Is outsourcing good or bad for America?

[sdmsanjose]

Is outsourcing good or bad for America?


"Offshore outsourcing of jobs, such as this call center in India, significantly increased during the decade as many multinational corporations moved their manufacturing and services from western countries to developing countries.

The removal of trade and investment barriers, the growth of domestic markets, artificially low currencies, the proliferation of education, the rapid development of high tech and information systems industries and the growth of the world economy lead to a significant growth of offshore outsourcing during the decade as many multinational corporations significantly increased subcontracting of manufacturing (and increasingly, services) across national boundaries in developing countries and particularly in China and India,

As a result, many customer service jobs as well as jobs in the information technology sectors (data processing, computer programming, and technical support) in countries such as the United States and the United Kingdom have been or are potentially affected."

http://en.wikipedia.org/wiki/2000s_(decade)

 

[Macx]

No sir I don't like it.

 

[sdmsanjose]

MacxNo sir I don't like it.

But I am told that free trade and compititon is good for America!

 

[Douger]

Indians aren't going to pause to ponder whether taking these jobs are good or bad for Americans.
Satellite and trans-ocean cable connections aren't going away, so communications jobs (like so many other types of jobs) are fair game internationally.

 

[jgarden]

In fact, it began to surface in the late 70’s championed by the very conservative Heritage Foundation. Under the auspices of President Ronald Reagan, free trade “throughout the hemisphere” was borne.

But truth be known, the seeds were sown long before Ronald Reagan. Richard Milhous Nixon was the first President given authority in the 1974 Fast Track Bill. It was awarded every president thereafter through 1998.

Fast Track gives the President sole authority over trade negotiations. Congress, after the fact, can accept or reject the negotiation, but it cannot amend it in any way whatsoever. In effect, Fast Track effectively removes Congress from the process of world trade negotiations.

Ronald Reagan, however, was the first to propose a free trade agreement in his 1980 presidential campaign. Proudly, The Heritage Foundation boasts its role in articulating President Reagan’s vision in no less than three dozen reports.

The Heritage Foundation predicted that free trade would, “over a fifteen-year time span, create the world's largest market: some 360 million people, with an economic output of more than $6 trillion a year.” Moreover, they asserted that NAFTA would guarantee that American workers would remain the most competitive in the world. That American consumers would continue to have access to the world's finest goods and services.

They also emphasized that NAFTA would assure Americans cheaper goods while increasing U.S. exports to the rest of the world. Moreover, the American workforce was told NAFTA would stimulate and create an estimated 200,000 jobs annually. Later, The Heritage Foundation wrote, “Economists are virtually unanimous in their conclusion that the NAFTA will have a strongly positive impact on job growth throughout the US , with most estimates in the hundreds of thousands.” That NAFTA would effectively reduce illegal immigration from Mexico , would be instrumental in tackling drug trafficking, would strengthen Mexican democracy and human rights, and above all else, would serve as a model for the rest of the world.

http://www.informationclearinghouse.info/article5190.htm

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The Heritage Foundation is a conservative American think tank based in Washington, D.C.

The foundation took a leading role in the conservative movement during the presidency of Ronald Reagan, whose policies drew significantly from Heritage's policy study Mandate for Leadership. Heritage has since continued to have a significant influence in U.S. public policy making, and is considered to be one of the most influential conservative research organizations in the United States.

Heritage's stated mission is to "formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense."

http://en.wikipedia.org/wiki/The_Heritage_Foundation

Our so-called "friends" at the Heritage Foundation and the Republican Party sold the American Public "a bill of goods" from which the nation may never recover!

And they'd do it all again - given half a chance!

 

[sdmsanjose]

“Economists are virtually unanimous in their conclusion that the NAFTA will have a strongly positive impact on job growth throughout the US , with most estimates in the hundreds of thousands.” That NAFTA would effectively reduce illegal immigration from Mexico , would be instrumental in tackling drug trafficking, would strengthen Mexican democracy and human rights, and above all else, would serve as a model for the rest of the world.

http://www.informationclearinghouse....rticle5190.htm

Illegal drug trafficking and illegal immigration is higher now that before NAFTA!

Job Loss Projections

As bad as these outsourcing numbers look, it is only the tip of the projected iceberg. According to the U.S. Department of Labor and Forrester Research, Inc, outsourcing is expected to expand in numbers and scope.

​

I know America is going to loose manufacturing jobs to outsourcing but I had no idea that the below sectors were going to outsourcing in such huge numbers!


U.S. Jobs lost from the categories of management, Computers, Business, Architecture, Life Sciences, Legal Art, design, and Sales

Year 2000 = 102,674 jobs lost to outsourcing

Year 2010 = 1,591,101 jobs lost to outsourcing

Year 2015 (projected) = 3,320,213 jobs lost to outsourcing

http://jobs.lovetoknow.com/Facts_and_Figures_on_Outsourcing

 

[Received]

I remember being in Wal Mart (ah, capitalism) and perusing through a random page from D'Souza's latest book, on Obama and his supposed "rage" (btw, the man recently came and spoke at my university, and was intelligent, cordial, but nonetheless full of holes), where he said something about how globalization has done more to help foreign countries than any foreign aid has. Well, that's obviously contestable, but even if true it happened through increasing the average wages of foreign workers in remote lands from 3 pennies a day to half a dollar a day, and doesn't mention a bit how stagnating wages for the lower and middle classes were a direct result of deregulation, technology, and globalization, all underway since the late 70s.

Globalization might help Americans, but it's not the lower and middle classes; it's the poor mistreated rich.

 

[MichaelHelp]

If people had to pay $1000 for their 32" TV instead of $400 there would be a different tune.

"free market says ship jobs overseas for cheaper products! whats wrong with that!"

 

[jgarden]

If people had to pay $1000 for their 32" TV instead of $400 there would be a different tune.

"free market says ship jobs overseas for cheaper products! whats wrong with that!"

Manufacturers can't have it both ways - outsourcing American jobs may reduce costs, but it also undermines the ability of those same American workers to buy their products at any cost!"

If multinationals outsource jobs, they'd better also be prepared to "outsource" their retail markets!

 

[Received]

And we're not even including the massive amount of temporary workers ("temp workers") corporations chose to use beginning most significantly in the 90s for cost-related reasons. Literally 70% of corporate costs are payroll-related. When you get into the much higher competition on a global stage (as it is with globalization), you see the paychecks and jobs pushed out first. It's good business, man.

 

[lordbt]

I remember being in Wal Mart (ah, capitalism) and perusing through a random page from D'Souza's latest book, on Obama and his supposed "rage" (btw, the man recently came and spoke at my university, and was intelligent, cordial, but nonetheless full of holes), where he said something about how globalization has done more to help foreign countries than any foreign aid has. Well, that's obviously contestable, but even if true it happened through increasing the average wages of foreign workers in remote lands from 3 pennies a day to half a dollar a day, and doesn't mention a bit how stagnating wages for the lower and middle classes were a direct result of deregulation, technology, and globalization, all underway since the late 70s.

Globalization might help Americans, but it's not the lower and middle classes; it's the poor mistreated rich.

As usual, you are focusing on only part of the equation, but good to see that you got your obligatory dig in on the rich. Wealth is a function of cost, not wages. If the cost of everything you buy goes down and your wages stagnate, you are actually ahead of the game.

Now, does globalization help the unionized slug making $70 an hour to take naps in the outhouse? No.

 

[EdwinWillers]

I would LOVE to hear the liberal SOLUTION to outsourcing - just one, even an idea, a concept, a hint...

I can imagine a couple liberal solutions:

1. Outlaw outsourcing - force American companies to hire only Americans -- er, or illegal aliens..
2. Tax imports out the wazoo - make importing to the US economically unfeasible, thus 'punishing' outsourcers
3. Outlaw global corporations
4. Extend the Davis-Bacon act globally - demand the world pay their workers on par with what we pay our union labor here.
5. Unionize the world (see #4) - actually, I think is in the works already...
6. Fire corporate CEOs and have the federal government purchase their companies, then sell them back to the unions - 'worked' for GM, why not all corporations?
7. Outlaw competition - it's such a pain in the dairy aire.
8. Turn the U.S. into an economic backwater that doesn't have to worry about outsourcing.

Fact is the problem with "outsourcing" is far more complex a problem than liberals care to admit. Nor do liberals care to admit the reasons companies are outsourcing; and while Americans are losing jobs to outsourcing - the only - repeat, the only "culprits" they can identify is evil corporations and "the rich."

Some are working to mitigate the problem - search the concept of "rural sourcing," "domestic sourcing," "insourcing," or "reverse-outsourcing." But that isn't a wholly viable idea in all cases (or many, as the case may be):

July 6, 2009

Of late, a few offshore players like Dell, Apple and American Express have repatriated a small chunk of their projects to the home country, under a trend that is enthusiastically being dubbed “backshoring,” reverse outsourcing, insourcing or rural-sourcing. Effectively, they convey the same model — movement of projects to low-cost locations within the home country.

Now the essential question here is: is the cost advantage offered by BPO employees in Idaho the same as that offered by their counterparts in India or Philippians?

Unfortunately, no. Which is why, a recent survey of over 600 companies conducted by Duke University has revealed that three-quarters of U.S. businesses plan to continue to offshore their customer service operations; increase it, if possible. And the writing is clear on the wall: “Despite the falling dollar and relatively low labor and real estate costs in semi rural America, the U.S. cannot compete with the economics or demographics of India and other emerging markets players,” Source

The question is, what do we do in America to become competitive with 'other emerging markets players?'

Given labor cost is the key factor in decisions to outsource, the cost of American labor needs to be addressed. Question is, how?

 

[Umaro]

Given labor cost is the key factor in decisions to outsource, the cost of American labor needs to be addressed. Question is, how?

That's why there's such a problem. An American worker literally cannot compete with the wage of a Chinese worker. The average paycheck of a Chinese factory worker is 64 cents (USD) an hour, which is impossible to live on in America, even if you took the job. It's one thing for people on the right to sit around and decry the unions for American workers being overpaid, but even if the unions weren't there, it'd still be cheaper to pay a Chinese worker than an American one.

 

[EdwinWillers]

That's why there's such a problem. An American worker literally cannot compete with the wage of a Chinese worker. The average paycheck of a Chinese factory worker is 64 cents (USD) an hour, which is impossible to live on in America, even if you took the job. It's one thing for people on the right to sit around and decry the unions for American workers being overpaid, but even if the unions weren't there, it'd still be cheaper to pay a Chinese worker than an American one.

So what is the solution?

 

[Umaro]

So what is the solution?

I don't claim to have one.

 

[EdwinWillers]

I don't claim to have one.

Fair enough.

 

[OldWiseGuy]

So what is the solution?

I have the solution. Demand 'balanced trade' (I didn't say 'fair' trade). If we buy $1Billion in goods from country A, they must buy $1Billion in stuff from us, using our currency. Because our stuff is more expensive than their stuff they will get less of it and seem to get the short end of the stick, but in reality no matter the disparity between the transactions their standard of living will improve as a result, albeit not as fast as they, or our bleeding heart liberals, would desire.

 

[sdmsanjose]

Quote of Lordbt
Wealth is a function of cost, not wages. If the cost of everything you buy goes down and your wages stagnate, you are actually ahead of the game.

Wealth is also a function of wages. The cost of a lot of things went up in the 1970s and other times but the wages of lots of entertainers, CEOs, investors, and other people involved in the right businesses gained wealth.

Quote by Lordbt
Now, does globalization help the unionized slug making $70 an hour to take naps in the outhouse? No.

How much of a problem in 2010 is the slug that makes $70 an hour, taking naps in the outhouse?

 

[sdmsanjose]

Obama presented a possible partial solution in September 2010. Reprinted below is part of his solution.


http://www.financialexpress.com/news/obama-threatens-to-end-tax-breaks-for-outsourcing/679716/3

The US President Barack Obama on Thursday issued a veiled threat on offshoring saying that he would end tax breaks that encourage companies to create jobs and profits outside the US—a threat that analysts said would impact multinational firms more than any Indian IT services firms.

“For years, our tax code has given billions of dollars in tax breaks, encouraging firms to create jobs in other nations. I want to change that,” the President said. Instead of tax loopholes that incentivise investments in overseas jobs, he will propose a “generous, permanent extension of tax credit that goes to firms for research and innovation done in the US”.

In May last year, Obama had proposed to close loopholes in a tax code that says “you should pay lower taxes if you create a job in Bangalore, than one in Buffalo, New York.”

Sudin Apte of Forrester Research said if the president’s proposals translate into law, it will cripple MNCs with captive centres in India, disrupting their cost models. The US-based firms such as IBM, HP, Oracle and Microsoft will become less competitive.

Currently, any income that is earned by US corporations outside the country is not taxed until it is brought into the US. Obama proposes to change this with a two-fold aim—raise revenues of the US government and create employment. By denying deductions on expenses made for offshore payments, the US government can ensure that it gets more expensive for US firms to operate subsidiaries. This, in turn, will encourage more job creation in the US, the thinking goes.

If the above action will help create new businesses and jobs for Americans then I am all for it. However, like all politicians, you never believe it until you see it actually occur. Obama seems to have flip flopped on this threat after the election.

I always encourage voters to vote on ACTIONS accomplished NOT on political ideology or party.

 

[TheApostleJohn]

Outsourcing isn't bad for anyone. Obviously it helps the people who get jobs, but it also means lower costs for business, which in turn means higher wages and/or lower prices, which means for consumer spending. Everyone loves to gripe about the "lost" jobs from NAFTA, but than fail to mention that more new jobs were avtually created after it's initiation, resulting in a net increase.