The myth of 'insourcing'

U.S.News & World Report ^ | 5/3/04 | Lou Dobbs

[Willie Green]

The issue of whether U.S. multinationals will continue to export American jobs to cheap overseas labor markets is critical to the well-being of millions of working Americans and, I believe, the future health of our economy and society. Advocates of unbridled free trade first defended the practice of shipping American jobs offshore by saying the practice wasn't widespread and few jobs were lost to outsourcing abroad. Then the University of California-Berkeley last fall revealed that as many as 14 million American jobs are potentially at risk over the next decade. Then the advocates of exporting America claimed that outsourced jobs would be replaced by high-value jobs. Instead, the economy has lost millions of jobs.

The Bush administration, corporate America, business groups, and their surrogate think tanks contend America must be able to kill U.S. jobs and move them to cheap foreign labor markets in order to be more productive, more competitive, and even more innovative. How competitive are our great American multinationals in the global marketplace? We now have a half-trillion-dollar trade deficit, and our surplus in services is falling like an anvil (one most likely not manufactured in the United States). We're exporting jobs senselessly and importing debt held by foreigners that amounts to $3 trillion--and is rising fast.

Smoke and mirrors. Outsourcing advocates, including many in the Bush administration, are now trying to change the language of the debate, and they've introduced a new term: "insourcing." They claim that the jobs created here by foreign companies counterbalance those outsourced to cheap foreign labor markets by U.S. corporations.

[Willie Green]

ping

[Enduring Freedom]

LOU DOBBS has become a national disgrace, a national joke.

Dobbs, you ignorant Socialist, you cannot force a company to hire anyone, let alone an over-priced American union worker.

You are more than welcome to start hammering people for buying the products made by companies that hire overseas workers. You may even advocate a boycott.

But you MAY NOT enforce your Socialist control over free enterprise in America.

[NewRomeTacitus]

"Former Assistant Treasury Secretary Paul Craig Roberts says, "This notion of insourcing is a propaganda device." And, Roberts says, "What they're calling insourcing is nothing but just standard foreign investment." Outsourcing, on the other hand, is the practice of utilizing cheap foreign labor to manufacture goods or provide services only to sell them back into the domestic marketplace.

Insourcing also consists of foreign companies purchasing previously established U.S. assets. According to the Economic Policy Institute, most U.S. investment by foreign companies is the acquisition of existing American companies. As a result, just 6.2 percent of the job growth by foreign firms in America is newly created jobs. Roberts says, "It concerns me that we receive so little direct foreign investment in the form of new plant and equipment."

What a house of cards. They never seem to factor in the long-term effect of impoverishing the (former) middle class they depend on to repurchase the goods. Apparently the lust for short-term profits deadens the part of the brain devoted to common sense. - NRT

[King Black Robe]

What about insourcing defined as illegal aliens being brought in for jobs? I do not see a big difference between that and outsourcing, except that the cost to taxpayers is greater when they must fund healthcare, education etc..

[ex-snook]

Ping back.

Well if the economy can 'insource' some 2 million jobs before November, it will have some merit at election time.

[ninenot]

Wow!!!

Now THERE'S an intelligent defense of FreeTraitoring if I ever saw one.

Call three names and denounce the writer as a Socialist.

Hmmmmm....are you, perhaps, a "highly-paid" RNC worker?

[ninenot]

I think we can look to a longer-term revival of American manufacturing based on quality concerns. It's becoming clear that $6.95 toasters and $30.00 keyboards (and $8.95 mice) just don't cut it for the long-term.

But God only knows when this little reality will set in.

[ninenot]

They never seem to factor in the long-term effect of impoverishing the (former) middle class they depend on to repurchase the goods

The Spin-Meister class remains in the White House. They just wear (R) labels, made in China.

[ninenot]

A story from today's ComputerWorld tells us that the chipmakers are having serious QC problems with the latest-gen chips--and from another FR thread we learn that DeWalt's Mexican tools are being returned in 'significant numbers' to HomeDespot stores---quality problems.

Hmmmmm.....

[TXBSAFH]

It sat in with me a long time ago. Example. I have a Wahl shaver made in the US, I use to do my hair. OK I am bald. It is one year old, it replaced one I had for 5 years that worked fine until I dropped it on a tile floor. My brother uses a cheap con air made in China. He is on his third in five years. And none of his died due to gravity stress testing. He will be replacing his with a made in the US wahl like mine when his die.

[Imal]

Bingo. The government subsidization of the illegal immigrant slave class is the real scandal behind "insourcing".

[TXBSAFH]

Please add me to your ping list, thank you.

[Camachee]

Then the University of California-Berkeley (an unbiased source if ever there was one) last fall revealed that as many as (ok, he's letting us know it's just a guess) 14 million American jobs are potentially (they can dream up a scenario, unlikely as it might be to ever happen) at risk over the next decade (not today or tomorrow, but far enough into the future that no one can disprove the claim).

Facing solid evidence like that, I guess I have to be on Mr. Dobb's side in this.

[Mr. Bird]

It's becoming clear that $6.95 toasters and $30.00 keyboards (and $8.95 mice) just don't cut it for the long-term.

I can't tell whether you are being sarcastic or serious with this statement. That we live at a time in which technology is so insanely affordable is no small condition. Desktop PC's are damned near free now, just to note one item.

I think the risk to a company that chooses to outsource is one of culture rather than quality (they are related, to be sure, but the underlying issue is cultural). You cannot outsource what has been called "good old-fashioned American know-how". We have a very odd culture, with respect to work ethic. We work harder than anyone on the globe, and that translates to higher wealth. And that correlation is what drives us.

I believe that companies will often ultimately outsource those functions that are ancillary to their core operation. Why not, if it only helps the bottom line? The question is how do we keep core business operations here? I think the easy (and correct) answer is easing regulatory and tax burdens on businesses here. And I think doing so would create an economic explosion.

[Extremely Extreme Extremist]

The four fallacies of protectionism:

(1) Limiting imports saves jobs

(2) Limiting imports keeps U.S. wages from falling

(3) Limiting imports saves American companies and American industries

(4) U.S. National security requires protection of industries needed to fight a war

Protectionism is based on POLITICAL premises, POLITICAL logic, and it COMPLETELY ignores economics.

[Mr. Bird]

A story from today's ComputerWorld tells us that the chipmakers are having serious QC problems with the latest-gen chips--and from another FR thread we learn that DeWalt's Mexican tools are being returned in 'significant numbers' to HomeDespot stores---quality problems. Hmmmmm.....

And this tells us.....what? That non-American employees aren't as good as American? Maybe. I believe that, by the way. And if it's true, doesn't it stand to reason that those jobs would return to our shores? Corporations don't do things out of spite; they do them out of greed. Thank heavens.

[TXBSAFH]

Bell and Howel, they once maded cameras, and they were a large firm. In the fifties they were top of the line. They started to outsource some then all of their manufacturing to a company in Japan. After a few years that company took what they learned an started making cameras under their own name. When is last time you heard of bell and howel. But I think you must have heard of the Japaness company Pentax. They outsourced manufacturing and got shoved out the market.

[ninenot]

Done. Welcome aboard!

[ninenot]

I am quite serious. Made offshore often = junk.

I believe that companies will often ultimately outsource those functions that are ancillary to their core operation.

Uh-huh.

And those US corp's which do NOT recognize that manufacturing happens to BE one of their "core operations" will be extinct.

Evidently you've missed about the last 6 months' discussion of this topic.