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.

[Toddsterpatriot]

What Unfair Trade has done:

Nasdaq high- 5132

Nasdaq today- 2034

So unfair trade started after March 10th 2000 when the Nasdaq peaked?

-the US dollar could lose 1/3 of it’s value within the next few years.

This would reduce the trade imbalance, that would be good, right?

America's trade deficit has hit a new record annual high of $490.8bn ...

The dollars are only good if them furriners buy stuff with them. If they don't, it's only paper.

-The National Debt has continued to increase an average of $1.87 billion per day since September 30, 2003!

-Total national debt= $7,175,406,613,213.38

National Debt is caused by govt spending, not trade.

-we spend nearly 20% of our GDP on paying just the interest on the debt

Recheck your numbers, boss, total govt spending is 20% of GDP. Interest is much less.

-3 million U.S. jobs lost since January 2001.

Yeah, it's called a recession.

[Toddsterpatriot]

I've got no problem cutting legal immigration way down and sending every illegal back and building a big wall on the border.

[GOP_1900AD]

RE: "Now you fear we can't compete so you want the government to restrict our businesses in a way that I feel moves us more toward communism." No, I take the simple anti Communist view. The Communists have seized the our means of production and now we don't have them. Is this too complicated for you to understand?

[GOP_1900AD]

RE: "The communists finally admit that we won and are adopting free enterprise. We win. " No they are not adopting free enterprise. They have simply seized the means of production, and, are allowing certain portions of the their still-centrally-controlled economy to experience something like Lenin's NEP on steroids. Again, it is simple. You simply do not want to acknowledge the geopolitical reality. We have sold, at liquidation prices, the rope to the Communists.

[GOP_1900AD]

Where are you located? I noticed that you use the Queen's English.

[edwin hubble]

Infineon, a German computer chip company just announced a huge plant expansion in the Richmond, Virginia suburbs.

Hiring 800 new manufacturing jobs, many other jobs in support.

[Toddsterpatriot]

The Communists have seized the our means of production and now we don't have them.

I've been busy the last few days and must have missed that news story. They seized all our means of production? Sneaky bastards.

[GOP_1900AD]

Certainly they have not seized all means in all industries. However in certain areas they are getting darn close. Printed Circuit Boards are heading in that direction, for example.

[GOP_1900AD]

The irony of this is that when Viasystems acquired what, at the time, was the world's largest, fully automoted printed circuit board plant from Lucent in Richmond, they shut it down and threw thousands out of work. Viasystems, who claim to be a US company, have HQ in the US but little else these days. Now here we have Siemens, a German co, who still do produce in Germany, providing some jobs for Richmond. Siemens is more American than Viasystems! At least they are in behavior!

[GOP_1900AD]

Then let's.

[Toddsterpatriot]

Deal.

[Toddsterpatriot]

Siemens is more American than Viasystems! At least they are in behavior!

So how do we encourage American behavior?

End our taxation of global profits. Every other country in the world taxes only on profits earned in that country.

Make our taxes lowest in the world. Tort reform. Reduce counter-productive regulations.

A German company created jobs here because we're more business friendly than Germany. We outsource to other countries because they're more business friendly than us.

[jimfree]

Most likely, it will take a REAL crisis of some sort to get the ball rolling.

You hit it. Sadly a crisis is too often a necessary precondition for real change.

[Jorge]

OK so you aren't mad. Just too lazy to rebut or even read his arguments.

What arguments?

[XBob]

334 - "OK so you aren't mad. Just too lazy to rebut or even read his arguments.
What arguments?"

Exactly.

[ggekko]

My critique of Mr. Dobb's article is based upon statistics involving Foreign Direct Investment (FDI) in the US over the last 20 years. It is well known among economists across the political spectrum that FDI has created a positive net number of jobs within the US economy. This number of net new jobs over the last 20 years includes the jobs that were lost to FDI by US companies in foreign jurisdictions.

I think Mr. Dobb's analysis trivializes the entire issue by focusing his analysis on statistics derived from the last few years. FDI in the US does consist, in part, in the acquisition of existing assets from US companies but the majority of FDI activity consists in the creation of new plants and facilities in the US. As bad as our economic climate is, in some respects, it is still relatively healthy compared to Western Europe's. We have benfitted from European policy mistakes.

If Mr. Dobb's could demonstrate a systematic pattern of disinvestment in the US economy over the last twenty years I would take his position more seriously; absent such an analysis his position could simply be founded on statistical noise.

[Jorge]

Exactly.

Then we agree. Thank you!

[XBob]

wow - I never thought you would admit to being so lazy.

[Cronos]

of the Japaness company Pentax.

Interesting. I did not know that. Thanks for the info.

[Cronos]

Made offshore often = junk.

Well, that blanker statement isn't quite right. Many Japanese cars are made offshore, and I wouldn't call them junk. The stuff made in China etc. are junk, but they're cheap. That's their USP. If tomorrow EVERYONE agreed to buy placing quality over price, then we'd see competition from quality suppliers. We've got too used to the cheap disposable culture.