Explain to me by downsizing or outsourcing are immoral

Great Debates
1

A number of people I know think that companies that downsize employees or use outsourcing are morally wrong. Most of these people are older or unskilled workers who are afraid of losing their job. Now, I can understand why they might not like downsizing or outsourcing , however, I think finding them immoral is crazy. Not only to I think that downsizing and outsourcing in most situations are not immoral - I think they are the morally correct things to do. If a company is going to stay competitive they need to layoff or fire employees that are not productive enough. Or they might need to move jobs overseas. This is just good business. It does not do anyone any good for a company to lose money and go under. If a company does not make good financial decisions they are not looking out for their investors. Also, why should a company be expected to have more loyalty to its employees than the employees have to the company? If an employee finds another job that better meets their needs they will be done in 2 weeks in most cases. Why should a company have loyalty to those that don’t show loyalty. I understand that a lot of the employees that are downsized or lose their job due to outsourcing don’t have a lot of options, but it is not the fault of the company that they are not aboe to find a new job. The company needs to look out for its investors and bottom line.

So for those that think downsizing and outsourcing are immoral can you explain why they are immoral?

2

I think what concerns some people (me at least) about the current wave of outscourcing is that we aren’t talking about heavy lifting or assembly line jobs. We’re talking about relatively high skill jobs done by highly trained people well above the bottom of the technological food chain. I don’t think the issue in most people’s minds is the “morality” or the lack thereof in outsourcing. It’s the notion that there’s no cushion or protection left even if you train yourself to a razor’s edge, if someone from an emerging country can do your job for a fraction of the price.

At what point in outsourcing do you start destroying the nation’s base of technological talent and skillsets that enabled the marketed technology and services in the first place? If all your programmers are Indian who actually (in real terms) controls the value added aspect of the technology?

3

Well, I’m not sure I’m the best person to respond to this since I’m not actually opposed to downsizing or outsourcing in principle, but I do have a number of caveats about them that I’ve expressed in previous threads, so I’ll give it a shot.

SW: If a company is going to stay competitive they need to layoff or fire employees that are not productive enough. Or they might need to move jobs overseas. This is just good business.

No question that sometimes companies need to cut costs to save money, and that sometimes this affects payroll. I think the “moral” question here is how and why a company goes about cost-cutting. If good employees are being laid off so that the money saved on their salaries can go into bonuses for top management who are already extremely highly paid, I think it’s reasonable to see that as somewhat unscrupulous and unfair. (The fact that executive compensation has been skyrocketing while layoffs have become more widespread suggests to many people that the “need to cut costs” excuse is not really sincere.)

Similarly, if a company is shortsightedly trying to boost its short-term profits by slashing payroll, at the expense of its long-term health and competence, that’s a problem too. I’d tend to call it “stupidity” rather than “immorality”, though.

It does not do anyone any good for a company to lose money and go under. If a company does not make good financial decisions they are not looking out for their investors.

True, but as I said above, it’s too simplistic to say that cutting costs by reducing payroll is always a “good financial decision”.

Personally, I think that what we’ll ultimately need to do is to shift to a “multiple-stakeholder” model where workers as well as management and investors have some say in making the financial decisions for the company. There’s no inherent reason why ownership of a company should belong exclusively to those who contribute its capital, rather than being shared with those who contribute its labor.

Once we start thinking of a company as being ultimately responsible to its workers as well as its investors (who in return are both ultimately responsible for its performance), we’ll probably be able to get better cooperation and less one-sided decisions about its financial strategies. (A current example of this, which of course isn’t free of problems either, is the German policy of “codetermination” guaranteeing a certain amount of labor representation on company boards.)

Also, why should a company be expected to have more loyalty to its employees than the employees have to the company? If an employee finds another job that better meets their needs they will be done in 2 weeks in most cases.

Well, I don’t think you can argue that the loss of mutual loyalty is all the employees’ fault. It’s true, I think, that overall our work culture is switching away from an earlier, more “paternalistic” ideal of mutual employer-employee loyalty to a more “symbiotic” (or to its critics, “exploitative”) relationship where each simply makes use of the other as long as they find it worthwhile. But considering the number of genuinely loyal workers who’ve been dumped by their firms after years of service, I don’t think it would be fair to say that management’s loss of loyalty is simply a defensive reaction to loss of loyalty by the workers.

4

Because it effectively allows companies to bypass protections that are considered fairly basic rights for workers in the country they live in.

Which has been an issue for manufactured goods for years, its just that its moving on to service related areas of work now.

Otara

5

Well, yea, other than the sweatshop factor and destruction to local economies, it isn’t so much “immoral” as “heartless.”

I think this sums it up better.

[Soup is good food-(We don’t need you any more)
You made a good meal-(We don’t need you any more)
Now how do you feel-(We don’t need you any more)
To be shit out our ass
And thrown in the cold like a piece of trash
We’re sorry
You’ll just have to leave
Unemployment runs out after just six weeks
How does it feel to be a budget cut?
You’re snipped
You no longer exist

Your number’s been purged from our central computer
So we can rig the facts
And sweep you under the rug
See our chart? Unemployment’s going down
If that ruins your life that’s your problem](http://www.azlyrics.com/lyrics/deadkennedys/soupisgoodfood.html)

6

Workers need to understand that their value is not worth what they expect. At my last job there were people who had been there for 15-20 years making 65-75 thousand dollars a year. New hires would make 35 thousand. After about 6 months new hires would be as good (and usually better) at the job as those that had been there 20 years. Why should the company have continued to employee the veteran employees?

7

The ‘morality’ of outsourcing/downsizing varies from one situation to the next of course, but some of the more notable ‘immoralities’ to my mind are…

Executives Salaries skyrocket over ‘workers’ salaries:
You can’t expect to continue selling high-value product if no-one is earning the money to buy high-value product…

Reducing the ‘value’ of the people who actually make things:
Once upon a time GM boasted that it’s (mostly male, at the time) staff should be able to have a family (2.4 kids!) and own the cars they built - seemed a sensible attitude to me, but it’s long, long, long gone of course.
The major question, therefore, is who actually does own those cars/fund those families then? Why should someone else be paying people enough to buy the cars GM’s staff make? - how long can that sort of attitude work??

Share values are seen as more important than employing people/creating jobs:
This just widens the gap between ‘haves’ and ‘have nots’ of course - shareholding not being high on a minimum-wage person’s agenda and isn’t even an option to people in some far flung “economic development area”…

All of this “someone else should pay my customers salaries” mentality just cannot be ‘balanced’ surely? There must be a staggering ‘hidden cost’ in the need to provide social security payments and manage social pressures such as crime, disorder, health issues etc. etc.

To my mind, a society has to offer EVERYONE in it an opportunity to prosper, no-one is actually any more important than anyone else regardless of your economic or religious perspectives and skewing your societal values to maximise gain for only part of society undermines the foundations of the whole thing to my mind…

Without social responsibility you stand a serious risk of everything you take for granted as ‘society’ being undermined or even destroyed altogether.

It sounds dramatic perhaps - but when a significant % of people have no way of earning enough to prosper, what do you think will happen exactly?

Do you think they’ll just hide-off-in-a-corner and play with rocks whilst they starve, or do you think they’ll decide to help themselves to what other people ‘own’ - by hook or by crook?

End of the day, you can’t get people in some far-flung low-employment-rights-offering boom-to-bust-economy to build a security wall around your house or police your streets forever can you? :slight_smile:

JP

8

Economies will begin to make self-corrections.

9

SW: Economies will begin to make self-corrections.

That sounds pretty vague and unsupported. Exactly why should we think that economies will automatically “self-correct” away from “capitalist imbalance”, in which a minority of people are very rich while a majority struggle for the basic amenities of life? How will those “self-corrections” take place? How much imbalance will be required for the “self-corrections” to kick in?

Workers need to understand that their value is not worth what they expect. At my last job there were people who had been there for 15-20 years making 65-75 thousand dollars a year. New hires would make 35 thousand. After about 6 months new hires would be as good (and usually better) at the job as those that had been there 20 years. Why should the company have continued to employee the veteran employees?

Wow, what kind of business is it where 20 years of experience contributes nothing to your value as an employee? Sounds as though your employer was completely failing to invest in their employees to make them more valuable in any way. If that’s the kind of shop they’re running, I agree that they might as well just transform their whole workforce into high-turnover entry-level cannon fodder. They have nothing to offer an employee in the long run.

10

Ooh, it is like being in the '70s again. Thanks for your expert economics theories, Friedman Jr.

Yes, lets let the income disparity skyrocket, until all the poor people start hoarding their money, the dollar collapses into itself, industry has no people to sell to, lang values collapse, companies start falling apart, all the happy rich investors become worth nothing, unemployment skyrockets, we stop being a productive country and become a consumer, and kick back with a margarita waiting for the economy to self-correct. Sounds like an excellent plan.

Oh, and lets lower the taxes on the few people who have money while we’re at it.

Not even Reagan bought into that, and I hear he actually urinated on the homeless.

11

My take on why this is sometimes framed as a ‘moral’ issue :

As I understand it the ethical debate on ‘outsourcing / downsizing’ etc centers around the issue of responsibility, ownership and power.

Through various mechanisms our society has placed the control of its capital in the hands of certain individuals. In exchange, we expect these individuals to show some responsibility in the exercise of power - contributing to the general good via employment, production of goods, respect for the environment etc.

One of the weaknesses of modern capitalism is that it tends to divorce ownership, power and responsibility. Ownership of some corporations for instance, is highly fragmented, pretty volatile, and hard to trace - blocks of shares can be bought and sold in real time, financial institutions hold large blocks in various corporations, and are in turn held by various other institutions etc. Capital, ownership and control flow fairly freely across international borders, and it’s pretty difficult to figure out where the buck stops (heh, heh).

It could also be argued that outsourcing (esp. international) is all about exploiting legal loopholes (and if you consider lobbying, it’s also about creating legal loopholes). Rough example - NAFTA - free flow of capital, but not free flow of workforce - hardly a good example of free-market economics at work.

Anyway - my 2 cents on a huge and complex issue…

12

One other factor may be the so-called Work Ethic, which implies that hard work should bring rewards. If our socioeconomic system devolves to the point where hard work doesn’t deliver rewards, no matter how conscientiously accomplished, that could be a serious motivational problem, which in turn could certainly affect the moral tone. To me, taking away the positive motivations to accomplishment is a far greater threat to our morals than all the drugs and pornography in the world.

The contribution of back office workers in the production and servicing of a product is just as necessary to the success of an enterprise as is the vision of the entrepreneur. Common decency says they should get a fair shake.

Slavery worked in the economic system of the antebellum South, but that didn’t make it acceptable, and there was quite a little fracas over that one.

13

Well, for starters, I’ve never seen an employee who after six months is as good and experienced as an employee who has worked for more than two decades at the job. Unless the job is just standing in one spot, pushing a button over and over, there are always contingencies.

Experienced employees know how to deal with situations which may come up which weren’t covered in the manual. As an example, my stepfather works in a factory. He told me that one day, something went wrong on the production line. The “new kid” who had been there for about a year didn’t know what to do-- it had never happened before, and he wasn’t trained on what to do if it did… An employee who had been there for most of his adult life stepped forward and calmly corrected the problem. It was one of those things that only happens once in a blue moon, but without the experienced employee fixing it quickly, the machinery could have jammed, stopping production, possibly for hours.

Secondly, I think there’s something to be said about loyalty between an employer and the employee. Stable workers are happy workers, and happy workers are more productive and caring about their jobs. Entire communities have been built around factories and production plants. A man could raise a family, as my stepfather would say, knowing that as long as he worked hard, he’d be able to pay the mortgage and send his kids to college. No one can be secure where they’ll only be employed until someone cheaper can be hired to replace them.

Spectre of Pithecanthropus is right: why the hell should anyone work hard if your reward is to be a series of short-lived jobs with no security?

14

My take (and most of this has been said before)

1.) The OP is not the right question – it’s not whether “outsourcing is immoral”, but whether it’s the correct thing to do. There’s a big difference.

2.) You are just seeing the beginning of the new wave of outsourcing, in my opinion. There has been a long run of outsourcing of “blue collar” jobs for decades now, (There’s an empty factory building next to me now as testament to this – all the jobs gone to Mexico, and the local economy devastated, but it’s economically defensible and in the stockholders’ best interests). This new wave of outsourcing is affecting “clean” jobs like telephone calls and traditional “white collar” jobs like engineering. That’s all new, made possible by rapid communication, e-mail, the Internet, and standardized engineering. A couple of decades ago it was inconceivable that you could have engineering drawings done off-site. But now everyone’s using the same computer packages, and there’s no reason they can’t be done half a world away. The promise of computer communication and standard packages was supposed to be that we’d all be able to “telecommute” – work at home and phone it in. Nobody seems to have foreseen that it also allowed you to send the jobs out of the country to places where the standard of living would completely undercut you. Not only answer-phone jobs and drawing jobs are threatened by this, but engineering jobs as well. Folks not only in India and China, but in Eastern Europe, Southeast Asia, Africa, and South America can also compete with you, and they cost less. And we’re just seeing the beginning of this phenomenon.

3.) An issue that was painfully obvious to me as a kid – if you send all the jobs elsewhere, who’s going to buy your product? They always say that Henry Ford’s greatest innovation was paying his employees enough so that they could become customers, too, but we seem to be moving in the opposite direction. What’s going to happen? Will we move to an oligarchy, with increasingly few rich folks buying disproportionate numbers of goods, or do we scale back to cheaper products affordable by poorer Americans and comparatively wealthier overseas folks?

4.) Some jobs don’t go overseas – defence and security stuff is supposed to stay in the country for security reasons. So some engineering and mechanical will have to stay here. But there are limits – cheap resistors andf other electronics come from overseas. At what point do you draw the line at accepting things from oversears. And unless the industry sells exclusively to the military, some of its customer base has to be standard civilian commercial goods. If these are to compete with companies manufacturing and engineering overseas, how do you keep costs down so your company is competitive? Or do you give up the whole idea of trying to produce your things almost completely in the US, and buy it all overseas?

5.) As I mention, engineering is starting to go overseas. Some companies are even actively supporting thius by starting research labs in areas with cheaper overhead. Some are advertising “Innovation on Demand” (Which strikes me as a tremendously stupid concept). If all the engineering goes overseas, what incentive is there for people in this country to even learn engineering? What happens to innovation? Once the engineering as well as the manufacturing goes elsewhere, what does anyone need the US for? It’s not as if we have ALL the money?

15

It’s interesting…all the supercapitalist apologizers keep talking about how Communism set things up so that there was no incentive to work hard or excel at your chosen career, as you get paid the same no matter how well you do.

But when it comes down to setting up a capitalist system that makes outsourcing and overseas hiring into sacred acts that raise the stock value, the fact that this system results in domestic workers having not much choice but to take a long series of short-term, low-rewarding jobs simply to sustain life, is a wonderful, wonderful thing and not at all immoral or wrong!

16

As someone else has already said - at what point will this happen exactly?

Economies tend to be driven by people with a lot of money - and therefore it’s surely their ‘moral’ responsibility that they recognise hardship and take on the responsibilities of providing employment sooner rather than later surely???

People are more important than money/wealth - I don’t think anyone fundamentally disagrees with that concept do they?

As has also been said - there is a lack of responsibility and a visible way of making people accountable with leaves a bad taste in my mouth about all of this - and statement like yours are typical of the “I’m OK so screw everyone else” attitude…

Your example about the employees of 20 years being no more use than someone who’s done a job for 6 months - even if true - misses something VERY fundamental.

They’ve been employees for 20 years! - without them the company would not have functioned!! - is that not worth anything then??? :confused:

Offer no security and reward - expect no loyalty and effort - whoever you employ wherever, whenever…

Thanks for bringing this up tho - having been on both sides of ‘downsizing’ more than once it’s something I think I’m getting a better handle on now! :frowning:

JP

17

In fairness to the OP - I should probably take up the other side for a moment too…

Many people defend outsourcing/globalisation as a truly “open market” concept - it simply knocks down borders and puts everything on a level playing field which is “fair” as no governments or other organisations are allowed to inflate or control innovation and enterprise through market manipulation.

Sadly, the reality is somewhat like the communism example above tho - the complete opposite actually happens!

Governments control the whole thing as they control the levels of worker protection, wage protection, import/export taxation etc. etc. creating a 'lowest standards always win" situation which is wholly sickening to my mind.

What will be interesting to see - although I’ll probably not see it with my own eyes - is what happens when you hand over so much of your ‘work’ to these economies - there may come a time when they realise they have a firmer hold on the deal than you do, you hace no-one left who can do the work and they have all the cards and are calling the shots.

Now that may be a fairer system - shame it will take so long really :slight_smile:

JP

18

You will note all those terrible Japanese sweatshops that produce Toyotas and Hondas.

19

If and when World War III breaks out, we’re going to feel awfully silly about shipping so much of our infrastructure to China.

Especially if China turns out to be not so friendly during that conflict. Hell, the only reason we won WWII was because we had all the production and infrastructure.

Soon, China will have it all. Is this good? I wonder how much of the planet China can annex while we’re frantically trying to build tank and plane factories…

20

Ah, the Yellow Peril. Or is it the Brown Peril these days? Or both?

Do you really think China’s going to have the ENTIRE manufacturing sector? (I assume you meant that, not “infrastructure.” How can you export infrastructure?) Let’s at least examine the issues that exist, not imaginary future scenarios of doom.