Outsourcing: A Greater Threat Than Terrorism

Chronicles Magazine ^ | Wednesday, April 20, 2005 | Paul Craig Roberts

[A. Pole]

Beginning in 2002, the United States began running trade deficits in advanced technology products with Asia, Mexico and Ireland.

Outsourcing bump!

[Borges]

U.S. corporations justify their offshore operations as essential to gaining a foothold in emerging Asian markets. The Hira brothers believe this is self-delusion. "There is no evidence that they will be able to out-compete local Chinese and Indian companies, who are very rapidly assimilating the technology and know-how from the local U.S. plants.

And when they see they can't compete there they will move somewhere else where they can compete....back home?

[KC_Conspirator]

I never hear the word "quality" mentioned when people make a case for outsourcing.

[WinOne4TheGipper]

Outsourcing Hyperbole: A Greater Threat Than Terrorism

[sgtbono2002]

I dpnt know much about trade deficits, or profits for companies or financial dealings. I do know a lot of our jobs are being sent to China. Now we see China starting trouble in the Taiwan straits, wanting to buy weapons from the EU, Buying oil all over the world, raisng the price of that oil, becoming more belligerent every day and now seeking to go to the moon , and who's mponey are they using to do all this. Thats right folks, the money Americans are spoending on Chinese good and the money thats been outsourced to them. I see Idian buying F-16's and Submarines, More of our money. Now I dont mind seeing the living conditions in these countries improving because of our outsourced jobs, but I do have a little bit of a problem with them using our money and jobs to strengthen their militarys'and possibly to become a threat to peace.

[L98Fiero]

It is in no American company's best interest for Americans to be broke and jobless. I have been saying all along, if outsourcing works and increases profits, companies will continue to do it. If it doesn't, they wont. Times change and economies change, thank goodness.

[CarrotAndStick]

Mostly true, but even that's changing now. Most Japanese brands like Sony and Casio get their wares manufactured in China these days, and I don't see much difference in terms of quality, compared to the older Japanese-made ones.

Maybe the reason is because these days, CNC machines have stripped off quality from human skills, and so, quality is solely the realm of the world of machines. And if China makes the couple of hundred billion dollars worth of goods it exports to America alone from machines bought mostly from Europe (and some from America and Japan), I don't think quality will be a very big issue in the near future. I believe this is the Japanese experience too, starting with sloppy tin-can Toyotas, to ending up being the largest automobile manufacturer today.

Let me clarify that I am open to revision of my opinion.

[ex-Texan]

U.S. corporations are selling American workers down the drain in the quest for short-term profits. This is long-term corporate idiocy. Such policies are put into place by MBA graduates who are more focused on 'golden parachute' than sensible policy. Most will take the money and run -- to company after company. These corporate personalities sabotage company after company as they jump sinking ships repeatedly like rats.

Read more about the coming financial crisis and how Americans are chained to debt ?

[KC_for_Freedom]

"The Department of Labor reports that more than one in three workers who are displaced remains unemployed, and many of those who are lucky enough to find jobs take major pay cuts. Many former manufacturing workers who were displaced a decade ago because of manufacturing that went offshore took training courses and found jobs in the information technology sector. They are now facing the unenviable situation of having their second career disappear overseas."

This is the key idea. What the authors don't say is that enough Americans benefit from the lower cost of the service that the net benefit to the nation may be positive. This does not make being laid off easier to take, but does make it easier to understand.

In short, if you have a job that some one else can do for less money, you had better hope that the customer who is paying you does not find out about the other guy. If he does, he presumably will switch unless you offer better service, better language skills, more attention or something. It is hard for me to imagine a person who wants a building designed to seek an architect in India to do the work. (Maybe an Indian who has moved here?) But if it were to happen, I suspect the US architect could find ways of competing. What I can imagine is that someone who needs a bunch of "fill in detail" on a design going to an Indian firm for the routine work. So the message to take from this if you are in architect school is: prepare well, be better than your contempories overseas, and stay up with the technology. If you can look at your job and honestly say that a technition can do this work, you are in danger.

The question of protectionism is real, the other alternative is to tell managers that they can look for cost reduction and profit margin only in certain places. This does not seem to make sense when at the same time we want bar owners to be able to decide whether to allow smoking or not. Either we are free or we are managed by our govenrment. Which will it be? Of course if the US school system still turned out the best product in the world we would not even be discussing this.

[RockyMtnMan]

The US cannot sustain an economy of our size without the "technicians" that currently inhabit it. Without these so-called middle-class jobs our economy would fall apart. Not everybody gets to be an executive and no-one wants to be a serf so we're headed for big trouble.

[brownsfan]

Offshore outsourcing is bad for America, anyone can see that if they examine:

1 - It's bad for national security. How can you defend yourself in wartime, if you don't MAKE many of the things your military requires.

2 - It's bad for the economy. Unemployed workers remain unemployed for emotional and physical reasons. Unemployed workers do not buy goods, or pay taxes.

3 - It's bad for the government. Businesses are a traditional source of tax revenue. If your physical plant is in India. Unemployed workers do not pay taxes!

4 - It costs us our future. Kids in college are smart. They look and see that technical and engineering jobs are easily oursourced. So they gravitate to what seems to be more stable. Service type careers, sales and marketing. If our country is outsourcing most of it's technical type work and a conflict arises, we can and most likely will, lose access to this "hired help".

Nationalism in America is dying, and the liberals continue to hasten nationalism's death. Without nationalism, corporate leaders don't care about their workers, or their community. Only one thing matters: "how much money did you make this quarter?"
Since our politicians are bought and paid for by lobbists. And there is a lobby for outsourcing, but very little against, there is no help coming from our legislators.
There is only one hope. People wake up and pay attention. Vote for anti-offshore outsourcing candidates. Buy from domestic producers.
If people continue to behave like our politicians and corporate leaders, worrying only about what benefits them today. We are doomed to becoming an also ran, not a super power. Think it can't happen?
Gee, who would have ever thought England would be where it is today?
What of Spain, or Rome if you want to go way back.

[Realism]

U.S. corporations justify their offshore operations as essential to gaining a foothold in emerging Asian markets.

We're going to make it there, then we're going to sell it there. Ok, obviously this will lead to higher corporate profits. I'd like to know exactly how this translates into higher paying American employment opportunities?

[jjmcgo]

Lenin said American capitalists will sell us the rope we hang them with.

[brownsfan]

"It is in no American company's best interest for Americans to be broke and jobless."

Actually, a global corporation has no stake in the status of American workers. If they are broke and jobless it just means someone, somewhere else is employed and prospering. They'll sell to them. You'll have corporate offices in the US that manufacture in China, and sell in India and China.
The only concern that corporation has for America is that their own gated communities are safe. When that becomes an issue, they'll move the corporate offices too!

Greed is good??

[dfwgator]

If he does, he presumably will switch unless you offer better service, better language skills, more attention or something.

It's not whether or not you are better than the cheaper guy. It's a question of 'is the cheaper guy good enough.'

[brownsfan]

"I'd like to know exactly how this translates into higher paying American employment opportunities?"

Doesn't. But they don't care. If the CEO of X corp. will make $11 million a year if the outsource, and $10 million a year if they don't: Good bye America, hello India!

[KC_for_Freedom]

Well if you are one of these "technicians" at the very least you have to realize that your job may one day be done by a machine or a cheap international. I would move into a technician job that can't be outsourced, Military work, Government work, school system work, real estate work, and franchise work are some examples. Don't stay in a job where you are a "coder" when the designers of the world are making coder jobs obsolete. BTW, the outsourced jobs will not last long either. Smarter chips will eliminate them anyway. Also, companies who have tried outsourcing have often found that language barriers or quality of workmanship have forced firms to move some jobs back to the US. Waht is really happening is people are trying things withoug knowing ahead of time that they will work. Our employees need to stay ready for change.

[KC_for_Freedom]

It's not whether or not you are better than the cheaper guy. It's a question of 'is the cheaper guy good enough.'

Right, it is the guy who does not need quality, or care about service who outsources. This is typically the guy whose next step is to go out of business entirely. Not a good future in either case. It is part of our capitalist system and will continue to change.