March 11, 2004
Offshoring is not just pro-con debate
By Steven C. Clemons
WASHINGTON - Alan Greenspan's honesty is tough for politicians to swallow in an election year, but he is saying things that the nation and political candidates need to hear. Not only has he uttered a truth that most people know but don't want publicly to accept - Social Security and Medicare are functionally insolvent without a cut in benefits - but he has warned that the dangers of "creeping protectionism" springing from the high profile debate over offshoring US jobs may seriously undermine American interests.
Blaming foreigners for America's homegrown economic shortcomings not only is irresponsible, it assures that America's economic circumstances continue to erode.
The US should be building a consensus for investing in resources - such as higher education and high tech ingenuity - that will ensure domestic jobs of the future.
Many previously pro-global Republicans and Democrats have turned the offshoring debate into a shallow choice that has no bearing on reality. While opposing offshoring, none of them has offered a prescription for how to stem the flow of US jobs to cheaper, overseas labor markets.
Sen. John Kerry has called for a "commission" to study the problem and wants firms that are relocating to report to local, state, and federal authorities about their plans. This is bureaucratic duplicity masquerading as policy - it won't keep any jobs in America.
George W. Bush and Co., however, have been even more negligent during their time at the helm, governing economic policy by short-term opportunism (such as unsustainable promises to steel producers) and manic "tax cut mantras" that have undermined fiscal confidence.
We need smarter policy and a road map that returns the nation to the axiom that investing in people and technology has enormous national payoffs. A twofold strategy focusing on new investments in industrial capital and human capital is long overdue. To upgrade industrial capital, we must pursue sustained research and development into leading-edge technologies. To upgrade our human capital, continuous investments must be made in higher education, making sure that the next generation of Americans has the job skills and the academic agility to take full advantage of tomorrow's most advanced technologies.
Since Washington has drained the Treasury and has thus undermined its already too-modest civilian research and development programs, state-level and regional investment must play a greater role to counterbalance the federal government's neglect.
Consider current efforts in two states in the industrial heartland - New York and Ohio - that have been struggling to create jobs. The contrast between the two efforts is explained not by party label - since both states' pro-growth plans have been offered by pragmatic Republican governors - but by political willpower.
New York has already invested $620 million of a planned $1 billion to create an imaginative network of research and development incubators - dubbed "the Empire State High-Tech Corridor."
It would create "centers of excellence" in leading-edge technologies near researchers at campuses of the state's extensive university system and with the existing knowledge base clustered around signature private-sector industries.
Albany, for example, is home to a large R&D complex developing advances in nanotechnology and molecular science (a field that holds great promise in such areas as healthcare, agriculture, and advanced manufacturing). With this critical mass of resources, the Albany center has lured new local investment by IBM, International Sematech, and Tokyo Electron Ltd.
Similarly, Rochester is the site of an R&D center that leverages local knowledge about photonics - a knowledge base energized by the presence of Eastman Kodak - to research the uses of light to transmit energy and information. Syracuse hosts a center studying environmental quality, drawing from the local research base led by Carrier Corp.; a center in Buffalo specializes in genetic research; and a center on Long Island focuses on advanced wireless communications.
There is no guarantee that all or any of New York's expensive projects will pay off in eventual job creation, but if any of the centers succeeds in creating breakthrough technologies, the potential for explosive local wealth creation is likely to justify the Pataki administration's investment.
Contrast the energetic New York program with the disappointment among business and labor advocates in Ohio when voters last November narrowly defeated a $500 million state bond issue to fund pro-growth R&D in the state. The proposal aimed to move Ohio beyond agriculture and heavy industry into the Information Age. With the state's economy stagnating in areas like Cleveland, Toledo, and Cincinnati, voters in Ohio's cities supported the R&D investment program - yet majorities in rural, agricultural areas defeated the plan by a 51-49 margin.
This setback for R&D investment in Ohio seemed sadly consistent with its legislature's recent record of cutting state support for higher education and shortchanging elementary and secondary education. Ohio's recent lapses in education and technology investment - which have triggered despair about a "quiet crisis" and a regional "brain drain" of talented young graduates moving out of state - leaves questions about how Ohio expects to create high-skilled jobs for the future.
Some states get it. Others don't.
A generation from now, few should be surprised if those regions now investing in advanced technologies and higher education are flourishing. Others could learn from the imaginative efforts in New York and Ohio - and there are scattered signs of progress. Baltimore is considering establishing a $1 billion biotech park in the shadow of Johns Hopkins University that will create 8,000 jobs connected to research on new drugs, medical devicemakers, and gene decoders.
With foresight - from voters and from the leaders they choose - America can safeguard its economic future.
But the patient process of persuasion will require a degree of common sense and self- restraint so far lacking among presidential candidates. Rather than blindly bashing foreign imports and global job migration, the candidates should build a consensus for investing in the academic resources and the high-tech ingenuity that will promote the jobs of the future.
Steven C. Clemons is executive vice president of the New America Foundation, a centrist policy institution in Washington.