Corporations Do Not Exist to Create Jobs

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Friday, 26 August 2011 05:08

In an article discussing three trade agreements being debated by Congress, the NYT told readers:

"under the agreements, American service providers would be able to compete in the three countries, ostensibly adding new jobs to the American economy. Because of this, they are widely supported by the U.S. Chamber of Commerce and other business trade groups."

This is wrong, wrong, and wrong. Corporations do not exist to create jobs, nor do they claim this as a goal. Invariably, corporate CEOs will say that their responsibility is to produce returns for shareholders, as they announce large layoffs. If the Chamber of Commerce is supporting these deals it is because it believes that they will increase profits, end of story.

The piece also bizarrely tells readers that the deals are projected to expand exports by $12 billion without mentioning how much it is expected to increase imports. This is like reporting a baseball score by telling us how many runs the Yankees got and not mentioning how many runs their opponents got.

It is net exports, the difference between exports and imports, that creates jobs. If the GM relocates an assembly plant from Texas to Mexico, the export of car parts from the United States is not adding jobs. Any reporter should know this and never print an export projection without including the corresponding import projection.

The piece also wrongly refers to the deals as "free-trade agreements." This is just a term that proponents use to make them sound more appealing. In fact, the deals will increase many forms of protectionism, most notably by imposing stronger patent and copyright protections on the three countries in these deals. A neutral report would just use refer to the deals as "trade agreements."