Business Leaders Concern Troll About Outsourcing

Gary Shapiro, President and CEO of the Consumer Electronics Association, warns that card-check legislation and increased unionization could “force jobs overseas.” Elsewhere in the piece he extols the virtues of lowering trade barriers and shares other pearls of wisdom he gleaned while “driving from New Delhi to Agra.” It is, of course, hard to take this concern trolling about jobs shifting overseas all that seriously when one assumes the point of his “recent delegation of world technology leaders to India” was precisely to explore opportunities for shifting jobs overseas.

But credibility aside these concerns are hard to square with the data. Consider this page where you’ll learn that union density is 80 percent in Denmark, 74 percent in Finland, 46 percent in Luxembourg, 35 percent in Ireland, and 25 percent in Switzerland compared to just 12 percent in the United States. These are all very small countries that depend much more highly on foreign trade than does the United States. And yet despite their much larger proportion of union members, none of these countries have seen their employment all drift overseas.

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Countries don’t become prosperous by having extremely low wages. Countries have low wages because they’re poor. Countries prosper by having reasonable quality infrastructure and a reasonably healthy and well-educated population. Unions can neither magically create wealth out of thin air, but neither can they magically destroy wealth. What they can do is influence at the margin the way wealth is distributed — a bit more to the workforce and somewhat less to the managers and the shareholders. That’s why people who represent the interests of managers and shareholders don’t like them. It’s a perfectly understandable sentiment, but not one that the broader public should find persuasive.