President Obama took a corporate bribe last Friday, and in full view of the national press corps, which generally gave him a pass. The quid pro quo occurred during a visit to Nike headquarters in Beaverton, Oregon, a gleaming, modern complex built on the backs of Nike’s third-world industrial serfs.
The president chose Nike to promote legislation he favors — TPA fast track authority and an associated Trans-Pacific Partnership (TPP) free trade agreement. In return, Nike CEO Mark Parker revealed the bribe that brought the president to Beaverton: Nike might, if TPA and TPP were passed (and U.S. footwear tariffs were cut), create up to 10,000 jobs over the next 10 years in the United States. That works out to 1,000 jobs/year, or a tiny drop in the bucket of America’s 165 million-job economy.
The exchange of favors is unseemly, because the president essentially validated Nike’s highly criticized and dubious corporate outsourcing model, and for a mere pittance. In fact, Nike is a pioneering outsourcer, employing roughly one million foreign contract workers to assemble sneakers in often substandard factories. This fact has long been known and Nike has been attempting to defuse the situation for years. As recently as 2011, however, its Indonesian factories were the subject of controversy.
Nike has not assembled shoes in the U.S. since 1984, and its domestic workforce of 26,000 pales in comparison to 1 million foreign workers. Last year, Nike eliminated one-third of its remaining 13,922 American production workers. President Obama conveniently overlooked these issues, and even allowed his spokesman Josh Earnest to tell reporters they should watch for a Nike announcement. Bottom line: The White House approved the quid pro quo.
The president played fast with a lot of “facts” during his speech, absolving Nike by saying that the days of outsourcing are over since the “companies that only care about low wages, they’ve already moved…They’ve already outsourced.” If only it were so.
Ironically, Nike may be poised for its greatest outsourcing move yet, especially if Congress passes TPP. The NBA’s outfitting mega-sponsorship comes up for competition in 2017. With the U.S. sneaker market now reaching $25 billion, Nike could achieve higher sales with the NBA sponsorship, thus spurring even greater overseas production of the Air Jordan’s and other shoes that dominate the consumer arena.
President Obama happily shilled for Nike, predicting a wide rebirth of manufacturing in the United States, promising that “more Nike products would be made in the U.S.A…Outsourcing is already giving way to insourcing…This trade deal would help that.”
Sorry, Mr. President, we have to call you on this one. Insourcing is a trickle, not a trend. There may be anecdotal evidence to suggest the return of up to 70,000 jobs overall, but outsourcing has continued apace, and the U.S. is still down a net 5 million factory jobs since the year 2000.
Additionally, the president won’t address seriously currency manipulation, which continues to aid Japan’s and China’s massive trade surpluses with the U.S. Obama tried to sweep the currency issue under the rug by observing that “this has been a problem in the past.” The president said that, although there “was a time when China was pretty egregious about this…I started pounding on them…In real terms, their currency has appreciated about 30 percent since I came into office.”
The president’s victory claim is hollow: the Yuan’s 30 percent appreciation is widely regarded as insufficient. And China continues to run massive trade surpluses, particularly with the U.S., while holding a staggering and growing cache of foreign reserves. Both are prima facie evidence of currency manipulation, and Beijing continues to intervene in currency markets whenever a competitive devaluation is needed to give Chinese exports a boost.
This is the Obama era, however, when truth is whatever the president wants to tell us. No worries, though, since outsourcing is over and currency manipulation is a thing of the past. There are, however, those tricky little things called facts: Obama’s own Treasury Department issued a report last month highlighting continued currency wrongdoing by China, Japan, South Korea, and Taiwan. But better to ignore Treasury when talking up Nike.
Obama’s head-in-the-sand approach applies to labor problems as well, which the president assures us will be solved if the TPP is passed. He says that TPP has “strong, enforceable provisions for workers, preventing things like child labor.” Maybe, but in the opaque industrial slums of the developing world, who will actually monitor the working sites where shoes and shirts are sewn? Maybe we’re supposed to take Vietnam’s word that it’s now “OSHA-compliant,” despite years of abuses.
More likely, Team Obama will just put a positive spin on things — in the same way it did when it staged its glossy rally at Nike’s temple of corporate outsourcing.
Kevin L. Kearns is President of the U.S. Business & Industry Council (USBIC), a national business organization advocating for domestic U.S. manufacturers since 1933.