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When Should Government Intervene?

These days it’s hard to go anywhere without hearing people say that the government should step in and do something about the offshoring trend — that hemorrhaging of service sector (and, increasingly, of white collar) jobs from the United States to developing nations, mostly in Asia. Some folks are calling for regulations on corporations as to which jobs — or how many — may be sent overseas. Others call for simple rules mandating that companies at least disclose to customers when service is provided by representatives overseas.

These days it’s hard to go anywhere without hearing people say that the government should step in and do something about the offshoring trend — that hemorrhaging of service sector (and, increasingly, of white collar) jobs from the United States to developing nations, mostly in Asia. Some folks are calling for regulations on corporations as to which jobs — or how many — may be sent overseas. Others call for simple rules mandating that companies at least disclose to customers when service is provided by representatives overseas. Even the Democratic presidential contenders are talking up the offshoring issue in their debates and stump speeches. (Check out our April cover story by Jennifer Reingold for FC’s take on the offshoring trend.)

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So far, though, the federal government has remained hands off — no pending legislation, no speeches from the White House — preferring to stick close to a doctrine of free trade and free markets.

I was surprised, then, to see this item in today’s New York Times, which describes recent letters from the Treasury Department to several U.S. publishing companies, which “warned publishers they may face grave legal consequences for editing manuscripts from Iran and other disfavored nations, on the ground that such tinkering amounts to trading with the enemy.”

Treasury is arguing that to edit manuscripts from Iran is tantamount to providing “services” which are controlled under the rules of the trade embargo. And though these letters named only Iran specifically, the Times reports that publishers are assuming the directives affect other embargoed nations, too: Cuba, North Korea, and Libya. Punishment for breaking the embargo include fines starting at several hundred thousand dollars and up to 10 years in jail.

To me, this seems the worst kind of government intervention. Why regulate editors dealing in free speech, but not CEOs who incorporate in Bermuda to avoid taxes, or those who slash tens of thousands of jobs here in favor of sending them offshore? Not only does this move hurt rather than help a struggling American industry — the book publishing business — but it works counter to American interests: to give voice to citizens within controlled societies and disseminate their ideas around the world for all to hear.

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