Posted on 10/28/2010 6:37:50 PM PDT by blam
Well OK then...I just get so tired of hearing people bitch about corporate America off shoring jobs while ignoring our own culpability in pushing them out.
Lol, and I noticed all the data and support you provided to support your sweeping claims. You certainly produced one of the more non-sensical comments of recent days. Dude, for highly skilled work such as that substantiated in my #29, the salaries are a large portion of the cost.
Now, think hard, what do you think would be the main costs of an engineering consulting firm, or an accounting/tax preparation firm, or a team of radiologists who read Xrays transmitted from afar?
You forgot the main problem. If it were Just about hourly wage costs Then yes your assumption would be close to truth BUT leaving out that one huge factor invalidates the premise of which you speak.
That one thing you left out is the unfunded mandates that US Businesses have to endure from the Federal, State and Local governments. Not to mention the kickbacks and political back dealing they must engage in just to open a business.
They are not really immense, once you account for them properly.
Suppose you, an American worker produce 10 gadgets and are paid $10/hour. A Chinese worker is paid $90c and produces 1 gadget per hour. The salary difference is immense: $10 vs. $0.9. But how much cheaper is the Chinese worker? By how much should your salary fall for the employer to break even? Well, the cost of one gadget is $1 vs. 90c. Thus, the Chinese worker in this example is only 10% cheaper.
That is not the whole story. In economics and finance, cash flows, profits and costs are evaluated not only on size but also risk (probability of obtaining them). Until very recently, risk abroad was considerably greater than in the U.S., due to political upheavals, crime, lack of well-functioning courts, etc. Thus, the risk-adjusted differences in labor costs are even smaller than the salaries suggest.
Presently, with our recent turn to socialism, the political instability of the U.S. is considered (by business people) to be quite high, favoring foreign investment. The productivity of our workers is poor due to the lack of proper education, especially in the technical areas. That favors foreigners as well. And, the indirect costs --- those of health-care, pensions, etc. has now skyrocketed here, making our workers even more expensive. The same is true with regard to operational costs as a result of over-regulation. All components of labor costs are thus increasing in this country, pricing our workers out of the market.
This is all our doing, not a natural disaster of some sort. But management is not to blame: they are doing the job that you yourself have hired it to do. The profits that the companies make are not kept in vaults but accrue to the American public (BP, for instance, has 40 million of America shareholders; similar numbers relate to all major corporations --- Goldman Sacks, GE, etc. It's a big secret, even among conservatives, that Wall Street is owned today by the Main Street).
Same here.... There is a REASON it is happening, both in our countries, and due to actions with our trading “partners”.
We need to remedy the situation from both sides. We need to ‘fix’ what is wrong with our country, and at the same time, hold other countries accountable if they give us a raw deal.
Having said that, if we fix what’s wrong in our country, businesses and manufacturers would probably be happy to come back here.
Lol, I’ve been the controller of two different firms, and also worked as a cost accountant. I definitely don’t need your silly lectures on this subject.
And my posts have been totally correct on this subject, particularly as it relates to the outsourcing of skilled, professional work where the salaries of the skilled workers will be the biggest expense in most firms doing this sort of outsourced work. The savings are immense.
And when it comes to unskilled labor, that all depends on how labor intensive it is. The portion of the costs that is labor and any labor overheads would vary significantly depending on the degree of automation. And it is the most labor intensive work that is exported first. Not many shirts and slacks being sewn in the US anymore, and those jobs seldom paid over $10.00 in the US.
And in that case, I knew of many sewing plants that employed 300 or more. Real significant saving to cut costs from around $10.00 per hour to less than $1.00, 2,080 hours per year for 300 employees.
And yes, the savings are still immense when the costs can be reduced to little more than 5% of what total labors costs were in a more affluent nation.
sfl
Yes, the big government bugaboo is often mentioned, but never quantified at all. You can't just throw that on every example and say that's the controlling factor. Maybe they exist, but I've never seen anyone present, or link a study that shows how much more it costs some specific type business to operate in the US as opposed to some foreign nation.
This is getting as bad the leftists yelling racism. There needs to some specifics attached to some real examples. It's a factor, but no one ever presents evidence to show just how significant a factor it is. And, as I asked in another comment. Do you really want the US to have the same environmental and workplace standards as China?
The technology company I worked for exported engineering jobs to India and China for no other reasons than lower labour costs, and was willing to tolerate lower productivity, higher employee turnover, high absenteeism, and lower quality of output. The shareholders loved it.
“What we have allowed to happen to this country with our manufacturing base has been an absolute disaster. Only a koolaid drinker of some kind could look around at what has happened during the past 15-20 years and tell you otherwise.”
Absolutely; then again, there are many people who are paid to tell you otherwise...
Oh, the age-old "argument:" I have nothing to say on substance, so let me appeal to authority. You personify the problem with American education: it does not even occur to you that appeal to authority is a logical fallacy and was known as such in Ancient Rome.
But even your appeal to authority fails: accountants are notorious for confusing accounting and economic costs.
Your "authority" is weakened further by your defensiveness which only proves that you know that you don't know. If you don't need my "lectures" and deem them as "silly" --- with not a hint, of course, on what makes them such --- why do you make mistakes for which I would fail a sophomore on a mid-term exam? Why is it that you not only fail to account properly for certain classes of costs but demonstrate no awareness that such classes even exist?
Well, I've tried. But nobody can help the one who refuses to think.
Since you find my post silly, I shall not write to you any more but be glad to do so again when you mature a bit and acquire some basic manners.
Have a good night.
“American jobs leave because of American Unions, American tort lawyers, American EPA regulations, etc.”
Partially true; they leave because of profits. At this point, the US would have to go to war to prop up India or China because international corporations couldn’t survive without their labor forces (even though nothing would benefit “Americans” more than having these two countries destroy each other).
“Only those who simply don’t think about it still demand “no outsourcing!” It’s not jobs shipped overseas, it’s jobs replaced with machines and automation. More jobs are lost to robotics and automation than to overseas competitors.”
This may be true for manufacturing jobs, but the financial jobs outsourced (mainly from the northeast) to Asia are never coming back. Many people who made a lot of money building the “information superhighway” are now upset that it works. India has a growing middle class that works all hours of the night, answering phones and emails during our “9 to 5” workday; these were jobs Americans used to have, and they are never coming back. Back office accounting functions? financial trades? all to Asia, never to return.
“Many of the jobs now being outsourced are highly skilled jobs, including all sorts of skilled jobs in the computer and software industries, engineering jobs, accounting and tax preparation, radiologists, draftsmen, and any other sort of skilled work that can be performed and transmitted back and forth via modern communications systems.”
Absolutely right; the blue-collar jobs went first, and now technology permits the outsourcing of the white-collar jobs. I don’t know how you convince someone to invest the time & money in a college degree anymore; as soon as any skill set can demand a decent salary, forces are at work to find a way to get it done overseas. You can’t outsource vehicle mechanics, electricians, plumbers, etc.; they have to be here “on the ground”.
Unfortunately, it's going to require a major overhaul with serious downtime. Our credit cards are max'd out and we could't afford a rental even if we could get one with our current driving record.
Ross Perot talked about it almost twenty years ago, and while the elites pooh-poohed him the American people knew better (giving him 19% of the vote, and BJ Clinton the White House).
Five years ago we all knew; ALL kinds of jobs were already leaving the country, and it was obvious to anyone with eyes.
“either way, the US living standards will fall.”
You say “already declining”; our standard of living is falling more quickly than people realize. More people are buying sub-par products rather than name-brand (see Q-tips as a perfect case in point), home ownership is up in smoke, as is “new car” ownership for most people, and savings have been depleted. The “new normal” (rock bottom) hasn’t been reached yet. Look for higher unemployment, lower birth rates, and the rapid depopulation of the costliest areas of the country (already happening here in NJ).
Hahahah OK, I can't believe you are serious but what the hell. I love it when I can drag a skeptic into the land of reality we business owners deal with every day!
This is from a report prepared by the SBA from 2004:
"The annual cost of federal regulations in the United States increased to more than $1.1 trillion in 2004. Had every household received a bill for an equal share, each would have owed $10,172, an amount that exceeds what the average American household spent on health care in 2004 (slightly under $9,000). While all citizens and businesses of course pay some portion of these costs, the distribution of the burden of regulations is quite uneven. The portion of regulatory costs that falls initially on businesses was $5,633 per employee in 2004, a 4.1 percent cost increase since 2000 after adjusting for inflation. Small businesses, defined as firms employing fewer than 20 employees, bear the largest burden of federal regulations, as they did in the mid-1990s and in 2000. Small businesses face an annual regulatory cost of $7,647 per employee, which is 45 percent higher than the regulatory cost facing large firms (defined as firms with 500 or more employees).."
The number 1.1 Trillion should leap out at you...
Further understand this is a 2004 work. This doesn't include Obamacare and, is 6 years old now. Do you honestly think China or Mexico even comes CLOSE (we will call close one tenth of one percent)to the same costs per worker as what the US demands in compliance?
One more time: 1.1 TRILLION and that is without Obamacare!
BTW this is what the government grudgingly ADMITS.
Here is the link: http://www.sba.gov/advo/research/rs264tot.pdf
Any questions?
This is a very old article. China wasted her stimulus by proclaiming 8 percent growth. The lower level officials did it by taking the money and have people employed building empty apartments and malls. The Chicoms know they blew it, but the good news for them is they still have a surplus and probably plan not to repeat the same mistake. They also have taken action to cool down the heated real estate bubble by raising interest rates. They also anticipate US QE making their dollar deonominated T bills less valuable in the future, thus they chose to buy only short term US bills as the old long term bills mature. China has shifted to gold and silver, secured and stockpiled her raw materials for the coming devalued dollar induced inflation of commodity prices. They are already making moves. Problem with China is corruption and official abuse that may trigger civil unrest. Ceding power to people is hard for authoritarian regimes to do. But, I think they have a more firm handle on their economy then one in the US would think. Remember, unemployment in the US means Congress will just extend unemployment benefits and the Fed will create money from thin air to finance it. In China high unemployment can lead to revolt (there are no safety nets) and death to the ones in charge. I think given what is at stake the Chicom leadership is a lot motivated to keep tabs on their economy and make necessary policies accordingly then our politicians. The other hidden strength of China is her citizens have a high savings rate. Very little cash is spent because the low valued yuan makes foreign goods expensive except for the top 10 percent urban dwellers. If China decides to increase the value of the yuan, the Chinese consumer may be in position to use their stronger currency to buy foreign goods (prices will drop due to better exchange rate). Before everyone jumps for joy at the prospect of selling their exports, China will use this consumer market as leverage for foreign favors. You want to make money on Chinese consumers armed with stronger Yuan, what has your nation done for us lately. US not so fast, stop arms sales to Taiwan and you will make money selling exports to Chinese consumers. We can always buy from Korea, EU, Latin America and etc. That is how the Chinese will play it. They do not let private corporations concentrate on selling and ignore the fact that it may enrich China’s detractors of her foreign policy objectives. Only the US is stupid enough enrich her strategic competitors, and unemploy her own workers at the same time. To add more insult to injury the US corporations dump the unemployment costs unto the working taxpayers and we have a government dumb enough to increase taxes and print money to finance this diseaster.
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