Posted on 12/31/2003 4:27:26 AM PST by expat_panama
Edited on 07/12/2004 4:11:19 PM PDT by Jim Robinson. [history]
Just before Christmas, workers at IBM got an early lump of coal in their stockings. The company announced plans to ship some 5,000 software-programming jobs to India. Although the trend toward outsourcing or offshoring has been going on for some time, the IBM announcement got people's attention. New York Times columnist Bob Herbert complained that globalization is now forcing white-collar service workers to follow "the well-trodden path of their factory brethren to lower-wage work, or the unemployment line."
(Excerpt) Read more at washtimes.com ...
...every $1 outsourced led to a gain for the U.S. as a whole of $1.12 to $1.14.
The two statements cannot both be true. Let's think: BLS figures show jobs are being created. That means that outsourcing coffee growing to Columbia and gold mining to South Africa has created jobs in the US.
So now, instead of having Indian workers come here, where they spent much of their earnings, companies are contracting with them to work in India, which is where they now spend their earnings. Rather than admit that they were wrong in the first place, the same people who demanded restrictions on foreign workers are trying to get new limits placed on outsourcing as well.
This stuff (the merits of economic freedom) is so patently obvious, on its face, that I think you have to seriously suspect the motives of anyone who is opposed to it. I find hard-core protectionists to usually either be: 1) not very educated, or 2) angry, unhappy people (for whatever reasons) with varying and shady ulterior motives, or 3) both of the above. The protectionists at FR have done little to dissuade me of that view.
People can be clear thinking with say, adjusting a carburetor, and then turn right around and freak out on trade. It is a emotional issue, and the emotions involved are jealousy and envy. Sales people understand how normal people make their decisions impulsively on first impressions, and the true purpose of the sales spiel is just provide the rationalizations needed to justify a choice that is already made.
I went to the trouble once of pursuing the debate with a freeper protectionist a while back-- step by step the guy came to admit that free trade creates jobs and that the new jobs are higher paying. But he maintained his love of import taxes because of unabashed envy. It didn't matter if we're better off, because if free trade makes someone else better off it's wrong.
I find this to be the case much more often then the other. The sad truth is very few people have a good econ class in high school or college. America would be vastly different, better, if they did. Example: Most people laugh at me when I tell them that minimum wage laws cause unemployment, but it does. After 30 minutes to an hour of making them think about it they usually figure out why. But the point is that I shouldn't have to go over why/how price controls cause problems, the person should already know this.
Maybe I am just reading this wrongly, but if the U.S. gains 12 to 14 cents on an outsourced dollar, and the country where the outsourcing takes place gains 33 cents (presumably on the dollar) that leaves money unaccounted for somewhere here. I am just not enough of a mathematician to cut through the statistical BS.
Still, wouldn't the 33 cents, or 18 to 20 cents if you subtract the alleged gain to the US, be better spent here?
Two staples of the liberal (small "L") diet.
I'm not surprised the left has such a problem with the displaying of The Ten - keeping the unwashed from the realization that "coveting" is not good, gives the welfare pimps their hold on power.
(my 2 cents)
This is the point. Many people don't want to be better off if it makes someone else better off too.
We benefit when our costs go down, even if the person we're buying from is able to make an increased profit. My 12 year old daughter is studying mercantilism (home schooling of course). She immediately spotted the folly of trying to keep 'all your money' at home.
The next time a new medical breakthrough comes from an overseas lab, lets have the protectionists refuse the new life saving cure so as to 'protect' the jobs of US scientists.
A study by the McKinsey Global Institute found that workers freed up from routine tasks that have been outsourced are often redeployed within the company in projects generating greater value-added and jobs paying higher wages. It also found that companies engaging in outsourcing often established foreign subsidiaries that generate sales and profits for the home company. Adding it all up, McKinsey concluded that every $1 outsourced led to a gain for the U.S. as a whole of $1.12 to $1.14. The country where the outsourcing takes place captures just 33 cents of the total gain from outsourcing.
Previously, IBM has pointed to a report by the McKinsey Global Institute that concludes the U.S. economy ultimately will benefit. The report was commissioned by Nasscom, a group made up of Indian tech companies as well as IBM's Indian services unit -- showing an effort by those invested in offshoring to sway public opinion.
The importers of steel did the same thing with their CATIC front group. They failed to fool GWB. But this wasn't just a simple trade dispute subject to the rules of law, as GWB soon discovered. It was a high-stakes poker match with the object the destruction of the U.S.'s indigenous steel supply. Or to put it in another analogy: GWB broght a knife to a gun fight.
Unfortunately, GWB folded his tent after they raised the stakes...obviously he felt he could not fight the EU's threat of wide-scale trade sanctions to permit them (with their controlled WTO) to continue to scoff-law the WTO rules of trade. Indeed, they even selectively focussed on what they assumed where critical GWB areas of support. Just as the EU played the double-game with Iraqi trade sanctions. Laughing at the U.S. administration for being 'suckers' the whole way.
I hope GWB remembers in his second term how the EU brazenly attempted (and temporarily succeeded) to subvert US electoral politics with a discriminatorily selective set of trade sanctions, and takes care to make an example of these EU Trade Weasels...comparable to Saddam Hussein. Once re-elected he will be beyond their influence. At least one would think.
Bwahahahahahah!! Man, that's a hoot. On what planet?
People do what they're good at. We feed our families by working, as do most people who enjoy the increase in jobs and higher wages that comes with lower import taxes. Those in the minority don't have to face the facts any more than they have to work, as long as they can raise our taxes to feed themselves.
That's ok; the tax raisers are in the minority-- we can support them.
Please remember that when you say "the government should pay" you're saying "the government should send people with guns to my house to take my money to pay for it." I got laid off from my job 4 years ago after 30 years as a professional civil engineer (college degree and state registration). I relocated myself and I retrained myself at my own expense and I now work in a different line of work. Call me Uncle Scrooge but I don't want to pay for someone else's relocation and retraining.. I didn't blow my money on booze and toys-- I saved so my family would not starve if I lost my job. I believe that it's morally wrong for someone who doesn't save his money to tax (steal) my savings make up the shortfall.
If you say we need a law to force private companies to pay for retraining and relocation, will you buy the company's products when they raise prices to cover the costs? Or should the CEO's lower the wages they pay their employees to make up the shortfall? How about they cut the dividends they pay their stockholders? If they do that I'm dumping their stock and investing elsewhere because I have a family to feed too.
There is a HUGE difference between protectionism and wanting equitable trade relations. One is totally against all trade, the other is totally for trade, but within the right framework. If we give country X 2% tarriffs, but they give us 200% tarriffs...that sucks.
There are other dimensions to trade also, but if the freepers stating them don't follow exactly what you say, they are all protectionist buchananites.
Lots of you guys want to win the argument in your own minds so you merely lump everyone who might be in the latter of those two in with those who are of the former of the two.
What is the difference between those two categories? Until you and Mr. Dawg admit this difference, its no use discussing things.
Yeah... Sucks for them. I'm amazed at how much you protectionists care about the economic well-being of China (and others) and making sure they don't shoot themselves in the foot. It's nice of you I guess to want them to practice sound economic policy, but it's also kind of weird since you normally seem to hate them so much.
You are absolutely right. There are no easy answers; society some how muddles through. We want to share our wealth, hard earned or not, partially because we have to (like you say) one way or the other-- but also because sharing wealth is what our creator would have us do.
Some societies (like the US) are mainly made up of those who enjoy working and crating wealth, and there is usually enough to go around for the minority who don't or can't. I'm optimistic that Americans won't go the way of so many populist regimes and try to have some imaginary pile of 'government money' to pay for everything. Wealth is created by the people; if the creative process is abused and exhausted the people have to leave or starve. It's happened (and is happening) elsewhere, but IMHO the US has power to spare.
A very happy new year to you and yours!
There are a lot of issues here. We got business decisions, and ego decisions. When we buy gasoline, we don't care what percentage goes to pay for tariffs, all we care about is how much we pay per gallon. People who talk about the unfair tariffs of other countries are switching from business to head butting.
Actually, the big problem is not tariffs--these days it's the phony enviro-wacky rules. The Euros don't have the stones to raise tariffs, so they ban the evil US foods because we use 'genetically engineered' crops. On our side of the pond our wackos complain about how the Euros use evil atomic radiation to kill germs-- but fortunately our wackos aren't as effective as their wackos.
You have the right to make purchases based on your ego conflicts. Just don't force me with taxes to join you.
However you are being somewhat of a simpleton about it.
Think bigger. Put yourself in position of Commander in Chief of the economy (god forbid). Your job is to ensure stable long term growth.
The first mistake you are making is one, thinking small. But besides that, you are thinking the 'market' is a static thing. You are completely ignoring the developing of new markets.
By doing so, you employ dot.com economics. Just so long as I make MY money right NOW, screw all of you. The only thing is you are thinking in 1999, when the crash of 2000 is on the way.
There is a heck of a lot more involved that egos. Egos are far from it.
Its sheerly business. Business decisions to ensure solid long term growth.
You might think you are making more money by short changing, but you only reap what you sow.
Lets give an example. Say I make wigits. My wigits are known as the best. They are not the cheapest, but they are hands down the best. Hence we sell a lot of them.
If I start cutting back, and changing the product, and do so with the idea of cost savings to me. The only problem is, the changes effect the performance of my product.
Because of the name and reputation I have built up we still sell tons of wigits. Our profits are way up.
However, complaints start coming in. My image as a company is starting to be challenged publicly. Some long term customers start to pull away.
Now, was the decision to make the changes to the product a good one or a bad one? It did drive up profits did it not?
By not having a healthy global system we end up in the exact same boat.
You say you are thinking of the individual consumer, but that argument breaks down as soon as you go to the next level. There are things more important than individual consumers. Sometimes what the consumer thinks is good for him isn't really good for him.
There are technical things that make things right.
Markets are not static as you think. If you are going to talk about the market, talk about the market. Don't mistake yourself for the market though. If you think of it only on an individual level, you have already committed your biggest mistake.
Your whole argument is "its cheaper for me so screw off". That sums up your whole argument. There are bigger and more important things than you though.
My goal is not to prevent trade, but to smooth out those technical (and sometimes political) issues in global trade. You yourself mentioned some of them, such as non tarriff barriers...
We should have FTAs and lots of them. FTAs will be a ratified agreement from both sides about environmental, health, regulatory, or whatever, including giving preferential tarriff treatment (that means zero tarriffs)
Does that sound like it is preventing trade to you?
Once we get 100 FTAs in place (including FTA of the Americas) the FTA holding countries will still have to compete amongst themselves.
Our corporations will have less tax and less restrictions. Whats more is we can sell overseas just like a snap.
FTAs will be standard operating procedure.
All this crap about US soybeans not meeting China's standards and being left to rot on the boat will cease.
The countries that don't have FTAs should be discriminated against until they come to a legal accord and agree to it and follow up.
You see, as we pour money into foreign countries, we create new markets for us to sell in. If those countries block us from entering their markets and have all types of trade barriers, and they prevent us from holding shares on their markets, then on that end, what good has our investment done? We ultimately are blocked from our own investment. We we are talking hundreds of billions of dollars and growing, that aint no small chunk of change.
I am talking about that type of problem and you and texas_idiot keep talking about 'its cheaper!!!!!!!'
In reality too, because of the anti-competitive nature of some countries it actually diminishes competition. In a sense its predatory practices, not real competitive advantage. Its not really all that different than Standard Oil.
Why do we have laws against dumping? Why are there laws against predatory practices, such as price fixing?
On an international arena there are countries breaking those very laws.
BTW I borrowed those images myself. They definately apply though.
There are several crowds here on FR.
One is the idiot types who scream and complain about unions and think its a god given right to import from China. They think they are doing people a favor and are smarter than others. They will get condescending toward others who don't do whatever it is they say. Everyone else is anti-business, except them. They are self proclaimed in favor of the consumer. They hate anyone who they think will make anyone pay any more for anything.
What they don't know is as soon as the businesses they defend can, they will raise the hell out of prices regardless of where they are made. Then they all of the sudden forget about the consumer and think its ok for business to raise their prices.
To me, many times these guys don't understand the operating principles of a free market system. Liberatarian economics is not a free market system.
Another group is the very much minority of people who really don't want to trade at all, for anything, or at the very least do want to tax imports. An offshoot are the buchanan types, but like I said, they are very much in the minority. There might be 4 or 5 regular posters that fit this, if that.
The last category are those who think in terms of equitable trade. As in, my post #28. Some freepers have differing views on it, and some ideas are different, but the goal is the same.
So much for intelligent conversation.
To me, offshoring isn't all that bad of a deal in the long term, but it has to be done within the right framework. It has to be done on the right terms.
If we continue on with things as they are, especially regarding China, there is big problems with that. Its one big lost opportunity.
Price is not the first thing on the list for trade partners. A basket of things should be measured, including price and other things.
I am not saying business cannot be done overseas. Not at all.
I think that sucks as to how it is being conducted.
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