Campaigning like it’s 2004: Outsourcing re-emerges as election-year issue

WASHINGTON — Michelle Nunn, running for Senate in Georgia, is one of several candidates relying on one rhetorical weapon to battle a political opponent: outsourcing.

Nunn’s opponent David Perdue, a business executive who has been at the helm of various multinational companies throughout his career, has found it a difficult argument to deflect. Nunn’s campaign received additional ammunition when a 2005 deposition unearthed sworn testimony of Perdue saying he “spent most of [his] career” outsourcing. When confronted by reporters on Oct. 6, Perdue said he was proud of his record.

Indeed, the shipping of jobs overseas as part of candidates’ business backgrounds has proved an effective cudgel in Senate and gubernatorial races across the country. In Illinois, Democratic Gov. Pat Quinn used it to attack his Republican opponent Bruce Rauner, a former executive at a private equity firm, as a heartless corporate profiteer, sending American jobs to China and India so he could make millions. The issue also surfaced in the contest between Republican Charlie Baker and Democrat Martha Coakley in the Massachusetts gubernatorial race, with the Coakley campaign circulating a photo of Baker accepting an “Outsourcing Excellence Award” in 2008, when he was CEO of a health insurance group. And in Wisconsin, Republican Gov. Scott Walker tried to turns the tables by leveraging the same accusations against Democrat Mary Burke, a former executive at Trek Bicycle.

Outsourcing isn’t a new phenomenon, but the attacks seem to be resonating anew in an economy where many voters still feel economically vulnerable — just as they did in the 2012 presidential election when the Obama campaign relentlessly hammered Republican Mitt Romney on his business record, transforming his private sector bona fides from an asset to a vulnerability. But whether the economic case against outsourcing is sound remains an open question.

“If you’re just talking about the economic effects of outsourcing, by and large people would argue that it makes sense from the standpoint of promoting efficiency and aggregate welfare to shift jobs where they can be done most cheaply, because the resulting products are lowest cost as well,” said Edward Mansfield, chair of the political science department at the University of Pennsylvania who studies international political economy. “But the problem, of course, is that this isn’t just an economic issue, it’s also a political issue. The politics of this is that offshore outsourcing gets cast in terms of jobs going overseas and that this is a threat to the standard of living to which a lot of people have become accustomed.”

Many economists argue that outsourcing comes as part of living in a global economy with free, international trade, with net positives for the U.S. economy in the long term, even while acknowledging that the process can cause short-term pain for the laid-off workers in displaced industries.

That tension has manifested itself on the political stage for a decade.

In 2004, another presidential election year, Greg Mankiw, the chairman of the Council of Economic Advisors in the Bush administration, set off a minor firestorm when he said at a Feb. 9 press conference that “outsourcing is probably a plus for the economy in the long run” and that “this is something that is universally believed by economists.”

Mankiw later apologized for appearing insensitive the plight of laid-off workers, while still maintaining his central position that offshoring provided an overall benefit to the economy by boosting productivity and growth for American firms and ultimately raising the standard of living in the United States.

Janet Yellen, now chairwoman of the Federal Reserve, agreed with him at the time, telling the Wall Street Journal on Feb. 12, 2004 that, “In the long run, outsourcing is another form of trade that benefits the U.S. economy by giving us cheaper ways to do things."

Still, the concept is not so easy to pass onto voters — a fact that politicians have been happy to capitalize on.

“The average person doesn’t think about outsourcing in purely economic terms — there’s a lot of fear about job loss,” Mansfield said. “Successful politicians are good at tapping into the anxieties of voters.”

Todd Rehm, a Georgia-based Republican political consultant, said the line of attacks fits neatly into Democrats’ messaging that the GOP is out of touch with voters’ needs and favors corporations profiting off of the woes of Americans workers. Rehm noted that Republican candidates around the country could do a better job of communicating their economic policies in a way that resonates with the middle class.

“You can talk about how when a company is faced with low cost imports decimating its market, how outsourcing can be a way to keep some of the jobs,” Rehm said. “That is absolutely a weak spot among a lot of Republicans that come from a business background — they speak about creating a favorable business environment in a way that doesn’t connect with the likes of a lot of people, especially wage workers.”

Peter Morici, former chief economist at the U.S. International Trade Commission and a business professor at the University of Maryland, went a step further, saying candidates lobbing blanket attacks at anyone has outsourced at any point in one’s career is irresponsible.

“It’s virtually impossible to run a large corporation without having some jobs overseas so in that sense — the argument is problematic. It’s a balance — some people are in the business of chopping down companies but elsewhere, it’s the process of creation and destruction,” he said. “Just to point at outsourcing is kind of silly — I saw Nunn in Georgia do it, and I didn’t think it was terribly responsible accusation. I thought it was a cheap political shot.”

There are other economists, nevertheless, with a different view. Robert Scott of the left-leaning think tank the Economic Policy Institute said the mass displacement of workers because of outsourcing is the result of unfair trade policies that multinational corporations lobby for and cash out on. It's a fair policy debate to have in an election year, Scott said.

“Not only are these multinational companies that many of these candidates have worked for responsible for the job losses, they lobby the government so that these trade practices stay in place,” he said. “And they’re using the cash they’ve gotten to buy elections to influence the political process.”

Scott added that investing more money in research and development to nurture new industries, training displaced workers and combating currency manipulation by the Chinese government would all help alleviate the problem — but added that he doubted many of the candidates who spent their careers incorporating outsourcing into their business plans would favor those measures.