Shipping Jobs Overseas

Issue Level: High, National

Issue: A factory closes in America. A factory opens in another country. Producing the same products. Owned by the same company. Why? Because the corporate executives are legally required to do what's in the best interest of the shareholders. That's bad.

Bad? Hasn't that been a key part of the financial engine of the American economy for generations? Yes it has, but best-interest-of-the-shareholder decisions didn't use to cause our jobs to move overseas because international shipping and communication used to be far more costly and far less reliable. As those factors have become inexpensive and reliable, the shareholder first/last/always perspective has led to a tremendous exodus of American jobs. When it means replacing a profitable factory if the executives think they can make larger profits by relocating, that's bad.

Is there anything we can do about it? You bet there is. And no, it's not trade wars to artifically raise the costs of international transporation and communication. It's much easier than that. The problem is that the shareholders aren't the only stakeholders, and the perspective of corporate excutives is distorted. The solution, I believe, is to balance that perspective.

Policy Proposal: Change the fiduciary responsibilities of corporate excutives to give equal weight to shareholders and employees.

Rationale: This change won't stop all American jobs from ending up in other countries, but it will protect many of them. When the needs of employees are given equal consideration to those of shareholders, an existing factory will be relocated only when that factory isn't sustainable at all where it is. Then it has has to be shut down, period. The company could, under those conditions, build a factory in another country, if that's feasible. But no factory would be ever again be relocated just to increase profits when that factory could be sustained where it is at marginal profits.