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The Harsh Truth About Outsourcing
Business Week ^
| March 22, 2004
| Paul Craig Roberts
Posted on 03/20/2004 12:30:25 PM PST by sarcasm
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1
posted on
03/20/2004 12:30:25 PM PST
by
sarcasm
To: harpseal; A. Pole
Paul Craig Roberts must be a communist.
2
posted on
03/20/2004 12:31:58 PM PST
by
sarcasm
(Tancredo 2004)
To: sarcasm
Outsourcing and offshoring of work does help corporate earnings, and sometimes stock prices, and that's it. There is no other benefit to us. To China, yes. To India, yes. To Mexico, yes. To us, no.
To: sarcasm
You're entitled to your opinion, but I wouldn't agree that someone who's leery of letting our capital leak out to a country run by a crazed Communist Party is a communist.
To: Batrachian
To us, no.Actually, we do get somewhat lower prices, but considering the labor we give up in return, I'm not sure that the difference is made up.
To: MegaSilver
Note screen name.
6
posted on
03/20/2004 12:41:09 PM PST
by
sarcasm
(Tancredo 2004)
To: MegaSilver
Or someone who was an asst tres. sec. under Reagan. Heh.
7
posted on
03/20/2004 12:43:07 PM PST
by
HarryCaul
To: sarcasm
The US must have an "absolute advantage" in private services expertise, because as the Wall Street Journal reported on Monday, foreigners outsourced 53.64 billion more office work to the United States than American companies send abroad in 2003. (See
More work outsourced to US than away from it)
8
posted on
03/20/2004 12:51:40 PM PST
by
jpthomas
To: All
labor arbitrage leakage, imported productivity, loss of consumer demand. . . .
Well, Morgan-Stanley's Stephen Roach finally has an ally. Somebody else gets it.
"David? Ricardo. I thought my economic advisors said Lucy Ricardo! Doh!" exclaimed A. Free Trader.
India and China are gaining, and the First World is losing.
"Hey! That's my job! I'm working on that." screamed Kyoto.
Well, if he doesn't understand that no American has a right to a job how can he be expected to understand that it's not fa-a-a-a-air to interfere with a corporation's right to make all the money it wants, any way it wants. All it asks is to stay out of the way -- and a little taxpayer-paid risk insurance coverage and such, that's all. Darn protectionist, racist communist.
9
posted on
03/20/2004 1:17:09 PM PST
by
WilliamofCarmichael
(Benedict Arnold was a hero for both sides in the same war, too!)
To: jpthomas
Durn, I'm not a subscriber to WSJ. I was hoping they'd explain how Europe and Japan can outsource to us and do Okay but our corporations have to outsource to "developing nations'" cheap labor to survive. I real mystery to me. Durn.
Well, one poster suggested that we are just a rest area as the foreign outsourcers find their way to India and China. They better hurry they'll be going out of business real soon paying American wages.
10
posted on
03/20/2004 1:29:08 PM PST
by
WilliamofCarmichael
(Benedict Arnold was a hero for both sides in the same war, too!)
To: MegaSilver
We get only slightly lower prices, because the companies keep large profit margins. Anyway, we don't build wealth by driving toward the rock-bottom of wages and costs. We build wealth by increasing wages over the years and decades and keeping the money in our economy instead of letting it flood out to other countries as it's doing now.
Slowly but surely, we're impoverishing ourselves. Of course, the situation is extremely complicated, and not to be analyzed in a sentence, but the bottom line is that there's a large net negative in outsourcing.
To: jpthomas
And therein lies the simple truth.
If we turn away from free trade now, our economy will slip into recession. In the short term at least, we would suffer losses from retaliatory action taken on behalf of foreign governments. If we raise tariffs, they will raise tariffs. If we eliminate outsourcing, they will eliminate outsourcing to the US.
We just witnessed what happens when we do take action to protect US markets. President Bush went out on a limb when he imposed policies to protect the steel industry from cheap imports (over a two-year period). Damn little thanks "today" for doing this, I might add. Not only did foreign governments threaten us, they sued us in the World Court...and won!!! If President Bush had not cancelled those policies, the EU would have placed embargoes on many, if not all of our goods imported into Europe.
If we pass laws that prohibit US businesses from utilizing outsourcing, how many Korean or Japanese companies will build new factories here in the US. We have a new Nissan plant in my area that employs 12,000 Americans. Toyota, Honda, and many other foreign corporations have moved some of their production to the US. This is directly due to productivity levels of the US worker, coupled with savings from the elimination of shipping product via sea-lanes.
How many jobs do we Americans enjoy now due to foreign "outsourcing" to the US? 6.4 million of us work for foreign automakers. Sony Electronics now builds some CE products here in the US. It would be naive to assume that these jobs would NOT be affected in some way, which would likely take place in foreign response to the US pulling away from free trade.
There is so much more to this problem than the above, but this is at the core when you peel back the layers.
LLS
12
posted on
03/20/2004 1:32:51 PM PST
by
LibLieSlayer
(We point out Kerry's record and the facts, and they just THINK it's attack politics.)
To: sarcasm; Lazamataz; RJayneJ
"There is no necessary reason for the relative costs of producing manufactured goods to vary from one country to another. Yet without different internal cost ratios, there is no basis for comparative advantage."
1. Infrastructure (good infrastructures move goods and services and data faster, for less money, with fewer losses)
2. Rule of Law (court costs, piracy protection, theft prevention, property rights...all factor into the cost of doing business anywhere)
3. Taxes
4. Freely exchangeable currency
5. Foreign Exchange value of currency
6. Local worker Productivity levels (some cultures value working hard for lots of hours with few days off, others don't)
7. Local regulations (red tape costs money)
8. Local corruption (paying off self-important bureaucrats is a big reason why "cheap" labor is seldom actually cheap)
9. Government stability (forget low costs, the risks are too high to invest in Zimbabwe)
10.Employee turnover (some cultures foster long employee/employer relationships, while other cultures don't breed such loyalty in any reasonable degree)
All of these things are above and beyond simple access to surplus labor or materials.
And ask yourself this: If "cheap labor" is the key to wealth, then why are the two highest-wage-paying nations in the world (e.g. the U.S. and Japan) also the two richest?
Likewise, ask yourself why the lowest wage-paying nations (e.g. Nigeria with 47% of its working population earning $100 per year...10% of China's average wages) aren't the ones with the most economic growth?!
13
posted on
03/20/2004 1:33:41 PM PST
by
Southack
(Media bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
To: Batrachian; RJayneJ
"Slowly but surely, we're impoverishing ourselves." That's the ENTIRE POINT and focus of Karl Marx's Das Capital...that every capitalistic economy will grow progressively poorer each year until the workers all inevitably rebel against the ruling class.
Of course, Marx has been proven wrong decade after decade (care to compare the U.S. living conditions in 1920 with half of our country not even having running water or electricity to today, for example)...but being proven wrong again and again hasn't stopped Marx's useful idiots from parroting his long discredited spiel over and over again...
14
posted on
03/20/2004 1:37:39 PM PST
by
Southack
(Media bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
To: Southack
If "cheap labor" is the key to wealth, then why are the two highest-wage-paying nations in the world (e.g. the U.S. and Japan) also the two richest? For how much longer?
15
posted on
03/20/2004 1:43:53 PM PST
by
sarcasm
(Tancredo 2004)
To: sarcasm
16
posted on
03/20/2004 1:49:54 PM PST
by
Southack
(Media bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
To: Southack
I've read that article - it doesn't answer my question.
17
posted on
03/20/2004 1:52:35 PM PST
by
sarcasm
(Tancredo 2004)
To: jpthomas
foreigners outsourced 53.64 billion more office work to the United States than American companies send abroadThe bush-bashers strut and bellow about some mythical loss of jobs-- the job-loss is like al-Querry's so called 'foreign leaders' pure fantasy. You show the al-Querry bush-bashers the unemployment rate and you hear 'smoke and mirrors'. You show them the millions of new jobs -- more 'smoke and mirrors'.
It must be a new kind of Teflon, one that reality can't stick to.
To: sarcasm
"I've read that article - it doesn't answer my question." Then you missed the article's guts which point out that China's wages have declined for the last three years in row...whereas the wages in the U.S. have continued to rise.
Your question was how much longer would U.S. and Japanese wages remain above everyone else's wages...well, if our most significant competitor's wages are declining while ours are rising, then there is no "end" in sight to our dominance.
19
posted on
03/20/2004 1:57:08 PM PST
by
Southack
(Media bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
To: Southack
All it means is that the world is awash in surplus labor - expect more offshoring to take advantage of the wage differential and a concomitant decline in American real wages. BTW, real wages are falling.
20
posted on
03/20/2004 2:04:14 PM PST
by
sarcasm
(Tancredo 2004)
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