# Offshoring - the snake that is eating itself. **URL:** \ **Category:** Great Debates\ **Created:** [October 3, 2010, 2:51pm UTC](https://boards.straightdope.com/t/offshoring-the-snake-that-is-eating-itself/555912 "2010-10-03T14:51:53Z")\ **Posts on this page:** 20\ **Page:** 11
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 8, 2010, 6:18pm UTC](https://boards.straightdope.com/t/offshoring-the-snake-that-is-eating-itself/555912/201 "2010-10-08T18:18:54Z")
> [@even\_sven](#): > > > [@Damuri\_Ajashi](#): > > > > I have no problem with China growing, its inevitable. I have a problem with China accelerating its growth at our expense using unfair trade practices. > > Think for a moment- what does “fair” mean? God didn’t include many rules for international economics in the ten commandments. It’s generally agreed that countries have an intrinsic right to manage their own internal affairs, as long as they don’t violate human rights or start wars. So “Fair” is not something with a universal definition. > > What seems “fair” is going to depend on your perspective. From the US point of view, free trade seems fair- and not coincidentally that happens to favor large well-developed economies like ours. > > But, I promise you, from the point of view of a small country like Nepal, free trade seems like a guarantee of getting completely screwed. If they were defining “fair” they would no doubt include contracts that make it easier for a small country less developed country to compete globally. I have no idea what North Korea would consider “fair,” but it probably wouldn’t be what is going on now. Back in Soviet times, they ran a whole different trading system that they, no doubt, considered “fair.” > > The point is, everyone is going to define “fair” as what best benefits them. This is, in fact, exactly what we have done. > > The only reason our version of “fair” has any global traction at all is because we are so big people have to play along by our rules. And they do indeed bitch about it. There is no shortage of official and unofficial bitching about how the US is able to impose it’s financial policies on the world. I’d venture most of the world doesn’t think our version of things is “fair” at all, but in true “unfair” fashion they have no ability to resist it. > > Well, there is a new kid on the block. They have their own version of “fair,” and apparently they are big enough to enforce it. > > You can be bummed that you aren’t the only game in town anymore, and you might have to share your toys. But it’s fatuous to claim any sort of moral high ground. I think the laws of economics are more or less universal. What constitutes fair trade practices are based on economic theories not whaever happens to be good for teh USA. As you can see by the responses of free traders on this thread, our trade polciies have been very fair and that’s fine but when someone is cheating, we shouldn’t sit abck and take it because retaliation would be harnful to both parties. So how have we defined fair in a way that unfairly benefits us? ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [October 8, 2010, 6:46pm UTC](https://boards.straightdope.com/t/offshoring-the-snake-that-is-eating-itself/555912/202 "2010-10-08T18:46:19Z")
> [@Damuri\_Ajashi](#): > > > [@RickJay](#): > > > > How in heaven’s name do you get that idea? Jesus, I must have said twenty times in twenty different ways in these damned threads that the solution to this sort of thing is allowing the market to replace jobs, not chase the ones you’ve already lost. > > Some of those jobs should not have been lost, WOULD not have been lost BUT FOR unfair Chinese trade practices. I don’t know why you keep saying that. It would only be true if China was the only alternative for low wage manufacturing. It isn’t. [quote=I think the laws of economics are more or less universal. What constitutes fair trade practices are based on economic theories not whaever happens to be good for teh USA. As you can see by the responses of free traders on this thread, our trade polciies have been very fair and that’s fine but when someone is cheating, we shouldn’t sit abck and take it because retaliation would be harnful to both parties. So how have we defined fair in a way that unfairly benefits us? [/quote] Although we haven’t done this yet, if we insist on some sort of carbon tax, that will be grossly unfair to countries like China, unless we’re willing to pay a retroactive carbon tax for what we did in the last ~150 years. ---
**Author:** ![treis](https://avatars.discourse-cdn.com/v4/letter/t/bc79bd/32.png) [@treis](https://boards.straightdope.com/u/treis)\ **Post date:** [October 8, 2010, 9:39pm UTC](https://boards.straightdope.com/t/offshoring-the-snake-that-is-eating-itself/555912/203 "2010-10-08T21:39:14Z")
> [@Damuri\_Ajashi](#): > > > [@treis](#): > > > > Do you have a cite for that? All I’ve found for U6 in chart form is [here](http://www.bls.gov/osmr/pdf/ec090020.pdf#page=12) (PDF page 12). That chart shows U6 being 12% in 94, steeply declining, and not making it back to it’s 94 level until the current economic crisis. > > I guess i would point out that your original statement was 1998-2008. I look at this chart: > > [http://www.economicpopulist.org/content/u3-and-u6-unemployment-during-great-depression](http://www.economicpopulist.org/content/u3-and-u6-unemployment-during-great-depression) Ok, but I still don’t see a U6 above the historical average. I see one about as low as one can ask for in that time frame. > [@Damuri\_Ajashi](#): > > I’m not blaming everything on trade. But I do think that China’s unfair trade practices are having a deleterious effect on domestic employment. I don’t know why you keep objecting to retaliating against China? part of your argument seems to be that we would invite retaliation if we did anything. Well, in this case, WE are the ones doing the retaliating. I’ve never said anything about retaliation. I’ve just said that off shoring to China is a minor part of the economy, and China’s currency manipulation is a minor part of that. It’s just not a big deal. > [@Damuri\_Ajashi](#): > > not in real terms: > > [Dave Manuel - Economy, Stock Market and Real Estate News](http://www.davemanuel.com/median-household-income.php) > > [Household income in the United States - Wikipedia](http://en.wikipedia.org/wiki/Household_income_in_the_United_States) > > Not for the typical household. Now of course MEAN household incomes have done very well but almost all of that gain has been captured by the top 1% of American households. I see incomes rising in the 90s and then stagnating in the 00s. What happened in the 00s is because we went through two recessions within 8 years of each other. That’s going to stagnate income growth regardless of what your doing with outsourcing. > [@Damuri\_Ajashi](#): > > Foreign politicians, especially those from the US, have been hammering these points home. President Obama made the RMB a key issue during his visit to China this week. Senator Chris Dodd chimed in with his two cents, that “You can’t give your competitor, your adversary in this case, a 40 percent advantage in global economies.” As analysts pointed out, the US, unfortunately, doesn’t have any leverage on this issue, as it is basically dependent on China to fund its budget deficits through Treasury Purchases. Thus, Chinese Prime Minister Hu JinTao couldn’t even be bothered as to so much mention the RMB when summarized the meeting with Obama for reporters. > > [Everyone Thinks the Yuan is Undervalued….Except for China | Forex Blog](http://www.forexblog.org/2009/11/everyone-thinks-the-yuan-is-undervalued-except-for-china.html) > > Now that I take another look at it 40% is at the high end of the consensus which seems to be 20% to 40%. > > “There is no serious debate about whether China’s currency is undervalued against the U.S. > dollar. There is a general consensus among economists that the Chinese yuan is undervalued by > as much as 40% against U.S. dollar.” > > Warning PDF CHINA’S UNDERVALUED CURRENCY: > KNOW THE FACTS Yes, the Chinese provide a convenient target for politicians. When constituents are grumbling about unemployment, it’s much better to say “those durn Chinese” instead of trying to explain the intricacies of our economy. > [@Damuri\_Ajashi](#): > > So your evidence is that you disagree with me? Great argument. I accept that any sort of impediment to free trade is likely to result in lower aggregate wealth, I don’t accept that it will result in lower societal utility where the distribution of wealth becomes a factor. I don’t think we need to support an economic policy that makes a few Americans insanely rich on the order of billions of dolalrs while stripping folks who make $30,000/year of their income, especially when we are so reluctant to tax the guy that is making billions of dollars. Again, that isn’t what is happening. Outsourcing helps everyone across the board, and in reality the people who are helped the most are those at the bottom of the economic scale. Bill Gates isn’t buying a $10 polo at Walmart, but Joe Sixpack is. Just look at numbers here. Imports from China are 10% the size of US manufacturing, and 2% of the US GDP. It’s just a small factor compared with the broader trends in the U.S. economy. I simply don’t believe that offosurcing to China, let alone their currency peg, is what is hammering the US lower class. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [October 8, 2010, 9:41pm UTC](https://boards.straightdope.com/t/offshoring-the-snake-that-is-eating-itself/555912/204 "2010-10-08T21:41:43Z")
> [@Damuri\_Ajashi](#): > > Yes, but the speed of change is different nowaday. I’m not even sure what this means. Things change as fast as they change. You’d think things had never changed quickly before, but automobiles replaced horses and became the thing around which cities were planned, a HUGE social change, in a remarkably short period of time. And that was a hundred years ago. I don’t see a lot of evidence that change is somehow overwhelming human beings. This has been theorized for 40 or 50 years, and it hasn’t happened yet. ---
**Author:** ![Le\_Jacquelope](https://avatars.discourse-cdn.com/v4/letter/l/e0b2c6/32.png) [@Le\_Jacquelope](https://boards.straightdope.com/u/Le_Jacquelope)\ **Post date:** [October 9, 2010, 1:40am UTC](https://boards.straightdope.com/t/offshoring-the-snake-that-is-eating-itself/555912/205 "2010-10-09T01:40:10Z")
> [@RickJay](#): > > If I know, I’m loading all my money into that industry and not letting anyone else in on it. > > They’ll be replaced with other jobs. They always have been in the past. What jobs those will end up being we don’t entirely know; I could throw out some guesses, but who in 1805 would have seen the rise of railroads? Who in 1870 could have imagined how many people would be employed in making cars? Who in 1900 would have guessed that in 2010 the USA’s biggest export would be gigantic passenger airplanes? In the future there will be jobs in industries and of sorts we can’t predict now. And there is the biggest flaw in this reasoning. You spent all that time declaring that I’m not _rational_ only to end this with “They’ll be replaced with other jobs”. How is that rational? How many decades will millions of unemployed have to wait for that next wave of jobs to happen? And what’s going to stop the next big thing from going overseas? This was asked by someone else and that never got answered. You’ve made my whole point about the staggering irrationality of the pro-offshoring argument: it’s a whole bunch of wishful thinking. We have 10% unemployment (even higher if you count those who are out of work and not getting unemployment benefits). What is your solution for them? Train them for a new line work? Which one? Who’s hiring now? Or do we tell them “your jobs will be replaced with other jobs… at some point in the future”? Some rational person who thinks they are better at this than me, please explain to us what happens when you have 10% unemployment and you have 5 people fighting for every available job, and you train that 10% in a “marketable skill”. How many of those people with “marketable skills” will get a job? The math says that with 5 people fighting for every 1 job, 10% shrinks to 8%. So now what do those 8% do? Spend more time looking for another marketable skill? Leave the country? Does anyone here know what “permanent employer’s market” means? Rhetorical questions, of course. We all know that we’re locked into this surrender-ist mentality that “these jobs are gone and they’re never coming back”. This pattern of jobless recoveries and more jobs going overseas than are coming here is unsustainable. There’s only so far the third world can go fueling themselves with other nations’ jobs. At some point someone has to listen not to me, but to history: look what happened to 20 million Chinese jobs in 2008 because the “rich” countries faltered. That’s just a taste of things to come. The third world depends too much on us, and we can’t continue to sustain them. I’m telling you - America will tap-out. When we do, it’s lights out for globalism. When it does, I hope this forum’s still here for me to come back and say “I told you so”. ---
**Author:** ![treis](https://avatars.discourse-cdn.com/v4/letter/t/bc79bd/32.png) [@treis](https://boards.straightdope.com/u/treis)\ **Post date:** [October 9, 2010, 2:50am UTC](https://boards.straightdope.com/t/offshoring-the-snake-that-is-eating-itself/555912/206 "2010-10-09T02:50:22Z")
> [@Le\_Jacquelope](#): > > You spent all that time declaring that I’m not _rational_ only to end this with “They’ll be replaced with other jobs”. How is that rational? Because that is what has been happening for centuries. > [@Le\_Jacquelope](#): > > How many decades will millions of unemployed have to wait for that next wave of jobs to happen? And what’s going to stop the next big thing from going overseas? This was asked by someone else and that never got answered. No, the answer to this has been posted repeatedly and directly many times. The U.S. manufacturing is and has been growing. It is not shrinking. It is not being sent over to China. The amount we import is small compared to the size of the manufacturing sector, and tiny compared to the broader US economy. The next big thing ™ is not going to go over to China anymore than the rest of US manufacturing is. You’re like a creationist continually asking for the missing link. ---
**Author:** ![penultima\_thule](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/penultima_thule/32/3833_2.png) [@penultima\_thule](https://boards.straightdope.com/u/penultima_thule)\ **Post date:** [October 9, 2010, 3:24am UTC](https://boards.straightdope.com/t/offshoring-the-snake-that-is-eating-itself/555912/207 "2010-10-09T03:24:33Z")
> [@Le\_Jacquelope](#): > > The third world depends too much on us, and we can’t continue to sustain them. I’m telling you - America will tap-out. You need to add the more recent chapters of history to your book. The US policy initiated\* and almost exported a world depression for the second time. What dragged the global economy out of the malaise is economic engine of a modernising China. You need them now every bit as much as they need you. The time is forseeable when you’ll need them more. Possibly you could take a lesson from this side of the puddle. A country that was itself written off as a “bannana republic” in the 80’s, and “the poor white trash of Asia”. In response we restructured, engaged with our region, supplied our customers things they wanted to buy at world competitive prices, and with a mix of good luck and management, sailed through both the Asian meltdown and the current GFC. We now have enjoy a positive trade balance with China, notwithstanding a prediliction for free trade, low tariff barriers and universal healthcare and other liberal trappings. So the US can undergo whatever is it’s equivalent, or remain in this paleoconservative blue flunk about how the world owes you a living. If the jobs you’ve lost to third world economies start coming back stateside, that’s not progress, but rather indicates that you’ve joined the third world. - David Gruen, Executive Director Macroeconomic Group Australian Treasury Address to the Sydney Institute “Reflections on the Global Financial Crisis” Tuesday 16 June 2009 [http://www.treasury.gov.au/documents/1564/PDF/Sydney\_Institute\_Address.pdf](http://www.treasury.gov.au/documents/1564/PDF/Sydney_Institute_Address.pdf) > [@](#): > > [ul] > [li]First, global imbalances implied a huge flow of funds from developing countries (particularly in Asia) to developed countries (particularly the US).[/li][li]Second, low global real interest rates contributed to strongly rising asset prices and, eventually, to house price bubbles in the US and several other countries.[/li][li]Third, there was incoherent financial regulation in the US mortgage market.[/li][li]Fourth, there was long-term public sponsorship of home ownership for low-income households in the US, many of which ultimately could not afford to own homes.[/li][li]Fifth, there were serious flaws in the ‘originate to distribute’ model for mortgages. This model involved mortgages being bundled up and ‘securitised’ and, in the case of many financial instruments based on sub-prime mortgages, given inappropriate AAA credit ratings[/li][/ul] ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [October 9, 2010, 3:38am UTC](https://boards.straightdope.com/t/offshoring-the-snake-that-is-eating-itself/555912/208 "2010-10-09T03:38:46Z")
> [@Le\_Jacquelope](#): > > You spent all that time declaring that I’m not _rational_ only to end this with “They’ll be replaced with other jobs”. How is that rational? I’m not sure you’re quite solid on what the word “Rational” means. If you mean based on reason, it is rational to assume that things that have always happened before, for centuries, in fact, will continue happening. We’ve now been through about two centuries of industrialized capitalism as it’s currently understood, and every time jobs have been made obsolete, other jobs have been created to replace them. That’s two centuries, eight to ten generations. When you have, on top of that, a century of economic study, theory, live examples of jobs being replaced with other jobs, and the weight of common damned sense, I think it very rational indeed to assume it at least pretty likely that the things that have always happened in the past will continue to happen. I’m also going to assume, based on past experience, that when I wake tomorrow the sun will rise in the East. I suppose it’s possible that it won’t, but I know where the smart money is. > [@](#): > > And what’s going to stop the next big thing from going overseas? Big things have always gone overseas. Or started there in the first place. What makes that prevent Americans from coming up with their own big things? Honestly, I wonder if you even know what creates jobs, or where they come from. > [@](#): > > We have 10% unemployment (even higher if you count those who are out of work and not getting unemployment benefits). Holy. Crap. You aren’t going to AGAIN introduce this old myth that unemployment is calculated by adding up the number of people on unemployment benefits, right? The myth that on this message board has been refuted - oh, I’m guessing, three hundred times? Get your facts straight. > [@](#): > > What is your solution for them? I’ve explained my solution three times to you, but will do so again: Rule of law. Freedom. A government that effectively enforces civil and criminal law. Government interference in areas of externality, and government noninterference otherwise. A solid central banking system. Pluralism. Equality and justice (which I guess is government dealing with externalities, sort of) Hard work and innovation. It’s a very slow process. It doesn’t produce results in a month. But it’s worked for two hundred years. It will work for two hundred more if we’re smart enough to stick with it. > [@](#): > > Rhetorical questions, of course. We all know that we’re locked into this surrender-ist mentality that “these jobs are gone and they’re never coming back”. Quite a lot of the lost jobs ARE coming back, of course, because they never left; they were cut due to the fiscal crisis that happened in 2008. The unemployment problem is, for the most part, not caused by the evil Chinese you want wiped out by a comet. It’s caused by a fiscal crisis. Most of the firms I work for fully intend to hire back **precisely the same sort of people they employed before;** they just need capital to free up, which it will. There will always be jobs for people like welders, machinists, truck drivers, draftspeople, skilled trades of all sorts. Some of them are out of, or short of, work now. They’ll be back. After all, the difference between a bad unemployment rate, like we have now, and a really good one, is one person out of every twenty. > [@](#): > > When we do, it’s lights out for globalism. When it does, I hope this forum’s still here for me to come back and say “I told you so”. Give me a year by which you guarantee this will happen so I can laugh at you when it doesn’t. Though you’ll probably disappear, like the guys in 2003 who absolutely, positively guaranteed that they knew a guy who’d seen WMDs in Iraq. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [October 9, 2010, 10:10pm UTC](https://boards.straightdope.com/t/offshoring-the-snake-that-is-eating-itself/555912/209 "2010-10-09T22:10:56Z")
[http://www.cio.com/article/511414/Career\_Watch\_a\_Challenge\_to\_the\_Wisdom\_on\_Offshoring?page=1&taxonomyId=3197](http://www.cio.com/article/511414/Career_Watch_a_Challenge_to_the_Wisdom_on_Offshoring?page=1&taxonomyId=3197) Here is a nice article explaining the impact of offshoring. We have had huge wage cuts in America due to offshore competition. If you don’t take a huge cut and give up your benefits, you job will go. They are offshoreing R @ D now. That is the future. The new products will not be conceived or implemented here. There is nothing sacred about American jobs. Corporations are international and owe nothing to the USA. They will move all your American technology to increase profits. American wages are on a steady downtrend and will continue for a long time. Perot said it when he opposed NAFTA. The wages of workers across the world will level off at a far lower rate than we will want to face. That is the future that offshoring brings us. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 12, 2010, 12:24am UTC](https://boards.straightdope.com/t/offshoring-the-snake-that-is-eating-itself/555912/210 "2010-10-12T00:24:47Z")
> [@John\_Mace](#): > > > [@Damuri\_Ajashi](#): > > > > Some of those jobs should not have been lost, WOULD not have been lost BUT FOR unfair Chinese trade practices. > > I don’t know why you keep saying that. Mostly because its true. > [@](#): > > It would only be true if China was the only alternative for low wage manufacturing. It isn’t. If China never became the factory floor of the world, we would not have the trade deficit we have. The fact that Sri Lanka is also a cheap source of labor doesn’t mean that absent China, we would be importing JUST AS MUCH from places like Sri Lanka. If China’s currency floated, do you think that our imports would remain constant but that we would simply start importing from Viet Nam instead of China? > [@](#): > > > [@](#): > > > > I think the laws of economics are more or less universal. What constitutes fair trade practices are based on economic theories not whaever happens to be good for teh USA. As you can see by the responses of free traders on this thread, our trade polciies have been very fair and that’s fine but when someone is cheating, we shouldn’t sit abck and take it because retaliation would be harnful to both parties. > > > > So how have we defined fair in a way that unfairly benefits us? > > Although we haven’t done this yet, if we insist on some sort of carbon tax, that will be grossly unfair to countries like China, unless we’re willing to pay a retroactive carbon tax for what we did in the last ~150 years. I agree it is a bit hypocritical to impose carbon taxes on China considering that the gross majority of the carbon in the atmosphere was put there by the industrialized nations. I DON’T think that means that they get to do today (after knowing how bad it is for our environment) what we did a century ago (when we had no idea). What makes it even more difficult is that we are not willing to lead the way on this issue. But that is an entirely different debate. The issue of unfair trade practices is so obvious that I don’t understand why anyone is defending it. Sure China is hurting other countries more than us but they are hurting us as well. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 12, 2010, 12:31am UTC](https://boards.straightdope.com/t/offshoring-the-snake-that-is-eating-itself/555912/211 "2010-10-12T00:31:33Z")
> [@treis](#): > > Ok, but I still don’t see a U6 above the historical average. I see one about as low as one can ask for in that time frame. I guess we are ignoring the patterns we saw from the 40’s through the 70’s. > [@](#): > > I’ve never said anything about retaliation. I’ve just said that off shoring to China is a minor part of the economy, and China’s currency manipulation is a minor part of that. It’s just not a big deal. Of course its not… if you have a job. Chinese imports are a significant part of our economy. Almost all the consumer goods are imported from China. You know what we still make here? Stuff like laundry detergent and other stuff that’s not worth shipping overseas. THAT is your 3 trillion dollar manufacturing industry along with some boeing airplanes, some weapons and equipment. > [@](#): > > I see incomes rising in the 90s and then stagnating in the 00s. What happened in the 00s is because we went through two recessions within 8 years of each other. That’s going to stagnate income growth regardless of what your doing with outsourcing. Yes, I understand that there is a business cycle and that the best part of this business cycle is better than the worst parts of previous business cycles but a lot of stagnation is the result of international labor competition. I don’t think there is much we can do about it but we shouldn’t tolerate unfair trade practices. > [@](#): > > Yes, the Chinese provide a convenient target for politicians. When constituents are grumbling about unemployment, it’s much better to say “those durn Chinese” instead of trying to explain the intricacies of our economy. You mean the intricacies of how currency manipulation will cause more imports from China and fewer exports TO China? Or the intracacies of how that currency peg is pulling jobs out of the US not only through direct outsourcing to China but through secondary outsourcing effects to other lower labor cost coutnries? ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 12, 2010, 12:39am UTC](https://boards.straightdope.com/t/offshoring-the-snake-that-is-eating-itself/555912/212 "2010-10-12T00:39:44Z")
> [@](#): > > > [@Damuri\_Ajashi](#): > > > > So your evidence is that you disagree with me? Great argument. I accept that any sort of impediment to free trade is likely to result in lower aggregate wealth, I don’t accept that it will result in lower societal utility where the distribution of wealth becomes a factor. I don’t think we need to support an economic policy that makes a few Americans insanely rich on the order of billions of dolalrs while stripping folks who make $30,000/year of their income, especially when we are so reluctant to tax the guy that is making billions of dollars. > > Again, that isn’t what is happening. Outsourcing helps everyone across the board, and in reality the people who are helped the most are those at the bottom of the economic scale. Bill Gates isn’t buying a $10 polo at Walmart, but Joe Sixpack is. Ask Joe Sixpack if he wants $10 polos from WalMart or a job. Outsourcing only helps who it helps. It provides lower prices at the cost of jobs. We might not be abler to save those jobs in the long run but we are losing them faster than our ability to find new ones for the folks that lost jobs. > [@](#): > > Just look at numbers here. Imports from China are 10% the size of US manufacturing, and 2% of the US GDP. It’s just a small factor compared with the broader trends in the U.S. economy. I simply don’t believe that offosurcing to China, let alone their currency peg, is what is hammering the US lower class. Its not the only thing. I don’t know how many times I have to say that. But it has a significant measurable impact. I’ll take 10% more manufacturing jobs or 2% more REAL GDP thank you very much. It would lower our unemployment rate by at least a percentage point. you don’t think thats significant? ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 12, 2010, 12:42am UTC](https://boards.straightdope.com/t/offshoring-the-snake-that-is-eating-itself/555912/213 "2010-10-12T00:42:29Z")
> [@RickJay](#): > > > [@Damuri\_Ajashi](#): > > > > Yes, but the speed of change is different nowaday. > > I’m not even sure what this means. Things change as fast as they change. > > You’d think things had never changed quickly before, but automobiles replaced horses and became the thing around which cities were planned, a HUGE social change, in a remarkably short period of time. And that was a hundred years ago. > > I don’t see a lot of evidence that change is somehow overwhelming human beings. This has been theorized for 40 or 50 years, and it hasn’t happened yet. Seems like you know exactly what I’m talking about. Autos were a huge change but it brought more jobs to America, it didn’t take them away. Its not as hard to adapt to change that gives you more jobs than people. The other way is a bit tougher. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [October 12, 2010, 12:44am UTC](https://boards.straightdope.com/t/offshoring-the-snake-that-is-eating-itself/555912/214 "2010-10-12T00:44:57Z")
> [@Damuri\_Ajashi](#): > > Ask Joe Sixpack if he wants $10 polos from WalMart or a job. Outsourcing only helps who it helps. It provides lower prices at the cost of jobs. But you haven’t established that this is true for the economy as a whole. Some jobs will be located in Indonesia rather than the USA, but additional jobs will be created in the USA as the result of trade (ask the folks who work at Boeing how international trade is working out) and the fact that more money’s available to buy other things. If I pay $10 for a shirt instead of $13, that’s $3 that goes elsewhere. I again have to ask; if offshoring is just a straight loss of jobs, then why isn’t the unemployment rate something like 50%? How on earth was it so low before the fiscal crisis? Heck, how is it as low as it is NOW? > [@](#): > > Its not the only thing. I don’t know how many times I have to say that. But it has a significant measurable impact. I’ll take 10% more manufacturing jobs or 2% more REAL GDP thank you very much. You seem to just be assuming that anything bought from overseas is a dead loss. I’m not sure what to say to something so.. well, hopelessly false. Buying stuff from a Chinese person does not mean you lose one American job with no correlating benefit. How are you accounting for the jobs **created** by these efficiencies? ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 12, 2010, 12:58am UTC](https://boards.straightdope.com/t/offshoring-the-snake-that-is-eating-itself/555912/215 "2010-10-12T00:58:34Z")
> [@penultima\_thule](#): > > If the jobs you’ve lost to third world economies start coming back stateside, that’s not progress, but rather indicates that you’ve joined the third world. My iphone was built in China as was my 3D blueray/dvd player. If manufacturing this stuff is third world work then i’m afraid that just about anything worth shipping is worth making in China. > [@](#): > > [ul] > [li]First, global imbalances implied a huge flow of funds from developing countries (particularly in Asia) to developed countries (particularly the US).[/li][li]Second, low global real interest rates contributed to strongly rising asset prices and, eventually, to house price bubbles in the US and several other countries.[/li][li]Third, there was incoherent financial regulation in the US mortgage market.[/li][li]Fourth, there was long-term public sponsorship of home ownership for low-income households in the US, many of which ultimately could not afford to own homes.[/li][li]Fifth, there were serious flaws in the ‘originate to distribute’ model for mortgages. This model involved mortgages being bundled up and ‘securitised’ and, in the case of many financial instruments based on sub-prime mortgages, given inappropriate AAA credit ratings[/li][/ul] [/QUOTE] Not sure what your point is. If your point is that we can’t blame China for this recession, then you’re right, we should blame the Republicans. If your point is that trade with China plays no role then the very first item on the list is … trade with China. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 12, 2010, 1:09am UTC](https://boards.straightdope.com/t/offshoring-the-snake-that-is-eating-itself/555912/216 "2010-10-12T01:09:34Z")
> [@RickJay](#): > > If you mean based on reason, it is rational to assume that things that have always happened before, for centuries, in fact, will continue happening. Its not like we’re talking about the sun rising in the east. You are assuming that new jobs replacing old jobs THAT HAVE BEEN OBSOLETED BY NEW INDUSTRIES is the same thing as “new jobs will replace old jobs that have been shipped overseas” Yes that happens too but it can take years and years. Ask the textile towns in the south or the steel towns in the rust belt. I’m not saying we can avoid that eventuality but when China pegs its currency it creates more displacement than there ought to be. > [@](#): > > We’ve now been through about two centuries of industrialized capitalism as it’s currently understood And we’ve had at least one great depression in that time. > [@](#): > > and every time jobs have been made obsolete, other jobs have been created to replace them. Yeah… sure… eventually. > [@](#): > > I think it very rational indeed to assume it at least pretty likely that the things that have always happened in the past will continue to happen. Or a failure to recognize why it might be a bit different this time. > [@](#): > > I’m also going to assume, based on past experience, that when I wake tomorrow the sun will rise in the East. I suppose it’s possible that it won’t, but I know where the smart money is. And you think the chances of this sort of job replacement is as certain as the sun rising in the east? There is no guarantee of continued prosperity for any country. Look at the countries that were global economic powers 200 years ago versus today. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [October 12, 2010, 1:13am UTC](https://boards.straightdope.com/t/offshoring-the-snake-that-is-eating-itself/555912/217 "2010-10-12T01:13:48Z")
> [@Damuri\_Ajashi](#): > > > [@John\_Mace](#): > > > > I don’t know why you keep saying that. > > Mostly because its true. If it’s true, then let’s see an unbiased, academic source backing that statement up. > [@](#): > > If China never became the factory floor of the world, we would not have the trade deficit we have. The fact that Sri Lanka is also a cheap source of labor doesn’t mean that absent China, we would be importing JUST AS MUCH from places like Sri Lanka. If China’s currency floated, do you think that our imports would remain constant but that we would simply start importing from Viet Nam instead of China? Yes, I do. Or, we’d just buy less stuff in total. People have a certain amount of discretionary money to spend. If prices rise, they are more likely to cut back on purchases rather than dig deeper into their pockets. Fact is, people like buying cheap stuff, and businesses are good at finding ways to provide cheap stuff to consumers. If it’s not made in China, it can be made somewhere else much cheaper than it can be made in the US. Make it in Indonesia, Malaysia, India or even Mexico before you’re going to make in the US. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [October 12, 2010, 1:23am UTC](https://boards.straightdope.com/t/offshoring-the-snake-that-is-eating-itself/555912/218 "2010-10-12T01:23:50Z")
[QUOTE=Damuri Ajashi] You are assuming that new jobs replacing old jobs THAT HAVE BEEN OBSOLETED BY NEW INDUSTRIES is the same thing as “new jobs will replace old jobs that have been shipped overseas” [/QUOTE] Well…yeah. Why wouldn’t this be the case. From a labor perspective, what’s the difference between workers being laid off due to automation and workers being laid off due to moving their jobs overseas? A worker who isn’t working because a robot turns the screw or welds the weld s/he used to turn or weld is just as out of work as a worker laid off because someone in China now turns that screw or welds that weld, no? And that idle worker represents the same possible resource for some new or existing industry to utilize, regardless of the reason they were laid off. You’d need to explain why you perceive a difference. > [@](#): > > Yes that happens too but it can take years and years. Sure it can. Or not. It’s more dependent on the state of the economy (and the recession) than it is on whether the job was moved offshore, eliminated due to automation or was due to cut backs due to lower demand (the real reason most folks who are recently out of work today are unemployed…the offshoring bug-a-boo is a load of horseshit, numerically speaking, though it seems to be a huge rallying cry certain Dems and Pubs lately). > [@](#): > > Ask the textile towns in the south or the steel towns in the rust belt. Ok. What if instead of moving textiles offshore the manufacturers had automated instead? Would those towns still have retained those jobs? How would it be different? > [@](#): > > And we’ve had at least one great depression in that time. Which was at least partially caused by the same sort of economic ignorance being touted in this thread…i.e., the fear of foreign competition and foreigners ‘stealing American jobs’, etc etc. > [@](#): > > Or a failure to recognize why it might be a bit different this time. How is it different this time? What’s different? Why has offshoring only NOW (that we are in a major recession not caused by offshoring) caused this supposed problem? Could you explain why you think the situation has changed? -XT ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [October 12, 2010, 3:48am UTC](https://boards.straightdope.com/t/offshoring-the-snake-that-is-eating-itself/555912/219 "2010-10-12T03:48:00Z")
> [@Damuri\_Ajashi](#): > > You are assuming that new jobs replacing old jobs THAT HAVE BEEN OBSOLETED BY NEW INDUSTRIES is the same thing as “new jobs will replace old jobs that have been shipped overseas” Yes, I am, because they’re the same thing. “China,” from the perspective of the U.S. economy, is basically a great big machine, its input and output lines serviced by stevedores. > [@](#): > > Yes that happens too but it can take years and years. Ask the textile towns in the south or the steel towns in the rust belt. I know those towns. They suck. You don’t have to tell me that economic change can hurt people. **But the Rust Belt cities were declining before the current wave of offshoring to China.** Why do you think that is? Do you think the government should have stepped in to prop them up? > [@](#): > > Yeah… sure… eventually. Exactly. Look, I’m sorry that “eventually” is an unsatisfying answer to “How will we create jobs/wealth?”, but when you ask “how will the jobs be created,” “Eventually” is the correct answer, and anyone who tells you otherwise is selling you snake oil. The government can step in and help out in the troughs with a Keynesian approach, but if you want the economy to really grow, “eventually” is how it grows. > [@](#): > > And you think the chances of this sort of job replacement is as certain as the sun rising in the east? There is no guarantee of continued prosperity for any country. Look at the countries that were global economic powers 200 years ago versus today. Who were the global economic powers 200 years ago? The UK, I guess. Tell me: who is richer, the average Briton in 1810, or the average Briton today? ---
**Author:** ![even\_sven](https://avatars.discourse-cdn.com/v4/letter/e/dfb087/32.png) [@even\_sven](https://boards.straightdope.com/u/even_sven)\ **Post date:** [October 12, 2010, 4:58am UTC](https://boards.straightdope.com/t/offshoring-the-snake-that-is-eating-itself/555912/220 "2010-10-12T04:58:24Z")
> [@Damuri\_Ajashi](#): > > I think the laws of economics are more or less universal. What constitutes fair trade practices are based on economic theories not whaever happens to be good for teh USA. This is a religious point of view. To give a basic example, you can look at the Structural Adjustment Programs. In the 1980s and 90s, Western institutions tried to use aid to leverage countries into adopting “free trade” practices, under the promise that this would build economic growth. Many countries, including much of Africa, went along with it. Some countries, like much of Asia, told the West to screw off. History shows who made the right choice. The idea that markets are a one-sized fit all good thing for all situations is a fundamentalist one. [Previous page](https://boards.straightdope.com/t/offshoring-the-snake-that-is-eating-itself/555912.md?page=10) [Next page](https://boards.straightdope.com/t/offshoring-the-snake-that-is-eating-itself/555912.md?page=12)