US Govt Condom Purchases Offshored to China: Obama’s Job Creation Deficit May Get 300 Jobs Worse

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wacky_condoms.jpgI’m not a protectionist type — but I do believe in smart industrial policy, national commitments to infrastructure, and the promotion of the American jobs base when tax dollars are involved – particularly during the greatest financial meltdown in generations.
And yet, U.S. AID funds — American taxpayer funds — that have purchased condoms under a long term contract from a US firm for distribution in Africa are now going to go to a Chinese manufacturer of condoms.
An estimated 300 American jobs may be lost by this offshoring of American government condom purchases.
Does it make any sense at all that during a time when American taxpayers are giving policymakers trust in spending trillions of dollars to kickstart the economy and to “create jobs” that a branch of that same said government is doing something now that is undermining the American jobs base?
I think not. This just isn’t smart policy — sort of like the AIG bonus kerfuffle.
I realize that there are efficiencies in going to China to produce stuff — and more condoms may mean more resources to send to those who need them in Africa, though many of these condoms are sold at nominal fees to help instill a market based appreciation for their importance.
But this is just the wrong time to be moving any productive capacity abroad, particularly when American taxpayer dollars are being used to finance the offshoring.
Leo Hindery, who served as a Member of the US Government’s Commission on Helping to Enhance the Livelihood of People Around the Globe (HELP Commission) and is one of the Democratic Party’s few CEOs who think in “stakeholder terms” about labor and business management, will have a piece out in The Nation this week focusing on the “jobs creation deficit” we have today. Hindery not only considers official unemployment but also the unofficial employed and partial employed work base — and makes a compelling case that we don’t need the several million jobs that Obama’s team is hoping to create — we need a plan to generate more than 20 million jobs.
Well, if this move of condom jobs to China goes through, add 300 more to the Obama jobs creation deficit.
— Steve Clemons

Comments

22 comments on “US Govt Condom Purchases Offshored to China: Obama’s Job Creation Deficit May Get 300 Jobs Worse

  1. questions says:

    Hey Bangzoom,
    Don’t forget that Darwin is a crock, and global climate change is nonsense, and people and dinosaurs walked the earth together (saw it at a local creationism museum where the REAL TRUTH is on display), and there’s this highway gonna be built from Mexico to Canada so that all teh autistic kids who got their autism from vaccines can ride in trucks driven by Mexican drug cartels and we can all spend Ameros at the…..
    Oh my. The Duesberg guy is fringe. Really really fringe. AIDS hits heterosexual non-drug using wives of bi-sexual men. There’s no “growing viewpoint,” there’s crazy conspiracy theory.

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  2. S Brennan says:

    Fortunately Steve,
    Your protectionist prayers have been heard over at Treasury.
    From Dean Baker:
    “can we explain the decision to require that the fund managers in their bank bailout plan must be headquartered in the United States…I can’t wait to see the outraged and condescending editorials in the Washington Post and elsewhere explaining how protectionism is not the way to promote jobs and growth.”
    But let’s remember, protectionism is only for upper echelon of society! “Let them eat cake” is still the policy for the unwashed masses….remember…some are more equal than others!
    BTW, Chinese condoms have been found to have 80% failure rates, so the cruelty of this decision is unconscionable.

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  3. Walt 'shauer says:

    John H.,
    Go to the next level, the story behind the story. Don’t be content with what the kneejerk alarmists tell you — they don’t understand science or economics. Anyone who suggests that rare earth magnets have a unique application in smart bombs is mired in the 1950s. Keep digging. Follow the science, not the political polemics…
    A start: http://en.wikipedia.org/wiki/Neodymium_magnet
    http://www.magneticsmagazine.com/images/Presentations/2007/Steve_Constantinides.pdf
    http://www.electronenergy.com/media/REM%20Workshop%20-PM%20Market%20in%20US.pdf
    It’s been fun.

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  4. JohnH says:

    Walt ‘shauer–“counterpunch” is a better source than anything you could come up with, (which was nothing.)
    I did my googling and came up with many citations like “counterpunch.” If you’re not making this stuff up, I’m sure you can find a credible source to support your case.
    Good luck!

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  5. bangzoom14 says:

    I like those little condoms.. cute.. colorful. And they are to be distributed in Africa? For what.. hmmm.. let me guess. To prevent the spread of AIDS. Isn’t that the “disease” that has not actually been proven to exist? According to the growing dissident viewpoint, HIV and AIDS have nothing to do with each other and it has never been proven that they did. It is not contagious and you don’t get AIDS from any sexual encounter. HIV is a harmless virus in the body. The condition known as AIDS is brought on by one’s own abuse of recreational drugs, prescription drugs and dangerous inhalents (poppers). All of these drugs severely lower the immune system. In addition, this was construed by the right wing back in the early 80’s as the republicans just won the white house and the moral majority was gaining power and steam. In contrast, the gay community in this country just came out of the seventies with a bright new spirit and confidence. And there you have the clash. The gay-hating right wing thought what better time to squash the gays and scare the hell out of them than with a brand new “disease” known as AIDS. And that they did. The dissidents go further on to explain that the deaths in Africa are brought on by very poor drinking water and poor dietary habits and not some “new disease”. This viewpoint has been popularized by Dr. Peter Duesberg from UCal Berkeley and supported by hundreds of doctors and scientists and well educated people around the world. Note: I am sorry that 300 jobs will be lost in the U.S. and condoms do prevent std’s. But this growing viewpoint seems too important to ignore. If this turns out to be true, this would be the scandal of the century.

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  6. Kevin says:

    “Well, if this move of condom jobs to China goes through, add 300 more to the Obama jobs creation deficit.”
    coughliarcough….
    OH its the OBAMA creation deficit now? cute. The repugs trash the place and its Obama who gets the blame.
    Let’s start adding up all the jobs saved and count them as “created”!

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  7. DavidT says:

    I am with the dissenters here. Steve, I believe, is right that the plight of the American worker should be front and center for the Obama Administration. However I think the best way to help the American worker is to make her more competitive and more able to contribute in areas that we have a competitive advantage — namely through better trained innovations rather than basic manufacturing (if I understand what jobs will be affected). We may get in small trade skirmishes, at the moment, for example, with Mexico. I can’t see how that’s in the interest of the American worker. The solution however is to make American business more competitive which is the opposite of what Steve suggests — by making our companies more competitive in the international market. For one, health care costs that overhang so many American businesses employing American workers argue for national health insurance that is not tied to businesses (which bear this burden that our competitors don’t). Sophisticated high tech training for those who have lost their jobs also makes more sense then protecting non-competitive businesses.
    I find it a bit peculiar that in foreign policy arenas Steve is a strong advocate of multilateralism and operating as though its not just our interests at stake but that our interests are often helped when we consider the interests of other actors. For reasons unknown to me he seems to feel differently in this case.
    In an earlier post Steve argues that Alexander Hamilton was a proponent of tariffs to protect American businesses while they developed. As someone whose probably most famous act enhancing this country’s credit was to trade the locating the country’s capitol in the South in exchange for the federal government taking on the debts of the states and revolutionary governments, even as this act benefited mostly speculators rather than the original recipients of this munificence, I suspect he too, today, would favor bolstering true American competitiveness over undermining its appearing to be open to free trade.

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  8. Walt 'shauer says:

    John H.,
    You’re really quoting “counterpunch” as a real source of info? Do a little googling beyond the alarmist blogosphere, or maybe actually look at some primary source stuff. It’s all there: neodymium magnets were introduced in 1984 and are ubiquitous now. The only neodymium source in the U.S. was a California mine that closed in 2003.
    Magnequench was started as a French/Japanese JV company in any case, so the notion that this was about a domestic company with domestic technology with purely domestic value is just local politics hyped to national politics. We all want to protect jobs, but the economy and technology are dynamic. Unfortunately, political sensibilities are not, and the public is easy prey to alarmism.

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  9. JohnH says:

    Walt ‘shauer–could you provide some further evidence that Magnequench’s products were nothing more than industrial magnets with zero strategic value?
    The stories I see on the web tell a different, scary story.
    http://www.counterpunch.org/stclair10252003.html

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  10. ... says:

    steve, i agree with you 100% here… from the article linked above ““Of course, we considered how many U.S. jobs would be affected by this move,” said a USAID official who spoke on the condition that he would not be named. But he said the reasons for the change included lower prices (2 cents versus more than 5 cents for U.S.-made condoms) and the fact that Congress dropped “buy American language” in a recent appropriations bill.”
    capitalism is all about getting something for the lowest price and perhaps recognizing after you have it the level of quality you got for your monies worth… capitalism is also about making the most amount of money…. at present the usa seems to be one big walmart outlet for chinese products… at some point americans are going to want to invest in themselves as opposed to always investing in walmart stuff that costs less…. i agree 100% with steve…

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  11. Dan Kervick says:

    I think I would be inclined to go with Steve if it weren’t for the underlying public health considerations here.
    If the American supplier is supplying the condoms for 5 cents per condom, and the Chinese supplier for 2 cents per condom, then it seems we can get 150% more condoms (and some corresponding number of fewer AIDS cases in Africa) for the same budgeted aid dollars. That seems more important.

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  12. Walt 'shauer says:

    JohnH,
    Ah, the old Magnequench nugget. Sorry, but what the company made was just industrial magnets, which are about as high-tech as condoms these days, the bulk of the market for which is in China (basic electronic equipment, hard drives and the like), and the sole commodity source for which is in China. This is one case where there was zero strategic rationale for propping up a company.
    As for condoms, I’d rather direct stimulus to jobs with a decided long-term competitive advantage. Any industry that needs a USG contract to bail it out (except genuine strategic industries) isn’t going to be around long, and we’re just delaying the inevitible with inevitably worse consequences.

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  13. dirk says:

    Given the quality problems of goods from China, I now look twice at labels to see where goods are made.
    In the past couple of years, we have seen defective drywall, high lead content in fake Halloween teeth, defective pharmaceuticals, infant formula, . . . the list is long.
    Having never been involved in condom mfg, I cannot imagine that it’s a highly labor-intensive proposition. And, if it’s not highly labor intensive, where are the savings?
    I have spent several weeks each year over the past several years interviewing business execs in Germany and Switzerland. They seem to think a lot more carefully about what mfg can be kept at home. They look carefully at the total cost of manufacturing an item (including shipping, import/export fees, pipeline inventory) and they overlay that with a real concern for local jobs, stating that a bit less profit helps the local community.
    I think some of outsource-to-china strategy is the result of universities teaching that maximizing profit is the only goal of a business. — This is changing somewhat, with a new focus on sustainability. WalMart, are you listening?
    —- In the meantime, guess I’d better check the “made-in” label for condoms!

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  14. dwg says:

    PoA – you always make my day! Thanks for being you.

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  15. PissedOffAmerican says:

    “There are issues far bigger than off shoring of condom procurement!”
    How come size always comes up when discussing condoms?

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  16. JohnH says:

    Gotta love this! A tempest about condoms!
    How about off shoring the manufacturing of critical parts for strategic missile systems to China? Well, it happened–years ago.
    http://www.americanchronicle.com/articles/view/8317
    There are issues far bigger than off shoring of condom procurement!

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  17. PissedOffAmerican says:

    Egads.
    You people are missing the larger point here. Except sdemetri, of course.
    As a long time complainer about the shitty quality of Chinese hardware, I can definitely recommend strongly against the use of Chinese condoms.
    Avoid them at all costs, I have it on good authority that if you use them, your rigging will fall off within 48 hrs.

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  18. sdemetri says:

    Condoms from China…?
    Now that I am unemployed I have been catching up on some home
    projects in between making calls and looking for work. I recently
    bought a $10/100 box of brass screws for something, made in
    China and sold at Home Depot, and have thrown out nearly half of
    them. The heads are stripping as soon as any torque is put to them,
    and a couple have sheared clean off leaving the shaft deeply buried
    in the piece I am working on. Market efficiencies notwithstanding
    this does not bode well for those relying on condom use in Africa.
    Might it have been a Chinese brand the Pope was talking about
    when he said condoms exacerbate the HIV/AIDS problem in Africa?

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  19. David says:

    As someone who has worked implementing USAID contracts and spent agonizing months seeking waivers from America’s tied aid policies for strategic foreign assistance programs, I must say that you are profoundly off-base picking this story for a bit of populist protectionism. Tied aid not only wastes the resources that the U.S. spends on developing countries, it dramatically inhibits the effectiveness of our foreign policy. And it serves as extremely poor precedent as the debate gets going about the exponentially greater issue of defense appropriations.
    A long-term contract to obtain condoms from the most economically efficient producer (in this case, China) will mean vast savings in both money and time for vital programs at USAID and Pepfar. This literally could save lives.

    Reply

  20. rich says:

    Good question: “Now that you’re having trade relations, Prznt. Obama, you are using protection? Aren’t you?”
    I was struck by how fast EU countries demanded –not asked, demanded — a piece of the stimulus bill contracts. They behaved as though they came first as a matter of right. And rhetorically, they shouldered aside the primary objective of getting the American economy back on its feet.
    I’d argue that a little bit of globalization is a good thing, but that like any ideology, lockstep adherence and blind obedience is always damaging to the ostensible values. ‘Free trade’ is pushed because somebody’s gittin’ something, and it aint’ you or me.
    I’m all for fair competition and efficient production.
    But in this case the EU’s demands to be first in line clearly parasitizes the American economy, rather than fix it. The more stimulus contracts that are awarded overseas, the fewer Americans have jobs and the slower the American economy recovers — the less likely EU & others are likely to see a return on investment or their own economies recover.
    The EU stance is not designed to get the American economy up and running as fast as possible.
    Putting American businesses second in stimulus contracts is patently counterproductive. And it turns the American nation into carrion others feed off of, rather than a nation & system with a primary purpose or end of our own.
    I’m happy to have trade and competition; but the corollary is there is no trump card to the interests, workforce and economy of the American nation. Else, what is our reciprocal interest? And where is the return flow for our participation? A global system that requires us to put American businesses second, at the expense of the American economy no less, is wholly untenable.
    If we don’t ‘got protection’; we need some.
    Amazed, though, at the chutzpah, self-interest and corrosive behavior of the EU guy (German banker I think) interviewed on the NewsHour. With the free trade dogma discredited as ideology, he went all Marie Antoinette on American a$$, and demanded more cake. Yikes.
    Totally Unacceptable.

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  21. Steve Clemons says:

    Sorry Kelly — I disagree. When you have a depression-tilting recession at hand and you are using US taxpayer money for a LONG TERM US contract that has been in place — you delay your offshoring decision until the American economy has the vibrancy to generate easily the jobs you are moving abroad. These are different, difficult times — and the idea that you are undoing a long term contract, funded by tax dollars, during this type of huge collapse of jobs, confidence, and consumption in the US — is not good policy.
    All best, steve

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  22. Kelly Young says:

    Sorry, Steve, you’ve got this completely backwards. U.S. taxpayers pay their taxes for services, such as these condoms (whether one thinks condoms wise use of taxpayer funds is another question), not in order to protect jobs that can be done more efficiently elsewhere. Otherwise, we’d all adopt “smart” industrial policies that amounted to trading with no one but our own families. After all, why would I want to buy groceries from Safeway when I could ask my brother to supply my groceries? Wouldn’t that help him? In fact, if your argument worked, each of us would be better off by never trading with anyone at all. Can that be true? No, and the answer is comparative advantage. That fundamental principle of economics is why each of us doesn’t live autarkically like some man trapped on a desert island, and it’s why closed societies always trail behind those that open their borders to goods, services, and labor.

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