Why We Have Nothing to Fear from Foreign Outsourcing

Free Trade Bulletin, Center for Trade Policy Studies, CATO Institute ^ | March 30, 2004 | Daniel T. Griswold

[E. Pluribus Unum]

I'm not talking about jobs that are no longer relevant,I'm talking about jobs that still are relevant,but going elsewhere.

Let me guess.

When you go to the store, you always buy from the place with the highest prices, right?

It's immoral to do otherwise. Think of the poor people at that store who will lose their jobs if you don't.

[Palmetto]

It benefits the corporation itself, and the stockholders,not the workers

So stop working and become a stockolder.

I am convinced that investing will be the occupation of the future for Americans.

[mommybain]

No, we haven't had job loss yet. The issue will be in about a year when the new work we were supposed to be doing has been done by foreign contractors and we're finished babysitting the other foreign contractors that sunset our old system. We're effectively useless at that point.

And, like I said, these articles always refer to lower-paying jobs being outsourced, and that's not the case here. They aren't lower-paying jobs. They are jobs that were being done by Americans with college degrees and making $50,000 and up.

[Mears]

Well,you really chose the wrong person to ask that question about bargain hunting.

I spend more than I have to spend most of the time because I am a firm believer in supporting small,local businesses.

I never go to Big Box stores or the Walmart type stores,ever.

[Elric@Melnibone]

Let me offer another case to bolster your point:

Two years ago, shortly after I had been laid off, I got a call from a recruiter in Grand Rapids, MI, wondering if I would be willing to take a 3-month contract in Spring Lake, MI.

I did a little investigating; contract could not possibly lead to anything long term, didn't pay noticeably better than my last contract some dozen years previous, wouldn't improve my resume noticeably and would require I set up a second residence some 2000 miles away from my wife and kids.

I jumped on the contract (and would have taken more when that one ended, if I could have found them).

Knowing the state of embedded software development in the automotive industry at that time, I asked both the recruiter and the client why they didn't get someone out from Detroit to do the contract.

Short answer was, they simply couldn't find anyone willing to spend 3 months in the Muskegon area for they price they could pay.

What amazed me was that I had to find an apartment, deal with utilities, coordinate receipt of paycheck and payment of bills with my wife and say goodbye to my family for 3 months while someone from Detroit could have taken a hotel room and gone home every weekend!

[E. Pluribus Unum]

I'm getting plain confused, nevermind facts!

Companies that go out of business because their labor costs price them out of the market don't employ anyone.

Is that simple enough for you?

[E. Pluribus Unum]

I never go to Big Box stores or the Walmart type stores,ever.

Should people who do be arrested?

[cyborg]

How can an American worker here compete with someone in India and China or Mexico? There is no comparision with respect to labor costs. I don't know about now but China used to use prisoners *LOL*

[cyborg]

I used to go to Walmart a lot. Not anymore really. It's not all that. There's something weird about shopping for groceries and car batteries under the same roof.

[Wolfie]

We're having layoffs next month (again), and maybe even an office shutdown or two. And the guy who went to India to train our replacements brought back some nice pictures of the new Bangalore office. But, at least outsourcing's not to blame.

[E. Pluribus Unum]

How can an American worker here compete with someone in India and China or Mexico?

They have been competing for years, and still are.

There are all kinds of costs involved in producing something besides straight labor costs. Training, communication, transportation, quality. Raw labor costs mean nothing out of context.

What would you suggest be done about this horrible "oustourcing" situation that is taking away good union jobs? Imprison employers who do so? Fine them? Confiscate their property?

I am interested in hearing about the Marxist solution you have in mind.

[mommybain]

Do I detect a note of sarcasm??? Covansys sent contractors here so we could impart knowledge and then sent some of them back home to Bangalore. Interesting side note: several of our management types spent a lovely week in Bangalore last January. We still haven't figured out why managers who consistently tell us that we won't be affected by this had a vacation week in India.

[CSM]

Sounds to me like you have a management problem at your company. If the original company is not able to effectively do their job, they should be fired and a replacement should be found. If the Management at your company is allowing this to continue, I would get out now!

The scenario you describe is not an "outsourcing" scenario. The intent was to maintain those positions for the "new" tasks. The results may be different, however, to say that these are high paying jobs being outsourced isn't accurate.

[TXBSAFH]

One interesting point on free trade. An aurgument used often by free traitors is that when these jobs go overseas we will get the goods cheaper and that is where the middle class will see a benefit. I noticed something this weekend I went to Home Depot to buy a jig saw for a project I ahve at the house. I was going to buy a Dewalt, but they are now all, or at least the half dozen of their tools I checked are made in Mexico. I asked the tool guy and he told me that recently they shut down their plant in the Mid west and moved their production to Mexico. The price (Dewalts always have been a bit costly, but they WERE the best) is the same. Now price break here. The same thing is happening with Chicago Cuttlery kithen knives. Were made in USA, now made in China. Price still the same.

And as a side note the tool guy told me he would not buy one of the new Mexican Dewalts because the quality had dropped serverly. He said the number of tools returned with defects has more then doubled since their move.

[cyborg]

No marxist solutions... I want to see less government regulations that drive up labor costs. Again HOW can American career people compete with someone in another country who has a lower pay standard than here?

[CSM]

Labor is a small percentage of the total cost of the product and in many cases it is offset by higher transportation costs and inventory carrying costs. The real issues driving business off shore is the government artificially driving up the cost of doing business. Not only do they drive up labor costs, but they also drive up every other cost to the business. Sorbanes-Oxley will add $12.5 Million in costs to my company every year. Now, we have to offset that somewhere.........

No, most companies in China don't use prisoners. There may be about the same number of exceptions as we have here.

[Wolfie]

Again HOW can American career people compete with someone in another country who has a lower pay standard than here?

By lowering our standard of living, of course.

[mommybain]

is not an "outsourcing" scenario...

Semantics: it is an offshoring scenario. Jobs that used to be done by Americans in North Carolina on Eastern time are now being done by Indians in whatever-the-heck it is over there.

Management problem: agreed, whole-heartedly. These managers do refer to this arrangement as outsourcing, though, even if there are no job losses at this point. Go figure.

[cyborg]

Yep. It's either going to be that the standard of living in China,India and other popular outsourcing countries increase or it decreases here. I don't think most Americans want the standard of living for the common man in these countries.

[cyborg]

Why aren't those issues being addressed then? We can talk about it ad nauseum here in FR, but I don't see government paying any attention.