Is Global Outsourcing Justifiable Despite Domestic Job Losses?

[gravenewworld]

If outsourcing is prohibited companies will just simply leave the US and move their entire operations overseas. It is a no win situation.

 

[Zlex]

...
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:
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?

The vitality/health of our economies depends directly on the energy/effort of those who swim in same. So, we could do our constructivist best, get out our little brains/energy/effort meters, and come up with a Five Year Plan, complete with quotas. Indeed, should there be no limits on citizenship, period? Hey, crack a 1000 on your SATs, or there is going to be a painful scene at Ellis Island, only heading out this time. (Unless, of course, you can dunk a basketball. I mean, how else is 'Duke' going to field a national championship team and have someone for all those 'crazie' fans from the 'burbs with their 1500 SATs to cheer for?)

Why such slack for the uneducated brains in skulls already taking up space, especially those un-energetically laying around waiting for the gov't to do something or fix something on their behalf, from whatever source, domestic or imported?

Do we or anyone actually know what our 'brain quota' should be for next year? As in, wait a minute, America has too many brains? How does that work when we reach 'the' quota?

a] The Five Year Plan is on track; we have exactly enough brains, per The Plan. See? Tha Answer is in The Plan.
b] Well, we came up short, but now there are plenty of unfilled brain jobs for Americas resident brains to swim about in. Great.
c] Oooops. "Too many" brains. The spreadsheets are all f'd up.
d] Nope, not reeally, we caught it in time. So, now there is less competition for what lessor brains there are to swim aroung in not so strenuously. Great.
e] Who knows?

We have two queues trying to get into America; a legitimate front door queue, and the illigitimate back door queue. Through both, let's say, are a fringe few trying to sneak to do us harm. The back door seems an easier way to go to avoid detection, yet it was through the front door that the 9/11 crew came in. ( Separate issue; the front door is not enough of an impediment to deter anyone into attempting the dusty route...)

If immigration in we're all immigrants America is a problem, it is easier for us to control the queue of folks we want, so ... that is what we do. On what basis, I have no idea(brain quota meter?), but that is what we do.

Meanwhile, the SS Trustees are all but counting on immigration to pad the numbers and apply AWI as a magic multiplier. Look, it's easy, you just plug the numbers into a spreadsheet, and some unseen recursive descent parser does all the work. I mean, Mexican.


We're a sad, tired, old place if we're really so worried about energetic/brainy folks showing up to make us have to bust a gut.

I mean, why not just unionize the Union, implement some nationwide seniority system, and get on with the slacking off?

 

[wasteofo2]

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

The rich, in my post, were essentially all the consumers in North America, Europe and Japan. I'm not talking about the super-rich, but the average consumers in the Western world who buy things like chairs, computers, clothing and automobiles. Compared to the populace of China, you and I are very rich. Through buying things that are made in poorer companies, we are funding the companies that make them, who in turn re-distribute this wealth to their workers through wages. We're giving up our money for things we need, and in turn, that money goes to the workers who gave up their time and labor to get the wages they need. The whole populations of the Western nations are funding China and India's growth every time they buy anyhting from a company that employs people in those nations.

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:

Totally different situation. Plus, it's blatantly apparent now that China and India are doing remarkably well because of the current process of Globalization that's going on.

http://transcripts.cnn.com/TRANSCRIP...21/ldt.01.html
You know how this country became so great so quick? Isolationism, not globalization.

Actually, this country didn't become so great so quick. Throughout the entirety of the industrial revolution, until the 1940's, (with a short exception during the 1920's), American workers had horrible conditions. Even into the early 1900's, sweat-shop labor was still quite common in America, as was children laboring for 15 hour days. It took generations for the American work force to have any power at all. The kicker was when business expanded to such a large degree that there weren't huge pools of unemployed people. Once you reach an unemployment rate that is low enough that you can't find anyone to do any **** job, wages begin rising very noticably. Isolationism certainly helped spur on our growth in the short term, but as we're seeing now, you can't stay isolated forever.

Isolationism can cause undue prosperity, but when your nation gets exposed to foreign competition, all these undue gains are competed away.

 

[Burnsys]

The rich, in my post, were essentially all the consumers in North America, Europe and Japan. I'm not talking about the super-rich, but the average consumers in the Western world who buy things like chairs, computers, clothing and automobiles. Compared to the populace of China, you and I are very rich. Through buying things that are made in poorer companies, we are funding the companies that make them, who in turn re-distribute this wealth to their workers through wages. We're giving up our money for things we need, and in turn, that money goes to the workers who gave up their time and labor to get the wages they need. The whole populations of the Western nations are funding China and India's growth every time they buy anyhting from a company that employs people in those nations.

That is wrong, becouse if you paythem a lot less of what they work really worth then you are taking whealth from them... a car, a tv a computer is wealth also.. I bet the workers who build cars and computers you buy can't pay a car with they wages... so actualy the rich countrys are taking the wealth in form of labor from the poor countrys, paying a small bribe for it...

 

[BobG]

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?

Long term globally, the free-trade position is the best economically. The flow of money from the richer countries to the poorer countries expands the market and raises the worldwide standard of living. Environmentally, that's a bad thing. I'm not sure Earth can support the entire globe consuming at the same rate as the US and Europe.

Within the US, I think the issue of outsourcing is blown a little out of proportion. I don't see outsourcing jobs overseas as being much different than old factories in the rust belt being replaced by new factories in southern states with lower tax rates and lower labor rates. For those affected, it's traumatic regardless of who's taking your jobs.

The difference is that the government could theoretically prevent companies from closing a factory in one state to open a factory in a different state (not in the US, but that's a conscious decision by our capitalistic society). You can't stop job markets from moving overseas unless all of the richer countries agree only to buy products among themselves.

Otherwise, obstacles that prevent American companies from outsourcing slows the flow of money to poorer countries, but doesn't stop it. It preserves American jobs until the American company, itself, goes out of business because foreign competitors can undersell it.

In fact, if a country isolates itself from the global market, that country's economy will suffer. Economically, Argentina was a global power prior to World War II. While it wasn't dropped because of trade practices, the close US-European ties after WWII that squeezed Argentina out reduced it to third world status. A nation just can't afford to be left out of the global market.

 

[SOS2008]

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.

Moving past the usual patronizing tone, I agree that definitions of middle class vary. And as discussed in PF before, so do people’s perception (so as to not reaffirm poverty, the poor often consider themselves to be middle class, and because people never feel they have enough, the upper class probably often consider themselves to be middle class). I also agree that statistics can vary:

The third major factor in changing income distribution is the job market. Read about Working in America. However, any conclusions about global inequality depend on what statistics analysts choose to look at. As economist Paul Krugman sees it, the broad middle class society we have gotten used to may have just been a temporary aberration of the 1950's and 60's. –

http://www.pbs.org/now/politics/working.html

I realize the regular media reports on the middle class squeeze could be exaggerated, and in addition to the link above (in my post #24) and post #40 in the thread on the employment situation, very quickly here are a few more links as an example:

NOW. Politics & Economy. Middle Class Squeeze | PBS - http://www.pbs.org/now/politics/middleclass.html

The gap between the haves and the have-nots in terms of wealth is greater now than at any time since 1929, immediately preceding the Great Depression.

http://americanassembler.com/issues/economy/

And just for you:

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.

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

Once again, I believe concern about outsourcing/off-shoring/foreign labor (particularly illegal) are legitimate concerns, as well as other points made by members in this thread regarding diminishing U.S. competitiveness in general. To deny this and not work on ways to improve the situation is foolish.

 

[Anttech]

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.

I have the same problem every time I call any ISP.. be it NTT level3 or your local ISP... I have to dumb down problems to first line and convince them I need to speak to an engineer. The amount of times I have been told to "reset a router".. If you know anything about Networking then you will know how stupid this is:

A Telecommuter I support right now for our company has a Cisco 800 Series dsl router. The Teleco company were having carrier problems, and the helpdesk wanted me to wipe the config from my router and rebuild it? I was like "I'll do it to my end if you do it to your end!" :-) They refused to help me until I erased the config, and would not escalate the case... I ended up hanging up and letting someone else try.. luckily after a few attempts we got someone who actually knew a couple of things...

Anyway sorry bit of topic, back on topic.. Technical Support requires some means of intellectual training a lot of indians can do this type of stuff, but as the saying goes if you pay peanuts you get monkeys.. this applies everywhere.. Until these companies stop looking at Tech support as an expense we as a consumer won't get any decent support

 

[Polly]

Life is not a stroll in the garden, at least not to those of us in HK.
Few of you would probably have heard that we have a rotten 7 years from 1997-2004. "Blessed" with a not very smart Chief Executive who is full of good intention and the economic pressure from Shangha and, Guangzhou (Yes, they are our competitors too and are trying to overtake us in every possible way), we went through a structural change in our economy amidst a major property adjustment when our CE vowed to build 85,000 public housing units every year. Property price at its lowest in 2003 represented only about http://www.centanet.com/cci.htm", there were massive bankruptcy and negative asset cases (i.e. the market price of your property is lower than what you owe the bank). Of course, cheap household goods and food stuff flooding our market also dampened local production. It was a sad and gloomy time, every other day people would be killing themselves through inhaling carbon monoxide by burning coal.
http://www.centanet.com/cci.htm
http://www.info.gov.hk/hkecon/kesi/index.htm
So we busted our guts in coping, adjusting and getting ahead and justifying an average salary which is at least 9 times higher than that in the Mainland. And we were lucky, the central government pumped up the economy by allowing independent tours to Hong Kong, and we seem to have made it so far. But will we always be retain this economic success? In 20 years' time? Maybe. In 50 years' time? Not likely. In 100 years' time? No way. For every successful mode of producton must be overtaken by changing times and development. Opposites spawn each other, great chaos is always followed by great prosperity and in great prosperity will be hidden the seeds of its own destruction. Such is The Way.
By the way, wasteofo2, bless your heart of gold .

 

[russ_watters]

I agree that definitions of middle class vary. And as discussed in PF before, so do people’s perception (so as to not reaffirm poverty, the poor often consider themselves to be middle class, and because people never feel they have enough, the upper class probably often consider themselves to be middle class). I also agree that statistics can vary:
http://www.pbs.org/now/politics/working.html
I realize the regular media reports on the middle class squeeze could be exaggerated, and in addition to the link above (in my post #24) and post #40 in the thread on the employment situation, very quickly here are a few more links as an example:
NOW. Politics & Economy. Middle Class Squeeze | PBS - http://www.pbs.org/now/politics/middleclass.html
http://americanassembler.com/issues/economy/
And just for you:
http://transcripts.cnn.com/TRANSCRIP...21/ldt.01.html
Once again, I believe concern about outsourcing/off-shoring/foreign labor (particularly illegal) are legitimate concerns, as well as other points made by members in this thread regarding diminishing U.S. competitiveness in general. To deny this and not work on ways to improve the situation is foolish.

Nowhere in there did you answer my question: Did you mean that the middle class is becoming poorer?

Most of those links have nothing to do with the issue (what does the health of labor unions have to do with anything?) and the last link is dead, but the link on income distribution implies that you define the size of the middle class based on income distribution. Please state it explicitly for clarity. And anyway, if that is what you believe, fine, but that still doesn't answer the question above...

 

[russ_watters]

That is wrong, becouse if you paythem a lot less of what they work really worth then you are taking whealth from them... a car, a tv a computer is wealth also.. I bet the workers who build cars and computers you buy can't pay a car with they wages... so actualy the rich countrys are taking the wealth in form of labor from the poor countrys, paying a small bribe for it...

The alternative, Burnsys, is for us to not pay them anything (not buy anything from them), and then they starve to death. You have a very twisted way of looking at a situation that is actually benefiting everyone involved.

 

[Art]

In my opinion outsourcing is a symptom rather than a root cause of the flight of capital and jobs from the U.S.. For example Germany is a high wage society and is the world's biggest exporter (btw far larger than China and yet never mentioned on this forum??) with nearly 40% of it's annual production sold abroad. Germany's exports have incresed by 50% over the past 5 years alone!
American businesses in general have been slow to innovate and slow to globalise their markets relying far too much on domestic demand for their products. Here in europe, despite the GAT agreement it is nigh on impossible to find anything made in America for sale in our shops. Where an American designed product is for sale it has usually been made in a european country so the U.S. parent can take advantage of tax breaks and possibly slightly lower wages.

The U.S.'s main trading partners are in South America where the populations are poor and so cannot afford luxury items and so for example whereas GM are looking to reduce car production in the U.S. by a million units per year, B.M.W. in Germany are ramping up their volumes to feed their export markets.

In conclusion what the U.S. need to do, rather than try to simply ban outsourcing (which would be impossible) is first the gov't needs to create a tax environment on a par with their industrial competitors then companies CEOs need to develop a sense of nationalism (consumers can help by boycotting companies with strong outsourcing policies) and finally and most importantly the U.S. companies need to start aggressively marketing their products in lucrative oversea markets.

 

[Astronuc]

Here is an interesting article -

V35-3: Globalization and Engineering
http://www.nae.edu/nae/bridgecom.nsf/weblinks/MKEZ-6GDPFQ?OpenDocument

Engineering as a profession in the United States and other developed nations may soon face a crisis. As a result of sophisticated telecommunications and the digitization of engineering work processes, increasing portions of engineering work can be done without close proximity to particular persons, places, or other processes. In principle at least, this work can be done anywhere in the world that has access to (1) global telecommunications networks and requisite software packages and (2) adequately trained personnel. Undergraduate engineering students in relatively advanced developing nations, such as India and China, follow a curriculum roughly comparable to the one taught in developed nations. Thus, even as barriers to performing conventional engineering work remotely are eroding, a global pool of conventionally trained engineers is growing. This means that U.S. engineers are now in global competition with engineers in developing nations whose wages are 40 to 80 percent lower than ours.

 

[SOS2008]

Nowhere in there did you answer my question: Did you mean that the middle class is becoming poorer? Most of those links have nothing to do with the issue (what does the health of labor unions have to do with anything?) and the last link is dead, but the link on income distribution implies that you define the size of the middle class based on income distribution. Please state it explicitly for clarity. And anyway, if that is what you believe, fine, but that still doesn't answer the question above...

The links were provided to exemplify varying positions on the topic (some cover more than the OP). Concerns that the middle class is being squeezed are legitimate, and nitpicking over whether it is getting poorer or smaller is irrelevant. I’m not purporting complete devastation for American workers, only that there are signs that we should note and try to make corrections before conditions do become extreme:

Once again, I believe concern about outsourcing/off-shoring/foreign labor (particularly illegal) are legitimate concerns, as well as other points made by members in this thread regarding diminishing U.S. competitiveness in general. To deny this and not work on ways to improve the situation is foolish.

 

[Gokul43201]

Just to make sure we're perfectly clear, you are saying that the middle class are becoming poor? Care to prove that?

This isn't a rigorous proof (since for one thing, I'm not sure exactly how 'middle class' is defined), but the numbers were provided by you in the other (state of the economy) thread. If I recall correctly, over the last couple of years, the adjusted incomes of the bottom 60% have declined while that of the top 40% has risen. Unless the middle class lies somewhere in the upper brackets, making 150K a year or more, they have gotten poorer.

Compared to 1999/2000 numbers, I think all brackets are poorer.