# Would some economist please explain: What's wrong with outsourcing? **URL:** \ **Category:** Great Debates\ **Created:** [August 13, 2016, 9:43pm UTC](https://boards.straightdope.com/t/would-some-economist-please-explain-whats-wrong-with-outsourcing/762720 "2016-08-13T21:43:13Z")\ **Posts on this page:** 20\ **Page:** 5
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [August 16, 2016, 5:50pm UTC](https://boards.straightdope.com/t/would-some-economist-please-explain-whats-wrong-with-outsourcing/762720/81 "2016-08-16T17:50:51Z")
> [@quimper](#): > > The problem with outsourcing is that the gains haven’t distributed evenly. Branko Milanovic’s ‘[Elephant Chart](http://harvardpress.typepad.com/.a/6a00d8341d17e553ef01b7c8758a1a970b-pi)’ shows that while the majority of the world (Asia in particular) has benefited in the past few decades, the lower-middle class of the OECD countries (US, Japan, Europe) has struggled with zero income growth since 1988. > > [http://harvardpress.typepad.com/hup\_publicity/2016/06/branko-milanovic-elephant-chart-brexit.html](http://harvardpress.typepad.com/hup_publicity/2016/06/branko-milanovic-elephant-chart-brexit.html) > > Western lumpen-proletariat are hurting and will gladly listen to whispers from demagogues like Trump encouraging false class consciousness and racial identity to lash out blindly at their perceived rivals in Asia/Latin America, instead of going after the global 1%. I disagree there has been no income growth since 1988. It is hard to quantify, but standards of living have obviously improved quite a bit. Do your statistics take into account the Internet and the extremely cheap and varied entertainment that lower-middle income groups love to consume? How about the ability to communicate with nearly anyone on the globe for pennies or better quality products like cars, food, and clothing? ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [August 16, 2016, 7:01pm UTC](https://boards.straightdope.com/t/would-some-economist-please-explain-whats-wrong-with-outsourcing/762720/82 "2016-08-16T19:01:19Z")
> [@Jonathan\_Chance](#): > > This is the core of the disagreement, Hellestal. It circles back to what I’ve said earlier. Voters look to themselves. Economists tend to look at a bigger picture without taking electoral behavior into account. > > Look at this statement you made - the first paragraph - where you use the past tense. That’s wrong. People still believe - and there’s real evidence for it - that democratic governments are designed to represent their constituents first and non-constituents second. You put that statement in front of every member of congress and you’ll get at least 90% agreement. I agree entirely with this second paragraph. If you ask politicians, they’ll happily say their obligation is to put their constituents first, and everyone else second. (And that actually makes some sense, too. See below.) But if you were following the thread, here is the actual statement I was responding to: “Our politicians have no obligation, moral or otherwise, to give a rats ass about the welfare of the poor except to the extent it affects their constituency.” Emphasis added. That is not the same thing that you are arguing now. As **RickJay** said, only a psychopathic politician would believe they had literally no moral obligation whatever to people across a line on a map. The broader point here is that people will tell you whatever the hell they think sounds nice at a given moment. If you ask people whether all people on earth deserve the same rights, you’ll get the majority of people saying “yes” to that. Including politicians. People respond to moral questions based on instinct, not careful deliberation from first principles. They are going to contradict themselves if you ask them too many questions. But here? I don’t see a contradiction. In fact, politicians _should_ be looking to their own constituents first, if only for the obvious reason that they understand the situation of their own constituents better than they do anywhere else. We shouldn’t be trying to govern the poor unruly masses in different countries. That would be ridiculous. We have a hard enough time governing ourselves, let alone other people. Colonialism is awful. Even acknowledging that all people deserve equal rights, our strict moral obligations to people in distant places are quite limited. But they are not ZERO. One of the most basic moral principles is that we should generally leave people alone if they’re not causing active harm to others. I’m not here to argue the various subtleties of that – there are of course some exceptions – I’m just trying to say that this one is basic. When people want to exchange things with other people, there is in general no intent to cause harm. It’s just exchange. In any other context, we would acknowledge that the best thing to do is allow it to happen. If some people starting clamoring that we should stop this rampant exchange of black people selling things to white people, when there are so many poor white people without jobs, that shit would not fly. This is the same thing. It’s not something so extreme as asking a politician to intervene actively in favor of people outside their constituency. It’s asking them to fulfill their very simple moral obligation of not interfering in matters that do not concern them. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [August 16, 2016, 7:42pm UTC](https://boards.straightdope.com/t/would-some-economist-please-explain-whats-wrong-with-outsourcing/762720/83 "2016-08-16T19:42:06Z")
> [@msmith537](#): > > I assume the OP means offshore outsourcing. > > I’m generally in favor of free markets. But just to play devils advocate, here are some of the problems with outsourcing (forgive me if I repeat anything): > > - Real or not, there is a perception that outsourcing disproportionately affects lower income workers. Most people can’t comprehend the benefits to the overall economy in terms of lower prices. But they can see that the factory in town is no longer open. > - Outsourcing transfers knowledge and expertise offshore. [Apple’s outsourcing of the iPhone enabled Samsung to become it’s greatest competitor.](http://www.cio.com/article/2926435/innovation/how-apples-outsourcing-strategy-created-two-giant-competitors.html) > - It can eliminate many of the entry-level jobs people need to gain practical experience in their career path. > - Outsourcing can exploit foreign workers who don’t enjoy the protections we enjoy. It’s still slavery even if you outsource it to slaveowners in another country. > > I think one of the dangers of outsourcing is that it creates an economy of people who don’t know how to do anything except be salespeople and middle managers. 1. It hurts some lower income workers in the US but it also helps lower income workers disproportionately. A rich person is not going to care if the price of clothes or electronics goes down 10% by to a poor person that could mean the ability to buy a new set of clothes or a mobile phone. 2. Transferring knowledge and expertise is good. It allows those countries to be more productive which increases the wealth of the world. If we wanted to keep foreign countries ignorant we could just can charities from helping poor countries educational systems. But no one would advocate that. 3. It does not eliminate entry level jobs, it just shifts the industry and maybe the locale of those jobs. The total number of jobs is related to aggregate demand and structural employment. It used to be that 90% of jobs were in agriculture, then manufacturing, and now they are in service industries. 4. You can not make someone worse off by giving them an option even if that option is unappealing. If people in poor countries do not think working in a factory will make their lives better no one is forcing them to. However, the facts are that factory work is usually so much better than subsistence farming that there is a great demand for these jobs. The problem is that people look at the economy as a zero sum game and think if a foreigner is better off that means a countryman must be worse off. This is not the case, the world economy is growing all the time. There are no more natural resources available to the planet than there were 100 years ago but pretty much every nation in the world is better off. ---
**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:** [August 16, 2016, 8:20pm UTC](https://boards.straightdope.com/t/would-some-economist-please-explain-whats-wrong-with-outsourcing/762720/84 "2016-08-16T20:20:38Z")
> [@RickJay](#): > > Really? In what way was NAFTA, for example, poorly negotiated in a way that displaces people unnecessarily? What was so inept about NAFTA that you caught but the negotiators didn’t? NAFTA is probably a wash but subjecting American labor to lower cost competition necessarily puts downward pressure on labor prices. Our labor market can probably absorb SOME of this sort of labor price competition but we can’t absorb a whole world’s labor supply worth of competition. Sure we all get slightly cheaper cars but the majority of the benefits of trade are concentrated in the hands of the owners of capital, not the owners of labor. > [@](#): > > That’s flatly silly. Of course all human beings have a moral responsibility to care about the welfare of all other human beings. I don’t want psychopaths running MY country. That’s flat out silly, the whole concept of modern economics is largely based on the premise that we all do better by pursuing our own enlightened self interest. I don’t want some politician to put the welfare of some poor guy in China at the same level of importance as my welfare. > [@](#): > > It is true that a politician has a LEGAL obligation only to serve their constituents. It is true that an American politician cannot practically, or politically, do as much for a person in Sierra Leone as they can for an American. But of course they have a moral right to try to do right by the human race. Not really. > [@](#): > > If the United States were to try to improve its economy by launching a nuclear attack on Europe, killing a hundred million people but giving the USA more competitive access to the Asian market with all its European competitors gone, would you think that a morally neutral action? No, but that is not what is being proposed. What is being proposed is sacrificing the welfare of Americans for the welfare of poor people around the world. ---
**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:** [August 16, 2016, 8:23pm UTC](https://boards.straightdope.com/t/would-some-economist-please-explain-whats-wrong-with-outsourcing/762720/85 "2016-08-16T20:23:23Z")
> [@WillFarnaby](#): > > Do you differentiate between those who are outcompeted by foreign labor and those outcompeted by domestic labor. Of course. > [@](#): > > If Joe’s Pizza is better and cheaper than Lou’s Pizza, should we pass a law that says Joe must pay a $5 tax for every pizza? Why or why not? Of course not. I am not saying we should repeal competition. I am saying that we don’t HAVE to force our citizens to compete with the citizens of impoverished nations on wages. I place labor in a different category than all other inputs of production because labor (more than any other input) represents the livelihoods of consumers. ---
**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:** [August 16, 2016, 8:30pm UTC](https://boards.straightdope.com/t/would-some-economist-please-explain-whats-wrong-with-outsourcing/762720/86 "2016-08-16T20:30:26Z")
> [@Hellestal](#): > > I agree entirely with this second paragraph. If you ask politicians, they’ll happily say their obligation is to put their constituents first, and everyone else second. (And that actually makes some sense, too. See below.) But if you were following the thread, here is the actual statement I was responding to: “Our politicians have no obligation, moral or otherwise, to give a rats ass about the welfare of the poor except to the extent it affects their constituency.” > > Emphasis added. That is not the same thing that you are arguing now. As **RickJay** said, only a psychopathic politician would believe they had literally no moral obligation whatever to people across a line on a map. OK, maybe I overstated my position. Let me rephrase. A politician has no obligation moral or otherwise to sacrifice the welfare of his constituents for the welfare of the global poor. > [@](#): > > When people want to exchange things with other people, there is in general no intent to cause harm. It’s just exchange. And tariffs are just taxation of that exchange. > [@](#): > > In any other context, we would acknowledge that the best thing to do is allow it to happen. If some people starting clamoring that we should stop this rampant exchange of black people selling things to white people, when there are so many poor white people without jobs, that shit would not fly. This is the same thing. It’s not something so extreme as asking a politician to intervene actively in favor of people outside their constituency. No , not its not the same thing at all. > [@](#): > > It’s asking them to fulfill their very simple moral obligation of not interfering in matters that do not concern them. The contours of the domestic economy is none of their concern? Displacement and unemployment among their constituency is none of their concern? ---
**Author:** ![Stranger\_On\_A\_Train](https://avatars.discourse-cdn.com/v4/letter/s/13edae/32.png) [@Stranger\_On\_A\_Train](https://boards.straightdope.com/u/Stranger_On_A_Train)\ **Post date:** [August 16, 2016, 10:52pm UTC](https://boards.straightdope.com/t/would-some-economist-please-explain-whats-wrong-with-outsourcing/762720/87 "2016-08-16T22:52:15Z")
> [@msmith537](#): > > I think one of the dangers of outsourcing is that it creates an economy of people who don’t know how to do anything except be salespeople and middle managers. It is interesting that this comment, out of all others, has been ignored by the majority of posters, and yet anyone involved in applied sciences and engineering will recognize both the essential truth and concern with the issues. Over the last three decades the United States (and to some extend, industrial Europe) has suffered a virtual “brain drain”, going from most students in graduate studies being domestic to foreign students, and [in particular from the Peoples Republic of China](http://www.sciencemag.org/news/2010/08/american-students-struggle-us-grad-school-slots-against-foreign-born-applicants) which has grown to being the largest international competitor not only in manufacturing but in the sciences. This has benefited the US economically, not only in leveraging on inexpensive labor but also the influx of hard hard cash tuition (US students typically received some significant financial aid or tuition relief where foreign students, often financed by their respective governments, pay the full face value for tuition. However, it also means that the educational and industrial knowledge is exported back to the home country to directly compete with US corporations but on a basis of a much lower cost of living, and a dearth of domestic capability in the sciences and engineering disciplines. The result is a domestic industry largely focused on buying, selling, and exchanging goods rather than producing anything of original or intrinsic value. It is somewhat ironic that (Hillary) Clinton critiques Donald Trump of supporting this because it was the (Bill) Clinton-supported North American Free Trade Agreement which substantially gutted the US automotive and meat production industries, which moved a lot of work to Mexico where worker protections and legally protected benefits were much weaker. (Trump, of course, is a hypocrite in that many of his branded products are also produced overseas, and so richly deserves to be called out for his bullshit.) But in the larger picture, outside of regulatory issues, US industry has been sold on offshoring in both real product and service industries on the basis of cost, even if the quality and actual value of the products and services is substantially impacted. This is a result of companies being run by people who are totally disconnected with the actual services and products they provide and only focused on immediate financial repercussions, e.g. being run by finance and sales people focused solely on often bogus fiscal forecasting and what I term the “cult of leadership”; people focused only on impressing other people without consideration for actual production or consequences. The reality is that for bulk consumer products, there is no stopping this. The immediate financial benefits (inexpensive products of cheap labor) is too appealing to the masses, while producing foreign expertise and actual leadership in science and techincal disciplines will not have a visible impact for a generation. Just as the Japanse took over consumer electronics industry in the 'Eighties and automobiles in the 'Nineties, South Korea took on mobile electronics in the 'Oughts, and and China is poised to take over pharmaceuticals, biosciences, and other leading areas of technology in the foreseeable future. All of this will spell a decline in the fortunes of the United States just as previous transfers of technical and industrial capability dimmed the sun over the British Empire and over the Spanish and Roman empires, the Abbassid caliphate, and the (somewhat ironical) Ming dynasty. “Making America Great Again,” however, has little to do with returning manufacturing jobs to the US, and more about ensuring future technical leadership in key fields such as biosciences, material science, and energy production. Stranger ---
**Author:** ![octopus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/octopus/32/3716_2.png) [@octopus](https://boards.straightdope.com/u/octopus)\ **Post date:** [August 16, 2016, 10:54pm UTC](https://boards.straightdope.com/t/would-some-economist-please-explain-whats-wrong-with-outsourcing/762720/88 "2016-08-16T22:54:15Z")
> [@Damuri\_Ajashi](#): > > NAFTA is probably a wash but subjecting American labor to lower cost competition necessarily puts downward pressure on labor prices. Our labor market can probably absorb SOME of this sort of labor price competition but we can’t absorb a whole world’s labor supply worth of competition. Sure we all get slightly cheaper cars but the majority of the benefits of trade are concentrated in the hands of the owners of capital, not the owners of labor. Actually we can compete with the whole world. We actually are at the moment competing with the whole world. It’s silly to think that price floors are going to helpful compete better. Our labor force is far from homogenous. But the fact is the USA still has tremendously high productivity. Even with counterproductive policy , which is evidence of many advantages the US enjoys for production. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [August 17, 2016, 12:27am UTC](https://boards.straightdope.com/t/would-some-economist-please-explain-whats-wrong-with-outsourcing/762720/89 "2016-08-17T00:27:43Z")
> [@Damuri\_Ajashi](#): > > That’s flat out silly, the whole concept of modern economics is largely based on the premise that we all do better by pursuing our own enlightened self interest. I don’t want some politician to put the welfare of some poor guy in China at the same level of importance as my welfare. You’re changing your story. Before you said your politician had no moral responsibility to foreigners. That’s crazy. Now you’re saying he has LESS responsibility. That’s a totally different statement. > [@](#): > > A politician has no obligation moral or otherwise to sacrifice the welfare of his constituents for the welfare of the global poor. Now you go back to crazy. A politician of course has a responsibility not to prioritize his constituents’ welfare to the point of causing legitimate evil. If a politician decides not to engage in a war of conquest, rape and pillage to bring riches back to his constituents, that is not wrong. That’'s the entire point of international agreements - trade, military and otherwise; to force politicians to consider the welfare of people outside their borders and cause foreign politicians to respects THEIR constituents. Such agreements are not zero sum. ---
**Author:** ![Jonathan\_Chance](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jonathan_chance/32/701_2.png) [@Jonathan\_Chance](https://boards.straightdope.com/u/Jonathan_Chance)\ **Post date:** [August 17, 2016, 2:15am UTC](https://boards.straightdope.com/t/would-some-economist-please-explain-whats-wrong-with-outsourcing/762720/90 "2016-08-17T02:15:36Z")
> [@Hellestal](#): > > I agree entirely with this second paragraph. If you ask politicians, they’ll happily say their obligation is to put their constituents first, and everyone else second. (And that actually makes some sense, too. See below.) But if you were following the thread, here is the actual statement I was responding to: “Our politicians have no obligation, moral or otherwise, to give a rats ass about the welfare of the poor except to the extent it affects their constituency.” > > Emphasis added. That is not the same thing that you are arguing now. As **RickJay** said, only a psychopathic politician would believe they had literally no moral obligation whatever to people across a line on a map. > > The broader point here is that people will tell you whatever the hell they think sounds nice at a given moment. > > It’s asking them to fulfill their very simple moral obligation of not interfering in matters that do not concern them. I still think we’re talking past each other a bit, Hellestal. I’m not arguing they may not have a moral responsibility to the poor of other nations. I’m arguing that, with their own jobs on the line, the majority of their constituents will vote to make them kick poor babies in the teeth. Moral judgements essentially exist as luxuries in the political sphere. They are not absolutes. This is because voters, in aggregate, value generosity exactly as long as it costs them very little. The minute it is perceived as threatening the standard of living of themselves, their friends and their children it goes out the window. You may get a ‘yeah, it’s too bad’ but that is also accompanied by a ‘but I got to take care of mine’. You can say that’s wrong or immoral or whatever you choose. It’s still standard voting behavior. And the American electorate is showing signs of it right now - and has for a few election cycles. Without some major development that improves their lives in a way they can directly feel - lower prices on consumer goods don’t count - this trend will continue. Had gasoline not collapsed I’d be willing to argue that Trump would now be the prohibitive favorite to win the presidency and we’d be looking at economic chaos for the next several years unless Ryan and company could get him under control. High energy and food and housing prices people FEEL even if their microwaves are marginally cheaper. Those are the sort of economic stresses that the working class - and other - voters feel. Look at the hot spots on the left. Lower costs - or none! - for higher education. Bankruptcy for student loans. Availability of decent paying jobs for new grads. These are the economic stress points for the left. Between Trump and Sanders we were near a majority in terms of people willing to alter trade patterns - NAFTA, TPP and so forth - because they feel the stressors I’ve outlined. Again, ignoring such things - regardless of your moral point of argument - leads to greater trouble down the road. So it’s not that trade deals are bad. You and I are largely on the same ground about them. But I’m arguing that we haven’t done a good job of dealing with the dislocations caused by them and the political pressure is building. We’re getting to a point where dealing with it is needed if we want to continue free market economics. It’s not like we actually want free trade. I know there’s a lot of lip service paid to it but we accept all sorts of restrictions on such. The minimum wage, import quotas, environmental regulations, child labor laws and so forth. This isn’t a binary equation. It’s a sliding scale. We need to decide - as a nation - where on the sliding scale we find the balance point between the things we want - economic growth - and the things we wish to avoid - unemployment, stagnant wage growth, increased indebtedness - and figure out some means to get there. But the politicians will only respond to voter pressure. There are certainly some real champions for free trade in both the senate and the house. But most of them are in safe seats of one sort of another. Put them in a race that’s 49-51 and pick 'em and you’ll see them change their tune in a hurry. This is exactly what Hillary has done over the last year. She’s done exactly what he incentives say she should do: oppose a free trade pact because voters disapprove of it enough to be heard. ---
**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:** [August 17, 2016, 2:32am UTC](https://boards.straightdope.com/t/would-some-economist-please-explain-whats-wrong-with-outsourcing/762720/91 "2016-08-17T02:32:31Z")
> [@octopus](#): > > Actually we can compete with the whole world. We actually are at the moment competing with the whole world. It’s silly to think that price floors are going to helpful compete better. Our labor force is far from homogenous. > > But the fact is the USA still has tremendously high productivity. Even with counterproductive policy , which is evidence of many advantages the US enjoys for production. Yes we compete with the whole world and its not working out so great for large portions of our population. It doesn’t matter much that we are twice as productive as another country if their labor costs less than a fifth of ours, does it? What does it matter that we are producing more than ever if we have lost 5 million manufacturing jobs since 2000? I can’t think of many things made in American factories that cannot be made cheaper in countries with much lower labor costs. In what way does our labor compete successfully with the world in making anything that the world will buy? China has the ability to fill the global need for manufactured products and they can do it all cheaper than we can. How much does comparative advantage come into play when the is and absolute advantage and the ability to fill all the world’s demand so that it doesn’t really make sense for them (or anyone else) to buy a significant amount of manufactured goods from us? The only thing they seem to buy from us is raw materials, food and airplanes. And when much of our agricultural labor is handled by illegal aliens, there is precious little left for citizens. Perhaps this is the new normal and our working class will just have to learn to live like the illegal aliens they despise so much. ---
**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:** [August 17, 2016, 2:38am UTC](https://boards.straightdope.com/t/would-some-economist-please-explain-whats-wrong-with-outsourcing/762720/92 "2016-08-17T02:38:55Z")
> [@RickJay](#): > > You’re changing your story. Before you said your politician had no moral responsibility to foreigners. That’s crazy. Now you’re saying he has LESS responsibility. That’s a totally different statement. Yeah I changed the statement up top. And you should know this because you quote the sentence where I amend the statement. And the amended statement is just as effective at rebutting the notion that we should sacrifice the welfare of Americans so that the global poor can catch a break. > [@](#): > > Now you go back to crazy. > > A politician of course has a responsibility not to prioritize his constituents’ welfare to the point of causing legitimate evil. If a politician decides not to engage in a war of conquest, rape and pillage to bring riches back to his constituents, that is not wrong. I can’t see what you mean because there is so much fucking straw in the way. It sounds like you are saying that it is a sacrifice of a constituent’s welfare not to rape people … and Hitler. > [@](#): > > That’'s the entire point of international agreements - trade, military and otherwise; to force politicians to consider the welfare of people outside their borders and cause foreign politicians to respects THEIR constituents. Such agreements are not zero sum. I never said they were. I also didn’t say we should cut all our diplomatic and military ties. I think we do a fairly good job of engaging in diplomacy, one of the problem is that our trade deals are too frequently an extension of that diplomacy. ---
**Author:** ![DagNation](https://avatars.discourse-cdn.com/v4/letter/d/ee7513/32.png) [@DagNation](https://boards.straightdope.com/u/DagNation)\ **Post date:** [August 17, 2016, 9:15am UTC](https://boards.straightdope.com/t/would-some-economist-please-explain-whats-wrong-with-outsourcing/762720/93 "2016-08-17T09:15:31Z")
The issue I have seen most among my lefty groups regarding TPP, the WTO meetings, NAFTA, and related treaties is not the protectionist stuff. Instead it is mostly the advantages these treaties give to large corporations and the global .01% over national governments and private citizens in environmental and other areas of law. These treaties are seen as giving up national sovereignty and individual rights to benefit international banks and megacorporations. The problem is not trade treaties in general, it is that these have been bad treaties that were negotiated without the input of any one except big businesses and their political toadies. I would say that this issue overlaps with the issue of fair trade quite a bit, but is distinct. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [August 17, 2016, 12:52pm UTC](https://boards.straightdope.com/t/would-some-economist-please-explain-whats-wrong-with-outsourcing/762720/94 "2016-08-17T12:52:29Z")
> [@Damuri\_Ajashi](#): > > Yes we compete with the whole world and its not working out so great for large portions of our population. It doesn’t matter much that we are twice as productive as another country if their labor costs less than a fifth of ours, does it? Of course it matters. Back to the Law of Comparative Advantage. > [@](#): > > What does it matter that we are producing more than ever if we have lost 5 million manufacturing jobs since 2000? The unemployment rate in the United States today is 4.9%. That’s LOW. Whatever jobs have been lost have apparently been replaced by other jobs. > [@](#): > > In what way does our labor compete successfully with the world in making anything that the world will buy? China has the ability to fill the global need for manufactured products and they can do it all cheaper than we can. Then why is it the USA continues to export a wide range of products? > [@](#): > > The only thing they seem to buy from us is raw materials, food and airplanes. And when much of our agricultural labor is handled by illegal aliens, there is precious little left for citizens. Well, that explains the sky high unemployment rate. The largest US export is refined petroleum (as opposed to RAW petroleum; the former is not a raw material, the latter is.) followed by airplanes, vehicles and vehicle parts, medicine, and industrial equipment. So pparently there are things the USA can compete it. Trillions of dollars’ worth, in fact. > [@](#): > > I can’t see what you mean because there is so much fucking straw in the way. It sounds like you are saying that it is a sacrifice of a constituent’s welfare not to rape people … and Hitler. What you wrote, word for word, was “A politician has no obligation moral or otherwise to sacrifice the welfare of his constituents for the welfare of the global poor.” Do you agree you wrote that? If so, then a country NOT invading and pillaging another country for its own profit constitutes a sacrifice. If the USA could move in to a helpless country and steal all its stuff, thereby improving the average welfare of an American, then not doing so means sacrificing the average welfare of an American for a moral reason. Countries have done this many times throughout history; it’s practically how Rome financed itself. If you agree this would be wrong, you’re admitting American politicians do, in fact, bear a moral responsibility for the welfare of non-Americans. Not to the same extent they do Americans, but some, and yes, it involves small sacrifices on the part of Americans. Any other attitude is psychopathic. The world is chopped up into countries, which is kind of unfortunate but it’s the way it is and we have to live with it. All countries are better off cooperating; there may be a minor sacrifice here and there but the benefits are enormous. If one country breaks from that, _everyone_ is worse off. It’s a prisoner’s dilemma. I’ve used this example before and no one has ever once come up with a coherent answer; if trade barriers aren’t bad things, why not improve the American economy by simply erecting massive trade barriers between states? I mean, if the State of New York is better off being protected for Chinese competition, why is it not also better off being protected from competition from Arkansas, Texas, or Montana? Once all those incredible benefits have been realized, then the State of New York can start erecting internal trade barriers, protecting Manhattanites from all that cheap labor in Rochester. If it works at one arbitrary line, why not create more? ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [August 17, 2016, 12:59pm UTC](https://boards.straightdope.com/t/would-some-economist-please-explain-whats-wrong-with-outsourcing/762720/95 "2016-08-17T12:59:35Z")
> [@Damuri\_Ajashi](#): > > Yes we compete with the whole world and its not working out so great for large portions of our population. This is too weaseled to pin down. Care to quantify “not working out so great” and “large portion”? And back it up? > [@Damuri\_Ajashi](#): > > It doesn’t matter much that we are twice as productive as another country if their labor costs less than a fifth of ours, does it? It certainly isn’t stopping us from manufacturing more than ever, as you acknowledge. > [@Damuri\_Ajashi](#): > > What does it matter that we are producing more than ever if we have lost 5 million manufacturing jobs since 2000? What does it matter that we’ve gained over 13 million jobs since 2000? > [@Damuri\_Ajashi](#): > > I can’t think of many things made in American factories that cannot be made cheaper in countries with much lower labor costs. Yet we make more than ever. > [@Damuri\_Ajashi](#): > > In what way does our labor compete successfully with the world in making anything that the world will buy? China has the ability to fill the global need for manufactured products and they can do it all cheaper than we can. How much does comparative advantage come into play when the is and absolute advantage and the ability to fill all the world’s demand so that it doesn’t really make sense for them (or anyone else) to buy a significant amount of manufactured goods from us? The only thing they seem to buy from us is raw materials, food and airplanes. And when much of our agricultural labor is handled by illegal aliens, there is precious little left for citizens. Maybe you can get answers to your questions from the people who bought $2.3 trillion from us last year. And maybe you’ll learn what they actually bought, since it’s clear you didn’t look that up. Raw materials indeed. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [August 17, 2016, 1:17pm UTC](https://boards.straightdope.com/t/would-some-economist-please-explain-whats-wrong-with-outsourcing/762720/96 "2016-08-17T13:17:04Z")
> [@Damuri Ajashi](#): > > In what way does our labor compete successfully with the world in making anything that the world will buy? Machines, engines, pumps, electronic equipment, aircraft, spacecraft, vehicles, medical and technical equipment, plastics, pharmaceuticals, organic chemicals, and computer software, among other things. ([Cite.](http://www.worldstopexports.com/united-states-top-10-exports/)) Regards, Shodan ---
**Author:** ![Richard\_Parker](https://avatars.discourse-cdn.com/v4/letter/r/35a633/32.png) [@Richard\_Parker](https://boards.straightdope.com/u/Richard_Parker)\ **Post date:** [August 17, 2016, 1:57pm UTC](https://boards.straightdope.com/t/would-some-economist-please-explain-whats-wrong-with-outsourcing/762720/97 "2016-08-17T13:57:01Z")
> [@Stranger\_On\_A\_Train](#): > > All of this will spell a decline in the fortunes of the United States just as previous transfers of technical and industrial capability dimmed the sun over the British Empire and over the Spanish and Roman empires, the Abbassid caliphate, and the (somewhat ironical) Ming dynasty. Your key premise–that the brain drain is a consequence of not negotiating certain conditions in trade treaties–seems pretty suspect to me. NAFTA did not lead to our graduate programs being filled with Chinese students. Note also that many of those foreign-born students end up staying. Ironically, the thing that would contribute most to preventing the brain drain is to make is easier for them to stay in the US after their schooling is over. ---
**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:** [August 17, 2016, 2:26pm UTC](https://boards.straightdope.com/t/would-some-economist-please-explain-whats-wrong-with-outsourcing/762720/98 "2016-08-17T14:26:39Z")
> [@RickJay](#): > > Of course it matters. Back to the Law of Comparative Advantage. I’m not saying that the general principles of economics have collapsed but the theory of comparative advantage is not an immutable law that cannot be manipulated. If I enter into a trade agreement with you that erects trade barriers where you have comparative advantages and open up free trade where I have comparative advantages, what is the result? If my ability to produce is so slack that I can satisfy all current demand at a price that prices you out of the market on pretty much everything where labor is a significant factor of production, what then? So lets say there are only two products guns and pizzas. It costs you $5 to produce a gun and $10 to produce a pizza. You have the ability to produce either 10 guns or 10 pizzas. I can produce guns for $1 and pizzas for $1. I have the ability to effectively produce an infinite amount of pizza and guns. Your comparative advantage is in guns. Why the fuck would I buy a gun from you for something over $5 if I can produce a near infinite supply of guns for $1. We are basically relegated to selling China guns for $1 and buying pizza from them for $1 so we can end up a bit better off that way but what is more likely is that you just buy all your guns and pizza from me and transfer your wealth to me as your workers remain largely idle except for those who are at the far lower left hand corner of the supply curve that can produce at a level that can compete with me. > [@](#): > > The unemployment rate in the United States today is 4.9%. That’s LOW. Whatever jobs have been lost have apparently been replaced by other jobs. Yeah, a lot of them are shitty McJobs working the fryalator. What has happened to the real incomes of Americans? Sure there is some organic domestic growth that drives up real median incomes a bit but its pretty close to treading water despite huge improvements in productivity because of the headwind of global competition. > [@](#): > > Then why is it the USA continues to export a wide range of products? Because every country does not have one monolithic producer that has a single cost structure, the ones on the lower left hand end of the supply curve are able to compete. There are many producers and the competition means that many of the domestic producers aren’t around any more but the most competitive ones still exist. What manufactured consumer product do we still export? Sure there’s a little here and there, after all France imports wine from California. > [@](#): > > Well, that explains the sky high unemployment rate. Are you under the impression that the U3 rate captures the health of our labor market right now? Do you think the unemployment rate generally captures the health of the labor market? Don’t you think its relevant that we haven’t had real wage growth in the last 40+ years? > **[Real hourly wage growth: The last generation](https://www.epi.org/blog/real-hourly-wage-growth-last-generation/)** > > The last generation has been marked by a stark disconnect between productivity growth (up 80 percent between 1973 and 2011) and slow or stunted wage growth. The real hourly wages of the median worker grew less than 4 percent over this span, and real... > [@](#): > > The largest US export is refined petroleum (as opposed to RAW petroleum; the former is not a raw material, the latter is.) You realize that there was a federal law that prohibits the export of crude oil until less than a year ago, right? I’m glad that you agree that we can positively affect our exports by restricting trade. We import about 2/3rds as much refined petroleum as we export, lets see if our exports of refined products increases or decreases relative to our imports of refined petroleum as a result of this relaxation of trade restrictions. [http://www.eia.gov/dnav/pet/pet\_move\_exp\_dc\_nus-z00\_mbblpd\_m.htm](http://www.eia.gov/dnav/pet/pet_move_exp_dc_nus-z00_mbblpd_m.htm) > [@](#): > > followed by airplanes, Yes, this is a bright spot that we pay for every year in subsidies and tax breaks to Boeing. Boeing receives more in direct and indirect government subsidies than any other corporation in America. These subsidies are the subject of endless trade litigation. Are you saying we should be subsidizing all of our exporters this way? [http://america.aljazeera.com/opinions/2014/2/corporate-welfaresubsidiesboeingalcoa.html](http://america.aljazeera.com/opinions/2014/2/corporate-welfaresubsidiesboeingalcoa.html) > [@](#): > > vehicles and vehicle parts, Are we net importers or exporters of vehicles and vehicle parts? We import almost three times as many vehicles as we export, double for vehicle parts. Like I said, even France imports wine. With that said, we don’t really compete too much on labor for car manufacturing. We compete mostly with Mexico (I think) but places like Germany and Japan are not low labor cost jurisdictions. If China or India can ever get their fledgling auto industries off the ground, I suspect things might be different. > [@](#): > > medicine, We import almost exactly as much medicine as we export. > **[The Observatory of Economic Complexity](https://oec.world/en)** > > The world's leading data visualization tool for international trade data. > [@](#): > > and industrial equipment. Not really sure what you mean by this. We export more heavy equipment than we import but I don’t recall it being a really big number. > [@](#): > > So pparently there are things the USA can compete it. Trillions of dollars’ worth, in fact. IIRC the US exports less than 2 trillion dollars worth of stuff. You missed food, we export a shitload of agriculture. You know who else exports agricultural products? Third world nations, but that’s OK because that’s where most of the people who work the field come from anyways so… > [@](#): > > What you wrote, word for word, was “A politician has no obligation moral or otherwise to sacrifice the welfare of his constituents for the welfare of the global poor.” Do you agree you wrote that? > > If so, then a country NOT invading and pillaging another country for its own profit constitutes a sacrifice. You are straining the meaning of the word sacrifice, certainly beyond anything that any reasonable person would think I intended. > [@](#): > > If the USA could move in to a helpless country and steal all its stuff, thereby improving the average welfare of an American, then not doing so means sacrificing the average welfare of an American for a moral reason. Am I sacrificing the welfare of my family when I don’t kill you and steal your stuff. > [@](#): > > Countries have done this many times throughout history; it’s practically how Rome financed itself. If you agree this would be wrong, you’re admitting American politicians do, in fact, bear a moral responsibility for the welfare of non-Americans. Not to the same extent they do Americans, but some, and yes, it involves small sacrifices on the part of Americans. That is a strained and ridiculous attempt to try and make me wrong and make yourself right. > [@](#): > > Any other attitude is psychopathic. The world is chopped up into countries, which is kind of unfortunate but it’s the way it is and we have to live with it. All countries are better off cooperating; there may be a minor sacrifice here and there but the benefits are enormous. If one country breaks from that, _everyone_ is worse off. It’s a prisoner’s dilemma. No its not. There are immediate negative consequences to going around conquering your neighbors, even under the color of law (just ask Russia about how they are faring in the blowback from the invasion of Crimea). That is not a prisoner’s dilemma when there is a positive incentive to cooperate and a readily available means to do so. > [@](#): > > I’ve used this example before and no one has ever once come up with a coherent answer; if trade barriers aren’t bad things, why not improve the American economy by simply erecting massive trade barriers between states? I mean, if the State of New York is better off being protected for Chinese competition, why is it not also better off being protected from competition from Arkansas, Texas, or Montana? Once all those incredible benefits have been realized, then the State of New York can start erecting internal trade barriers, protecting Manhattanites from all that cheap labor in Rochester. If it works at one arbitrary line, why not create more? Because trade barriers are net negatives in the aggregate even if they are net positives in individual cases. Free trade increases the size of the pie but the pie is not shared equally by all participants. So lets say you have a pie with 10 slices 2 for you and 8 for me. We enact free trade and now the pie has 12 slices, 6 for you and 6 for me. We are better off in the aggregate but I am worse off. ---
**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:** [August 17, 2016, 2:46pm UTC](https://boards.straightdope.com/t/would-some-economist-please-explain-whats-wrong-with-outsourcing/762720/99 "2016-08-17T14:46:41Z")
> [@Ruken](#): > > This is too weaseled to pin down. Care to quantify “not working out so great” and “large portion”? And back it up? It certainly isn’t stopping us from manufacturing more than ever, as you acknowledge. What does it matter if our manufacturing and exports have increased a millionfold if none of that growth is reflected in the wages of Americans. So historically, real wages have increase in tandem with productivity. Over the last few decades, wage growth has been growing at about 1/20th the rate of productivity growth. This is in large par due to labor competition from abroad. > [@](#): > > What does it matter that we’ve gained over 13 million jobs since 2000? The US population has grown by 30 million in that time, you do realize that gross employment numbers naturally increase with increases in population numbers right? The job growth we have see has not been really good jobs. [https://www.washingtonpost.com/news/wonk/wp/2014/04/28/u-s-job-growth-is-coming-in-all-the-wrong-places/](https://www.washingtonpost.com/news/wonk/wp/2014/04/28/u-s-job-growth-is-coming-in-all-the-wrong-places/) > [@](#): > > Yet we make more than ever. And most of that is consumed domestically and employ fewer people in manufacturing stuff. > [@](#): > > Maybe you can get answers to your questions from the people who bought $2.3 trillion from us last year. And maybe you’ll learn what they actually bought, since it’s clear you didn’t look that up. Raw materials indeed. Are you sure tat your number isn’t imports? Most estimates of our exports are under 2 trillion. Most estimates of our IMPORTS are over 2 trillion. [https://www.cia.gov/library/publications/the-world-factbook/rankorder/2078rank.html](https://www.cia.gov/library/publications/the-world-factbook/rankorder/2078rank.html) ---
**Author:** ![hermitcrab](https://avatars.discourse-cdn.com/v4/letter/h/6f9a4e/32.png) [@hermitcrab](https://boards.straightdope.com/u/hermitcrab)\ **Post date:** [August 17, 2016, 2:52pm UTC](https://boards.straightdope.com/t/would-some-economist-please-explain-whats-wrong-with-outsourcing/762720/100 "2016-08-17T14:52:15Z")
just wanted to add a few observations. i am not an economist, but i do live in a pretty economically depressed part of the US (maybe more economists should live out here, too!) > [@bump](#): > > What worries me is rather than a rising tide lifting all boats, it sure looks like everyone’s going to level out at some equilibrium wage point better than where the third world nations were before, but substantially lower than where working-class US wages and benefits are with our current laws and regulations. That’s a good point. A rising tide floats all boats in a global economy, but how does that help as the ocean gets bigger and bigger? Western countries used to enjoy a high tide and others a very low tide in their respective little stagnant pools, what happens as channels are dug and the pool becomes wider? I think that leaves, in order of benefit 1.) countries that got outsourced to early, such as Korea, Japan, etc. They have had a great influx of jobs and money 2.) countries that have globalized later, who are getting smaller and smaller rises in benefits, and 3.) countries that benefitted from outsourcing jobs to the first two in cheaper products, who now are watching their own tide fall to global “sea-level.” We’ve had years to prepare for globalization, but we’re only seeing it now because middle-class and now upper middle-class jobs are disappearing. I think we’re going to be high and dry. Not only is the pool growing as other countries become globalized; population is growing too. That means more people competing for more jobs at lower wages and benefits. It’s debatable if global jobs are become fewer, also. Mechanization and the development of AI software means all of us will have to compete with machinery that doesn’t need sleep, doesn’t get sick, doesn’t need a living wage, and can work 24/7 and 365 days a year. [Previous page](https://boards.straightdope.com/t/would-some-economist-please-explain-whats-wrong-with-outsourcing/762720.md?page=4) [Next page](https://boards.straightdope.com/t/would-some-economist-please-explain-whats-wrong-with-outsourcing/762720.md?page=6)