Outsourcing Still Isn't Wrong

A blog about business and economics.
July 20 2012 10:37 AM

Outsourcing Still Isn't Wrong: Mitt Romney and the Asian Electronics Supply Chain Edition

Republican presidential candidate, former Massachusetts Gov. Mitt Romney
Republican presidential candidate, former Massachusetts Gov. Mitt Romney

Photograph by J.D. Pooley/Getty Images.

I wrote earlier this week that one of the main problems with the leveraged buyout industry is its tendency to earn profits through breach of trust that undermines the long-term social basis of a complicated and prosperous market economy. But with a new investigative feature designed to bolster the xenophobic case against Mitt Romney, David Corn and Nick Baumann remind us that some of Romney's fortune was legitimately assembled through savvy investments:

In March 1999, shortly after Romney left Bain to take over the troubled Winter Olympics in Salt Lake City, Brookside Capital Investors Inc., a Bain-related entity wholly owned by Romney, filed a report with the Securities and Exchange Commission that listed dozens of companies in which Brookside held a stake the previous quarter. The roster included investments in Singapore-based Flextronics International ($13 million) and Florida-headquartered Jabil Circuit Inc. ($41 million), two companies that were leaders in the fast-growing field of outsourcing electronics manufacturing and offshoring production to low-wage countries. Together, these two investments represented almost 10 percent of Brookside's $559 million portfolio.
For much of the 1990s, most overseas outsourcing involved unsophisticated products like apparel. But in the second half of that decade, US high-tech companies producing computers, telecommunications equipment, and other electronics began contracting out their manufacturing to firms that had established production facilities both in the United States and in overseas locales where labor was cheap.
Advertisement

This is, I guess, supposed to be damning news about how Romney hates America or something. But in the real world the development of the Asian electronics supply chain has been a great thing. Obviously Romney didn't play his small role in it in order to help impoverished Chinese people get better jobs, but it has helped impoverished Chinese people get better jobs. And the Asian electronics supply chain has  brought Americans lots of consumer surplus in the form of affordable magic gizmos. What's more, the existence of a mass market for those gizmos has created new horizons of economic opportunity as people earn a living developing smartphone apps or doing the old-fashioned blue collar work of physically installing mobile broadband technology.

Given the political unpopularity of this kind of pro-outsourcing sentiment, it may well have been an error for the party of business to have nominated a practical businessman. But I really do think Team Rommey would be better off trying to mount a frontal defense of offshoring and trade rather than trying to argue paperwork and evade responsibility. Otherwise they're going to keep getting hit with a random drip-drip-drip of "accusations" of having been involved in sensible and moderately useful business investments.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Politics

Talking White

Black people’s disdain for “proper English” and academic achievement is a myth.

Hong Kong’s Protesters Are Ridiculously Polite. That’s What Scares Beijing So Much.

The One Fact About Ebola That Should Calm You: It Spreads Slowly

Operation Backbone

How White Boy Rick, a legendary Detroit cocaine dealer, helped the FBI uncover brazen police corruption.

A Jaw-Dropping Political Ad Aimed at Young Women, Apparently

The XX Factor
Oct. 1 2014 4:05 PM Today in GOP Outreach to Women: You Broads Like Wedding Dresses, Right?
Music

How Even an Old Hipster Can Age Gracefully

On their new albums, Leonard Cohen, Robert Plant, and Loudon Wainwright III show three ways.

How Tattoo Parlors Became the Barber Shops of Hipster Neighborhoods

This Gargantuan Wind Farm in Wyoming Would Be the Hoover Dam of the 21st Century

Moneybox
Oct. 1 2014 8:34 AM This Gargantuan Wind Farm in Wyoming Would Be the Hoover Dam of the 21st Century To undertake a massively ambitious energy project, you don’t need the government anymore.
  News & Politics
Politics
Oct. 1 2014 7:26 PM Talking White Black people’s disdain for “proper English” and academic achievement is a myth.
  Business
Moneybox
Oct. 2 2014 8:07 AM The Dark Side of Techtopia
  Life
Quora
Oct. 2 2014 8:27 AM How Do Teachers Kill the Joy of Reading for Students?
  Double X
The XX Factor
Oct. 1 2014 5:11 PM Celebrity Feminist Identification Has Reached Peak Meaninglessness
  Slate Plus
Behind the Scenes
Oct. 1 2014 3:24 PM Revelry (and Business) at Mohonk Photos and highlights from Slate’s annual retreat.
  Arts
Brow Beat
Oct. 1 2014 9:39 PM Tom Cruise Dies Over and Over Again in This Edge of Tomorrow Supercut
  Technology
Future Tense
Oct. 1 2014 6:59 PM EU’s Next Digital Commissioner Thinks Keeping Nude Celeb Photos in the Cloud Is “Stupid”
  Health & Science
Bad Astronomy
Oct. 2 2014 7:30 AM What Put the Man in the Moon in the Moon?
  Sports
Sports Nut
Oct. 1 2014 5:19 PM Bunt-a-Palooza! How bad was the Kansas City Royals’ bunt-all-the-time strategy in the American League wild-card game?