American Outsourcing advantage and disadvantage

[acropolis]

I'm the one running a company and hiring employees...right here in the United States. And you? Other than fantasizing about the government changing your life, what are you doing?

This doesn't respond to my point at all. Why do you expect things to change without a reason? What major difference would allow more geniuses to suddenly arise in this particular nation? And how would they be more effective with less financial and educational support?

 

[brindisi]

This doesn't respond to my point at all. Why do you expect things to change without a reason? What major difference would allow more geniuses to suddenly arise in this particular nation? And how would they be more effective with less financial and educational support?

It responds to your point but you refuse to understand it. You're arguing just or the sake of arguing.

 

[DeathMagus]

It responds to your point but you refuse to understand it. You're arguing just or the sake of arguing.

Brindisi, the point you seem to be making is that if more people were entrepreneurs like you or I, the problem would correct itself - is that about right?

 

[brindisi]

Brindisi, the point you seem to be making is that if more people were entrepreneurs like you or I, the problem would correct itself - is that about right?

Yes,..., and that people should have more faith in their own abilities. I really don't know when we became a nation of people so willing to turn their lives over to government. The greatness of America comes from our people, not from the government.

 

[acropolis]

It responds to your point but you refuse to understand it. You're arguing just or the sake of arguing.

It really doesn't. Unemployment isn't zero, that was never asserted, so of course some people are hiring. But many are losing jobs to outsourcing, as well as a national loss of wealth. Statistically, most of the wealth gained in the US is going to the top few percent of people. This is consistent with a system of outsourcing whereby the owners of the business make major profits, but most people do not see any real benefits. The problem is one of aggregates, not individuals. You haven't made any sort of case for a multitude of geniuses emerging to reverse the problems of outsourcing. You aren't really responding to any of my arguments, really. Just restating your beliefs.

 

[DeathMagus]

Yes,..., and that people should have more faith in their own abilities. I really don't know when we became a nation of people so willing to turn their lives over to government. The greatness of America comes from our people, not from the government.

You could say that about a job that cannot be outsourced - but suppose someone's skill set puts them in direct competition with pennies-on-the-hour overseas workers. It would make no sense to start a business based around that skill set at 10x the standard operating cost. What are they supposed to do?

 

[brindisi]

You could say that about a job that cannot be outsourced - but suppose someone's skill set puts them in direct competition with pennies-on-the-hour overseas workers. It would make no sense to start a business based around that skill set at 10x the standard operating cost. What are they supposed to do?

DeathMagus, you're right in that there are some sectors of the market where it will be difficult to create low skill jobs. And there will always be some number of people who really don't have an option to improve their circumstances by themselves. But expecting the government to do much more just doesn't work. The best we can expect of government is setting up basic safety nets and otherwise getting out of the way.

This excerpt from an article in The Telegrah online gives us some information that America's problems are not unique, and that government can be an actual hinderance.


Europe is 'heading for third world status'

Europe risks becoming a "second- or third-world region" within a generation because strict labour laws are preventing companies from restructuring properly, according to the author of a Government-sponsored report out today.

The study "i2010 - Responding to the Challenge" criticises large European countries, particularly France, Germany, Spain and Italy, for not having the courage to reform archaic labour laws.

David Lewin, who co-wrote the study, said that after decades of productivity growth, European countries were falling behind the United States because of a lack of investment in information and communication technology (ICT).


Mr Lewin warned that without more investment in ICT then "Europe will lose the technology and fall behind and become a second- or third-world country within decades".


Companies in Europe had to pursue a policy of "creative destruction" to change the way they do business and learn from the "hire and fire" culture of the US to compete with emerging Asian companies.

 

[DeathMagus]

DeathMagus, you're right in that there are some sectors of the market where it will be difficult to create low skill jobs. And there will always be some number of people who really don't have an option to improve their circumstances by themselves. But expecting the government to do much more just doesn't work. The best we can expect of government is setting up basic safety nets and otherwise getting out of the way.

This excerpt from an article in The Telegrah online gives us some information that America's problems are not unique, and that government can be an actual hinderance.

It wouldn't take a whole lot of bureaucracy or meddling by the government - simply some basic tariffs to protect the American economy. The reason it doesn't happen is because it would require putting America's interests ahead of the interests of the wealthy who profit off of the cheap overseas labor and rampant consumerism that free trade allows.

 

[brindisi]

It wouldn't take a whole lot of bureaucracy or meddling by the government - simply some basic tariffs to protect the American economy. The reason it doesn't happen is because it would require putting America's interests ahead of the interests of the wealthy who profit off of the cheap overseas labor and rampant consumerism that free trade allows.

Be carefull with tariffs, our economy is vulnerable to retaliation. If we raise tariffs in one sector to save jobs we're likely to lose them in other sectors. The real solution is to cut spending, and reform the tax code so that companies have confidence in expanding. There is a lot of money being held back waiting for stable fiscal policies before companies will expand.



2008 U.S. EXPORT FACT SHEET , U.S. Dept. of Commerce
http://www.trade.gov/press/press_releases/2009/export-factsheet_021109.pdf

With the release of December 2008 U.S. International Trade in Goods and Services report by the Department of Commerce’s U.S. Census Bureau and the Bureau of Economic Analysis, U.S. exports of goods and services grew by 12.0% in 2008 to $1.84 trillion, while imports increased 7.4% to $2.52 trillion.

Exports comprised 13.1% of U.S. GDP in 2008. To put in historical terms, exports were 9.5% of U.S. GDP five years earlier (2003), and 5.3% 40 years ago (1968).

The largest export markets for U.S. goods in 2008 (with percent increase over 2007) were Canada ($261.4 billion, up 5.0%), Mexico ($151.5 billion, up 11.4%), China ($71.5 billion, up 9.5%), Japan ($66.6 billion, up 6.2%), and Germany ($54.7 billion, up 10.2%).

Capital goods represent the largest goods export category (end-use) for the U.S. with $469.5 billion worth of exports in 2008. The U.S. trade surplus in capital goods rose $12.8 billion to reach $15.7 billion in 2008, up from a surplus of $2.9 billion in 2007.

The top growth categories for capital goods products in 2008 were medicinal equipment (up $3.3 billion), materials handling equipment (up $2.7 billion), industrial engines (up $2.7 billion), telecommunications equipment (up $2.6 billion), and civilian aircraft engines (up $2.5 billion).

Industrial supplies the largest growth category in dollar value represented $387.3 billion of U.S. exports in 2008, up $70.9 billion (or 22.4 percent) from 2007.

The top growth categories for industrial supplies in 2008 were fuel oil (up $19.3 billion), other petroleum products (up $8.5 billion), nonmonetary gold (up $5.4 billion), chemicals-fertilizers (up $4.5 billion), and steelmaking materials (up $4.3 billion).

Foods, feeds, and beverages represented $108.4 billion of U.S. exports in 2008, and was the second largest export growth category (end-use) for the U.S., with exports rising $24.2 billion (or 28.7 percent) over 2007. The U.S. trade surplus in foods, feeds, and beverages rose $16.8 billion to reach $19.4 billion in 2008, up from a surplus of $2.6 billion in 2007.

The top growth categories for foods, feeds, and beverages in 2008 were soybeans (up $5.6 billion), meat and poultry (up $3.7 billion), corn (up $3.4 billion), and wheat (up $3.0 billion).

U.S. services exports totaled $551.6 billion in 2008, up $54.4 billion (or 10.9 percent) from 2007. This rise in exports helped the U.S. to have a record trade surplus in services at $144.1 billion, up $24.9 billion (or 20.9 percent) from 2007.

The top services export categories were other private services, which includes items such as business, professional and technical services, insurance services, and financial services ($241.0 billion), travel ($111.5 billion), royalties and license fees ($91.1 billion), other transportation ($60.2 billion), passenger fares ($31.4 billion), and government services ($16.3 billion).

 

[Umaro]

Be carefull with tariffs, our economy is vulnerable to retaliation. If we raise tariffs in one sector to save jobs we're likely to lose them in other sectors. The real solution is to cut spending, and reform the tax code so that companies have confidence in expanding. There is a lot of money being held back waiting for stable fiscal policies before companies will expand.[/I][/B][/FONT][/SIZE]

I don't care if I paid $0 taxes and the government spent nothing, I'm still going to pick paying someone $1 a day over $8 an hour given the choice.

 

[brindisi]

I don't care if I paid $0 taxes and the government spent nothing, I'm still going to pick paying someone $1 a day over $8 an hour given the choice.

You would, perhaps, if the only important cost factor of your product was labor. That isn't the case with most products and services.

A more important factor in a company's deciding to produce overseas might be to serve those expanding markets.

 

[Umaro]

You would, perhaps, if the only important cost factor of your product was labor. That isn't the case with most products and services.

Labor accounts for something like 70% of costs. Plus, I'm pretty sure that is the case with most products. I mean, I've searched and there's one item I could find in the hardware store I work at that was made in America: A flag (but not the pole it comes on).

 

[brindisi]

Labor accounts for something like 70% of costs. Plus, I'm pretty sure that is the case with most products. I mean, I've searched and there's one item I could find in the hardware store I work at that was made in America: A flag (but not the pole it comes on).

You're probably right about most of the products in your hardware store.
But think about those products, a hammer for instance. Nearly every country in the world has the equipment and technology to produce hammers. The only variable cost factor remaining is labor.

 

[Umaro]

You're probably right about most of the products in your hardware store.
But think about those products, a hammer for instance. Nearly every country in the world has the equipment and technology to produce hammers. The only variable cost factor remaining is labor.

Exactly. So if you're in the business of making hammers, why would you pick paying an American $8 an hour over paying a Chinese worker $1 a day?

 

[brindisi]

Exactly. So if you're in the business of making hammers, why would you pick paying an American $8 an hour over paying a Chinese worker $1 a day?

You wouldn't. When labor is the only variable cost left, America will lose that production to a low labor cost country. That means that some workers lose their jobs, but most are resilient and set about finding other work, so that they are productive for another company. In economic theory that's known as "creative destruction."

"A term coined by Joseph Schumpeter in his work entitled "Capitalism, Socialism and Democracy" (1942) to denote a "process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.""

 

[DeathMagus]

You wouldn't. When labor is the only variable cost left, America will lose that production to a low labor cost country. That means that some workers lose their jobs, but most are resilient and set about finding other work, so that they are productive for another company. In economic theory that's known as "creative destruction."

Perhaps the unskilled assembly-line hammer-makers could find other work - if the exact same thing hadn't happened to every single other unskilled labor job. A hammer-maker who lost their job to a Chinese company can't go across the street to the steel plant, because that one is closed too for the same reason.

Perhaps we could do better if our overall education was solid enough to shifter workers from our skilled/unskilled labor pool into the service/managerial/research sectors - but education technique in this country is marginal at best, and funding for education is one thing that both Republicans and Democrats are willing to cut - so it frequently is.