping out American jobs and moving capital out of the United
States.
One by one, Director of the Center for Trade Policy Studies Dan Griswold’s research punctures
the myths promulgated by the anti-trade crowd. Worried about the U.S. manufacturing base
moving factories to China, India and Mexico? Then consider this: “Between 2003 and 2007, U.S.
manufacturing companies sent an average of $2 billion a year in direct investment to China and $1.9
billion to Mexico”; meanwhile, U.S. corporations were investing $165 billion per year in the USA. An
additional $15 billion per year was being invested in manufacturing in the United States by foreign
corporations during this time. These data show that while, yes, American companies were spreading
their manufacturing wings overseas, they were investing more than 80 times as much here at home.