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Richmans' Trade and Taxes Blog
Outsourcing is not a political winner, and may cost Republicans the Senate
Democrats are taking a page from their Anti-Romney playbook with a series of apparently quite effective attack ads against Georgia Republican Senate candidate David Purdue. Purdue must respond effectively, and articulate a clear vision on trade to counter these attacks.
Purdue seems to be in significant trouble. The polls have tightened, and national super-PACs and campaign committees are pouring millions into the Georgia Senate contest as a result. A major factor in that trouble seems to be his record of outsourcing jobs while CEO of Dollar General and before that as an executive with other firms, as highlighted in a series of attack ads such as this attack on his compensation from managing a struggling manufacturing company that folded soon after he left, this ad emphasizing his career in outsourcing and this "outsourcing is good" ad. The Real Clear Politics average for this race began moving substantially immediately after the second ad ran, with Nunn leading in the two most recent polls.
Purdue's campaign website says some very positive things about his aspirations to boost the growth of American manufacturing. Here are two of his "issue positions."
Revitalizing American Manufacturing
I believe that we are on the verge of revitalizing American manufacturing. The private sector is primed to create quality jobs by manufacturing innovative products that require a skilled workforce and high-tech facilities. These products are needed for domestic consumption and more importantly for exports to foreign markets. But the manufacturing industry’s renewal can be stunted if we don’t correct bad energy policies, the lack of infrastructure, failures in education, and the punitive tax code.
Increasing American Exports
The best opportunity for long-term economic growth is to boost our exports to emerging economies worldwide. In fact, I have started my own exporting business where we ship American-made products overseas. They have an increasing demand for American goods, both quality manufactured products as well as other needs such as agriculture products. Increasing exports requires elected leaders who understand global trends and how to remove barriers to growth. If so, we can create a new age of American prosperity.
Purdue does also have some good policy ideas that might help at least on the margins. He wants to reform the tax code, and supports the FAIR tax. Both of these are important elements of creating a more favorable environment.
However, as we argued in Balanced Trade and in Trading Away Our Future such policies are unlikely to be sufficient. The international trading system has been distorted by mercantilists and by faulty U.S. government policies that have produced enormous long-term trade deficits which have undermined the competitiveness and comparative advantage of American manufacturing and other export production for decades. Although tax code changes, a good energy policy, and better education are obviously important, they are unlikely to be sufficient unless accompanied by a broader appreciation of the importance of balanced trade. Policies like the Scaled Tariff would go a long way toward addressing the international incentives that currently encourage American businesses to outsource.
Purdue and Republicans should also emphasize the failures of Obama's trade policies. Although he ran as a critic of NAFTA, and a hawk on China's trade policies, Obama in government has pursued failed free trade policies that are bad for the U.S. economy. Although it has rebounded somewhat from the depths of the recession, US manufacturing still employs fewer workers than it did in February 2009. The U.S. trade deficit in goods with China is on pace to be the highest ever in 2014. While the growth of domestic energy sources has diminished the overall trade deficit somewhat, Obama's trade policies have made little difference for U.S. manufacturing workers.
Every two years in October Democratic candidates decide that outsourcing and the massive U.S. trade deficit are important issues. At other times of year they largely ignore the issue, or make things worse. A Republican party with a robust position in favor of balanced trade could effectively parry and repost against Democrats opportunistic attention to trade policy. Otherwise Republicans will continue to lose to the Democrat's Anti-Romney playbook, and deservedly so.
Comment by M, 10/24/2014:
The last mainstream republican worth his salt was Bob Dole (Kansas). When he ran for President, fellow Republicrats savaged Senator Dole as- "The Tax Collector for the Welfare State". No one will ever embarrass David Perdue with being overly concerned about people who are less fortunate.
Money is declared a form of protected free speech. Corporations are ruled to have "personhood". How can anyone be surprised that the pathway to political power is hogged by the super-rich. As if being wealthy wasn't reward enough. The millions spent (and wasted) by the rich, grasping for power and fame could be better used elsewhere.
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