Kerry says Ni hao: How does Kerry stack up with regard to South Asia policy?
There are two issues which prop up whenever Kerry alludes to South Asia.
1. Outsourcing &
2. Monetary Policy.
From Kerry's campaign web site:
"Promoting America's competitiveness in a global economy. Kerry's plan will ... For example, if you want to open a hotel in Bermuda, a bank branch in Shanghai to service the Chinese market, or a car factory in India to sell cars in India, you can still defer your foreign income. But if you open up a call center in India to answer calls from outside of India or re-locate abroad to sell cars back to the United States or Canada you must pay taxes just like call centers and auto manufacturers in the United States."
Remember NAFTA? We learnt the hard way that protectionism with regard to industries does more harm than good in the long run. Now we are discussing the idea of protecting the service market. Kerry seems to forget that although America is geographically isolated from the rest of the world, financially, it is smack in the middle. American companies sell their products and services all over the world. What if other countries decided to reciprocate- the EU penalizes Microsoft since it doesn't develop its product in the EU. Iraq wants Halliburton out since it outsources manpower... Kerry's outsourcing rhetoric resonates well with labor unions, but one wonders if it been thought through?
How much is South Asian countries to blame for loss of jobs? How many jobs are lost to cheap labor in China and India?
From an article in NY Times based on a report from the Bureau of Labor Statistics.
"The bulk of outsourced jobs never leave U.S. shores, the government said. Nine percent of non-seasonal U.S. layoffs in the first quarter were due to outsourcing, but less than a third of the work was sent overseas, the U.S. Labor Department said in releasing new figures on mass layoffs and outsourcing...In more than seven out of 10 cases, the work activities were reassigned to places elsewhere in the U.S."
From Kerry's campaign web site:
"America has lost millions of manufacturing jobs. Just yesterday, we learned that the trade deficit hit a new record. As the trade deficit with China has ballooned, President Bush has stood on the sidelines. He has failed to do anything to effectively address China's predatory currency manipulation..."
huh, Predatory what? asks William Pesek Jr in a column in Bloomberg. "China hasn't altered its currency policy since 1995, when it pegged the yuan at 8.3 to the dollar. In fact, just six years ago, at the height of the Asian crisis, the White House was practically begging China to maintain its currency peg."
"China in particular on the hot seat, and the hypocrisy of all this isn't lost in Asia. During the 1990s multinational companies rushed there because of cheap land and labor costs. Like their counterparts in Europe and Asia, U.S. companies pumped up profits by firing workers and hiring Chinese that commanded far less compensation and weak worker-rights rules. Somehow U.S. executives are keeping a straight face complaining that China is now stealing business with a currency policy that's been in place for almost 10 years."
There has definitely been some damage done due to Kerry's rhetoric. (See article in Asia Times) How could Kerry stop himself from being branded anti-South Asian?