US presidential hopeful Hillary Clinton may be storming ahead in most of the polls, but as 'Super Tuesday' approaches there's a looming problem: her stance on outsourcing.
In the last US Presidential Election, the issue of outsourcing – most specifically offshoring – became a major voter concern, with working class voters being inherently suspicious of US jobs going overseas, and rich areas such as the West Coast watching the high-tech brain drain towards offshore locations such as India. With neither the recent strategic tax cuts nor this week's dramatic intervention of the Federal Reserve on interest rates stabilising the economy, it's a safe bet the issue of job security will focus voters' minds.
To date the issue has not arisen in the primaries, with subjects such as the war in Iraq clearly taking precedence. Nevertheless, the economy is in decline, perhaps already bottoming out into recession, and attention is focusing on matters closer to home, according to US analyst firm Brown-Wilson Group. "Until this week, offshore outsourcing hasn't been the emotional vote-motivator like it was in 2004,” said Doug Brown, managing partner of Brown-Wilson Group and co-author of The Black Book of Outsourcing. "Outsourcing is a reality for US companies to reach their business and financial goals and critical in today's fiscal climate. It's been four years since the heavy negative rhetoric of the presidential election used outsourcing and offshoring interchangeably, and made 'outsourcing' a dirty word.”
In a report,Outsourcing and the 2008 Presidential Primary Vote, the group notes: “Foreign outsourcing – or offshoring – remains the 2008 target of choice for protectionists.Critics claim offshoring is sending jobs to foreigners at the expense of American workers. The fact that the rest of the world also outsources their services to the US – i.e. 'insourcing' – is a consequence of the global economy too often overlooked by critics. For instance, American companies sell three times more IT services to the rest of the world – more than $10 billion worth – than they buy. If politicians declare war on outsourcing, US producers and workers will suffer the most.”
The return of offshoring to the political agenda will have differing levels of impact on the various candidates. A survey of over 5,000 registered voters in all fifty states from January 2-14 indicates that Mitt Romney and John McCain are the top Republican supporters of offshore outsourcing by record. McCain noted: “Every time US went protectionist, we paid a heavy price”, while Romney agreed: “It’s tempting to want to protect our markets and stay closed, but at some point it all comes crashing down and you’re hopelessly left behind”.
Among Democrats Clinton, Barack Obama and John Edwards, only Edwards and Obama have made strong public statements, or have voting records that indicate cautious opposition to offshore outsourcing. Edwards has stated that outsourcing is "an economic reality" and "America must act to ensure that it stays strong and adapts... to ensure that the American people are better prepared to meet the challenges of the new world”, while Obama admitted: "We know that we can't put the forces of globalisation back in the bottle. We cannot bring back every job that's been lost."
On the other hand, there is growing suspicion in some quarters of the electorate about Clinton's financial and diplomatic relationships with offshore outsourcers. This concern is most tangible in states that have seen high unemployment and foreclosures. Crucially, a number of these are also states with Super Tuesday primaries. In June, the Obama campaign released a memo accusing Clinton of pandering to the Indian-American community and noting the “tens of thousands” Clinton has received from companies that outsource jobs to India. For her part, Clinton has said: "There is no way to legislate against reality. Outsourcing will continue ... We are not against all outsourcing; we are not in favour of putting up fences."
Of the 3,000 Democrats polled, more than half (55 percent) of voters see offshore outsourcing as unpatriotic, a significant decrease from October 2004 when 93.9 percent of voting Democrats felt offshoring was anti-American. In the Super Tuesday states, 84 percent of Democrats believe offshore outsourcing is unpatriotic. Less than 7.9 percent of Republicans viewed offshoring as unpatriotic in 2004 and 6.5 percent in 2008.
It's difficult to know what Clinton or any other candidate can hope to achieve by engaging with the outsourcing issue as there is widespread ignorance among the electorate about (a) what it actually means and (b) what any President could or could not do about it. This ignorance is strongest among voters in Alabama, Michigan, Georgia, Tennessee, Missouri, Ohio, Texas, North Carolina, Wisconsin, Kentucky and Nevada.
Beyond that, America has been the engine of the world economy for the past couple of decades, and there is little that increased isolationism and protectionism will do to help it combat those giant economies in waiting, China and India, both major offshoring locations of choice. So far, the further east you travel, the less likely you are to catch the economic cold that is beginning to take hold in Europe.
In 47 out of 50 states, more than half of all registered voters in each state incorrectly assumed that the US President could unilaterally ban offshore outsourcing. Among Democrat voters in Super Tuesday states, the percentage dramatically increases to over 85 percent, who also said that this misconception would guide their candidate selection.
Brown-Wilson Group argues: “The argument is often made that it doesn’t matter if we vote for a president who is for or against anything issue-wise, because Congress ultimately represents the people and balances out the President's opinion or powers regarding imposing or approving anything. It does matter what the future President thinks or does in regards to economic issues like outsourcing. The President directs the foreign policy of this country and indeed both appoints individuals and works with individuals who make decisions regarding this and related federal issues.
“One of the President's responsibilities is Foreign Policy. However, it is a mistake to think that outsourcing is a federal issue. The US Constitution does not mention outsourcing at all. Other than Congress enacting legislation that indirectly affects outsourcing (via tariffs or some other means), there isn't anything that they can do that is permitted by the US Constitution, least of all the President.
"Though many of the candidates claim to be in favour of free trade, their rhetoric and voting records vary. Issues of fair trade, enforcement of labour standards, and trade policy towards African and Latin American economies will likely remain in the forefront of legislative debate as the presidential campaigns pick up steam.”