Here’s how I see it: If an American company is forbidden to outsource some of its work, its cost would be higher than foreign companies that are in the same business and are allowed to outsource. American company is at a severe disadvantage, and resulting lower sales results in more job loss than outsourcing would have caused.
It is hurting a lot of people.
But how is a person being layed off due to “offshoring” any different than a person being layed off due to automation, or the obsolescence of a particular technology (think of all the “Ernestine”-type telephone operaters that used to manually switch phone calls)?
The problem we have is an unemployment problem, not an outsourcing problem. The solutions should be the same, but I don’t have any confidence that we’ve been able to figure out how to solve that problem (unemployment) other than by ensureing the overall economy is strong.
Let’s imagine an eventual world where almost all work is done more cheaply overseas, leaving a majority of the American work force unemployed.
This benefits greatly the minority of people who are invested in the stock market, but leaves a huge unemployed (and unemployable) class of aging workers (including many highly-educated former members of the middle class).
How is that problem addressed? Will a European-style “dole” be required? Or what? What happens when the growing underclass that outsourcing produces realizes its electoral strength? Will the corporations and their shareholders have to bear an increasing tax burden to support this underclass? (A Huey-Long-style share-the-wealth program?)
Please, no faith-based “something will come along” responses. These workers are not analogous to the oft-cited “unemployed buggy whip makers” of yore. When a buggy whip maker lost his job, he could get another job in the new Model T factory down the street. Whereas if a new industry were to spring up now, why wouldn’t it be outsourced like all the others? Why wouldn’t the modern analog of the Model T factory be placed in Mexico, say, instead of the US?
That would be my objection as well. But even if stock ownership were somehow so distributed, that we all could have piddling wages, and yet receive $40K or more in dividends, it might look like we were all gleaning the same benefit from the economy as we would from a healthy labor market. Yet, what would the underpinnings of such an economy be, when nothing moveable is designed or built here?
Apples and oranges, John. In the case of importing cheaper goods, everybody gets a chance to benefit from the wider availability of cheaper goods, thus distributing the benefit of the cheaper goods. But in the case of exporting jobs, the only beneficiaries are the wealthy capitalists and stockholders who hire overseas. For everyone else, it’s a straight-out losing proposition. And while it’s one thing to send our manufacturing capacity overseas, it’s another thing entirely – and a very bad thing – to send our intellectual capacity overseas. It demonstrably makes us weaker in several respects. Maybe the world overall benefits, but America LOSES LOSES LOSES when we outsource overseas.
Sorry, John, you’re still on the hook for the extraordinary claim. Apples and oranges and all.
But the way things are heading, you need to alter you statement about “designing, manufacturing, and selling” to be just “selling”, since there are powerful economic forces tugging at the “designing” and “manufacturing” part. I agree it can be effective in the short to middle run. Wal*Mart, for instance, claims a large share of credit for keeping inflation under control. But how do they do that? By cheap imports–dollars going out, and cheap stuff coming in. The balance of trade is atrocious, but there seems to be no way to correct that anymore since there’s so little manufacturing here.
I only hope that by the long term an equilibrium will be reached that isn’t too painful for everyone.
spoke, I am afraid that the probable answer is “let them eat cake” and that the eventual outcome will be similar.
But the people being outsourced are still 100 percent unemployed. You are saying it is better to toss people off a raft than to wait for the raft to sink and founder under their weight. Maybe you are right. But if you are wrong, you are advocating tossing people off a raft for no reason. Lots of countries protect their jobs and their people. America wouldn’t be all that extraordinarily different from other countries if it followed suit. So, I don’t think the raft is gonna sink and I don’t think you should be so damned eager to toss all those folks over the side.
It makes us stronger because it is the perfect social Darwinian solution. Let all the proles starve to death, keeping just enough around to run our latte shops and trendy boutiques. The only real humans in the USA–major stockholders, will then be free to live lives without having to deal with all those untermenschen blue-collar sorts.
How much work is actually being outsourced.I hardly think we are in any danger of actually having all the industry moved offshore. Thousands of colleges across this country are teaching young minds new things to encourage new business and growth.I believe American money moves a good percentage of global commerce.If we move all jobs overseas no one would be able to buy the things they are producing.I trust that economists and business movers and shakers realize this.
Just wanted to add to my remarks in response to msmith57: It seems to me that historically, businesses competed with one another on the revenue side, that is by marketing, and getting as many people to come in your door as possible. Now it’s all about finding the lowest cost possible. I may not have the POV a true businessperson would, but as I see it, a business needs customers more than anything. WalMart make be the most successful and profitable retail enterprise in history, and part of this comes from its abysmal wages, off-the-clock overtime, and other slimy labor policies. But for that scenario to work, even WalMart needs to have people on the other side of the counter, who have the money to buy their cheap electronics, furniture, and all the rest. The only way for that to happen is for the customers to have good jobs. As cheap as Wal*Mart’s prices are, its employees probably do not contribute much to its sales revenue, being so underpaid.
I would ask you to either clarify this post in such a way that you make it clear that you actually believe this (which is loathsome) or that you admit that you posted it in order to inflame and get a reaction.
Are you for real?
You know what would be really cool? If, as labor, I were allowed to offshore myself. It is all well and good for businesses to be able to and indeed need to outsource jobs in order to benefit from lower wages and therefore remain competitive. Fine, lets accept this as a fact for now. However, the businesses should not get to hold all of the cards. I should be able to follow the jobs wherever they globally happen to be.
Couldn’t that be a creative yet non-harmful protection? Simply have as firm condition that if a given company wishes to do business in the USA that wherever they happen to be employing people have open boarders to the American worker?
But the countries that are doing this in any major way are not the ones participating in the world economy. Tarrifs and import quotas are hinderances to such participation.
To answer the OP, outsourcing (in the manner you mean) makes us stronger by forcing us to compete on a more level field than otherwise. Look at the US auto industry, for instance. They prospered without serious competition for some time before 1970ish. When they had to compete, however, they did not do very well. After a couple decades of firece competition they are now doing much better.
My point is that competition makes us better at competing. That is, it forces us to become better at those activities at which we are competing. Specifically, at economic growth and wealth creation.
But this is a skewed interpretation of history. Historically, businesses have competed by marketing and pricing. They imporved features and lowered costs. There have been times of much higher unemployment than we are seeing now (even if you believe the conspiracy theorists that 5.X is much too low) when we did not panic.
This is a very interesting idea. For the most part, I think it is already true. As an American, you probably can move to most any country you want. Surely there are exceptions. But I think they are the exceptions rather than the rule.
Is there any country in particular that you had in mind?
Don’t forget that economies will correct themselves. Let’s say that most manufacturing can be done more cheaply overseas. Two things can happen: 1, our economy shifts so that people employed by manufacturers get jobs in other sectors. So no problems everyone has a job.
Or, 2, they don’t. U.S. buying power will decrease, leading to a weaker dollar and fewer imports. Eventually the dollar will become weak enough that American workers will again be competitive on the world market. Jobs will come back.
And finally options 1 and 2 aren’t mutually exclusive. They’re happening simultaneous all the time, to a greater or lesser degree.
The "big picture" point of view is that a free market will find the most efficient means to meet demand. Economic efficiencies mean that individual workers will be more productive. The more productive we are, the more resources we all get to consume (i.e., a higher standard of living).
As for "small picture" complaints: obviously people who have lost their jobs (for whatever reason) are hurting. I believe the government should mitigate this pain by subsidizing retraining (work in a new economic sector) and moving (not all regions are equally competitive) costs. Tariffs and other protectionist actions have a long-term negative effect: they protect economic inefficiencies. This lowers everyone's standard of living in the long run. (What's the point of a decent wage, if everything costs more?)
In the long run, for the U.S. to remain competitive in the world market (and stay high on the economic food chain) we need large investments in education. And, no, I’m not sure how to do that.
Well, as a Helpdesk dude, a very obvious example would be India. Now, I have not been having a lot of luck finding out if it is possible for me to just show up in India, get an job and stay as long as I want, but if this were the case I would be rather surprised.
I do know that it does not work that way here. If anyone has any information about this I would love to look it over.
Define “real.”
Our brother Dogface has a sarcastic sense of humor and is especially fond of tweaking liberals. Try not to let it bother you.
This argument has been echoed by several others, but I believe it may be misleading. Based on your link, it apparently refers to individuals who own equities. This ignores the fact that there is an enormous amount of stock owned by mutual funds and pension funds - these are in turn owned by individuals (most of whom are not as wealthy as the average individual equity owner).
I don’t know if this has much bearing on the central issue of this thread, but FWIW it is worth correcting.