Some do, some don’t.
Free reign to market forces is always to the advantage of capital in the long run. I’m curious to hear what you think is an exception.
The new device wasn’t invented overnight, but in your example my company doesn’t consider using the new device until my competition has already rolled it out. How is this not a failure in the management of my company?
An ideal company would have identified the device before their competition and they would have purchased two devices so that all 100 employees could out-produce and destroy the competition.
Having to RIF employees is a failure in leadership and planing. There are exceptions to this rule, like natural disasters and company tragedies.
I don’t think you read my post carefully. Once downsizing is necessary, the company leadership has already failed and therefore acted immorally. Any necessary RIFs are just an extension of this failure and are therefore immoral.
I don’t understand this “immoral” judgement you are placing on a loss in profitability. Sure, it would be ideal if every company could be profitable all the time, but businesses that take risks are important to an economy also. Then there’s the obsolete factor. Is Kodak immoral because people are using digital cameras, and there is now less demand for film?
My garbage collector uses a truck that has an automatic trashbin lifter and dumper. It takes one employee to drive and operate it. Should that company not have bought those trucks and instead continued to use 3 guys doing it by hand so as not to lay anyone off, even though a competitor might underbid their city contract next year?
It seems to be a fact of life nowadays that jobs are not always permanent. I suspect technology is changing markets too quickly for many businesses to provide the lifetime positions people once could expect. Losing one’s job is not a death sentence. It’s not fun (well, sometimes it is 
), but one can become productive elsewhere, doing a job that is more cost effective for the economy than the previous one.
Asking a company to maintain an inflated payroll is equivalent to asking the company to go buy some books for the purpose of burning them. It’s a simple waste of resources that will ultimately destroy the company.
I am on the fence regarding outsourcing, but your statement is no longer true. IBM, Intel, and Microsoft all have research centers in China and India staffed with PhDs. In at least one of these companies all R&D growth is happening overseas.
To me, what is immoral are the salaries paid to top executives. I do not believe that they are justified by the market. Instead, an old boys club of board members determines the pay. With any justice, more executive level jobs will move overseas. Imagine how many brilliant MBAs you could hire in India for $1.5M.
Another thing to consider is that the military that is keeping the trade routes open, and protecting business interests inside and outside the country, is filled mainly with people from the lower socio-economic classes. Why should these people put their lives on the line to protect businesses that have no loyalty to US citizens?
OTOH, I generally favor market solutions. I think the right approach is to use moderation. You certainly don’t want incentives for companies that outsource, but you also don’t want to have tarrifs and other barriers that could lead to another depression.
Asteroide
Mr_Moonlight
I’m not sure what you mean by this. I guess my point is that the advantages to be gained by international outsourcing are not simply the result of mysterious market forces, but largely attributable to governmental policy decisions, such as preventing the free flow of labor.
Skewing the playing field in favor of large capital is not necessarily sound for the economy - local or global.
Free market forces might set the stage for a sound self-regulating economy, but in order for them to function on a global level, the issue of borders would need to be addressed.
This may be something of a digression…
The OP, as I recall, was about why downsizing or oursourcing are immoral. Now, as I recall, morality has nothing to do with personal gain and is only indirectly to profitabliliy; morality is more inlved with total damages to others and society as a whole. Should I knock somebody upside the head and steal their wallet, that might be profitable, but it wouldn’t be moral.
With that in mind, here are my opinions of why downsizing and outsourcing are immoral.
Downsizing: In my experience, a frequent reason for downsizing is to replace older, more experienced workers, who draw a high salary, to be eventually replaced with newer employees that accept entry-level wages, or unbenefitted temps. By firing a lot of people at once you can sidestep the fact that it is illegal to fire someone based on their age without other cause. Though this is profitable, I see it as insufficient reason to fire the worker; there is -or was- an implied contract of loyalty in many industries, particularly regarding the cases when the employee is older and entered the field when it had some ethics to it.
Further, the loss of loyal, experienced workers, and the resulting uncertianty and distrust generated amongst the remaining employees, is likely in the long run (or short run) to undermine the efficiency of the company, thus betraying the trust of the stockholders anyway. I have known several people who were included in mass firings, and then were promptly hired back on as consultants -at twice the wage- because work couldn’t proceed without them. Now, that’s stupid management. (These people were older and experienced, incidentally. Any guesses as to why they were fired?)
Outsourcing: Similar to downsizing, outsourcing genereally removes an existent employee for a lower-cost one. The primary difference is, rather than the company paying less money out into the local economy as wages, they pay no local wages. This drains money out of the local economy, reducing local standard of living. If unrestrained and taken to a theoretical extreme, this could collapse the local economy, with attendent horrors, without necessarily benefiting the foreign market proportionally. As this would be a case of excessive harm to others (for personal profit, even), it would be decidedly immoral.
Granted this is the case in the extreme, but minor participation in these activities encourages more rapid trends toward the extreme. Any activity that makes a company more competitive makes it harder for other companies that don’t do the same to survive in the marketplace. So, if one company starts using computers for their filing, pressure is put on the rest to do the same or die. This applies to any profitable activity, be it downsizing, outsourcing, antitrust activities, what have you. If effective enough, the profitable activity will eventually pare the competition down to onlyinclude companies that engage in the activity. Wouldn’t it be nice if there were NO local jobs? As downsizing and outsourcing make a company at least temporarily more competitive, whatever immorality these actshave is magnified by the pressure put on the competition to join in.
Now, I’m almost certain to be accused of exaggerating and assumming the extreme case and slippery slope and whatever all else, but it’s worth noting that most morality issues are approached similarly. Petty shoplifting is not immoral because the store can’t afford to lose the stick of gum, it’s immoral because ALL stealing is immoral, because you can ruin somebody by stealing enough from them.
Just to comment on this point: It makes it all the more painful when you realize that our knowledge infrastructure was built up, say, over the last 150 years. Universal education. Wider availability of higher education. An economic system in which, until recently, the ideal was considered to be a situation in which most workers earned enough to take care of their families. It took decades and decades for the Western world to achieve what it has. Blood, sweat, and toil went into it. And now it seems like we’re being sold out.
Well…
With the decline in the demand for film there is an increase in the demand for digital cameras, so there is a potential for the people losing their film-making jobs to get training in (and jobs) in the digital camera making industry. Also, if the gargage collection actually did the right thing and passed the cost savings from the need for less labor on to the consumer, then there would be more money available to create demand for other goods and services, so the garbage collectors would be able to find other work. That’s the nature of technology drven and productivity- increase driven layoffs. Presumably, the companie will pass the cost savings (or at least some part of it) on to the consumer, which will increase demand. And if the company is really progressive it will retrain as much of its existing workforce as is feasible to use the new technology, in order to be able to manufacture more of the products to keep up with that increased demand.
The problem with outsourcing is that there are no new jobs being created to replace the ones being shipped offshore. There is no ability to say “yeah, I lost my job, but because there is a new up-and-coming industry, I can go to a vo-tech school and get a job in the new field”.
My bolding.
Huh? Is it your contention that everything that will be invented has already been invented?
I don’t understand why you equate failure with immorality. Business is a competitive field where risk is involved. Companies cannot be be successful at everything every-time. In a changing business environment layoffs and outsourcing may become necessary. Just because you say all RIF’s represent an immoral failure of management does not make it true. In the highly competitive field of business companies need to maximize their competitive advantages. RIF’s may create the best option for a company to achieve success. RIF’s that were not once necessary may become necessary if the company is going to continue to suceed. Sucess to most companies is to become and remain economically profitable for its owners and investors, not to employ people. It is not a failure of a company to fire employees.
Actually, most places in the US are “employ at will”. Companies need little reason to let someone go other than they don’t “feel” like employing them.
As I said, no contract, implied or otherwise.
Most middle managers are stupid…or at least of mediocre ability and intelligence. If they were that smart, they would be rich, own a company or pursuing something worthwhile, not managing a sea of cubicles.
Bad for one local economy…good for another.
If outsourcing is a symptom of a problems company, it could take a LONG time for a company to give up the ghost as it continues to try one quick fix after another until finally it gets to “reorganize” under bankruptcy and come back to try again.
Company management is generally amoral. Management knows that they will continue to have the good life, regardless what happens to the workers below. Few companies/managements pay more than lip service to caring about the society they live and exist in.
Therefore, government has to put some limits on what a company can and cannot do. As this is difficult to do in our “free” environment, the tool of choice will be some change in the tax policy directly related to companies themselves. It is very likely that there will be some changes made to tax laws this year that help restrict the displacement of workers to other countries.
Any company of more than a small size can not just pick up and move overseas. There are too many exposures to doing this, such as security, infrastructure, taxes, labor pool availability, IP protection, punitive tariffs and on and on.
Sigh, more meaningless pap! Companies who allow themselves to be placed in a uncompetitive position usually do so because they have POOR MANAGEMENT. Typically, in stories I have read in business magazines, they don’t understand their market, don’t understand or practice good use of technology, don’t know much about their competitors and don’t have a good planning function. Sort of similar to our foray into Iraq where it doesn’t appear that we have anything other than Plan A to work with. For MANY companies, outsourcing is mainly a reactive decision, not a proactive one.
Reams and reams have been written about how poor the management at Kodak over the years. For years, everyone has been writing about how film will be superseded by digital cameras. And what did Kodak do with this knowledge? Little or nothing until they were absolutely forced (by declining sales) to do something. Kodak is a clear example of lack of management understanding of the market and planning.
A similar example is the music industry. As an industry, and despite declining sales every year, they have refused to investigate and take advantage of new technology to give the customer what it wants. So now they use the RIAA to sue consumers to try and maintain a failed business model. Unfortunately, the effect of their short-sightedness has been to force companies that earned their living from the industry out of business or into bankruptcy (like Tower Records). Which has further led to layoffs of many and loss of sales tax revenue to local entities. So the effect of poor management is not limited to just a company but radiates to all they do business with.
Consider that outsourcing works both ways. For example, there are Japansese and German automobile factories located in the United States.
But if in fact outsourcing is a profitable business decision for an American company to make, then it is harmful to the American economy NOT to do it. To see why, one must look beyond the local economy.
Yes, it does hurt the employees who are laid off. However, the millions of customers of the business benefit from lower prices. And those customers can in turn use their savings to invest or spend somewhere they otherwise would not be able to. Materials and labor are being used to their maximum potential, and the economy improves overall.
If you take the protection of local jobs to its logical extreme, it leads to each town manufacturing its own computers, cars, and maple syrup. Not an efficient system.
But that doesn’t make them immoral. It’s not immoral to be stupid, is it? Businesses fail, and people make bad decisions sometimes. That’s the nature of life. In a free market, stupid businesses go out of business and make way (eventually) for businesses that better satisfy their customers.
This is for the posters who think there is something “immoral” about outsourcing (or offshoring):
Mr. Consumer walks into an electronics store to by some piece of home entertainment equipment. One brand is 100% made in the US of A and costs $500. The other brand is made in China and costs $300. Same features, same everything. Is it immoral for Mr. C to buy the Chinese brand?
And then the millions of customers have to support the millions of unemployed workers. But that’s okay, we’ll just use the deficit to pay for it. Sure the interest jsut keeps spiralling out of control, but that’s a problem for future generations hopefully. As long as the system doesn’t collapse until we’re gone, things couldn’t be better.
But I once again raise the point for the oustourcing crowd: Since outsourcing is so good, why not send all our jobs overseas? After all, you’ve made it quite clear that capital flow into the economy doesn’t matter, and value-adding labor growing the economy is just some communist myth. All that counts is lower outflows due to prices of consumer goods.
So clearly we can just have no jobs at all, and everything will be perfect.
liagle, you’re guilty of the same black-and-white fallacies that plague iamme99’s thinking.
Nobody’s saying that outsourcing is always good. Sometimes it is; sometimes it isn’t. It should be painfully obvious that nobody is saying that it is always the best way to increase productivity and reduce costs.