Like Romney and Obama, We Are All Outsourcers

Ordinary Americans patronize overseas workers every day.

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Mitt Romney and Barack Obama,

You're an outsourcer.

No, you're an outsourcer.

No—YOU'RE an outsourcer.

[Photo Gallery: London Makes Way for the Olympics]

This is the exalted level of the debate we're now witnessing in the campaign to become the president of the world's leading democracy.

President Obama charges that his Republican opponent, Mitt Romney, helped send U.S. jobs overseas when he ran Bain Capital from 1984 to 1999. Romney now charges that the 2009 stimulus bill Obama championed and signed used U.S. taxpayer money to fund work done by foreigners. Fact-checking sites have been working overtime to sort it all out (hopefully, using only American fact-checkers).

Instead of boring you with yet another tedious breakdown of the Bain record or the stimulus scorecard, I'd like to make one simple assertion that ought to clear up this whole inane argument: We are all outsourcers. It's almost impossible not to be.

If you bought a T-shirt or a pair of socks in the last decade, odds are you spent your money to patronize workers in China, Vietnam, or Pakistan. If you purchased a car, it's virtually guaranteed to contain components built by foreigners in dozens of other countries—even if the car was assembled in the United States. Much of the gas that fuels your car comes from someplace else, too. When your kids go to school—supposedly a local activity that's hard to outsource--they probably sit on furniture and use pencils and paper that are imported.

[See Mitt Romney missing answers on jobs.]

The pace of globalization has clearly accelerated over the last two decades, with many domestic goods that used to be made by Americans now built overseas. There's nothing new about that, and it's the whole reason Wal-Mart and other discounters have become so prominent. While some Americans have suffered from the loss of jobs, millions of others have benefited from imports that are far cheaper than goods made here. Cheap imports are one of the main reasons inflation has averaged a very tame 3 percent or so for the last 20 years.

America, in fact, has always been a nation heavily dependent on foreign trade and on goods made overseas. Trade with Britain was largely suspended during the Revolutionary War, but it picked right up again once the war ended, with George Washington being one of the mother country's biggest patrons. In modern times, the only exception to America's heavy reliance on trade came during World War II, when hostilities with Germany, Japan, and their allies disrupted international commerce, requiring an uncomfortably high degree of economic self-reliance. That was one cause of rationing, not something anybody considers a sign of good times.

The problem with the argument over outsourcing is that it's based on the false premise that it is somehow possible, and even desirable, to keep economic activity contained to one geographic area. This is ridiculous. The modern economy is so globally interconnected that it is virtually impossible to conduct a major financial transaction that doesn't spread in any way beyond national borders. The only nation that really manages to keep its economy closed today is North Korea, and even it imports scotch, movies, and pornography for its privileged leaders. Anybody think we should emulate North Korea?

[See why Romney's outsourcing expertise could help him as president.]

In fact, now that reliable fact-checkers have dug into the stimulus bill, it's somewhat amazing there wasn't more cross-border leakage, given all the money that flowed out of Washington. The Washington Post, for instance, found that the only credible claim of the stimulus bill funding overseas jobs involves components for wind turbines that were supplied by companies in Denmark, France, Germany, India, Italy, and Japan.

The stimulus funding went to construct U.S. wind farms, but no U.S. companies built some of the required parts. So they had to be purchased overseas. The total amount that went abroad was well under $5 billion, out of nearly $850 billion of stimulus spending. If those numbers are correct, then I'm astonished that the Obama administration was able to keep 99.4 percent of the stimulus money strictly inside U.S. borders.

The attacks on Romney's outsourcing record are just as silly. Romney's job at Bain wasn't to create jobs. It was to turn a handsome profit for investors by plowing their money into companies that could be turned around or supercharged through the expertise of Bain's financial engineers.

There are unsavory elements to such private-equity investing, since it often involves the elimination of "inefficiencies," otherwise known as in-house jobs that can be done more cheaply by outsiders. But private equity has become a basic part of modern capitalism, and it serves an important role by forcing companies to become lean and competitive. If Bain didn't do what it did, somebody else would have, or many of the target companies would simply have gone out of business anyway.

There are many conversations the candidates should be having, but aren't: How will we create high-paying jobs in the future? What's the best way for underqualified Americans to gain the skills that the modern economy rewards? What kinds of sacrifices will everybody have to make in order to get the government's finances in order? Maybe we can outsource those important questions to better candidates, overseas.

Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.