OK, I know protectionism is bad, but do we really need Geithner working against US workers?
This is from Thursday's Financial Times:
The US government has vowed not to harm India’s IT outsourcing sector as it battles to create jobs at home in the worst labour market since the Great Depression of the 1930s. Tim Geithner, US Treasury secretary, said during a two-day visit to India that protectionist measures to prevent jobs from migrating outside the country would do more harm to the US than good.
“We are not going to go down that path,” promised Mr Geithner. “We know that it would make us weaker, not stronger.”
He also said that the administration of Barack Obama, president, would not seek to curb the investments of US companies overseas as “our fortunes are tied with the world”. There have been proposals to trim the tax privileges of US companies that operate internationally.
“American companies are long in the world,” Mr Geithner told Indian business leaders at a discussion hosted by the Confederation of Indian Industry.
“They are good at what much of the world needs. A huge part of the basic economic challenge we face is to give stronger in- centive for private investment, help support innovation and try to make sure there is more investment and stronger exports globally.”
Mr Geithner said Mr Obama was “deeply committed” to trying to build a consensus among Americans for more open trade to support the recovery.
“We have got the worst labour market since the Great Depression,” the Treasury secretary said. “Most Americans are still going through an incredibly difficult economic series of challenges and yet we’ve been very successful in working to keep our markets open under all that pressure.”
IT outsourcing, which is heavily dependent on business from the US, is one of India’s flagship economic sectors. Companies such as Tata Consultancy Services, Infosys and Genpact helped propel the economy to growth rates of 9 per cent before the global financial crisis and was responsible for creating 45 per cent of new jobs over the past 10 years.
Last year the global IT outsourcing market was estimated to be worth as much as $250bn (€187bn, £164bn).
“Some of the sounds coming out of the US have caused concerns here,” said Tarun Das, the president of the Aspen Institute in India. Local businesses were wondering whether “the authors of globalisation are turning to protectionism”.
Senior policymakers say that the Indian economy is fast becoming more export-oriented and more vulnerable to protectionist action by other large economies.
“If we want to get to 9-10 per cent growth it’s in our interest that the US should get back to growing as soon as possible,” said Montek Singh Ahluwalia, deputy chairman of India’s powerful planning commission.
“It’s also [important] that [the] market remain open.”