Outsourcing is good for the economy
Nym90:
Quote from: MN-Troy on September 10, 2004, 08:51:56 PM
Not only is outsourcing good for the U.S., outsourcing is also necessary key component that has made this country and other capitalistic countries wealthy. 17th and 18th century European textile mills were probably angry about being undercut by American textile factories that could produce for considerably less. But over time cost equalized. This is no different than IT jobs going to India. And the result is that we see a rapid rise in Indian wages and in return they will want American goods and services. American businesses need to stay competitive in a global market and its a necessary function for those businesses to outsource labor cost to remain competitive.
The other rhetoric I often hear and read about job outsourcing is that once a job initially leaves the United States, no other jobs can be created. This is complete and utter nonsense. There tends to a net gain of 1 job for every job lost due to outsourcing. And the majority of those jobs that are being outsourced are very low-level work anyway.
Except that a lot of the jobs being outsourced are good jobs now. White collar jobs in engineering and IT are often being outsourced to India as you said, but they are only being paid a fraction of what an American would be paid. So they aren't going to be able to afford as many products as the American worker. Their standard of living isn't as high as that of an American doing the same job. Sure, their wages are rising over what they would have, but it's still a lot lower than what we have here. Outsourcing is dragging Americans down towards the lower standards of 3rd world nations that the workers are being forced to compete with.
If there were plenty of jobs available in this country, such that someone whose job is outsourced would have no problem at all getting a different job at the same pay rate, then it would be fine. If the jobs were being replace by new domestic jobs of equal pay right away, then that would be no problem. But that's not what's happening.
Jobs are being sent away and being replaced, if at all, by lower paying service jobs, and the workers who are losing their good paying jobs don't have the training or skills, nor is it going to be provided to them, to get another job of comprable pay.
We are losing our manufacturing base, and we can't be a successful or competitive country importing far more than we export. It's a fundamental weakness in our economy; we need to produce as much as we can here.
Outsourcing brings in wealth, but it's not wealth that is being evenly distributed. It brings wealth to the corporate owners, but it doesn't trickle down to the workers, not nearly as much as it would trickle up if the workers were made wealthier instead.
MN-Troy:
Quote from: SCJ Nym90 on September 10, 2004, 08:18:02 PM
But corporations aren't as likely to invest their dollars in helping America as are laborers. Those who work in organized labor spend a higher percentage of their income than those who are wealthy, because they have more need to spend it. They buy a new car, a house, a new computer or big screen TV, etc. They spend a higher percentage of the income that they earn from the jobs that are kept in America than the corporation would spend from the equal amount of money that they save by not having the jobs in America. If these people could get a different job that would be equally good paying, that would be fine, but no jobs are popping up to replace the lost ones. You have to have the job first; it's not enough to say "we'll ship your job overseas, but don't worry, a few years from now we'll create a new one due to all of this new prosperity that will result." That doesn't do the person much good in the meantime.
Corporations aren't going to spend the money here to create domestic jobs; they'll use the extra profits that they make from outsourcing to build even more and more overseas factories. You claim that they would create domestic jobs, but why? It's not in their interest. They can make more money by creating jobs overseas, so if they make more money by doing just that, why would they then turn around and create jobs here, when it's not cost effective to do so?
The corporation is more likely to spend the money overseas, helping the economy of other countries and not of ours. Yes, corporations spend most of the money that they earn, but the laborers spend a higher percentage of it. So it's better for the economy to produce as many goods as we feasibly can here, rather than producing them overseas. As I said, we can't consume our way into prosperity; it's a false prosperity for Americans to spend their money on products if we aren't making an equal amount of products in this country. Corporations are taking the dollars that we spend on products and shipping them out of the country. That's good for the economy of China, but not for the USA.
I'm trying to stay on topic, since the question was whether or not outsourcing was good for the economy. A whole different case can be made against it from a moral perspective, of course.
Cisco Systems a leader of outsourcing, but has not reduce the number of domestic American jobs. The costs that were being outsourced by Cisco created new, high value jobs. What I'm saying maybe simplistic, but studies have shown a net gain of 1 job to the loss of 1 job due to outsourcing.
But I really want to hear how you would end outsourcing?
Nym90:
Well I'm glad that at least one company is doing the right thing there. Hopefully others will follow their lead.
I agree that there's no one simple solution to outsourcing. I would, however, cut back on trade with countries that don't have comparable labor and environmental standards to our own. I wouldn't do this all at once; to minimize the impact, I'd gradually phase in a tariff increase slowly over several years to ensure that any potential negative effects could be caught and it could be reversed if it was producing catastrophic consequences.
I support completely free trade with countries whose labor standards, wages, environmental standards, etc. are all on a par with or higher than ours. I'm not an isolationist, but it's bad for the country for good paying jobs here to be replaced by lower paying jobs in a different country, simply because the company can make more profits. There's nothing wrong with imports, but if a good can be produced here, assuming we have the technology and the willing and available manpower, then it should be made here. We should remove the purely financial incentive for corporations to produce products in other countries. If another country can make a product better than we can, because they have better technology or more willing workers (if we can't find enough people in this country willing to work in that type of job) then I have no problem with outsourcing at all.
Another key component is education; if more people realized how outsourcing takes away jobs, they'd be more likely to buy American. Ultimately that will be the most effective solution, if the people can see the damage it is doing and refuse to buy products made in 3rd world nations. Market forces are always more powerful than anything that government can do.
MN-Troy:
Quote from: SCJ Nym90 on September 10, 2004, 09:01:41 PM
Quote from: MN-Troy on September 10, 2004, 08:51:56 PM
Not only is outsourcing good for the U.S., outsourcing is also necessary key component that has made this country and other capitalistic countries wealthy. 17th and 18th century European textile mills were probably angry about being undercut by American textile factories that could produce for considerably less. But over time cost equalized. This is no different than IT jobs going to India. And the result is that we see a rapid rise in Indian wages and in return they will want American goods and services. American businesses need to stay competitive in a global market and its a necessary function for those businesses to outsource labor cost to remain competitive.
The other rhetoric I often hear and read about job outsourcing is that once a job initially leaves the United States, no other jobs can be created. This is complete and utter nonsense. There tends to a net gain of 1 job for every job lost due to outsourcing. And the majority of those jobs that are being outsourced are very low-level work anyway.
Except that a lot of the jobs being outsourced are good jobs now. White collar jobs in engineering and IT are often being outsourced to India as you said, but they are only being paid a fraction of what an American would be paid. So they aren't going to be able to afford as many products as the American worker. Their standard of living isn't as high as that of an American doing the same job. Sure, their wages are rising over what they would have, but it's still a lot lower than what we have here. Outsourcing is dragging Americans down towards the lower standards of 3rd world nations that the workers are being forced to compete with.
If there were plenty of jobs available in this country, such that someone whose job is outsourced would have no problem at all getting a different job at the same pay rate, then it would be fine. If the jobs were being replace by new domestic jobs of equal pay right away, then that would be no problem. But that's not what's happening.
Jobs are being sent away and being replaced, if at all, by lower paying service jobs, and the workers who are losing their good paying jobs don't have the training or skills, nor is it going to be provided to them, to get another job of comprable pay.
We are losing our manufacturing base, and we can't be a successful or competitive country importing far more than we export. It's a fundamental weakness in our economy; we need to produce as much as we can here.
Outsourcing brings in wealth, but it's not wealth that is being evenly distributed. It brings wealth to the corporate owners, but it doesn't trickle down to the workers, not nearly as much as it would trickle up if the workers were made wealthier instead.
Please check a study done by the McKinsey Global Institute
http://www.mckinsey.com/knowledge/mgi/rp/offshoring/
Scroll down to EXPLODING THE MYTHS ABOUT OFFSHORING and click on the link. You have to register (quick and easy) and have Adobe Acrobat to read it.
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