Obama and Outsourcing


Barack Obama promised to run a different campaign for the United States’ presidency. Defiantly inclusive, he wanted to avoid “negative” campaigning and to draw together this divided country around his positive image. Thrown into the national limelight after his remarkable speech at the Democratic National Convention in 2004, Obama became the standard-bearer for a new politics. “Do we participate in a politics of cynicism,” he asked, “or do we participate in a politics of hope?” Then, he let loose with a flourish, “I’m not talking about blind optimism here – the almost wilful ignorance that thinks unemployment will go away if we just don’t think about it, or the health care crisis will solve itself if we just ignore it. That’s not what I’m talking about. I’m talking about something more substantial. It’s the hope of slaves sitting around a fire singing freedom songs; the hope of immigrants setting out for distant shores… . Hope – hope in the face of difficulty. Hope in the face of uncertainty. The audacity of hope!” In keeping with his first name, Barack Obama was a breath of life in a political landscape torn between cynicism and ruthlessness.

When Obama decided to run for the presidency after his short stint as the Democratic Senator from Illinois, his candidacy was welcomed across the country. Running against the putative front runner, Senator Hillary Clinton (New York), he was at a disadvantage. Hillary Clinton, with her name recognition and her Rolodex from the White House years, not only had political capital to collect but also had better access to money than any other candidate running on either party ticket. In 2000, Hillary Clinton raised about $30 million in her victorious campaign against first Rudy Giuliani and then Rick Lazio (they raised a total of $60 million).

Six years later, with minimal opposition for her re-election campaign, Hillary Clinton pulled in $50 million but only spent $37 million. The remainder will go towards her presidential run. But Obama surprised Hillary Clinton with his popularity among voters and with his ability to raise money. By mid-June, both have raised about the same amount (about $26 million). Since money is the lubricant of today’s “democratic” politics, the person who raises more money with the least amount of controversy is declared by the media to be the front runner and is thereby able to ride a kind of artificial momentum to the elections.

The public recognises that money has corrupted politics. A Washington Post poll found that 66 per cent of the public supports restrictions on the way that political candidates raise money, and a plurality of the population feels that the process is now corrupted by big business. Campaign finance laws make it to the floor of the Senate and the House, but the elected officials water them down. As veteran consultant Joe Trippi put it, the campaign finance situation “is kind of like the nuclear arms race. No one’s willing to unilaterally disarm.” A cynical attitude has taken hold, where these same political candidates argue that donations are a form of free speech and any attempt to regulate campaign finance is a restriction on these fundamental freedoms. Money then is a form of speech.

The money for the US elections comes, largely, from corporations whose interests are in finance, insurance and real estate (so-called FIRE); pharmaceuticals; media; and retail sales (such as Wal-Mart). These are the beneficiaries of globalisation and neoliberal polices, which tend to favour transnational corporations more than the benighted citizens of bounded nation states. Given this structure, it is virtually impossible for a serious candidate for elected office in the US to be critical of globalisation and neoliberalism. The most they can offer are gentle suggestions about the dangers or the immorality of inequality (as John Edwards has been trying to do). A frontal critique of the power of transnational corporations eclipses the candidate from money, which means marginal media attention (the fate of Ralph Nader in 2000 and 2004).


“Off-the-record” memo

In early June, the Obama campaign circulated an “off-the-record” memorandum to journalists entitled “Hillary Clinton (D-Punjab)’s Personal Financial and Political Ties”. The joke, Democrat-Punjab, comes from a remark made by Senator Clinton at a March 2006 fundraiser hosted by Dr. Rajwant Singh in Maryland. “I can certainly run for the Senate seat in Punjab and win easily,” she said, after Singh introduced her as the Senator not only from New York but also from Punjab (Singh is the National Chairman of the Sikh Council on Religion and Education, SCORE). The joke was tasteless in its first instance, and it remained offensive when it appeared in the Obama memo. Obama hastily distanced himself from the memo, which he called “stupid and caustic”. This is the third time in a few months that Obama has had to put daylight between himself and his staff, a poor indication of his control over his campaign.

Obama’s apology is credible to Sudhir Venkatesh, a professor of sociology and African American studies at Columbia University. When in graduate school at the University of Chicago, Chennai-born and US-raised Venkatesh was on a basketball team with Obama (who was then a charismatic young law professor and State Senator). Venkatesh interviewed Obama for his work on the public housing projects that bordered the university. “I was struck by how well Obama listens,” Venkatesh told me. Obama is “fair-minded”, he said, so “you can imagine how surprised I was when his team of professional consultants came up with this vile depiction of Indians and their relationship with the US. My first thought was Obama would never approve this. My second thought was his campaign is getting away from him, and he better do something”.

The race to the White House is always dirty, regardless of the high-minded statements made by candidates. “Negative” campaigning is more the norm than the exception. In 2000, George W. Bush conducted a whisper campaign that John McCain’s daughter (adopted from Bangladesh) is a “black child”. This sort of racism is commonplace in American politics. The professional campaign staff that go from one election cycle to another are well schooled in “spin” (media manipulation). These consultants are so numerous that they have their own national organisation (American Association of Political Consultants) and their own magazine (Campaigns & Elections). In the 2003-04 election cycle, 600 political consultants earned more than $1.85 billion. “Dirty” politics is their bread and butter.

The memo attempted to raise the issue of Senator Clinton’s passionate defence of outsourcing. In 2005, while on a trip to India, Hillary Clinton told a meeting of industrialists: “There is no way to legislate against reality. Outsourcing will continue.” By her estimates, the US exported $5 billion in merchandise to India, and India exported $13.8 billion to the US. (The World Trade Organisation cites far lower figures for Indian exports, somewhere closer to half this figure.)

This unevenness does not sit well in the US. “I have to be frank,” she told the business leaders, “people in my country are losing their jobs and US policymakers need to address this issue.” Her suggestion was that “Indian companies should invest more in the US to create a balance in trade relations”. The showcase for this is a small office opened by Tata Consultancy Services in Buffalo, New York. But Senator Clinton is not alone in her defence of outsourcing. The Democratic Party is broadly committed to outsourcing, although with a caveat: it does not “believe in tax giveaways that reward companies for moving American jobs overseas”. But it will not do anything to halt the haemorrhaging of jobs.

Indian American groups such as the US India Political Action Committee (USINPAC) hastily protested the memo. USINPAC’s Sanjay Puri wrote the Senator a tepid letter, which said: “We are concerned about media reports indicating your staff may be engaging in the worst kind of anti-Indian American stereotyping.” A group called South Asians for Obama (SAFO) wrote the Senator a note saying that they were disturbed “by the clear anti-Indian sentiment” in the memo, and in a conference call with them and other Indian Americans, Obama’s campaign manager David Plouffe apologised. “Make no mistake,” Dave Kumar of SAFO told me, “we were very disappointed when we first saw the memo. However, the campaign manager and the Senator’s personal response over the last couple of days have made it clear that the memo does not reflect the Senator’s views.” His statement to SAFO, Kumar continued, “makes it clear that he takes responsibility for the memo, understands the hurt it caused the Indian American community, and is taking steps to prevent such mistakes from occurring in the future”.

Not being a think tank itself, SAFO deferred to the candidate on questions of outsourcing. But USINPAC has a clear position in favour of outsourcing, despite the way outsourcing has worked to strengthen corporate power over workers’ rights both in the US and in India. In its summary note on Hillary Clinton, whom USINPAC appears to favour, the lobbying group writes approvingly: “Even though she was against outsourcing at the beginning of her political career, she has since changed her position and now maintains that offshoring brings as much economic value to the United States as to the country where services are outsourced, especially India.” USINPAC was predisposed to take even a non-offensive criticism of outsourcing adversely.

Obama is on the progressive end of the Democratic Party, in that he is both for free trade and fair trade, for free trade agreements (as with Oman in 2006) and against free trade agreements (as with Central America in 2005), for globalisation and for job creation in the US. This ambivalence is the best there is inside the Democratic Party, where the bosses are averse to anyone who crosses the major donors.

With no precise alternatives to offer on globalisation’s impact on the US working class, the Democratic Party’s base, the Obama campaign resorted to a politics of despair and distortion. “Workers who have been laid off in upstate New York might not think that her recent joke that she could be elected to the Senate seat in Punjab is that funny.” What is sadly humorous is that the Obama campaign did not go after Hillary Clinton’s far more substantial vulnerability: she is a subsidiary of oil companies, pharmaceutical firms and defence contractors, not to speak of trial lawyers and media conglomerates. Obama’s campaign is as prone to these interests as Hillary Clinton’s. Instead of putting those social forces that produce job loss in their sights, Obama’s campaign went after one small subset of donors, Indians. Obama recognised this problem: “The issue of outsourcing is a genuine and important issue but to refer to one country was, I think, an error.” More than error, it was lack of judgment from someone who is very aware of the way racism functions in US society.

Unmade in America

The US Commerce Department spent $335,000 in 2003-04 on what was considered a comprehensive study on the impact of high-tech job loss in the US. Required to release the 360-page report in July 2004, the Bush administration stalled. Instead, in September 2005, it produced a tepid 12-page summary that championed job loss as a gain for the US economy. A fight in Congress eventually brought this document into the public domain although newspapers have failed to give it the attention it deserves.

The study shows that the attrition of jobs in the high-tech sector is quite serious for those who live within the US. Between 2000 and 2003, the number of engineers employed in the US dropped by 4,000, while those hired by US semiconductor firms offshore increased by 10,000. “As leading companies locate in or contract with labour in other countries,” the report argues, “concerns about the shift of work include fears that higher value work may shift from the United States to other locations, impacting US industrial strength and high-salary employment… . Offshoring of design work can also impose downward pressure on US wages and reduce the demand for US design engineers. As the number of overseas design centres increases, it may draw foreign talent from the United States.”

Princeton economist Alan Blinder’s “Offshoring: The New Industrial Revolution?” (Foreign Affairs, March/April 2006) explores the extent of the problem. “We have so far barely seen the tip of the offshoring iceberg,” he writes, “the eventual dimensions of which may be staggering.” In our time, manufacturing jobs have been exported out of the US at an alarming rate for workers, while service jobs have only begun to disappear. “The fraction of service jobs in the United States and other rich countries that can potentially be moved offshore is certain to rise as technology improves and as countries such as China and India continue to modernise, prosper, and educate their work forces. Eventually, the number of service-sector jobs that will be vulnerable to competition from abroad will likely exceed the total number of manufacturing jobs. Thus, coping with foreign competition, currently a concern for only a minority of workers in rich countries, will become a major concern for many more.”

Blinder is right about what outsourcing is doing to the capacity of US job creation, but he exaggerates its benefits to India. In India, the information technology sector, for instance, is an enclave that employs just about less than a million workers. This is hardly civilisation-changing, even if the media hype tries to make it so (Planet India, India Inc.).

No American politician has shown leadership on the issue of globalisation and outsourcing. To do so would mean that they must challenge the power of global financial firms, many of whom are their biggest campaign financiers. Instead of going after the real issues, there is a temptation either to resort to fear-mongering about particular peoples (China or India) or to obfuscate the matter by triangulation (being in favour of both fair and free trade). Obama’s misstep is an indication of the paucity of debate about an issue that is central to the fears of a neglected element in US electioneering: the electorate.

VIJAY PRASHAD is the George and Martha Kellner Chair of South Asian History and Director of International Studies at Trinity College, Hartford, CT His new book is The Darker Nations: A People’s History of the Third World, New York: The New Press, 2007. He can be reached at: vijay.prashad@trincoll.edu




Vijay Prashad’s most recent book (with Noam Chomsky) is The Withdrawal: Iraq, Libya, Afghanistan and the Fragility of US Power (New Press, August 2022).