The Real Benedict Arnolds

by | Mar 16, 2004 | POLITICS

Sen. John Kerry is fond of calling CEOs who employ foreigners “Benedict Arnolds,” after the despicable Revolutionary War turncoat. But look at H.J. Heinz & Co., the family business of Kerry and his wife Teresa. Of the 79 factories that the food-processor owns, 57 (a felicitous number!) are overseas. According to its website, Heinz is […]

Sen. John Kerry is fond of calling CEOs who employ foreigners “Benedict Arnolds,” after the despicable Revolutionary War turncoat.

But look at H.J. Heinz & Co., the family business of Kerry and his wife Teresa. Of the 79 factories that the food-processor owns, 57 (a felicitous number!) are overseas. According to its website, Heinz is making ketchup, pizza crust, baby cereal and other edibles in such countries as Poland, Venezuela, Botswana, China, Thailand and India.

Put hypocrisy aside. The traitors to American interests aren’t CEOs seeking to boost profits that ultimately lead to more hiring at home. The real Benedict Arnolds are Kerry and his colleagues in Congress, like Sens. Hillary Clinton (D-NY) and Jon Corzine (D-NJ), who understand enough economics to know that outsourcing is trade and that trade — as David Ricardo figured out 200 years ago and as Hillary’s husband articulated in the 1990s — benefits both parties.

Imagine if U.S. computer companies were forced to make all their components at home. The cost of computers would be higher, so U.S. business could not enhance productivity, grow and hire workers. Plus, U.S. computer makers would be priced out of the market and forced to fire workers.

So far, legislation backed by Clinton, Corzine and the rest has been fairly benign. But they have fanned the flames of protectionist anger, and the fire is raging out of control. One result could be a reversal of the global movement toward open trade, which has been a boon to America.

This is a good time to remember the 1930 Smoot-Hawley Act, which touched off a tariff war that cut global trade by more than two-thirds in five years. Smoot-Hawley, in the view of many economists, intensified and prolonged — and perhaps even caused — the Great Depression.

But there’s a more immediate way that the outsourcing hysteria hurts American interests: It is antagonizing India, one of our most important allies.

Indians are angry and bewildered by what’s happening here. India had been the world’s most prominent example of autarky, a backward policy of protectionism. Partly because of pressure from the United States — and partly from observing the economic success of smaller countries like Singapore and South Korea — India has eased that policy in recent years.

Imports and exports have soared, and India’s growth rate has doubled to 8 percent. The world’s largest democracy, with a population of one billion, is getting more prosperous, creating what could ultimately become the best market in the world for American goods and services.

Meanwhile, India has been critical to American foreign policy. The war against terror forced us to lavish aid on India’s arch-rival, Pakistan, and a nuclear war between the two countries over disputed Kashmir seemed possible. But peace is now closer, and despite provocations, India has proven a steadfast ally.

Now, many Indians feel they are the scapegoats for America’s cyclical economic downturn in what they see as a racist campaign. Isn’t this the way trade works? “On the one hand you talk about opening up our markets. On the other, you want to ban

Ambassador Glassman has had a long career in media. He was host of three weekly public-affairs programs, editor-in-chief and co-owner of Roll Call, the congressional newspaper, and publisher of the Atlantic Monthly and the New Republic. For 11 years, he was both an investment and op-ed columnist for the Washington Post.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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