The Good, the Bad & the Ugly
BusinessWeek on how outsourcing benefits the economy; Lou Dobbs takes erroneous outrage on the road; CNN on Hollywood stars vs. Wall Street execs.

Jan. 25, 2006

     Two of our award winners this week, BusinessWeek and Lou Dobbs, earned their places in this column by their reporting, or misreporting in Dobbs’s case, on the impact of free trade policies. The former devoted a special report in its January 30 edition to the positive impact of outsourcing, while the latter outsourced his protectionist populism to ABC’s “Good Morning America.” Andy Serwer of Fortune magazine rounds out the field with his ugly one-sided slam at corporate executives’ salaries.

The Good
     “Many executives are discovering offshoring is really about corporate growth, making better use of skilled U.S. staff, and even job creation in the U.S., not just cheap wages abroad,” writes BusinessWeek’s Pete Engardio in a special report in the January 30 magazine. “True, the labor savings from global sourcing can still be substantial,” Engardio adds, “But it’s peanuts compared to the enormous gains in efficiency, productivity, quality, and revenues that can be achieved by fully leveraging offshore talent.” For presenting the benefits of free trade and globalization, BusinessWeek earns “The Good” award this week.

The Bad
     Speaking of outsourcing, CNN’s Lou Dobbs exported his error-prone anti-free market services to a competing network with a January 23 guest appearance on ABC’s “Good Morning America.” The business anchor blamed free trade policies for the rise of foreign motor companies in the United States, which he said “exploit” the law by locating in right-to-work states to avoid union labor. In point of fact, however, Honda and Toyota, two of the largest Japanese companies with plants in the United States, produce most of their U.S.-purchased vehicles and engines in labor-friendly states like California and Ohio and have other facilities in non-right-to-work states like Colorado and Michigan.

The Ugly
     Fortune magazine’s Andy Serwer unloaded an unbalanced “debate” over pay for corporate executives in a news package for the January 19 edition of CNN's “American Morning.” Arbitrarily deciding that Hollywood stars like Julia Roberts “earn” their millions while Wall Street stars like Jack Welch are overpaid, Serwer insulted the intelligence of his viewers while throwing aside his objectivity and ignoring the concept of “economic rent,” a principle taught in Econ 101. The truth is whether it’s Julia Roberts, Jack Welch, or Andy Serwer, those individuals command high pay in their respective industries not just for the quality of their labor but the uniqueness of their talent. It’s a notion economists refer to as “economic rent,” but the CNN business contributor derided it as “getting paid for a pulse.”

The Good, the Bad & the Ugly tracks the best and worst media coverage of business and economics. Readers are invited to submit suggestions or news tips to staff writer Ken Shepherd at kshepherd@mediaresearch.org.