Posted on 02/13/2004 6:11:03 AM PST by Deliberator
HARRISBURG, Pa. (Reuters) - Under pressure from fellow Republicans, President Bush distanced himself on Thursday from one of his top economic advisers who said the outsourcing of U.S. jobs to workers overseas may benefit the economy.
"The (economic) numbers are good. But I don't worry about numbers, I worry about people," Bush told students and teachers at a high school in Pennsylvania -- a pivotal state in this year's election and one of the hardest hit by factory job losses during his presidency.
Without mentioning by name the chairman of his Council of Economic Advisers, Gregory Mankiw, Bush said he was concerned "there are people looking for work because jobs have gone overseas" and vowed to "act to make sure there are more jobs at home" by keeping taxes low and by retraining displaced workers. Bush offered no new initiatives to curb outsourcing and aides said he opposed restrictions on free trade.
With political concern about unemployment heating up ahead of the November presidential election, critics have seized on Mankiw's characterization of "outsourcing" by U.S. companies as "something that we should realize is probably a plus for the economy in the long run."
Democrats said his comments and the council's annual report were evidence that the Bush White House is insensitive to the plight of out-of-work Americans.
Senate Democratic leader Tom Daschle predicted Mankiw would quit.
But Democratic Sen. Hillary Rodham Clinton of New York said, "This is the economic report of the president and not the economic report of Mr. Mankiw ... We cannot allow our Republican friends to shift the blame and the burden to Mr. Mankiw."
Senate Democrats said they would propose new protections for workers whose employers send their jobs overseas. Their proposal would require that outsourcing companies disclose their plans to their employees and to the Labor Department.
On Wednesday House Speaker Dennis Hastert of Illinois joined the bipartisan chorus of criticism from the U.S. Congress and the campaign trail, saying of Mankiw: "His theory fails a basic test of real economics."
The White House has rebuffed any suggestion that Mankiw resign. "That's kind of laughable," spokesman Scott McClellan said, adding: "Our economic team is doing a great job."
U.S. Commerce Secretary Don Evans defended the comments, telling CNBC: "What he praised was free trade and open trade. Every president since Herbert Hoover (1929-33) has said that free and open trade - as long as it's fair trade - is good for our economy."
At issue is the practice of a growing number of U.S. companies to move all or a portion of their operations to places like Mexico, India and China, where labor costs are lower and goods can be produced more cheaply, in order to improve corporate profits.
Nearly 2.8 million factory jobs have been lost since Bush took office and the issue looms large ahead of November's vote, where victory in rust-belt states like Pennsylvania could be key.
Underscoring its political importance to Bush's re-election, Thursday's visit was his 25th to Pennsylvania as president. He narrowly lost the state in the 2000 election, and analysts say he may have hurt his chances of winning it this year when he scrapped U.S. tariffs on steel imports in December to avert a trade war with Europe.
© Reuters 2004. All Rights Reserved.
You hit the nail on the head. EXCELLENT question.
As you properly allude to, let me describe outsourcing trends.
It varies industry by industry and even company to company.
Lets say you work in a bank. The bank before had a security guard in every location as well as had a 3 of its own armored cars. The position of that department is obviously security and delivery of much needed cash to the branch operations.
This imaginary department lets say employs 55 people total for that area of operations and has to keep up 3 trucks.
What outsourcing is, is when the bank puts up that department's work for bid to outside companies. Its expensive to keep all those guards up and running and trained and licensed. Plus there are continual complaints (internally) about the management of that department.
Whichever company wins that bid gets the job. In that instance there is not a real net job loss (for America) other than what could be gained from consolidation under a bunch of professionals.
That TOO is outsourcing.
It goes on from there. Manufacturing though is often all outsourced. Many companies that used to manufacture don't manufacture at all. In the above mentioned bidding process, foreign companies are allowed to bid also. All the original company does is deliver the plans and say 'make it to those specs'. 80% of our imports from China are done in this manner. 80% are not related party trade. (in order to qualify for related party trade the company has to own 6% of its supplier)
It could be call centers or whatever.
The last type of outsourcing is actual FDI type of outsourcing. This is when the air conditioner factory in Tennessee is actually closed and moved to Mexico, but the company is still owner and operator of it. With Mexico I think about 75% of our imports are from related party trade.
Figuring out which company falls into which category is the trick. Some companies started out owning their own factory, but actually changed business models in favor of the second style. A company can and does change categories all the time.
Of course not. If you look at the items I listed (population, resource base, and transportation infrastructure), you'll see that I only listed those things in which the U.S. and Great Britain differed. I specifically did not list the things that countries like Great Britain, the U.S., Germany, Japan, etc. have in common, because they would not have accounted for any differences between the nations in question.
These additional factors do, however, explain why the U.S., Germany, Great Britain, Japan, etc. have always been stronger economically than other countries that are "wealthier" in terms of population and natural resources. These factors -- which include such things as a stable currency, sound legal system (particularly with regard to land titles), stable government, etc. -- are far more important than the ones I included in my original list.
Yes, but nothing you've said here contradicts what I posted. Even if Ford controlled the entire process of extraction, fabrication, and production from start to finish, he still had to "outsource" part of the process to someone (even if the "outsourcing" was to another part of teh Ford empire) who could not afford to buy a new Ford car every few years.
When you look back at it, Ford was absolutely right -- the wages he paid to his assembly line workers had to be enough to allow them to buy a new Ford car every few years. But this did not extend to every step in the production process, or else he would have been out of business very quickly. He couldn't pay the steelworker as much as he paid the assembly line worker, because the steelworker wasn't producing cars -- he was producing steel. So under Ford's philosophy the steelworker had to be paid enough to allow him to buy the steel he produced (not that he needed it, but you get the point). And the people who worked in the iron and coal mines had to paid enough to allow them to buy the iron and coal they produced, etc.
Obviously, things changed as machinery and automation were introduced into the process, which allowed steelworkers and miners to be paid enough to buy cars every few years. But my original point would still hold, in that the machinery used to automate part of the extraction and fabrication processes would have their own internal "chain" similar to the one we've discussed for the auto manufacturing process. And somewhere in that chain there must be a sizeable element that can't afford to purchase the end product. Without this element in place, there's no point in making any cars in the first place.
Isn't that quote from a speech he made in New Delhi ;-)
You still haven't done anything but hand-wave about this. No proof has been presented.
Because it's your livelihood, and if you don't care about it you're going to starve. If I'm a truck driver I don't a single piece of real estate on which I drive my truck -- but you can be damned sure that I care about what condition it's in.
Today, IBM doesn't make any personal computers from the ground up -- if any assembly is done at all by IBM in the U.S., it is done using parts from outside suppliers. And yet nearly every IBM employee in the U.S. has a computer on his desk at work, and most of them probably have one or even more at home.
I don't understand why you can't accept this. You can look at almost any consumer product in use today and see the same trend at work. In fact, computers are a classic case in point -- because the desktop PC that is now a "consumer product" is more advanced by several orders of magnitude than machines that used to be called "high-end business equipment."
You're mistaken. Bush has clearly given his opinion on homosexual marriage, stating that he was committed to do whatever it takes to preserve the sanctity of marriage as between one man and one woman.
And as far as Judge Moore goes, not many Republicans have come out in support of him, because quite frankly most Christians and conservatives seem embarrassed by him. And I can see why.
Because you handwave with handpicked examples, not prove a general principle.
I'd far, far sooner buy from Canada than from China -- Canada has no missiles pointed at the USA -- but sooner yet from the USA.
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