# 518  

September 2004



It's Time to "Out" the Real Outsourcers


by Bonner Cohen

 

Outsourcing. The mere mention of the word is enough to send shivers down the spines of millions of Americans, fearful of losing their jobs to workers in China, India, or some other country where labor is cheap.

While economists, business leaders, and others debate whether outsourcing poses a serious threat to the U.S. workforce, and what -- if anything -- can be done about it, politicians have been quick in finding villains to blame for the putative loss of American jobs.

Massachusetts Senator John Kerry has shaken his finger at "Benedict Arnold CEOs" for shifting American jobs to foreign workers. On Capitol Hill, lawmakers from both parties have introduced bills designed to punish those who would betray American workers for their own selfish reasons.

In truth, the country is awash with Benedict-Arnold outsourcers -- ready, willing and able to send American jobs overseas. But the culprits aren't the people Mr. Kerry and his colleagues have in mind.

The real outsourcers are to be found among regulators, trial lawyers, and environmental groups whose cumulative actions have devastated once-flourishing industries and the communities in which they were located. Their deeds have consigned hundreds of thousands of Americans to the ranks of the unemployed. Meanwhile, the jobs these people once had have been gleefully picked up by foreign workers.

Though much attention has focused on outsourcing in manufacturing and information technology (IT), by far the biggest damage has been wrought in the timber and mineral-extraction industries. These industries provide some of the most essential products of modern life. Paper, furniture, and much-coveted hardwood floors are just the most visible fruits of the timber industry. Similarly, the precious metals taken from mines find their way into cars, bridges, computers, cell phones, cooking utensils, and dozens of other creations of human ingenuity.

In the last decade alone, over 900 mills, pulp and paper plants, and other forest products facilities have closed in the U.S., with a loss of over 130,000 jobs.
1 Hardest hit is the rural Pacific Northwest, where environmentalists and the Clinton administration successfully -- and wrongfully -- blamed logging for what was said to be the declining population of the Northern spotted owl. Despite mounting scientific evidence that the owl was not endangered, severe restrictions were slapped on logging and other activities in the region's national forests, shutting down 187 sawmills in Washington, Oregon, and California.2

The Southwest was next. This time it was the Mexican spotted owl that environmentalists claimed was endangered by logging. As a result of a lawsuit brought by the Southwest Center for Biological Diversity (now, Center for Biological Diversity), logging in 11 Southwestern national forests was banned indefinitely.
3 Absent regular timber harvests, growth in the region's drought-ridden, insect-infested forests is such that now 80 percent are at risk of catastrophic wildfire.4 Enactment of a Bush administration plan allowing thinning of trees in overgrown forests will provide some relief. However, with only two sawmills still in operation in New Mexico, the state lacks the infrastructure to deal effectively with this summer's approaching fire season.5

Meanwhile, thousands of jobs the timber industry once provided to communities throughout the West have been outsourced to Canada and other countries.

The mineral-extraction industry also has been assaulted by domestic outsourcers. After spending 12 years and $75 million in a fruitless effort to obtain some 70 permits from a slew of federal, state, and county agencies to mine gold in Washington's Buckhorn Mountain, Crown Resources Corp. finally threw in the towel. Forced into Chapter 11 bankruptcy proceedings three years ago, the company no longer pursues exploration in the U.S. It but has joined other American mining companies seeking opportunities in, and moving jobs to, South America.6

"Our decision to abandon exploration in the United States for foreign shores is not to avoid the costs of sound environmental practices," Chris Herold, the company's CEO, recently told a House Resources Committee panel, "but to escape the uncertainty of regulatory policy and its chaotic and often arbitrary implementation."7

Even though 60 percent of the zinc, and 40 percent of the copper, used in the U.S. are imported, the Environmental Protection Agency (EPA) in the 1990s throttled an effort by Nicolet Minerals Co. to create an underground zinc mining operation in northern Wisconsin. Designed to comply with all environmental requirements, the project would have employed 400 people at an hourly wage of $22 in the second-poorest county in the state. But after spending nine years and $75 million battling EPA, the company abandoned the project.8

These are real job losses, courtesy of real outsourcers.

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Bonner R. Cohen is a senior fellow of The National Center for Public Policy Research. Comments may be sent to [email protected].


Footnotes:

1. "Forest Subcommittee Examines Job Losses in Forest Industry," press release, U.S. House of Representatives Subcommittee on Forests and Forest Health, 109th Congress, Feb. 3, 2004.

2. Ron Arnold, Undue Influence: Wealthy Foundations, Grant-Driven Environmental Groups and Zealous Bureaucrats That Control Your Future (Bellevue, Wash.: The Free Enterprise Press, 1999) 16.

3. Arnold, Undue Influence 17.

4. Rep. Steven Pearce, "Issues Affecting Jobs in the Forest Industry," opening statement before the U.S. House of Representatives Subcommittee on Forests and Forest Health, 109th Congress, Feb. 3, 2004.

5. Pearce, "Forest Industry."

6. Christopher E. Herald, "The Role of Science in Public Policy," testimony before the U.S. House of Representatives Subcommittee on Energy and Mineral Resources, 109th Congress, Feb. 4, 2004.

7. Herald, "The Role of Science."

8. Dale L. Alberts, "Energy and Minerals Outsourcing American Jobs Overseas," testimony before the U.S. House of Representatives Subcommittee on Energy and Mineral Resources, 109th Congress, March 3, 2004.


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