The Heritage Foundation - Leadership for America

Here is a quote from the President’s new budget (emphasis added):

“If we lead the world in the research and development of clean energy technology, we can create a whole new industry with high-paying jobs that cannot be shipped overseas. Some compare the promise of this sector to information technology.”

“High-paying jobs that cannot be shipped overseas,” is a mantra of the left. It is an entirely bogus claim and even if it weren’t, it would be a bad idea.

First, developing technology in the USA doesn’t guarantee that the jobs using the technology will stay in the USA. The budget’s author couldn’t have chosen a more ironic example than information technology. Virtually all of the cell phones, computers, MP3 players, pick any information technology, are made overseas.

Green technology has no magical immunity to trade pressures. About half of our wind turbines are manufactured by foreign companies. No matter what we do to develop more efficient solar cells, there is nothing to insure that they will not also be manufactured overseas.

But, here is a more fundamental problem with the “jobs that can’t be exported” vision: It would focus our workforce on making goods that can’t be imported and, therefore, on goods that can’t be exported. That is, we would have a no-trade economy.

This attitude exposes the administration’s anti-free-trade, mercantilist proclivities—like those of postwar Albania. Albania’s donkey-cart economy may have been pretty green, but only because it impoverished its citizens.

Chaining our future to jobs that “can’t be exported” is much worse than the typical protectionism. With normal protectionism, we produce things for which we don’t necessarily have a comparative advantage. But that doesn’t prevent us from producing those goods for which we do have an advantage.

In contrast, the “unexportable” jobs are ones for which no country can have a comparative advantage. What can’t be traded on the international market? Medical services? No, there is a burgeoning medical tourism trade. Legal services? Nope, they can be imported as well. Repair work? If the goods to be repaired can be traded, their repair can as well.

Information and intellectual work can be traded internationally. Anything tangible that isn’t too large to move can be traded. What’s left are services that need to be performed on physical items too large to move.

Construction jobs and repairing things that can’t be moved may well be good jobs. But, if that’s all we do, we won’t have much of an economy.

A country that bets its future on avoiding trade is a country living in fear and a country with its economy in full retreat. America has thrived on free trade and will continue to do so if allowed.