By DAVID MOON, Moon Capital Management
The intensifying debate about the exporting of US jobs is interesting as
sport, but it is mostly grandstanding by the two presidential candidates and
their respective camps. It is impossible to isolate a single factor, such
as a specific US company moving jobs overseas, and draw any macroeconomic
conclusions from it. (Of course, this isn't true from a microeconomic
standpoint. If you are an unemployed US employee of that company, it is
very easy to gauge the economic impact of that single act.)
The difficulty is that no participant in our economic system operates in a
vacuum. Every company's economic decisions have either a direct or
indirect influence on almost every other participant within the system. If
you don't want US companies to hire workers overseas, would you allow foreign
companies to build plants and hire workers in the US? There are almost 7
million people in the US, almost all of them US citizens, who work for foreign
companies. Should we ask Nissan to take those jobs back to Japan?
Are you prepared to pay higher prices at Lowes, Wal-Mart and the locally owned
furniture store that would result if we banned imported goods?
But every time consumers move from a higher cost producer to a lower cost
one, there are negative consequences to the individuals associated with the
higher cost producer. That is terribly unfortunate. The economy is
the equivalent of a worldwide ecosystem, where the outcome is not a zero sum
game, but weaker species often suffer in favor of the stronger. Whether
you like it or not, economic Darwinism shapes the economies of the entire
world. In the long term, the key is to be among the strongest (or best or
most efficient or lowest cost, etc) in order to survive and thrive. When
we legislate the survival or protection of a particular economic participant, we
almost guarantee its long-term demise.
Imagine an otherwise healthy child who is protected from society, forced to
live in a germ free bubble. He is never exposed to violence, cruelty,
disease or hardship. In the short term, that sounds like Utopia. But
the longer-term ramifications would be disastrous. The only way that child
could live to a ripe old age would be in a state of constant and permanent
protection. He would be a child his entire life. If he ever had to
live in the real world, he would not have the tools necessary to survive, much
When we send our children out into the world to face certain occasional
failure, are we cruel? Or would it be more cruel to feign love and keep
them in a maternal nest until we no longer had the physical or mental resources
to protect them? What would become of them then?
Ask the Japanese, who for decades protected their markets from competitors,
while benefiting from the freer trade policies of other countries. They
are currently in their 16th year of economic hardship.
David Moon is president of Moon Capital Management, a
Knoxville-based investment management firm. This article
originally appeared in the News Sentinel (Knoxville, TN).