Lou Dobbs and Outsourcing

Lordy, lordy, Lou Dobbs has created for himself a profitable niche. Dobbs, a business journalist, anchors CNN's Lou Dobbs Tonight, which I don't watch because I don't catch much TV. (Besides, we don't have cable out here where I live.) On the show, as I understand, he offers a “rogue's gallery” of companies that shift work overseas. However, I can read his new book, Exporting America: Why Corporate Greed Is Shipping American Jobs Overseas.

His intent: to persuade CEOs to look to their obligations to American workers and end outsourcing. (Or possibly to keep the viewing audience tuning in while he publicly denigrates those same CEOs who decide to be guests on his show. I did happen to see a strangely-rube-like Marc Andreeson being skewered by Mr. Dobbs in a transcript posted online. It was painful to witness.)

I found myself nodding at several of the arguments in Mr. Dobbs' book, most of them centered around a lack of a reasonable national policy on “balanced trade” in this country. The nugget of truth I found: Frequently, other countries don't give us the same consideration that we give them regarding tariffs and openness. The national policy has become spotty and highly politicized, culminating with such blunders as President Bush's decision to impose steel tariffs then reverse course once the European Union decided to retaliate with some special tariffs of its own — focused on industries with large influence in swing states. Oops.

I'm no economist. Far from it; most articles in The Wall Street Journal alarm or bore me. But it seems to me our government could be doing more to ensure a level playing field in the matters of meta-business. If, for example, India imposes restrictions on US imports of goods and services, we should look hard at that and figure out ways to motivate them to open up their markets in equitable fashions.

But at the same time, Mr. Dobbs needs to do better fact-checking or get a better editor. For one, he equates “outsourcing” with “offshoring.” They're not the same. I'm outsourcing IT work, but it's staying here in the states. His misuse suggests he's pushing the populist notion with little regard for accuracy and great regard for keeping the reader's blood boiling.

Second, several times he states that professionals working here on L-1 and H-1B visas don't pay taxes: “Since they aren't American citizens, they don't pay taxes here.” This fact sounded bogus to me, so I checked the IRS site and found Publication 519, “U.S. Tax Guide for Aliens,” which doesn't come right out and say, “Hey, better plan on paying taxes,” but does spend paragraph after paragraph explaining the minutia behind the policy that “Resident aliens are generally taxed in the same way as U.S. citizens. Nonresident aliens are taxed based on the source of their income and whether or not their income is effectively connected with a U.S. trade or business.”

Third, his arguments rest on what the largest companies are doing. My understanding is that small and medium-sized companies have a greater overall impact on the financial state of the US economy than large multi-national corporations (though not necessarily on its tax and trade laws). For them, outsourcing may be a do-or-die proposition.

I'd be interested in hearing what you think. You could easily read the book on a two-hour flight.