But when it is, and when no laws are broken, there is no reason not to. However, I agree that labor costs are just one factor. For example, there are costs and risks to doing business in 3rd World countries. You might have to build your own electicical generation plant, or your company might get nationalized in some coup, or you might have to do a bit of currency hedging. It’s pretty clear than some posters here have never actually run a business…
No, but quite a few people are saying it’s inherently better to reduce costs without regard to wage capital. In fact, that’s the central crux of the outsourcing argument. And outsourcing all the jobs would greatly reduce costs, no way around that. Even if India starts to build up, the jobs can easily be spread around thinly enough in a global marketplace to keep wages at negligible levels compared to the US.
Now you’re backpedaling, liagle.
You were specifically asking why we shouldn’t outsource all our jobs. The simple and obvious answer is that outsourcing is not always a viable (or even preferable) way to increase productivity. It. Is. That. Simple.
Your question was answered. End of story.
Kodak is an awful example. They were a company with incredible brand-recognition, strong customer loyalty, a large research team (albeit in a slightly different area), and a lot of cash flow. The fact that the company’s leadership did not have the vision to foresee what digital cameras would do to their buisiness and manuver to accomodate digital cameras is a failure of the highest order. They did not suffer because of risks, they suffered because they didn’t take risks. The leadership had a responsibility to their shareholders and to their employees, but they totally dropped the ball. Given the size and scope of their failure, I consider it immoral.
I think a better example to illustrate your point would be to site one of the numerous start-ups that have failed. Some of these are cases where companies took risks, but simply guessed wrong. I admit that the resulting RIFs are not immoral, especially since the employees knew and accepted the risks when joining.
Ideally your garbage collector would have bought three trucks for each crew and expanded their territory by three times. If they adopted the trucks quickly enough, they would be able to undercut the competition. Yeah, I know, this an ideal and it is not that easy.
I understand that a company might get to the point where RIFs are the best (and sometimes only) option available to restore profitability. My point is that to get in this situation, a number of mistakes and failures had to occur. If the company’s leadership had done its job well, it should have avoided the situation. Yeah, I know, we’re just human and mistakes happen, but that doesn’t mean they aren’t failures just the same. Sure, some companies take risks and fail, but the massive amount of corporate downsizing in the last few years is not the result of failed risks.
In my previous post, I do acknowlege that their are cases of risk-taking companies that aren’t immoral.
And I’ll back-pedal a little. Immoral is not the best choice of words. I was trying a little too hard to frame my answer in the context of your OP. I consider RIFs to be a failure and if the failure is big enough (see Kodak above), then it is immoral.
As to outsourcing, I haven’t mentioned it up until now. The truth is that I don’t have a problem with it at all. As a software engineer, I am seeing a lot of outsourcing in my field. But I consider it good competition and an opportunity to prove my value above and beyond my cost. I don’t have a problem with jobs moving to India any more than I have a problem with jobs moving to Indiana. I am glad to see other countries getting an opportunity to raise their standard of living.
Not at all. What I’m saying is that jobs that disappear because of new technology or methods that improve productivity can be replaced with new jobs in the newly developed field/industry, or by jobs created because the money saved by the consumer is then able to be spent on other goods and services, thus creating a demand for more workers to manufacture/provide them.
With outsourcing/offshoring, there are no (or at least far fewer) replacement jobs created, because the job loss is not a result of a new developing job field, and, since there is a net loss of jobs, there are fewer potential consumers with disposable dollars to spend, which reduces demand…
Sure, there will at some point in the future, new inventions will come along, but it takes time for inventions to become new industries and potential job fields, and when the rent is due at the end of the month and you don’t have a job (or one that pays enough to keep up with even the most basic expenses), that time waiting to find out what the next hot new job field will be is time you just don’t have.
You are assuming that job losses not related to offshoring are because of some new “developing job field” and that job losses due to offshoring are not. I don’t see it. Offshoring for information type jobs is only possible **because of ** the advances in communication and data processing technologies. As for labor intensive manufacturing jobs, there is nothing new about offshoring. It’s been going on for hundreds of years.
We used to employ something like 40% of the populace in agriculture. Now it’s about 2%. Do you think the 38% remainder are all making tractors and harvsters (the new technology that knocked out the agriculture jobs)? Doesn’t work that way.
Old job categories die out (for any number of reasons) and new job categories are created. You seem to want to know in advance what the new jobs are going to be. If that were possible, we’d just all invest in those companies and retire in a few years. The truth is, it is simply not possible to know what the new jobs are going to be 10 years from now.
Speaking of which, here is something I got in the email today:
To me, it depends on the circumstances under which that product was made. I think that workers should be fairly compensated for the job that they do. To me, along with salary, this means decent work hours, decent benefits. I realize that the cost of living in China may be much lower than that in America, but I’ve read the articles that talk about the awful conditions in which some of these people work, as we all have. I don’t want to support a product that exploits a foreign economy.
My lifestyle is by no means extravagant by American standards, but I realize that it is much more comfortable than that of a typical factory worker in China. And I’m not talking about the fact that I get to drive a Corolla to work instead of a bike. For instance, I don’t have to leave my children 500 miles behind with their father to get a factory job in the city, where I can live in terrible conditions and send back as much of my salary as humanly possible so that my family in the country can barely scrape by. If you need a cite for this situation, let me know and I’ll find one for you. Is it better than starving to death? Yes, but not really a lot better. I believe it is immoral parts of our comfortable lifestyle in America depends on the misery of these people.
I do realize that there are foreign-made products out there from third world countries where the workers are treated in a fair fashion. I’d buy these products, no problem. In fact, I might even buy them in preference to American made products.
If you can’t say what they will be, you also can’t say whether they will exist at all. That’s what has people spooked, John. Before you start blah blahing about economic cycles, I will remind you of the Great Depression, of Britain’s prolonged and painful economic “adjustment” (1970-present) and other lengthy, miserable experiences created by your oh-so-wonderful Invisible Hand.
This is not, strictly speaking, true. I can’t say who the president will be in 30 years. But I know there will be one (to a good degree of certainty at least).
That and the possibility of alien abductions. 
Many things have people spooked. I cannot pass a graveyard at night on foot without conjuring up images of dawn of the dead in me head. I know they are irrational, but I can’t help it. The difference is that I am not asking the government to protect me form rampant zombies.
Well, a good argument can be made that these cycles (or at least the inordinant amount of pain associated with them) has more to do with govenrment interferance rather than the invisible hand.
No, it wasn’t. No, I’m not. And frankly, I have no friggin clue what posts you’ve been reading. You said people weren’t claiming that outsourcing is always good. I pointed out that this was the logical extension of the notion that reducing prices is inherently good. That’s not backpedaling.
I state again. Outsourcing WILL reduce the cost of labor. Outsourcing specifically to India, or China, or any other particular scenario may not always do so, but you CAN find somewhere with a lower cost of doing business than the US. Why not then outsource all jobs?
Or, if you’d prefer a compromise, why not simply outsource all high value jobs and only retain bottom tier service sector employment in the US? Clearly, that will grow our economy since we won’t have to pay as much for goods and services.
Or how about this argument, since you don’t want to be asked to defend your stance on that one: You say reducing prices will increase our buying power, yielding more good than the harm done by kicking a few million people out into cardboard boxes. I say that if you pay people more, they’ll be able to afford the increase in prices because those will be spread out over a much larger number of people. Thus we should not outsource, but rather drastically increase the minimum wage. QED.
No more specious than your side of the coin. Still doesn’t address the core problem of an unbelievably incompetent management caste destroying the economy by hoarding all the capital in a mindless attempt to outscore everyone else, but hey.
American labor is already too expensive in many cases now. And you want to place crippling labor cost increases on American companies? How are they going to compete with foreign companies?
Hmm… what did I say about that… oh yeah
Do try to read the post once in awhile, instead of just skimming for things to take out of context.
Sorry I missed the last paragraph.
I have idea, why don’t you start your own company and clean up? Since management is unbelievably incompetent in America you should have no problems running your company better and becoming incredibly successful.
Yes it is. Pay. Close. Attention.
Reducing prices is inherently good. However, outsourcing will not always reduce prices. Ergo, outsourcing is sometimes the most preferable solution, but it is not inherently good.
Additionally, while reducing prices is inherently good, there are other goals to achieve as well – long-term productivity and stability, for example. These goals will sometimes be in tension with each other. ERGO, it is disingenuous to claim that the universal good of outsourcing is “the logical extension of the notion that reducing prices is inherently good.”
NOBODY claims that outsourcing is always a good thing, and this notion is NOT the logical implication to draw from the value of reducing costs. Your steadfast insistence on equating the two speaks volumes about your grasp of economics and basic logic.
You might want to try an experiment. Read a post before you reply to it.
I didnt say that all jobs not related to offshoring are related to some new developing job field, nor did I say that jobs lost because of new technologies are replaced by jobs in the new technological field (the aforementioned tractors).
What I said is that jobs lost to new technologies are replaced by new jobs because the new technology itself creates a potential new job field, and that the lower cost of goods and services that results from increased productivity means that consumers have more money to spend on other goods and services, which creates a demand for more workers to provide them.
As for advanced technology making much offshoring possible…
This is not creating new jobs, it’s just moving existing ones so companies can exploit cheap foriegn labor at the expense of American workers. These jobs are not being replaced by developing new fields the way jobs lost to improved technology leading to increased productivity would. Which means more unemployed workers with less money which ultimately will lead to less demand for goods and services.
I never said that. What I said was that someone who is unemployed (or severely underemployed) people don’t have ten years to wait around to see what the Next Big Thing employment field-wise is going to be. The rent is due at the end of the month, the kids need food on a daily basis, and the electric company isn’t going to wait to shut the power off until a potential worker has gotten an education and found work in an as-yet undeveloped technology field.
Um, yeah, that was kind of my point.
Wouldn’t matter much if they did. Unless the Next Big Thing is in a person to person service role, it can be done cheaper somewhere else. Guess that still leaves prostitution and fast food service.
While reducing prices is always good for consumers, lower prices are not necessarily good for companies, particularly if their product/service sales don’t increase from the lower prices.
Experience shows that, in general, outsourcing, as it is practiced in corporate America, rarely reduces prices. Instead any savings generated seem to be redirected to maintaining the companies stock prices and enriching management compensation. So outsourcing not only removes a person in this country from a job, something that reverberates through the person’s family and the local economy, but the supposed savings from this practice aren’t generally returned to the consumer in the form of lower prices.
For instance, here is a story on SBC, an under-performing telecom company that has laid off and/or outsourced tens of thousands of employees because of their management problems:
JThunder: Reducing prices is inherently good. However, outsourcing will not always reduce prices. Ergo, outsourcing is sometimes the most preferable solution, but it is not inherently good.
I hear you. However, that seems to pose some potential contradictions about the effects of outsourcing and how we deal with them:
A) If outsourcing is not the most preferable solution in most cases, and consequently will not become an important cost-saving strategy for most businesses, and will affect only a small number of US jobs—then it won’t seriously damage the economy if we call it “immoral” and slap legal restrictions on it. It might be a rather silly way for us to react, but since most businesses wouldn’t outsource anyway, they won’t be significantly affected by it.
B) Contrariwise, if outsourcing is going to be an important cost-saving strategy for most businesses, then it will affect a large number of US jobs, which will cause hardships for lots of US workers, and we really need to be concerned about its ethics and economic effects. (I still think that simply banning outsourcing wouldn’t be the best way to deal with them, but we definitely need to take its consequences very seriously.)