The View From 1776

In an increasingly globalized market, failure to expand in the most rapidly growing world markets means relative stagnation domestically. 

Ironically liberal-progressives believe that we should be moving toward a single world government, but want to keep the economic realm rigidly divided among nations. 

It’s hard not to conclude that, in berating business, Obama is simply pandering to our socialistic labor unions, counting upon the public’s economic ignorance.

The following op-ed article appears in the December 29, 2010, edition of the Wall Street Journal.

The Mistaken Attack on Outsourcing
When American firms grow abroad, they also grow domestically

By MIHIR DESAI
President Obama concluded his recent meeting with leading corporate executives with a call for more ideas about how to create jobs at home. With this meeting, he has begun to work toward a sorely needed rapprochement with the business community. The continued degradation of the relationship between that community and the White House serves no one.

Sound public policies surely matter, such as the provisions on expensing in the recently passed tax legislation, which will help spur investment. But the president could perform an even greater public service if he changed the way he has talked about the impact of American firms on the economy.

Since his presidential campaign, Mr. Obama has repeatedly said that the global operations of U.S. companies harm the country because they drain the American economy of jobs. His rhetoric about “tax breaks for companies that ship our jobs overseas” has populist resonance at a time of economic uncertainty, but it is also at odds with the available evidence about how globalizing firms affect the American economy. Moreover, it harms the popular understanding of our opportunities and challenges.

When American firms grow abroad, they also grow domestically, as demonstrated by research I conducted with C. Fritz Foley of Harvard and James R. Hines Jr. of the University of Michigan (published in the American Economic Journal: Economic Policy, 2009).

The data do not support the crude, fixed-pie intuition that firms either invest abroad or at home. Ten percent growth in American firms’ foreign investment is associated with 3% growth in their domestic investment. And when firms grow abroad, their domestic exports and R&D activities grow especially, contrary to Mr. Obama’s rhetoric.

Today, CEOs in this country look out on global markets that are growing at four or five times the pace of the U.S. economy. Foreign operations of all sorts are typically considerably more profitable than domestic opportunities would be. And, of course, American CEOs must compete with companies that are based—and that invest—all around the world.

Vilifying or penalizing American businesses for their global operations will only lead them to consider leaving the U.S.—or consider being bought by foreign companies. Such moves would hurt America by removing valuable headquarter jobs. Instead, Mr. Obama should emphasize how Americans succeed when our firms succeed world-wide. That formulation better captures reality and offers a more sensible way to engage businesses in a new spirit of cooperation.

The United Kingdom, Canada and Japan have all initiated reforms that explicitly recognize the benefits of their global firms by lowering penalties on their overseas activities. The U.K. government, for example, has initiated a restructuring of its corporate tax system, including a shift to a territorial system that does not tax the foreign income of British companies. According to the U.K. Treasury, the new system “will better reflect the global reality of modern business and will allow businesses based in the UK to be more competitive on the world stage supporting UK investment and jobs.”

Mr. Obama could manifest a similar appreciation for his country’s global firms by pushing significant corporate tax reform—such as making marginal rates more consistent with global norms and adopting a territorial system.

The president’s recent trip to Asia—on which he was accompanied by CEOs of companies with major foreign operations—may signal a nascent appreciation for this crucial issue, and the president could reinforce the message at his upcoming State of the Union address. Altering the national conversation can help prevent the rise of a new economic protectionism that demonizes global firms.

Mr. Desai is a professor of finance at Harvard Business School.

Is the Experiment Over?
Gary Kelly
December 21, 2010

John Adams in a letter to Count Sarsfield, 3 February 1786 stated: “It has ever been my hobby-horse to see rising in America an empire of liberty, and a prospect of two or three hundred millions of freemen, without one noble or one king among them. You say it is impossible. If I should agree with you in this, I would still say, let us try the experiment, and preserve our equality as long as we can. A better system of education for the common people might preserve them long from such artificial inequalities as are prejudicial to society, by confounding the natural distinctions of right and wrong, virtue and vice.” (Reference: Our Sacred Honor, Bennett, 264.)

George Washington in his First Inaugural Address, 30 April 1789 stated: “The preservation of the sacred fire of liberty, and the destiny of the republican model of government, are justly considered as deeply, perhaps as finally, staked on the experiment entrusted to the hands of the American People.”

Is it ironic that Judeo-Christians who first came to America to escape religious persecution and tyranny are today facing the same persecutions perversely calculated by those who decry Biblical moral virtue and boundaries? Anti-Christian sentiments abound with progressive political correct assaults against Christmas, Easter, Father’s Day, Mother’s Day, etc. etc. Even RINOs like Scott Brown who believes sodomy in the military is somehow now acceptable then the boundary George Washington established with his orders concerning Lieut. Frederick Gotthold Enslin.

Does this indicate the fault of “We the People” falling for the secular Marxist’s ploy and becoming “We the sheeple?” Or is the neglect of the shepherds of Christendom who no longer preach all that they are called to preach? Are “We the sheeple” only hearing John 3:16 and not John 3:16-21, 1 Timothy 2 and not 2 timothy 4?  Is this why “We the sheeple” cowardly refrain from discussing “religion and politics” because someone might get offended when the foundation of Biblical moral virtue highlights the chaos of lives without responsibilities as defined by the boundaries of “the Laws of Nature and of Nature’s God?”

Progressives apparently are convinced that Americans can obtain “morals and values” as defined by atheists apart from the Holy Scriptures, exactly the opposite of the Biblical moral virtue and values of our American ancestors. Plus, in complacency, “We the sheeple” seem to prefer to make government god, despite of the evidence of Providence during the war for independence against tyranny and actually scorn the hand of Providence by expelling Him from Christmas, public education, etc.
When one considers Election 2010 in the Marxist states (formerly known as blue states) and the number of voters who voted for Marxists (formerly known as Democrats) to allow government to continue to enslave them under corrupt Union and despotic control, is it in ignorance or simply a complacency of a false “In Government We Trust?”

Therefore Christian conservatives must begin to confront the evil of tyranny by not only asking, but demanding, by what new and improved foundation of wisdom do progressives possess that supersedes that of the Biblical moral virtue of America’s Founding Fathers? It is without doubt, as it always is, the response will be at best evasive, then once offended, attempt to deflect and redirect the blame of the current chaos back towards those who possess Biblical moral virtue. The Christian conservative must in the midst of these baseless attacks continue to press for that new and improved foundation upon which progressives cannot provide.

If individual responsibility is no longer the basis for the American Way of Life, what will the outcome be with this “progressive” neglect? Will the Republic continue to be dismantled in favor of mob rule (pure democracy) by those who cannot appreciate why the representative government, with the three branches, and the Electoral College was established, because they are ignorant of what a Republic is?

Patrick Henry warned: “It is natural to man to indulge in the illusions of hope. We are apt to shut our eyes against a painful truth—and listen to the song of that syren, till she transforms us into beasts. ... Are we disposed to be of the number of those, who having eyes, see not, and having ears, hear not?”

Thomas Jefferson hoped: “My confidence is that there will for a long time be virtue and good sense enough in our countrymen to correct abuses.”

Will we as countrymen correct the abuses? Can the experiment last? How long before it is too late? Can “We the people” rescue “We the sheeple” from their dependency upon government. It is only then that “liberty from God,” defined by the foundation of Biblical moral virtue and boundaries, can once again overshadow “mandates from government,” defined by progressive political correctness, without a foundation without boundaries, and therefore resulting in chaos and slavery.

Either we confront the slow “progressive” demise or as Samuel Adams admonished, “Contemplate the mangled bodies of your countrymen, and then say, ‘What should be the reward of such sacrifices?’ ... If ye love wealth better than liberty, the tranquility of servitude than the animating contest of freedom...crouch down and lick the hands, which feed you. May your chains sit lightly upon you, and may posterity forget that ye were our countrymen!”

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Gary Kelly’s web site is EarsToHear.net and he is the author of Lessons of The Holy Spirit: A Guide for Entering the Kingdom of God and Discover Why It Pleased God to Hide His Kingdom from the Wise.