Book of the Fortnight: Bringing the Jobs Home

Buckley the Book Review Mascot

Sure, it’s been longer than a fortnight, but between computer crashes and moving the Book of the Fortnight series has suffered a slight setback. But with a new laptop (courtesy of Gripweed) and Buckley the Book Review Mascot comfortably settling into his new surroundings, the time is ripe for a new review and to get back on schedule.

And what could be a more topical book in light of recent unemployment figures than Bringing the Jobs Home: How the Left Created the Outsourcing Crisis – and How We Can Fix It by Todd G. Buchholz? Buchholz highlights six key areas where policy is harming American economic growth and job creation: litigation costs, education, taxation, regulation, immigration and entertainment. He then spends the next several chapters further examining each aspect and how it’s harming American economic growth – policies that are still stalling the economy even now.

Buchholz begins by tackling immigration and how our current policies cost the U.S. billions every year. For example,the 1965 Immigration and Nationality Acts Amendments sponsored by Robert Kennedy, Ted Kennedy and President Johnson. RFK told the New York Times that the old system would be “replaced by the merit system” but today about 75% of our immigrants come through “family reunification” practices. But educated immigrants contribute more to economic growth – a point our neighbors to the north are using to their advantage. During the 1990s, new immigrants to Canada accounted for 30% of the job growth in computer technology fields. While Canada’s system awards points for education, the U.S. abides by family reunification and luck. While Canada welcomes skilled immigrants, America puts up roadblocks.

When it comes to education, raising test scores even one point would increase annual GDP growth by 1%. That’s enough to create nearly a million new jobs per year and raise incomes by 65% in 50 years. Buchholz notes the reduced quality of teachers through two factors. The first is the loss of women in the teaching workforce to new opportunities for women in other fields that were previously closed to them. The other is the teacher’s unions. His recommendations include voucher programs (like the ones in Vermont and Maine that have been operating since the late 1800s) as well as reforms on teacher licensing. On this latter point, Buchholz asks, “would you rather your son taught physics by a Ph.D. from NASA who took an intensive eight-week course on teaching methods or a graduate of a four-year teaching college who tried to avoid the hard sciences?”

There is, of course, much to be said about the American tax code, and Buchholz tackles a number of points including mentioning some of the hard demographic trends facing the nation as discussed in the book The Coming Generational Storm, which he specifically names. But among the myriad of issues with the tax code he discusses, the disparity between the US corporate rate and that of other countries is notable. Corporate taxes are at 35% while state and local taxes can add another 5%. That’s 1/3 higher than the Organization of Economic Cooperation and Development average. Even liberal Charles Rangel has said, “it is no longer a question of whether the U.S. tax code encourages the export of American jobs. We now know it does.”

Buchholz notes that regulatory problems occur when government intrudes and help existing businesses block new competition. Among his many examples is one from 1898 when the New York medical society tried to stop free vaccinations and diptheria antitoxia by claiming it was “inimic to the best welfare of young medical men.” While government licensing covers 1/5 of the workforce, studies show these regulations do little to nothing to enhance quality or safety. These practices prevent a fluid movement in the workforce by preventing workers from easily moving from one community or state to another.

In 2002 the United States spent more than $233 billion in tort costs, or about 2.23% of GDP. It’s gotten so bad in the state of Mississippi that in May of 2002 the American College of Obstetricians and Gynecologists denounced the state for driving their practitioners out. After the IUD lawsuits, the American Medical Association reported the number of U.S. pharmaceutical companies pursuing research in contraception went from 13 to 1. But it’s not just women’s health that suffers – the American Bar Association Journal found that an extra 20% is added to the cost of ladders due to regular litigation.

The book is a quick read yet filled with far more information and examples than I cite here, giving a clear explanation as to how current policies harm our economic growth. While the economy continues to struggle and as Americans prepare for another Presidential election, understanding the roadblocks to job creation and economic growth will be more important than ever. I believe some candidates (possibly even incumbents) will show they lack this understanding while other candidates will show they have what it takes to overcome economic hurdles and generate prosperity. This book is one I’d certainly recommend to anyone seeking office or anyone planning to vote.

Buckley gives it one trunk up.

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One Response to Book of the Fortnight: Bringing the Jobs Home

  1. roopost says:

    Drae,

    Always a pleasure – thanks for the nudge.

    An interesting piece as usual. While I agree that Canadian Immigration is providing positive returns on investment in certain fields, we are no less impacted by follow on family members. A particular benefit for us is that Asia and Eastern Europe provide reasonable IT skills and are keen to export them. Wages in Canada are good, taxes are high, but quality of life remains above average. And… don’t forget the health care!

    As well, the policy has only recently changed to encourage skills based preference. Previous governments were far more open-minded and less restrictive. A layover policy of that time is the 10-year residency entitlement. This entitles a ten year landed resident right to citizenship (on application) and benefits – old age pension etc. Back when the Israelis last invaded Lebanon, Canada had to send ships and planes to evacuate all the ‘Canadians’ trapped there. Thousands of Canadians were in reality familial immigrants, who did the base level of time in Canada, may or may not have contributed, and are now entitled to ongoing government support. Granted, not very much – but in Lebanon likely a decent monthly stipend.

    However, no whining.

    Buchholz views on education I generally agree with. However, while I’d like the NASA guy to teach physics, keep him out of the English Class and I won’t send a hard science avoiding fine arts educated teacher into Calculus 101. Still, point taken. I firmly believe that public education should extend into the first three years of University – especially in this day and age when it’s impossible to find work that pays well and doesn’t demand a degree – after that pay up! The baseline of a high school diploma is out of date. This speaks to another point – outsourcing.

    The question of services and manufacturing is fast coming to the fore. Aside from some supporting legislation, business has been focused on short-term gains for the past twenty years – hence the focus on shareholder rather than corporate value. The result is outsourcing, get it cheaper there rather than here. Collateral reasons include unreasonable union demands and arguably corporate taxation to a degree, but not in all cases – certainly not in the financial industry for example which outsources extensively. However, I digress. Longer-term focus on corporate value will likely achieve a reversal of some of this concern, but also determining what business the nation wants to be in is important. Let’s face it, certain manufacturing will remain cheaper elsewhere – no getting around it; but, it is possible to offset these trends with education, repositioning of markets, and reasonable encouragement of new and service oriented business opportunities.

    As the US particularly is so big, investments in business creation can’t be limited by inter-state restrictions.
    In short, by adopting some of the principles mentioned above it seems to me that without unwieldy and unnecessary protectionism, the US can improve both overseas trade and internal trade. A long-term strategy to be sure, but then isn’t that the case with all good ideas.

    Kind regards,

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