Don't Drive Good Jobs Abroad

By , Northwestern University in Evanston, Ill.

Globalization is no longer in the future. It's here. American industry is facing international competition on a scale never before experienced. And it's only going to get worse. The toughest competition will no longer come from Germany and Japan, but from new powerhouses: Asia, led by China, India, and Indonesia; and Latin America, led by a resurgent Mexico.

Governments of the developing world are aggressively wooing companies from the industrialized world to invest and locate their future manufacturing facilities there - with the promise of cheaper labor and with attractive tax and regulatory inducements.

President Clinton and Labor Secretary Robert Reich are calling on US industry to be better "corporate citizens." They are especially concerned, they say, about the effects of downsizing, job security, and benefits. They should also look at government policies and procedures that are driving good jobs abroad.

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They could begin with what is happening to one of America's most successful, most progressive, and best-paying industries, which is being driven abroad by policies these same politicians have put in place. I refer to America's gold-mining industry. Since the 1980s, a combination of private investment, new technologies, and enlightened management has made the US the world's second-largest gold producer, creating more than 80,000 high-paying, skilled jobs. It has poured billions into capital-equipment purchases from manufacturers in over 40 states.

The average weekly wage for production workers in this industry is more than 75 percent higher than the average for all private-sector employees. Safety standards, working conditions, and benefits are among the best in the world. The industry has tremendous growth potential. Mr. Clinton should be inviting its leaders to the White House as exemplars of good corporate citizenship and asking them, "How can we help you?"

Instead, in recent years the federal government has restricted expansion, discouraged investment, and placed other regulatory burdens on the industry, making it increasingly difficult to do business. Meanwhile, developing countries with huge gold reserves are offering major tax and regulatory incentives to US companies to export their technology and know-how. Since 1991, investment in exploration and mine develop- ment has steadily declined in the US while it has risen dramatically in South America, East Asia, and other regions.

Regulation alone is not the problem. More serious are the interminable delays involved in obtaining permits before work can even start. A new study shows that in most countries the necessary permits can be obtained within 12 months. In the US it takes up to 10 years. For a capital-intensive industry like mining, delays very soon become too costly.

World demand for gold is soaring. Yet a decade from now, if current government procedures aren't modified, the US share of free-market investment in the gold-mining industry will fall from 20 percent to less than 12 percent, with a loss of over 40,000 good jobs. After 20 years, there will be virtually no gold-mining activity left in this country.

On the other hand, with more intelligent regulation and oversight - while still maintaining rigorous vigilance over the environment - investment could rise 70 percent, production almost 50 percent, and the US could overtake South Africa as the world's leading gold producer over the next decade. This would mean tens of thousands more well-paid jobs and career opportunities, with excellent benefits, and billions of dollars in additional income for the US Treasury and state and local governments.

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