Obama's gambit

In his latest state of the union address US President Barrack Obama has returned to the old political bogey of outsourcing, which he had raised during his election campaign last time and a few times after becoming president.

He has revisited the theme now, when he is launching another campaign for presidency, and the emotive nature of the issue suits the electoral purpose well. In his address Obama was short on the achievements of three years of his presidency and long on what he wants to do in the remaining term and possibly in the next term which he hopes to win.

Politicians do not go back to failed promises like the one about closing down Guantanamo. But Obama is politically not in such a bad position as to need to give a thrust to his candidature with an issue where false patriotism and wrong economics combine.

The US economy has recovered much after the 2008 collapse but it will remain the most important campaign issue this year. Unemployment rate is above 8 per cent. The success of any economic policy will be tested on its ability to create jobs. Therefore, Obama is trying to sell a policy that discourages outsourcing as the panacea for America’s economic ills. He has proposed that US companies that outsource jobs should be denied tax benefits and those that create jobs should be rewarded.

But he glosses over the inconvenient truth that these companies will not be viable without outsourcing their jobs. They have gone out of the country because there are not enough qualified personnel available in the US and even when they are available they cost much more than elsewhere. A tax break will not reverse the economic logic.

Instead of tilting at the windmill of outsourcing what Obama should try to do is to create the necessary basis to develop human skill and talent within the US. This cannot be achieved in one presidency. Even the best US companies would not agree with Obama on the role of outsourcing in their working.

While the world is globalising, economies cannot be one-way streets. In fact many companies in other countries create jobs in the US too. India’s technology major HCL Technologies recently announced it would create 10,000 jobs in the US and Europe in the next five years. Protectionist sentiments and policies would ill serve the US economy.