It is a fact that companies exist largely to maximize profit. In order to accomplish that, cutting labor costs by moving jobs is a valid techinique. Although I am a pretty staunch liberal on social issues, I can’t see any way that government regulation over companies relocating jobs could be elegant or effective. However, if companies exist to maximize gain, government exists to serve the needs of the people it represents. So I humbly suggest that the US goverment, on all levels, should simply refuse to provide tax breaks, incentives, or enter into contracts with firms that do not attempt to hire locally whenever possible. Any thoughts?
i disagree with your suggestion. first off, i must point out that the purpose of government (in my opinion) is not to serve its constituents, but to provide for them protection of their basic rights.
second, what evidence do you have that letting companies hire cheaper labor isn’t serving the people? it has been my experience that people who advocate protectionist policies lack a keen understanding of macroeconomics, or don’t care much about the economics involved (i.e. they advocate protectionist policies to pander to the constituents who don’t understand the implications of such policies and feel they would be good for them). to me, using cheaper labor allows a company to increase its gains, lower prices, and grow (i.e. create more jobs). also, it helps to pull countries where the labor is cheaper toward our economic level (which is better for everyone involved), and promote specialization, which further reduces costs and promotes growth.
if more jobs are produced overall, why not let a few go?
Because we’re producing more low wage jobs in China and reducing living wage jobs here. Net effect: brutal autocratic regimes with no labor or environmental standards become the dominant economic powers.
First of all, 90% of the people who advocate protectionism on this board are computer programmers who are pissed because the days of posting your resume online and receiving 100 responses in 24 hours are over. Programming is a back-office operation that most companies would gladly outsource so they can focus on their actual business.
Second, suggesting that the government not enter into contracts or provide incentices to companies that do business overseas shows a startling lack of business or economic sense. Most large companies are, in fact, multinational. The government should provide incentives to encourage companies to do business in the US. That creates jobs. Punishing companies does not.
Third, free trade allows companies to produce more products more cheaply by lowering labor costs. Would you rather make more money to buy fewer expensive products or make less money and afford a greater number of cheaper products.
That is a completely accaptable flip-side to my thinking. But discouraging jobs from leaving is just as important as encouraging them to come.
What the difference between these two companies:
Company XYZ used to employ 100 people to pack boxes for their products. An new invention, by a British company, automates the box packing process, and allows 1 person to do the job of 10. Company XYZ purchases the equipement and lays off 90 box packers.
Company ABC used to employ 100 write invoices. They find that they can hire people in Bangalor to do the job at about 1/10 the price, and would only need about 10 US coordinators to maintaint he process. Company ABC lays off 90 invoice writers, and hires an equivalent number of Indians in Banglore.
For once, I agree with Ramunajan. No offense, but I think your statement is an example of what he spoke about, when he said that advocates of such policies “lack a keen understanding of macroeconomics.”
Right now, outsourcing is reducing living wage jobs here; however, it can also increase productivity and competitiveness in the foreign market. In the medium- and long-term, this can increase the number of local jobs, and is quitely likely to do so.
Actually, if this dumb board would have loaded I would have been the first person to respond. Oh well, such is life.
I agree with Emilio Lizardo
I agree, and that is especially true with companies who move their factories overseas. My husband would be the better person to post an answer about this, but from what I understand the companies who lay off all their American workers and then go overseas do that because they think it will help them save money. I’m sure it will, in the short term. What they don’t seem to take into consideration is that Chinese slave labour can’t afford to buy the items they’re making, and if Americans are out of a job, then they’ll have no money beyond what is needed for the necessities either.
Oh, and don’t even get me started with those people who say, “oh dear, you lost your job? What a crying shame. Go back to college, ker-yuck ker-yuck.” Those people can all join the real world. If you have a family, kids, a house and car payment, pets, eldery parents etc. it’s not as simple as “learn a new skill! d’uh!”. Look at all the people who lost their factory jobs thanks to NAFTA. Many of them did return to college and went into computers because everyone was told it would be the next big thing. Now guess what? There are so many computer jobs either being outsourced to India, or the Indians with H1-b visas are coming over here and being hired for a third of what a normal American would live on that most native born Americans with computer skills are outta luck when it comes to landing a job. Of course, they could work fast food, but thats hardly the type of employment that will keep Junior in diapers and help you save for Bobby Sue’s college in 15 years.
In short, it’s sickening, how corporations screw over American workers. One other story, I read this on a newsite somewhere, but I’m repeating it from memory. WalMart insisted that Rubbermaid lower their prices or they would drop the entire line. The only way Rubbermaid can lower prices is close factories in the US. It boggles the mind, that WalMart has enough power to force factories to close. Actually, this should fall under some kind of anti-trust law, because they shouldn’t be able to threaten like that.
Things to do to let companies know you don’t like all the jobs leaving:
- Look for made in USA on the product.
- Write to the company and thank them for being made in the USA.
- Or call them and thank them.
- Tell your friends, neighbors, family, worst enemy that “such and such” was made in America, and encourage them to buy the same brand.
Great post, Lizardo. I wonder what anyone else has to say about this subject.
ciao,
G.
I think that what galls a lot of people about this issue is that it inherently favors the companies over the workers. While a company may easily choose to outsource labor globally, individual workers face huge barriers should they wish to compete globally.
I have no problems with opening trade up globally, but to be fair it should also apply to people.
Gllrnz, many of us live in the real world as well…and many of us have lost jobs. Don’t be patronizing, or think you are the only ‘real’ person on this board. As a network engineer, I can tell you the last few years have been rough on everyone in the field.
From Gllrnz
Well, you’d need to provide a cite to really get into this. At a guess though, what Walmart REALLY said was, “we have a competing company that can make similar products to Rubbermaid but at a cheaper price. If you do not lower your price to be able to compete with them, we will drop your product line in favor of the other company.” What exactly is wrong with that? Do you think its Walmarts responsibility to keep Rubbermaid products on THEIR shelves, if they can get a similar product cheaper??? Should Walmart subsidize Rubbermaid just because they are ‘made in the US’?? Or maybe the government should subsidize Rubbermaid so their products compete with cheaper foreign imports??
I’ll let other get into this deeper, but IMO its not a problem for companies to move business and jobs to other countries…in many respects its a GOOD thing. Companies are in the business of making money, not of manufacturing jobs. To be competetive companies have to manufacture products that are cheaper, or higher quality (or both) to their competetive with other companies. If they can’t…they fold, and then ALL their employees lose their jobs. No?
The benifits of moving jobs over seas far outweighs the negative aspects IMO. In many case (most?), moving jobs overseas actually CREATES more jobs in the medium and long terms, as those workers in other countries who start off at what you term ‘slave wages’ don’t remain at those levels for long…and in the LONG term, they DO create new markets.
-XT
The US Government, or more accurately the Bush Administration, is heavily promoting outsourcing within government. Bush wants to outsource up to 800,000 federal employees to be replaced by private contract workers. However, early reports indicate there is no cost savings to taxpayers and no customer service improvements either.
So even if the OPs post had merit, it would find no friend in the Administration.
"as those workers in other countries who start off at what you term ‘slave wages’ don’t remain at those levels for long…and in the LONG term, they DO create new markets. "
Are the Koreans or Cambodians or Japaneese huge importers of American products creating huge new markets and lots of new jobs for Americans?
Each of those is a former “cheap labor camp” of sorts for US companies.
Or are they simply creating local wealth and spending the vast bulk of it on local services and goods?
Think carefuly about your answer.
Regards,
-Bouncer-
And this is why I think the Republicans’ talk about increased productivity leading to a Bush re-election is premature – the companies may be more productive and more profitable with job-slashing methods like outsourcing, but if well-paying jobs aren’t created at home, that just means a sizable pissed-off block of voters who won’t vote for Bush in 2004.
In the interest of fighting ignorance, H-1b workers are required by Federal Law to be paid prevailing wages and Indian programmers on H1-B most definitely do not work at 1/3rd of what a “normal American” would work for. Haven’t you noticed Indians living like normal Americans in suburbia with kids, two cars, and a flat-screen TV?
If you try once more, you might get Bangalore right 
The largest importers of US goods in 2002:
Canada, $160 billion
Mexico, $97 billion
Japan, $51 billion
United Kingdon, $33 billion
Germany, $27 billion
South Korea, $23 billion
China, $22 billion
France, $19 billion
Taiwan, $18 billion
Netherlands, $18 billion
Singapore, $16 billion
That’s a LOT of people importing U.S. goods.
A brief lesson in Macroeconomics - You can’t look at an individual company or even an individual industry and say “there aren’t any buggy-whip jobs anymore!! The economy is bad!!” You have to look at every facet of the entire economy the entire economy. What does protectionism in one industry due to all the others? What does all this outsourcing due to the purchasing power of the dollar?
In principal I agree. I don’t really care about the economies of Inda or Taiwain. I care about MY economy and MY job. Problem is that protectionism goes against eveything I know about economics.
The answer is yes. When jobs move overseas, foreign workers have more purchasing power. Some of it is spent locally (like the local Noodle-Hut) but it also creates markets for foreign companies to sell their products. In fact, many of the “Asian Tigers” are now finding that they have to outsource labor to even poorer countries because their wages have increased.
Problem with this is that the price tag is a far more powerful persuader than you are. I may want to buy American but even assuming I can find a 100% American product, I more inclined to purchase a cheaper one.
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companies exist, are licensed(allowed) to do business, in order to benefit american citizens. If we dont like what companies are doing, or if they are treasonous, we can not allow them to do business.
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It is not valid. A red chinese communist works for 61 cents an hour, has no medical benifits, no social security, no unemployment insurance, no workers comp insurance, no osha regulations, no epa, no state taxes, etc. You dont have a level competition between red chinese who can pollute all they want to in unsafe working conditions with no health costs, etc. YOu cant say it is valid, unless you are against unions, are against laws protecting our environment, are against Social security and companies contributing to it, etc.
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our government was BOTH very “effective” and “elegant” for 200 years using the tarriff system, making the United STates the most powerful country in the world with the highest standard of living. Our tarriff system since 1789 worked, and worked well:
NATIONAL REPUBLICAN PLATFORM, ADOPTED AT MINNEAPOLIS, MINN., JUNE 9, 1892 We reaffirm the American doctrine of protection. We maintain that the prosperous condition of our country is largely due to the wise revenue legislation of the Republican Congress. We believe that all articles which cannot be produced in the United States, except for luxuries, should be admitted free of duty, and that upon all imports coming into the United States coming into competition with the products of American labor there should be levied duties equal to the difference between wages abroad and at home.
And The Republican Platform in 1904:
“We met these unhappy conditions vigorously, effectively, and at once. We replaced a Democratic tariff law based on free trade principles and garnished with sectional protection by a consistent protective tariff, and industry, freed from oppression and stimulated by the encouragement of wise laws, has expanded to a degree never before known, has conquered new markets, and has created a volume of exports which has surpassed imagination Under the Dingley tariff labor has been fully employed, wages have risen, and all industries have revived and prospered.”
http://www.presidency.ucsb.edu/site/docs/doc_platforms.php?platindex=R1904
Well, what do you know, it’s the protectionist thread of the month. We do it regularly, over and over and over. Oh well, we shall repeat the same things all over again.
Whether I am an individual or a corporation I do not owe you a job. Nobody owes you a job. If some guy in China is willing to do a job I need done under more favorable conditions then I am entitled to give him the job. It is my freedom to which I am entitled and I should not lose it because you believe you are entitled somehow to privileges to which other human beings are not entitled. That’s for starters.
Furthermore, protectionism has never worked its intended purpose and would only benefit a few by harming the majority. No country as a whole has ever benefitted from protectionist policies and if there is one thing about which economists agree is that protectionism does not benefit a country.
But, as I said, we repeat the same things periodically so you can just do a search and see it all.
It’s kinda like rent control: very easy to fall into and very hard to climb out of. Meantime, the evil it causes is universally acknowledged.
Oh well.
Still, this is coming up for a real reason. We are well into this recovery, and new jobs, net, are not coming onstream.
From Stephen Roach of Morgan Stanley on what he calls the “Global Labor Arbitrage”:
Other than forcing China, Malaysia, Japan, et al, to stop intervening in the currency markets to prop up the dollar, I have no real solution to offer. It seems blindingly obvious to me that the purchasing power of the American worker has to go down in the current environment, and the only relatively (major stress on that word) painless way to do it is to revalue the currency radically lower.
This would mean Americans could no longer afford all the imported goodies they’ve become used to though. It would also probably mean a sharp rise in interest rates, which would cause sharp pain in the housing market.
Like I said, the emphasis in relatively painless is in the word relatively.
Who are “we”? It is truly scary to think that there are people apparently empowered to shut down businesses just because they “don’t like what [they] are doing”. Unless you are talking utter bollocks, of course.