Is Global Outsourcing Justifiable Despite Domestic Job Losses?

[wasteofo2]

I think it's pretty obvious that from now until global wages are competed to relatively equal positions, that jobs will continuously be outsourced from currently rich nations to currently poor nations. With this, it seems pretty obvious that the western world will have to live with a decreased standard of living during this whole re-adjustment period when India and China are building up their economies.

Lots of people in the USA have been calling for protective measures to stop American jobs from going overseas.

I think this is really selfish. Maybe it's because I'm not really nationalistic or anything, but when you look at the immense good the outsourcing of "American jobs" has done for China and India (along with all the other smaller nations that the west is outsourcing to), I think that the negative consequences America has suffered and will suffer are more than justified. Wages will be depressed in the USA, and unemployment will likely rise, but well over 1/3 of the world is being elevated to unprecedented levels of economic prosperity. That's more than worth it to me.

It seems to me that everyone who wants these protectionist measures is really just ego-centric and doesn't even care about all the good it's doing throughout the world.

So should governments take steps to keep domestic jobs at home, or is free-trade a justifiable position for governments to have?

 

[Smasherman]

Outsourcing very effectively makes the super-rich richer (since they own the companies outsourcing), the very poor richer (third-world), and the wealthy poorer (USA). My beef with outsourcing is that more wealth goes to the top than anywhere else. Now, if we outsourced with a more restricted method, I'd be happy (ie, the rich don't get richer).

Oh, also outsourcing bypasses environmental protections, which hurts everyone.

(note: sorry if my logic is wrong, but I've got a movie to go to really soon, so this is off the top of my head)

edit: Outsourcing should be allowed if regulated.

 

[wasteofo2]

Outsourcing very effectively makes the super-rich richer (since they own the companies outsourcing), the very poor richer (third-world), and the wealthy poorer (USA). My beef with outsourcing is that more wealth goes to the top than anywhere else. Now, if we outsourced with a more restricted method, I'd be happy (ie, the rich don't get richer).

Oh, also outsourcing bypasses environmental protections, which hurts everyone.

(note: sorry if my logic is wrong, but I've got a movie to go to really soon, so this is off the top of my head)

edit: Outsourcing should be allowed if regulated.

The only reason more wealth goes to the top is because there are still huge untapped labor markets. Once outsourcing has run its course, and the whole world is essentially one market, global labor will invariably demand higher and higher prices as there is less and less of it available (less unemployed people who'll work for next-to nothing that is), and those higher wages will cut right out of the profits of the super-wealthy business owners.

Though the environmental thing is a good point, but forcing ecological-friendly methods of production would likely slow growth in the third world a bit.

How do you propose to "regulate" outsourcing? Government control of which jobs may and may not leave a country?

 

[TheStatutoryApe]

The only reason outsourcing bypasses environmental protections is because the other countries don't have laws regulating environmental damage concerns. We can't make people in other countries abide by the laws in our country. You could tax profits incoming from facilities in countries where they do not have environmental restrictions but this does no good for the environment of that particular country. It would only make our tax revenue richer at the expense of another country's environment and leave them to deal with the consequences and to take care of the bill for cleaning it up later on down the road.

 

[SOS2008]

So should governments take steps to keep domestic jobs at home, or is free-trade a justifiable position for governments to have?

The key words are "free" trade versus "fair" trade, and that goes for rich and poor nations and how each exploit and/or benefit from globalization.

Multinational companies are responsible for exploitation of third world labor, as well as questionable practices by international organizations (World Bank, IMF, etc.). At the same time China’s devaluation of its currency and piracy of U.S. technology is irreprehensible. The U.S protects agriculture, and rightfully so because food production is a national security issue (and even so, trade in such raw goods does little for trade deficits).

Continental Divide
Asia has been growing rapidly for 25 years. So why does half its population live on $2 a day? Inside the Asia you don't see.

Newsweek International
Nov. 21, 2005 issue

…This year's APEC host seems to argue that free trade and open markets exacerbate, rather than assuage, poverty. "The more emphasis we place on forging a business-friendly environment, the more aggravated social disparities will tend to become," Roh warned.

…Although many proponents of globalization would take issue with Roh's analysis, they can't deny that, in the era of regional free trade that emerged after the cold war, national GDPs have risen much more quickly in Asia than national poverty rates have fallen, leading to the dangerous perception that global capitalism punishes the poor. "Perhaps [President Roh] means that certain outcomes of the way we have done globalization could have increased inequality," says Mari Pangatsu, Indonesia's Trade minister and top WTO negotiator.

http://www.msnbc.msn.com/id/10019829/site/newsweek/page/3/

Part of the problem is differences in population growth – “Asia's impoverished masses now exceed the region's total population at the end of World War II.” In “Asia's three most populous countries—China, Indonesia and India-poverty issues now drive their politics within.” The rich countries aren’t responsible for population growths in other countries. Not to mention poor governance, often associated with corruption (e.g., south of our border).

We often provide aid, hopefully along with management of the aid. But at the end of the day, we need to manage our economies too (and not give away the farm so to speak), because if we go down, other countries will go with us.

 

[loseyourname]

How do you propose to "regulate" outsourcing? Government control of which jobs may and may not leave a country?

I think he's talking about profit-caps and worldwide environmental regulations. His question to answer, though.

 

[russ_watters]

I think it's pretty obvious that from now until global wages are competed to relatively equal positions, that jobs will continuously be outsourced from currently rich nations to currently poor nations.

Agreed.

With this, it seems pretty obvious that the western world will have to live with a decreased standard of living during this whole re-adjustment period when India and China are building up their economies.

I don't agree. So far, the effect of outsourcing is not noticeable in overall employment statistics - ie, unemployment has not increased by a measurable amount, if at all, due to the effect (say, in the past 10 years) of outsourcing.

I think it is an assumption that outsourcing is/will harm the economy, not an established piece of data.

Though perhaps I was reading too much into your statement and you just mean that standards of living could be increasing faster - not that they are actually declining in the absolute sense. That I would tend to agree with.

I think this is really selfish. Maybe it's because I'm not really nationalistic or anything, but when you look at the immense good the outsourcing of "American jobs" has done for China and India (along with all the other smaller nations that the west is outsourcing to), I think that the negative consequences America has suffered and will suffer are more than justified.

I agree - take note: when I say that I think everyone should be able to share in the American Dream, I mean it. It isn't just about the goverment, at least as important is the prosperity.

So should governments take steps to keep domestic jobs at home, or is free-trade a justifiable position for governments to have?

Ironically, such protectionism would create a huge backlash internationally and domestically. It's a damned-if-you-do, damned-if-you-don't thing: we get blamed for inflicting these low-wage jobs on foreigners, and we'd get blamed for keeping those low-wage jobs away from them too. I think the status-quo is fine.

 

[Zlex]

wasteof02,

The question is not only should, but can it be stopped.

Hey--gradients drive everything. Did I ever mention that?

Another factor is the lubricity of the Internet, but even before that, the nature of many of the 'jobs' in the new intellectual frontiers are such that physical location is not a factor at all. For example, for the past 20 years or so, where I live has nothing to do with what I do to make a living.

I could just as well live in India.

Lather, rinse, repeat. In some markets, in some economies, the concrete battleship days are gone. There are no steamships pulling into ports, waiting for customs officials. The borders are gone. Gradients in these economies without renewed effort to advance them will naturally deteriorate.

But the good news is, in these new massless intellectual frontiers, there are no 'zero sum' resource considerations; they are essentially massless, but they are not effortless, and that is the new paradigm which (some) Americans are having trouble adjusting to. In the new economic frontiers, little mass, little material, and the kind of 'energy' demanded is purely intellectual.

With the lubricity of the Internet--near instantaneous point to point transport of intellectual content from any point on Earth to any other point on earth--there are no barriers to competition anywhwere on the face of the earth.

The sooner more of us figure this out, the better. Only Draconian measures could begin to even try to halt this. But, with this bleeding of purely intellectual effort comes the collateral bleedoff of conventional material effort. It's not that material effort is magically transported through the ether, but rather, the ability to marshall and coordinate material effort is magically transported through the ether.

None of which is going to be muzzled. Nobody is going to be able to tell the folks in India, "Hey, you there, you cannot do that for $5/hr because I want to charge $125/hr for it over here." If the folks in India are able and willing to do the same thing for $5/hr, then the folks here watning to charge $125/hr are just going to have to climb the hill and come up with something actually worth $125/hr, and stop trying to resell the same bitmap dancing engines to unsuspecting consumers just because it's the easy thing to do.

ie, gradients drive everything. The grinding of gears we are hearing is, as someone once coined, the sound of paradigm shifting without the clutch.

our focus should be on the value we bring to the marketplace, not the ease of scraping up protected value from the marketplace. ie, entitlement, as in, to riding out our cushy, protected, isolated marketplace, artificially shielded from other naked sweaty apes just like us who definitely have similar wants and needs and undoubtedly have the ability to offer similar value.

And then, I wish it were that simple. Because, some naked sweaty apes are willing to sell their kids into the equivalent of slavery for peanuts a day, take every environmental shortcut possible to claw their way to the top--just like we here once did, and so on.

As well, you can't look at the great panapoly of naked sweaty ape endeavours and not notice a marked tendency to lean towards, if not outright crime, a driving desire to cut every corner and look for the freebie; what applies here, applies everywhere.

There's a spectrum of effort from trying to function efficiently/productively to aggressively taking shortcuts to targeting 'goodenuf' to foisting crap to outright scam, finally to crime and outright thuggery. At one end is calculus, at the other end is crime. Old saying, crime is easier than calculus; that's why it will always be with us.

There's another old saying, that is significantly flawed; "crime doesn't pay." In fact, crime pays very well; that is the problem. It only does not pay well if civilization bands together and makes a concerted effort to enforce costs to crime. That works in the context of a community, a state, a nation, because each of those units of civilization has a governing authority with a clear cut license to apply superior violence and enforce law, make crime pay.

In 'global' economies, the 'community' is the world. The jury is way still out on the concept of 'world governing authority,' and the early results look grim, indeed. And, there is the rub with 'global economies;' local/national 'enforcement' authorities are pretty much going to enforce the law, locally, to their own benefit, or at least, on their own terms and schedule.

For example, when Nixon created the EPA, it was at a time and cultural moment when we could afford such a luxury. A hundred years earlier, was not around, we had bidness to take care of. We could afford the EPA in the '70s. We could not afford the EPA in the 1870s. So, for us to look at China in its present stage of development and tsk,tsk about how it manages its development and polices itself is forgetting how we got to our present affluent state, which was, messily.

I think this much is certain; what happens in the coming century will be very similar to what happened in previous centuries; imperfect naked sweaty ape goings ons, at best.

 

[Evo]

Most of the "outsourcing" of jobs has been in the support and customer service area. Making clothes or manufacturing, is not "outsourcing". "Outsourcing" is usually in referrence to BPO's (Business Process Outsourcing).

American's demands of better service, lower costs and high returns on investments have driven these jobs overseas. You just cannot get intelligent help within the US for a reasonable cost.

I have to point the finger at American's for being the major driving factor behind outsourcing.

Wasteof2, are you referring to outsourcing or moving manufacturing, etc, oversees?

 

[Ivan Seeking]

American's demands of better service, lower costs and high returns on investments have driven these jobs overseas. You just cannot get intelligent help within the US for a reasonable cost.

With one major exception IMO, rarely if ever have I gotten good tech support from groups overseas. What I have experienced, and I deal with this sort of thing daily at times, is underqualifed or undertrained people following troubleshooting flow charts. If the chart doesn't tell them what to do, I get the runaround. I could tell you horror stories about my DirectPC satellite internet connection - support in India. It was critical that I have the service for work and we couldn't get DSL yet, but somewhere after 100 hours, I lost track of time spent on the phone with tech support. And every time I called, we had to start from scratch all over again.

Anyway, that's just one example but this happens for many products that I deal with. American support can be almost as bad, but almost every US company has someone who really knows their stuff. But it takes time to groom a good support tech, and with time comes higher wages. So my idea is that in part, outsourcing is a good way to lower standards without anyone noticing except the frustrated customers. If I took a group at support engineers from some place such as Rockwell, and replaced them all with entry level college grads, I'm sure that cheaper support could be provided in the US as well as overseas.

 

[TheStatutoryApe]

With one major exception IMO, rarely if ever have I gotten good tech support from groups overseas. What I have experienced, and I deal with this sort of thing daily at times, is underqualifed or undertrained people following troubleshooting flow charts. If the chart doesn't tell them what to do, I get the runaround. I could tell you horror stories about my DirectPC satellite internet connection - support in India. It was critical that I have the service for work and we couldn't get DSL yet, but somewhere after 100 hours, I lost track of time spent on the phone with tech support. And every time I called, we had to start from scratch all over again.
Anyway, that's just one example but this happens for many products that I deal with. American support can be almost as bad, but almost every US company has someone who really knows their stuff. But it takes time to groom a good support tech, and with time comes higher wages. So my idea is that in part, outsourcing is a good way to lower standards without anyone noticing except the frustrated customers.

I've had the same trouble with american based customer service departments.

 

[Evo]

I've had superior service from India, they are at least polite and speak better English than some of the American service reps I've spoken with. I have never spoken to a rude person in a BPO. Of course they're probably thinking "another brain dead American".

It depends which BPO your American company contracts with. I watched a PBS program on BPO's in India and all have at least an undergraduate degree. Most Americans in the same position are high school drop outs.

 

[Ivan Seeking]

Most Americans in the same position are high school drop outs.

Nearly all support people that I deal with must be engineers for entry level.

 

[Ivan Seeking]

Perhaps US standards are dropping in an effort to keep up with lower standards from the competition.

 

[Smasherman]

By regulation I mean a cap on how much profit can be gained from outsourcing. Really I'd prefer forcing companies to pay workers a certain amount, and if the company leaves, they have to give their infrastructure to the country (intact).

Scenario:

A company builds factories in a country (outsourcing, specifically). This raises the standard of living in that country, thus raising the wages. When the wages raise up to a certain point, it becomes more cost-effective to do business in another country. So the business packs up and does business elsewhere, leaving the first country without jobs (and thus quickly impoverished).

 

[Ivan Seeking]

I've had the same trouble with american based customer service departments.

In my world, here in the US, there is usually at least one hot shot, but you have to get to him or her, and that isn't always easy.

 

[Evo]

Nearly all support people that I deal with must be engineers for entry level.

Pffftthbttt. I'm talking about consumer every day help desks.

At work "my" American help desk guy has a PHD. Pffftthbttt! I forgot in what. He is sharp.

 

[Ivan Seeking]

As for consumer level support...less a few calls for Windows and the one example of DirectPC, I have almost no experience. But I must say, the DPC experience was something else. If I hadn't needed it so bad it would have been canceled the first week.

 

[SOS2008]

For example, when Nixon created the EPA, it was at a time and cultural moment when we could afford such a luxury. A hundred years earlier, was not around, we had bidness to take care of. We could afford the EPA in the '70s. We could not afford the EPA in the 1870s. So, for us to look at China in its present stage of development and tsk,tsk about how it manages its development and polices itself is forgetting how we got to our present affluent state, which was, messily.

Not quite an apple-to-apple comparison, because 100 years ago people didn’t know they were making a mess. We know now, and must ask if we can afford to keep making messes.

Most of the "outsourcing" of jobs has been in the support and customer service area. Making clothes or manufacturing, is not "outsourcing". "Outsourcing" is usually in referrence to BPO's (Business Process Outsourcing).

Wasteof2, are you referring to outsourcing or moving manufacturing, etc, oversees?

Outsourcing or off-shoring, either way it results in loss of jobs for Americans.

But it takes time to groom a good support tech, and with time comes higher wages.

In time, the same thing happens in these other countries. (Edit: And then the companies move on to a new location.)

I watched a PBS program on BPO's in India and all have at least an undergraduate degree.

If it is the same program I watched, these people have left jobs in science, medicine, or what have you to work for the American BPOs. So BPO jobs in America are lost, not to provide work for those abroad who aren’t already earning a living, but to attract them away (some had as many as three offers) to do jobs below their capability just to earn a little more. Now, what’s wrong with this picture?

 

[Astronuc]

I was listening to a program this morning about an attempt to unionize the 'call center employees' in India. They make $3000 /yr, as opposed to the average income in India - $500 /yr.

The median income in the US is about $44,473 /yr (2002-2004).
http://www.census.gov/hhes/www/income/income04/statemhi.html

 

[Zlex]

Not quite an apple-to-apple comparison, because 100 years ago people didn’t know they were making a mess. We know now, and must ask if we can afford to keep making messes.

It was just one example in a long line of examples of our messy rise. Like...slavery.

 

[Zlex]

If it is the same program I watched, these people have left jobs in science, medicine, or what have you to work for the American BPOs. So BPO jobs in America are lost, not to provide work for those abroad who aren’t already earning a living, but to attract them away (some had as many as three offers) to do jobs below their capability just to earn a little more. Now, what’s wrong with this picture?

Hey, it is not just the high-paying jobs.

We can't even just sell each other hamburgers and call it a day; dirt cheap bandwidth has resulted in a world where fast food drive thru jobs -- you know, the idiot at the other end of the speaker that screws up your order most of the time?-- are being replaced by digitized audio/video fed to some other point anywhere in the world, where the order is accurately processed and digitally sent back to the restaurant/kitchen, along with a picture of the person who drove up, to match the order.

So, cheap bandwidth means that it no longer matters if the person handling your order is 20 feet away and unseen or 12000 miles away and unseen; economics are determining that the best labor at the cheapest price is filling the need.

There are actually local restaurant chains doing this as we speak, and the results have been a significant increase in the accuracy and speed of order processing. Within 5 years, I predict, nearly every Wendys, McDonalds, and other major chain will process drive thru orders like this.

How quickly will America react to the new realities? Not very quickly. For example, and this trend is already happening, is well in place, 95% of accounting tasks are already readily exported overseas; the number of US returns actually prepared overseas quadruples every year. A sanitized copy of US return data (name/SS removed) is digitized and sent overseas, where experts in every US state tax laws complete the require returns cheaply and transmit back to the US, where the individual specifics are remerged. No actual accountant in the US actually fills out the returns. Large accounting firms increasingly are glomming onto this, and the practice will diffuse out to smaller and smaller firms, as a commodity. India/China etc. are able to train and crank out accountants to do this kind of rote form completion in huge numbers; they have the bodies able and willing to be trained to do it, they are not being sent to $40,000/yr 4 yr schools for this purpose, and they work at it accurately, diligently, and efficiently.

And, I've been told, the number one US undergraduate degree is: accounting. Just in time to compete with $5/day labor.

How fast does America wake up to this coming reality? In theory, the very engine of its creeation is the engine of its discovery and solution, except for one major difference; the motivations, expectations, and work ethic of the populations involved. Listen to us; 300,000,000 of us have all come to expect that our gov't is going to turn some magic handle/switch and fix our economies for us. Meanwhile, like at no time before, the balance of the world's 6 billion is able and willing to convert their hunger into eating the lunch we once believed was marked 'RESERVED: USA.'

I guess we'll see.

 

[Polly]

In theory, the very engine of its creeation is the engine of its discovery and solution, except for one major difference; the motivations, expectations, and work ethic of the populations involved. Listen to us; 300,000,000 of us have all come to expect that our gov't is going to turn some magic handle/switch and fix our economies for us.

The following article seems to be a natural expansion of your sentiment. I probably would not have posted it if it were not for what you have written.
http://www.lewrockwell.com/englund/englund29.html

 

[SOS2008]

Hey, it is not just the high-paying jobs. We can't even just sell each other hamburgers and call it a day.

On occasion I go to a Wendy’s near my office. One day, all of a sudden all the workers are Hispanic, and because their English was so poor, I had to pull to another window to finally find a person who could respond to my question. These young adults who can’t speak English--if they were here legally, wouldn’t they have learned English in school? IMO, this is unacceptable, and no wonder teenagers are hardest hit with unemployment. And without these kinds of jobs, how are they to gain experience to enter the workforce as adults?

The following article seems to be a natural expansion of your sentiment. I probably would not have posted it if it were not for what you have written. http://www.lewrockwell.com/englund/englund29.html

Good article, and I agree with a lot of it. On the news yesterday the discussion was about GM and how they produce poor quality, gas-guzzling, unimaginative automobiles. They’ve got to change or go under. Also, I’ve mentioned in other threads how kids stay (or return to) living with their parents until a much older age now. I agree they want to live at a standard to which they’ve become accustomed, and often are unwilling to pay dues to get there on their own. However, the article mentions the older, skilled workers. The problem is these workers are losing their jobs--once again, very unacceptable.

How fast does America wake up to this coming reality? In theory, the very engine of its creeation is the engine of its discovery and solution, except for one major difference; the motivations, expectations, and work ethic of the populations involved. Listen to us; 300,000,000 of us have all come to expect that our gov't is going to turn some magic handle/switch and fix our economies for us. Meanwhile, like at no time before, the balance of the world's 6 billion is able and willing to convert their hunger into eating the lunch we once believed was marked 'RESERVED: USA.' I guess we'll see.

It’s not just a welfare mentality that is the problem. Many pro-capitalist Americans who are comfortably delusional about the safety of their jobs believe the American Dream will always be there, and there’s plenty to go around. These people focus on statistics (rather than the writing on the wall) to argue that all is well. To this point, this was reported yesterday on CNN:

Well, turning now to a new effort to save American jobs and reform H1B visas. Tens of thousands of foreigners use those visas to come to this country for jobs, but one Congressman has proposed legislation that would radically overhaul the system. Bill Tucker reports from Patterson, New Jersey.

BILL TUCKER, CNN CORRESPONDENT: Congressman Bill Pascrell does not want to eliminate the H1B visa, he wants to reform it and create stronger enforcement provisions.

REP. BILL PASCRELL, (D) NEW JERSEY: Corporations are providing a glass ceiling for American workers in a trap of virtual servitude for low paying, overworked H1B employees. My friends, that is not an exaggeration, that is not hyperbole, I found this through research to be the truth.

TUCKER: The Congressman held his news conference outside the unemployment office in Patterson, New Jersey, to underscore what he calls his commitment to the American worker. Supporters of his bill include the Institute of Electrical and Electronics Engineers who say the current H1B visa program has caused their members great harm.

HAROLD AMMOND, IEEE: It's been devastating. We have actually had communities where engineers were told they had to train new employees. The new employees happen to be H1B employees. And when the training was done, the engineers -- the American engineers were laid off.

TUCKER: Among the proposed changes, centralizing the oversight of the program under the Department of Labor. Currently at least four departments are involved in oversight. Require mandatory annual audits to enforce prevailing wage provisions. Companies would be required to notify employees of open positions where H1Bs were being considered to give American workers the first shot at the jobs.

The visa would become a three-year visa, instead of the six years as it is now. The fee would triple to $4,500 and workers would get the right to sue their employers, offering a different kind of enforcement.

http://transcripts.cnn.com/TRANSCRIP...21/ldt.01.html

Has anyone considered that companies of the world are causing more and more workers to live at poverty levels in exchange for higher and higher profits for themselves? Has anyone considered this to be the result, rather than finite resources being enjoyed by all?

 

[wasteofo2]

Wasteof2, are you referring to outsourcing or moving manufacturing, etc, oversees?

I'm referring to anything that involves the movement of jobs from one country to another. Perhaps outsourcing isn't the technically proper term for all such movement of jobs, but that's rapidly the definition it's taking on.

 

[edward]

The term ,outsource, seems to be in the eye of the beholder. There are many Chinese and other Asian companies online who offer to provide cheap manufacturing of goods. They call it outsourcing and I agree.

BaySource was formed as a venture recognizing our economy was now more than ever, operating as a global system of trade. BaySource utilizes a broad network of manufacturers based in mainland China, Hong Kong and Taiwan to assist small to mid-size companies in strategic outsourcing and manufacturing options with low cost country providers.

http://www.baysourceglobal.com/
http://www.spartronics.com/

A number of problems exist with this type of outsourcing of manufacturing.

The USA loses jobs.

The trade deficit , especially with China, is totally out of control. It is getting to the point that tyring to find a consumer product that is not made in China is nearly impossible. Last spring I was suprised to see that GE window air conditioners are now made in China.

And from what I have read this is just the beginning of "large ticket item" production that will be outsourced.

And perhaps most importantly, we have outsourced our manufacturing technology to an extent that too many CAD, CAM, and R&D jobs no longer exist. If the jobs do not exist, no one will train and study to be capable of performing those jobs in our economy.

This makes it incredibly difficult for the USA to ever resume the manufacture of consumer products.

 

[wasteofo2]

The term ,outsource, seems to be in the eye of the beholder. There are many Chinese and other Asian companies online who offer to provide cheap manufacturing of goods. They call it outsourcing and I agree.
http://www.baysourceglobal.com/
http://www.spartronics.com/
A number of problems exist with this type of outsourcing of manufacturing.
The USA loses jobs.
The trade deficit , especially with China, is totally out of control. It is getting to the point that tyring to find a consumer product that is not made in China is nearly impossible. Last spring I was suprised to see that GE window air conditioners are now made in China.
And from what I have read this is just the beginning of "large ticket item" production that will be outsourced.
And perhaps most importantly, we have outsourced our manufacturing technology to an extent that too many CAD, CAM, and R&D jobs no longer exist. If the jobs do not exist, no one will train and study to be capable of performing those jobs in our economy.
This makes it incredibly difficult for the USA to ever resume the manufacture of consumer products.

Why is that a bad thing though? So the USA loses some prosperity, but it's the richest nation in the world. Think of it from the perspective of the people in poor countries who are getting these jobs. They're being lifted out of abject poverty, while the U.S. is just being knocked down a few notches. Even in the U.S., those who have no job at all have a decent social welfare system; people don't have things like that in these poor countries that are being outsourced to.

 

[Astronuc]

They're being lifted out of abject poverty, while the U.S. is just being knocked down a few notches. Even in the U.S., those who have no job at all have a decent social welfare system;

The problem is while the US economy is knocked down a few notches, those at the bottom feel the brunt - in some cases of abject poverty.

There is a common myth that those on welfare have it easy.

That is certainly not the case. Malnutrition, poor quality housing, lack of medical care, take a great toll on the poor. And then there is the drug and other social problems on top of that.

I think it is great for the poor in other countries to get good jobs, but simply moving jobs to the cheapest source is not the answer. The global economy needs to provide a 'good' standard of living for all, not just those at the top.

-----------------------------
As for terminology outsourcing jobs beyond national borders is sometimes terms 'off-shoring', as in moving jobs offshore - which really means overseas.

The social ramifications of 'off-shoring' can be seen within the US. During the post WWII period, manufacturers encouraged people from the south to move north to work in factories. Then in the 1970's as labor costs increased, factories, and their jobs, moved south to cheaper labor. All those people and their families who had moved north were then stranded without jobs.

Now the cheaper labor is overseas, and so the manufacturers move to those labor markets leaving labor stranded yet again. The problem will be that when the jobs are lost, their economic power to consume is also lost, so there will be less demand for consumer goods like automobiles, large TV's, durable goods. There will come a time when the consumer demand will necessarily drop.

 

[motai]

Now the cheaper labor is overseas, and so the manufacturers move to those labor markets leaving labor stranded yet again. The problem will be that when the jobs are lost, their economic power to consume is also lost, so there will be less demand for consumer goods like automobiles, large TV's, durable goods. There will come a time when the consumer demand will necessarily drop.

Either that... or people will stretch their credit to the limit and go deep into debt, while the demand will hover around the same level. There already are quite a few people in America who are now more or less indentured servants to creditors.

 

[edward]

Either that... or people will stretch their credit to the limit and go deep into debt, while the demand will hover around the same level. There already are quite a few people in America who are now more or less indentured servants to creditors.

The debt statistics for Americans are staggering.

Consumers owe nearly $2 trillion
American consumers owed a grand total of $1.9773 trillion in October 2003, according to the latest statistics on consumer credit from the Federal Reserve. That’s about $18,654 per household, a figure that doesn’t include mortgage debt. The number is up more than 41% from the $1.3999 trillion consumers owed in 1998.

http://moneycentral.msn.com/content/SavingandDebt/P70581.asp

 

[wasteofo2]

The problem is while the US economy is knocked down a few notches, those at the bottom feel the brunt - in some cases of abject poverty.
There is a common myth that those on welfare have it easy.
That is certainly not the case. Malnutrition, poor quality housing, lack of medical care, take a great toll on the poor. And then there is the drug and other social problems on top of that.

I didn't mean to imply being abjectly poor in the U.S. was glorioius by any means, but it's certainly better than being abjectly poor in India. Even though life is ****ty, it's not as if you're living off muddy water infested with parasites.

I think it is great for the poor in other countries to get good jobs, but simply moving jobs to the cheapest source is not the answer. The global economy needs to provide a 'good' standard of living for all, not just those at the top.

Why isn't that the answer? Jobs get provided for the very poorest people because the rich people are willing to buy what they make. Eventually, the rich people will buy so much from poor people, that wealth will re-distribute itself so that both groups of people are on more or less equal footing. It just takes time; there is no instant formula for economic prosperity.

As for terminology outsourcing jobs beyond national borders is sometimes terms 'off-shoring', as in moving jobs offshore - which really means overseas.
The social ramifications of 'off-shoring' can be seen within the US. During the post WWII period, manufacturers encouraged people from the south to move north to work in factories. Then in the 1970's as labor costs increased, factories, and their jobs, moved south to cheaper labor. All those people and their families who had moved north were then stranded without jobs.

And if the factories had stayed in the north, the wages for the workers would've dropped as high salaries took more and more money out of corporate pockets. Businesses like factories tend to migrate towards where there is cheaper labor, and cheaper labor tends to migrate towards where there are many jobs. If labor migration fails, then business migration picks up the slack and jumps into labor markets which don't have much job competition in them. Capitalism is dynamic, and people need to constantly readjust to changing job markets, as well as corporations need to constantly adjust to changing markets for goods and services. Some people are left behind in the process, and the progress includes new people.

Now the cheaper labor is overseas, and so the manufacturers move to those labor markets leaving labor stranded yet again. The problem will be that when the jobs are lost, their economic power to consume is also lost, so there will be less demand for consumer goods like automobiles, large TV's, durable goods. There will come a time when the consumer demand will necessarily drop.

It's not as if there is a static amount of jobs out there, and X jobs created in India means X jobs lost from America. One of Capitalism's main trends is to expand itself. As businesses expand and hire more people, the richest people (owners of factors of production) spread the wealth around by paying wages to the poorest people. Eventually, the poorest people get paid enough wages collectively that they become well off, as happened during America's industrial revolution. Then these well-off people can finance more expansion into cheaper labor markets. Like jobs, wealth is not static. It's not as if wealth can only be spread so thin, and mean prosperity can never increase. Wealth can be created through innovation, and this process is constantly occurring. As long as people think of new ways to make money, or cheaper ways to do things, more wealth will be created. And as more wealth is created, there's more demand for goods and services in general. This leads corporations to seek out new, cheap, labor markets, as previously cheap labor markets have by then been risen to higher standards, and are financing more corporate expansion through their purchases.

Sure prosperity in America will probabally decline a bit as India and China really get moving, but in the long run, I see no reason why consumer demand will necessarily drop. Care to explain that to me?

 

[SOS2008]

Why is that a bad thing though? So the USA loses some prosperity, but it's the richest nation in the world. Think of it from the perspective of the people in poor countries who are getting these jobs. They're being lifted out of abject poverty, while the U.S. is just being knocked down a few notches. Even in the U.S., those who have no job at all have a decent social welfare system; people don't have things like that in these poor countries that are being outsourced to.

First is the U.S. trade deficit and foreign debt, which can then have other negative impacts on the economy, such as inflation. At the minimum it creates national security problems. Look at Bush’s visit to China and how powerless he was in trying to negotiate with them, because they hold most of our debt.

In the meantime the U.S. is the largest market (for countries like China), but only if people here have income to spend. As posted above, Americans are also in debt on an individual basis—most families are two paychecks away from bankruptcy. How will people continue to consume if they aren’t earning the money, and where will the revenue for social welfare come from if people aren’t earning money, etc., etc., etc.

But the main question is whether outsourcing/off-shoring/foreign labor is really helping the poor of the world. IMO it is helping the multinationals (and who ever else is at the top of the feeding chain) and in the long run masses everywhere will be worse off.

 

[wasteofo2]

First is the U.S. trade deficit and foreign debt, which can then have other negative impacts on the economy, such as inflation. At the minimum it creates national security problems. Look at Bush’s visit to China and how powerless he was in trying to negotiate with them, because they hold most of our debt.

You misunderstand my position. I realize that the U.S. is being harmed by outsourcing. You seem to think that I'm advocating outsourcing as good for the U.S., but I'm not. I'm advocating it as good for the world as a whole, not necessarily one particular country. In my mind, I don't care that the U.S. is less prosperous if it's helping billions get on level with the rest of the world.

The U.S. trade deficit and foreign debt is certianly bad for the U.S. in the short run, but from the other side of the coin, the U.S. is killing itself to pump money into these poor countries, helping them grow even faster.

In the meantime the U.S. is the largest market (for countries like China), but only if people here have income to spend.

So long as there's still a tremendous disparity between American wages and Chinese and Indian wages, America will still finance Chinese and Indian growth. If America plunges into another Great Depression, naturally China and India would suffer simmilarly, but so long as people are being paid some approximation of what they're being paid now, they'll spend more than enough money to finance China and India's growth. Think of all the profits a company makes selling Chinese manufactured goods in America, and with that money, think how many more factories that company could create. The profit margin is great, and the amount they can sell at such low prices makes it even better for them.

As posted above, Americans are also in debt on an individual basis—most families are two paychecks away from bankruptcy. How will people continue to consume if they aren’t earning the money, and where will the revenue for social welfare come from if people aren’t earning money, etc., etc., etc.

You're looking at this from a very American perspective. It's not as if people in America are on the verge of having NO MONEY whatsoever. Sure Americans are in debt and don't know how to handle their finances, and I totally agree that America in the near future will suffer quite a few serious economic consequences, but for the time being, we're way better off than places like China and India.

But the main question is whether outsourcing/off-shoring/foreign labor is really helping the poor of the world. IMO it is helping the multinationals (and who ever else is at the top of the feeding chain) and in the long run masses everywhere will be worse off.

I had this whole thing about what might happen when the whole world is Capitalist a little bit ago. I laid out my opinions on how globalization will play out in the long run, which I pretty much concluded would lead to a sort of worker's dictatorship. I don't see how you could conclude that masses everywhere will be wrose off.

Right now, corporations have huge supplies of cheap labor that they can use. So maybe in the near future, wages around the world drop, since there are so many poor people who'll work for next to nothing. But the world's population is relatively finite. At some point or another, the whole world will be involved in the global market for everything. At this point, corporations will have no huge labor markets of poor people to exploit. Without this ability, it seems to me that wages will necessarily rise, as there's less and less supply of labor avialable (that is, unemployed people around the world), labors price goes up, and workers are more and more valuable.

 

[SOS2008]

I'm not an economist, and only studied economics in a peripheral way, but it seems "there are some holes in the theory."

Jobs get provided for the very poorest people because the rich people are willing to buy what they make. Eventually, the rich people will buy so much from poor people, that wealth will re-distribute itself so that both groups of people are on more or less equal footing. It just takes time; there is no instant formula for economic prosperity.

The rich are only one percent of the population, and I’m not sure how many yachts they will buy from the poor people. The problem is the middle class is shrinking in the U.S. because of these practices, so this will leave the poor to buy from the poor?

It's not as if there is a static amount of jobs out there, and X jobs created in India means X jobs lost from America. One of Capitalism's main trends is to expand itself. As businesses expand and hire more people, the richest people (owners of factors of production) spread the wealth around by paying wages to the poorest people. Eventually, the poorest people get paid enough wages collectively that they become well off, as happened during America's industrial revolution. Then these well-off people can finance more expansion into cheaper labor markets. Like jobs, wealth is not static. It's not as if wealth can only be spread so thin, and mean prosperity can never increase. Wealth can be created through innovation, and this process is constantly occurring. As long as people think of new ways to make money, or cheaper ways to do things, more wealth will be created. And as more wealth is created, there's more demand for goods and services in general.

Like a friend who argued that the war in Iraq would be good because wars fuel the economy, a lot of this thinking is no longer valid. Per my post in the employment thread:

RALPH MARTIRE, CTR. FOR TAX & BUDGET ACCOUNTABILITY: We are truly feeling the impact of globalization, and it's not like the old days where maybe one high-paying wage sector would go away in the economy and another high-paying wage sector would jump up to replace it. That's not what's really happening now.

http://transcripts.cnn.com/TRANSCRIP...21/ldt.01.html

You know how this country became so great so quick? Isolationism, not globalization.

 

[russ_watters]

The problem is the middle class is shrinking in the U.S. because of these practices, so this will leave the poor to buy from the poor?

Just to make sure we're perfectly clear, you are saying that the middle class are becoming poor? Care to prove that? (and be sure to specify your timeframe...) Because I'm sure you've seen the stats I've posted in pretty much every thread where someone claims that. This is another case (like the gas lines thing) of you thinking something that sounds good in your head and in a liberal campaign speech is actually a reality. It isn't. The middle class is not getting poorer. In fact, the middle class is getting so big (definitions vary, though), the term is starting to become meaningless! It is very common to see three middle classes listed: a lower-middle, middle-middle, and upper-middle.

edit: I'm guessing you are getting this from Kerry's presidential campaign. Be aware that that claim by Kerry was based on an extremely short timeframe of 3 years - essentially meaningless for the identification of a long-term trend. It is, however, something that liberals have liked to claim for much longer. Sometimes it is even factually true to say "the middle class is shrinking" - but the implied effect (they are getting poorer) is actually the opposite of what is really happening: if the middle-class is shrinking long-term, it's because the people in it are rising out of it, not falling out of it.

A good article:

Being middle class in America is sometimes taken to define a set of values, not simply income class. But even defined purely in terms of income, middle class is not a static concept, because it involves comparisons between your family and others. Using DOL s example, defining the middle class as having an income between 40 percent above and below the U.S. median income adjusted for family size, it becomes apparent that over the past 25 years, American middle class families became better off.

In 1969, 51 percent of individuals in families were middle class. By 1993, that share had declined to 40 percent. The decline in the middle class was primarily the result of growth in the share of individuals in upper class families. By 1993, onethird more individuals in families had incomes more than 40 percent above the U.S. median than in 1969. A much smaller share of the decline in the middle class, only 6 percent, was the result of a 3 percentage point increase in the lower class.

It was also true, however, that many individuals in lower class families in 1993 had higher real income than individuals in middle class families had in 1969, because sizeadjusted U.S. median real family income grew by more than 20 percent between 1969 and 1993. Thus, despite the fact that these individuals were no longer part of the middle class, they and their families had greater access to goods and services than some middle class individuals and their families had in 1969. This is one reason why the continued rise in per capita consumption is a better barometer of real economic wellbeing.

http://www.epf.org/pubs/newsletters/1996/ff2-1.asp

So the middle-class is shrinking? Great!