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  • When Trade is Free, the U.S. Gains Investment and Jobs

    The argument against U.S. companies investing abroad typically goes as follows: “Companies are just trying to substitute cheap foreign labor for expensive U.S. labor. The United States loses jobs, capital, and technology when companies go offshore to employ cheaper foreign labor.”

    While that may be true for individual companies, the data show that overall, “offshoring” from other countries to the U.S. is greatly benefitting the American economy.

    As this chart shows, most foreign direct investment does not go to low-wage countries like China and Mexico—it goes to the United States!

    Protectionists would be shocked – shocked! to find that many huge multinational corporations actually prefer to produce in the United States with U.S. workers.

    U.S.-based multinational corporations employ 22.9 million Americans—more than twice as many people as they employ in China, Mexico, and all other countries combined. Foreign-owned multinational corporations employ another 5.5 million people in the United States.

    When talking heads or campaigning politicians assert that outsourcing is costing the U.S. jobs, they’re telling only part of the story. The whole picture shows that U.S. workers do just fine competing for jobs in a global marketplace, and in fact the United States continues to win the war for global investment.

    Posted in Ongoing Priorities [slideshow_deploy]

    7 Responses to When Trade is Free, the U.S. Gains Investment and Jobs

    1. Gadflye.com, Barring says:

      Crap in part. Offshoring is not the same as outsourcing. Outsourcing, in the context of this article or blog, is contract to a third party outside the US. Offshoring, in the context of this article or blog, is moving a company (or business process) from outside the US to the US.

      So, this article/blog is comparing apples to oranges.

      The idea of outsourcing jobs overseas for cheap labor is a fact, but what is also true is the startup costs or usually significant, in some cases cost prohibitive. Also, we shouldn't promote the decline one economy just to benefit our own. It is wrong, because we don't like it, unless the move is to move the company and process closer to market instead of just to save a buck.

      Societies are more important than a dollar.

      The way we get foreign investment in the US is to significant improve consumption demand in the US. The way to greatly improve consumption demand in the US is to get folks back to work. The way to get folks back to work is improve the entrepreneurial environment in the US and reduce the taxes for the working class (income tax – 15% cap, bonus pay – 15% cap) while increasing capital gains to 25% and tie deductions for the wealthy and corporate persons to GDP growth.


    2. Jim, CT says:

      Just imagine how many more jobs would have been created in the US if our government had balanced its budget and foreign entities had not been given the option of "investing" the money they earned in trade with us in US government debt.

    3. Warren, Denver says:

      Foreign company's prefer and or are willing to invest and produce in the US because they can repatriate profits at a very favorable tax level (3-5% for Germany) as opposed to US coproratios who must pay in the range of 33%. The issue is not that simple Mr. Riley.

      • carole says:

        however during the last repartriate opportunity for big corp mostly pharmaceutical companies not one of them showed a increase in hiring or any future investment into the united states. Its all about money money money with no care as to the shape of america

    4. Roger S., Mass. says:

      Economics is all about the efficient and effective allocation of (scarce) resources for the purpose of maximizing utility. That also defines productivity. "Free trade" is the only vehicle whereby this may be accomplished on an (inter)national scale. Which points to our actual problem: undue governmental interference in markets. That includes in largest part incompetent regulatory efforts unmindful of unintended consequences, or attempting to induce improper (ideological) consequences. In that sense the imposition of trade-barriers is just another symptom of a government by small minds trying to do a job too big for them. A lot of that going down in Washington in recent years. Time to check out (and heed) the "Laffer curve". Hint: has nothing to do with laughing and isn't funny!

    5. Leon Lundquist, Dura says:

      I am not so highly impressed by Foreign Investment in the States, I don't know that the common American gets much from it. Great for the Markets, great for the speculators. But Foreign Investors take home profits from America or they wouldn't be here. We Americans pay God's quantity of money to shore up the Marketplace. There are dozens of hidden subsidies like this that nobody factors in, like Defense subsidizes Big Oil! We used to have Rule of Law in this country, and all those Billions we spend on Law protects property here! Well! That is a subsidy, we protect the property of the Foreign Investors. At home they probably can't get much assurance.

      With Obama giving the Government the license to steal, the 'Invest in America' bunch ought to take a lesson from the BP Pensioners who paid for the Gulf Oil Spill! (They lost their whole year's Dividend! Obama insisted on it! Hurt our best allies, the Brits!) Obama rewrites contracts! Obama creates uncertainty! Every possible way Obama harms Business. As Americans lose the Rule of Law it won't be such a nice place to invest! Progressives demonize their prospective victims, they are clearly going after the Rich! In so doing they further destroy the American Dream, you can never be Rich. "The property of the Rich shall be not be secure!"

      Gee! I thought the Rich were Americans too! Simplify it, Progressives are going after All Americans! "You first!"

      • carole says:

        I love the rich and I care for the poor.
        Are you saying that BP should not of been held accountable for the losses?
        Foreign companies are at least giving americans a job yes probably taking home profits but at least they give an american a job unlike american companies!
        It the illegals who pay no tax, use our medical facilities and send home the money they make here that is a huge problem that is causing our debt and bringing down the american wage!
        Steal glass was a regulation put in place to avoid another meltdown on wall street clinton removed this regulation and we had a meltdown on wall street. Regulations are needed to keep the greed from taking over the common sense

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