Keith Chrostowski: Middle class pays too high a price for corporations moving jobs to repressive countries

Perhaps the two most beneficial human inventions that go hand in hand are constitutional representative government and the corporation.

The benefits of freely elected governments under the rule of law are obvious. But corporations, too, have brought immeasurable improvements to the human condition.

Corporations are powerful generators of wealth because owners hire expert managers to run them. And, crucially, they maximize efficiency by organizing employees into specialties.

Economists and thinkers going back to Adam Smith have pointed out that this division of labor allows people to best develop their individual talents — and as a result provides their best chance at personal fulfillment.

It’s a connection worth making: Free government gives people the right to pursue individual happiness, while free-enterprise corporations provide myriad means to do so. And don’t forget, it’s the prosperity generated by corporations that allows countries to have robust social welfare nets, if they choose.

But representative ships of state can list this way and that and sometimes need a course correction. So do corporations.

For decades now, U.S. corporations have been globalizing and moving jobs overseas. Naturally in a free market system, they’re seeking out the lowest costs of labor.

But the job shifting is a key reason U.S. wages have been stagnant over the last couple of decades. More important, it has distorted the economy and removed rungs on the ladder to a middle class life for millions.

Recognition is building about how severely damaging this has been. Consider a recent comment from John Angelos, son of the owner of the Baltimore Orioles and the team’s chief operating officer.

Angelos was reacting to the riots in Baltimore after the Freddie Gray death and the postponement of a ballgame. He was searching for an explanation of the sense of hopelessness gripping some in Baltimore, which like many cities has seen its industrial and manufacturing base wither.

“My greater source of personal concern, outrage and sympathy beyond this particular case,” he wrote on Twitter, “is focused neither upon one night’s property damage nor upon the acts, but is focused rather upon the past four-decade period during which an American political elite have shipped middle class and working class jobs away from Baltimore and cities and towns around the U.S. to third-world dictatorships like China and others (and) plunged tens of millions of good, hard-working Americans into economic devastation.”

That’s a high, inside pitch to those who defend granting corporations a free hand to move jobs overseas.

Angelos is essentially right: It’s one thing to move jobs to other free-enterprise, democratic countries, but why do we allow corporations to shift jobs to countries that don’t share our values? To countries that are even hostile to them?

CEOs are moving jobs to countries with repressive political regimes that discriminate against women and minorities, that exploit workers and give them few safety and working condition protections, that allow products to be made with substandard materials, that allow pollution and poisons into the environment.

In many cases, the CEOs themselves wouldn’t even consider moving their families to such countries.

Some often argue that putting jobs in Third World repressive countries will eventually raise their living standards and lead to democratic governments. But what if that doesn’t happen? We’ve been moving jobs to China for decades now. Do we really think its communist masters will give up control?

Why do business at all with Russian kleptocrats? Or some Middle East potentates?

It’s more likely that the leaders of such countries are siphoning off the wealth generated by their improved economies to strengthen their grips on power.

Other business executives besides Angelos apparently are becoming more sensitive to this. Aware that critics have attacked previous trade treaties for spurring the shifting of jobs, some are trying to pre-empt such assaults on the 12-nation Trans-Pacific Partnership.

Last week, Nike CEO Mark Parker said the trade pact would lead to 10,000 new manufacturing and engineering jobs in the U.S. Tariff relief, he said, would aid the development of advanced manufacturing methods and boost the supply chain of shoes domestically.

We’ll see. But keep in mind that Nike is a perfect example of a U.S. business relying on workers overseas.

The New York Times reported that the company employs about 26,000 people in the U.S. but that its contract factories overseas employ about 1 million. About a third are in Vietnam, making low wages and without worker rights protections.

Under a free-enterprise system and in the current political climate, preventing corporations from such job shifting would be difficult.

Average consumers, on the other hand, could apply pressure by buying products made in the U.S. or at least from more friendly countries.

We all could remind U.S. corporations that keeping jobs here provides more opportunities for America to build a happy and prosperous middle class and that will be good for their profits in the long run.

Maybe they’ll get the point that moving jobs overseas is bad for business.

Or, simply, it’s bad business.

This story was originally published May 14, 2015 at 9:41 AM with the headline "Keith Chrostowski: Middle class pays too high a price for corporations moving jobs to repressive countries."