Outsourcing: a micro perspective

[Rainsford]

Originally posted by: techs
Wow, did you miss the boat on this one.
First off you are confusing specialization with outsourcing.
It is impossible for one person to learn to build everything they need. So we specialize in a particular area.
You are also completey ignorant of markets when comparing the idea of buying items from diffferent states, with the same general wealth and trade rules and nations with vastly different political and economic situations..
Therefore, nations are different.
In general when you buy, say, a pair of shoes made in another state, the money goes to pay a worker in your nation.
Why is this important? Because you neglect to mention where your money comes from to buy the shoes.
It comes from that shoebuilder buying the product you make (maybe not directly, he may buy another product and that person buys from you)
This works in nations because we play by the same rules and are of a roughly equal economic level and political level.
What happens when you buy your shoes from China?
China artificially holds down the value of their currency (the most important part of Capitalism is Capital).
And China has severe import restrictions on what you produce.
So the money that goes to China leaves the American currency nation and goes to China.
Eventually a few things will happen.
One, much of American wealth will be in China.
Two, and most importantly the people who buy your product lose their jobs and can't afford to buy your product. Lowering your income.
Three, people who livin in dictatorships cannot choose to protect their lives with environment legislation, and other choices free people make, forver unbalancing the fairness of trade with that country. This creates an unbalanced system that ensures America will never be able to compete.
Etc, etc.
You have also confused Efficiency with Cheapness.
China is NOT an efficient manufacturing country. The US is one of the most efficient manufacturing countries in the world.
In China human life and wages are so Cheap that factories there are labor intensive. It takes far more workers to produce a product in China. The reason manufacturing goes there is that is cheaper to use manpower than efficient production machines. This is almost unprecedented in the world since the industrial age began. Efficient mechanized factories being replaced with cheap manual labor. It's a huge step BACKWARD in efficiency.

I think you hit on a key problem with economic ideal of specialization. In a perfect world, there would be no difference between specialization and outsourcing, "outsourcing" would simply be specialization on a world-wide scale. But the problem is that the reason it works in theory is that the theory says you have an economic "circle" of sorts...when group B makes a good group A needs, group A makes a good group B needs. If they buy from each other, it doesn't matter whether it's between states or between countries, each group supports the industry that the other group is comparitivly better at.

But we do not opperate in a perfect economic situation, our largest trading partners are NOT playing by the same rules, especially China. Through import restrictions and controls from their central bank, they try to limit how much they import without placing similar restrictions on what they export. So China is essentially ignoring the benefits of comparitive advantage and national specialization, except when it means they can sell something to someone else. Japan has done a smiliar thing for years, they export tons of products to the US, but refuse to import many things from us, even things we do much better than they do (growing food, for example).

The upshot of all this is that the economic models don't apply, becausee the situation they describe does not exist in real life. Free trade is certainly good, but not when only one party is doing it. We export our labor in certain areas, and while OTHER areas should make up for that, they might not because huge foreign markets are essentially closed to our business. Don't get me wrong, this is bad for those foreign countries as well, because they waste huge amounts of resources doing things that we could do far better for them (again, Japan trying to grow their own food being the best example). In the long run, nobody wins.

 

[6000SUX]

Originally posted by: Rainsford
I think you hit on a key problem with economic ideal of specialization. In a perfect world, there would be no difference between specialization and outsourcing, "outsourcing" would simply be specialization on a world-wide scale. But the problem is that the reason it works in theory is that the theory says you have an economic "circle" of sorts...when group B makes a good group A needs, group A makes a good group B needs. If they buy from each other, it doesn't matter whether it's between states or between countries, each group supports the industry that the other group is comparitivly better at.

But we do not opperate in a perfect economic situation, our largest trading partners are NOT playing by the same rules, especially China. Through import restrictions and controls from their central bank, they try to limit how much they import without placing similar restrictions on what they export. So China is essentially ignoring the benefits of comparitive advantage and national specialization, except when it means they can sell something to someone else. Japan has done a smiliar thing for years, they export tons of products to the US, but refuse to import many things from us, even things we do much better than they do (growing food, for example).

The upshot of all this is that the economic models don't apply, becausee the situation they describe does not exist in real life. Free trade is certainly good, but not when only one party is doing it. We export our labor in certain areas, and while OTHER areas should make up for that, they might not because huge foreign markets are essentially closed to our business. Don't get me wrong, this is bad for those foreign countries as well, because they waste huge amounts of resources doing things that we could do far better for them (again, Japan trying to grow their own food being the best example). In the long run, nobody wins.

Score: 5 (Insightful)

 

[AnitaPeterson]

Originally posted by: Rainsford

Originally posted by: dmcowen674
I'm all for outsourcing too, let's outsource Stunt to some remote Island with no Internets :laugh:

Here is what I like about outsourcing, it keeps us honest. For example, I think the situation 10-15 years ago, where computer science types were so in demand that they could name their own salary even if they had a degree from Bob Jones University, was a bad thing for the industry. The threat of foreign competition has removed part of the labor scarcity and forced people to really try and be competitive. I graduated about a year ago with an area of study that very few people in THIS country know much about, to say nothing of other countries. I'm secure in my employment, for a while at least, because I tried to not just be another guy with a generic set of skills. I'm not sure I would have done that had I been able to breeze through a generic CS degree and get a six figure job right away.

WHAT is your degree, mate? you really got me curious there... are you in Public Administration or something like that?

 

[rchiu]

Originally posted by: Stunt
I confess, I am guilty of outsourcing. I outsource the production of my food, clothes, car, many other objects I buy; I also outsource services like haircuts, food preparation, entertainment. Now why would I not do these tasks on my own? Because there are others out there who can do them better, cheaper, and faster than I can. Besides I am perfectly happy giving compensation for these objects and services, even if they buy nothing in return.

Now that we can see some of the great opportunities outsourcing allows for, we can now consider where we are willing to draw the line when it comes to buying these items. Ideally people would like to support their own communities and would look to outsource close to their home. Say I live in New York City; I'm not a big fan of the food produced within the city and would likely turn to rural areas to supply my food, seems logical right? But why should I have to settle for a expensive, lower quality food products from my small state, it makes much more sense to get my dairy from wisconsin, potatoes from idaho, etc. Similarly with many other products; because my area of the world is too costly for that particular product, I look to compensate people in other areas even within my own country for these goods and services.

But that's still ok right? Paying people in another state to produce my food and other items i buy. I mean my state's potato and dairy producers aren't too impressed by my decision, and instead of funds staying within my own state I'm not supporting my community. Could this be morally wrong? Should we be jumping up and down to stop this horrendous injustice? Of course not, it's a much better use of limited resources for me to buy from another state as property values are lower, the product is similar, and will be much less expensive. Does the farmer buy products from me? No. But he sells me a good product at a fair price and I am happy with this.

Now finally take it onto the national level, why should this be any different? Everybody in our country conciously outsources on a day to day basis; either due to quality, cost or both. Remember outsourcing can be the purchase of a fine italian leather, or a bottle of aged french wine.

By definition trade is the exchange of goods and services mutually benificial for both parties. It is trade that has allowed each nation to specialize in production of certain products at a lower price. So the argument to keep *everything* within one's borders is not only less than ideal, but repressive for increasing productivity and wealth.

It's not as simple as equating labour of nation 1 vs. labour of nation 2. Outsourcing tends to go to areas of political instability and low capital investment is desired, therefore more labour is required for the same output (less automation means less consumption of energy during manufacture). Also, these regions are long distances away and require extremely large inventories for warehousing and during shipment; causing much more costs and inflexibility to customer demand. That's not even considering costs to ship and distribute these goods as you are so focused on in this thread. Therefore it's not just a labour issue as magomago thinks; there are many other cost considerations when deciding to outsource.

It is for these reasons I fully support the outsourcing of manufacturing when economically justified, as it is the most efficient use of limited resources, we increase our productivity and wealth, and we allow the poorer nations of the world a chance to better their lives. Read Here

Companies who do not remain competitive will not survive and eventually die. If a company in the US decides to go against the most economically favourable route (ie. to outsource or not to outsource), within a margin of course; they will likely underperform, lose investment and become a burden on the economy through debt, lack of profits and poor opportunities for growth.

Don't be short sighted in saying that domestic products are always in our best interests, and don't assume outsourcing is a bad thing. It will be up to the company to outsource or not and I full support the most effective way to produce. This is the only way we will continue to grow and succeed; the biggest growth periods have been expericienced through the reduction of trade barriers, don't push backwards through short-sighted reasoning.

Let's say if you have kids, would you outsource the caring of your kids even if it makes economic sense? I know some people do that, but I think most would not.

The reason I use this example is that I want to show economy is not the only thing that controls this world. There are other things to consider as well.

People usually won't let other people care for their children, even if it makes economic sense because the family bond built by the process of caring for your children is more important than economics.

There are thing for a country that's more important than economics as well. It is important for a country to have technological advantage over other countries. It is also important for a country to have sufficient jobs for the people in the country, even when there maybe deadweight loss in the economy.

Economy, or money can only just take a country so far. It is important for the leader of the country to BALANCE the economic aspect, the social impact, and other strategic advantages of the country when deciding on policies and directions for the country. It would be foolish to think economy is the only thing to consider.

 

[6000SUX]

Originally posted by: rchiu
Let's say if you have kids, would you outsource the caring of your kids even if it makes economic sense? I know some people do that, but I think most would not.

The reason I use this example is that I want to show economy is not the only thing that controls this world. There are other things to consider as well.

People usually won't let other people care for their children, even if it makes economic sense because the family bond built by the process of caring for your children is more important than economics.

There are thing for a country that's more important than economics as well. It is important for a country to have technological advantage over other countries. It is also important for a country to have sufficient jobs for the people in the country, even when there maybe deadweight loss in the economy.

Economy, or money can only just take a country so far. It is important for the leader of the country to BALANCE the economic aspect, the social impact, and other strategic advantages of the country when deciding on policies and directions for the country. It would be foolish to think economy is the only thing to consider.

Not only that, but the fact that some companies and a few people get richer via offshoring does not alone mean that it "makes economic sense". An unfair redistribution of wealth in order to achieve a small net gain for a few people does not make economic sense.

 

[Skanderberg]

Originally posted by: Looney

If there is outsourcing to the US, it's got to be very miniscule. If anything, the US outsources to Canada. Occasionally you'll read about a Canadian company outsourcing to a US company, but that US company would actually open the call center in Canada! And may even hire some of the laid off workers! Why do they do this? To dump the union. Bell did just this in the late 90s.


Ontario?s 6.5 million workers are well educated. 55% of our workforce (25-64years) have completed their post-secondary education. That?s a higher percentage than any industrialized country

Are ou basing this assumption on any statistical evidece or relying on the media to make your decisions for you?

Are you aware that every major automaker in Japan has at least three auto plants in the U.S.? How many GM and Ford plants are in Japan?...ZERO.

Are you aware that major European companies have many offices in the U.S. that employ Americans?

Are you aware that the number one trade partner of the U.S. is not China? It is Canada followed by Mexico at number two.

Are you aware that American exports to Mexico have gone up more than imports from Mexico since NAFTA was signed into law by President Clinton?

If you are so against outsourcing, why not go to an employee of a BMW auto plant or a Sony electronics plant and ask them to return their paycheck to the foreign company that employs them in America?

 

[Engineer]

Originally posted by: Skanderberg
Are you aware that American exports to Mexico have gone up more than imports from Mexico since NAFTA was signed into law by President Clinton?

That doesn't seem to be true.

 

[Skanderberg]

Originally posted by: 6000SUX
It does not make economic sense to put most Americans out of work while businessmen grow rich and fat. Our country was founded based on notions of equality. In the extreme case of an entirely "virtual" corporation, the CEO may be a single American and make a mint, while thousands of workers in other countries perform the labor. The government is able to tax the profits (at a lower rate), but the thing that's missing is the sharing in the profits by the American people.

Call it protectionism or whatever you want. The Indian government is guilty of protectionism as well. They protect the interests of their citizens, as we should protect the interests of ours.

In addition, it is not the duty of the American people to upgrade the standard of living of people in other countries at their own expense.

Outsourcing may make financial sense in some cases, but that is often due to shortsighted thinking and by tax breaks from the government (which should be abolished). Many companies tried to offshore much of all of their in-house development, with a resulting backlash due to poor-quality production by the outsourcing partners.

"We" do not succeed if corporations become richer but fewer people can find work. You may be more successful if you are one of the antisocial businessmen doing the offshoring, but you are not the American people.

If so many jobs are being outsourced, how come America has one of the lowest unemployment rates among modern, industrialized countries?

Have you stopped to think that any creation of wealth in America creates jobs. The corporation is not an intangible entity that buries money out in the desert. A corporation is a group of people who employ other people in the pursuit of seeing profits. Corporations reinvest thier profits and hire more people.

Let's take two secnarios. In both scenarios, a company outsources it widget manufacturing plant to cheap foreign laborers earning them an additional $20 million in profit.

In scenario A, the company invests that $20 million in expansion allowing the factory (in the foreign country) to produce more widgits. This in turn gives them more product to sell requiring them to open new offices and ware houses, create new advertising campaigns, and expand their distribution network to allow them to sell the additional widgits. To do this they hire new marketing people, ware house employees, new accountants, and new managers, as well as contract new truck drivers and retain additional legal professionals. Guess who has all these new jobs...Americans!

In scenario B, the company has greedy share holders who vote to keep the additional profits as a dividend (paying them back for their investment, how criminal) instead of expanding. In this scenario, the executives and share holders pay tuition to send their privlidged children to private school, trade in their cars for newer models, some of them buy a new house, a couple a new yacht, and one of them a privte jet. These transactions payed the salaries of teachers, school administrators, salesmen, managers, insurance agents, loan officers, etc...all of them Americans!

 

[6000SUX]

Originally posted by: Skanderberg
If so many jobs are being outsourced, how come America has one of the lowest unemployment rates among modern, industrialized countries?

Have you stopped to think that any creation of wealth in America creates jobs. The corporation is not an intangible entity that buries money out in the desert. A corporation is a group of people who employ other people in the pursuit of seeing profits. Corporations reinvest thier profits and hire more people.

Many jobs have been outsourced, and simple-mindedly quoting aggregate employment statistics doesn't change that. You don't suppose that a single out-of-work programmer ever took a job at Wal-Mart, do you?

It is not true that any creation of wealth in America creates American jobs, and it certainly doesn't necessarily create a good distribution of wealth. I don't know where you could have gotten that mistaken notion. A corporation which offshores jobs invests in foreign economies at the expense of our own.

Again, it is not the responsiblity of American workers to create foreign jobs at their own expense. Any person in a position of power who aids and abets this harmful redistribution of wealth is committing a crime against the American people.

 

[Skanderberg]

Originally posted by: 6000SUX

It is not true that any creation of wealth in America creates American jobs, and it certainly doesn't necessarily create a good distribution of wealth. I don't know where you could have gotten that mistaken notion. A corporation which offshores jobs invests in foreign economies at the expense of our own.

Again, it is not the responsiblity of American workers to create foreign jobs at their own expense. Any person in a position of power who aids and abets this harmful redistribution of wealth is committing a crime against the American people.

Economics is not a zero sum game. The idea that the gain of one cuntry is the loss of another was abandoned by economists along with 19th Century mercantilism. As countries adopt more liberal trade policies their economy improves. Countries that proctice proctionism limit the growth of their economy.

The reason why you hear so much about unemployment even though it is low (and declining) is because someone who does not have a job has a lot of time to protest. People who are getting new jobs do not protest because they have something better to do with their time.

 

[Rainsford]

Originally posted by: AnitaPeterson

Originally posted by: Rainsford

Originally posted by: dmcowen674
I'm all for outsourcing too, let's outsource Stunt to some remote Island with no Internets :laugh:

Here is what I like about outsourcing, it keeps us honest. For example, I think the situation 10-15 years ago, where computer science types were so in demand that they could name their own salary even if they had a degree from Bob Jones University, was a bad thing for the industry. The threat of foreign competition has removed part of the labor scarcity and forced people to really try and be competitive. I graduated about a year ago with an area of study that very few people in THIS country know much about, to say nothing of other countries. I'm secure in my employment, for a while at least, because I tried to not just be another guy with a generic set of skills. I'm not sure I would have done that had I been able to breeze through a generic CS degree and get a six figure job right away.

WHAT is your degree, mate? you really got me curious there... are you in Public Administration or something like that?

Computer engineering with a heavy security focus. I figure I'm catching the start of the trend with that, computer security is really starting to become a major deal, and employers are slowly discovering that hardly anybody with a CS, computer engineering, MIS, or similar degree has any knowledge at all of computer security. Even today, if you don't go out of your way to get some sort of computer security education, the computer programs at almost any university will pretty much ignore the issue.

 

[rchiu]

Originally posted by: Skanderberg

If so many jobs are being outsourced, how come America has one of the lowest unemployment rates among modern, industrialized countries?

Have you stopped to think that any creation of wealth in America creates jobs. The corporation is not an intangible entity that buries money out in the desert. A corporation is a group of people who employ other people in the pursuit of seeing profits. Corporations reinvest thier profits and hire more people.

Let's take two secnarios. In both scenarios, a company outsources it widget manufacturing plant to cheap foreign laborers earning them an additional $20 million in profit.

In scenario A, the company invests that $20 million in expansion allowing the factory (in the foreign country) to produce more widgits. This in turn gives them more product to sell requiring them to open new offices and ware houses, create new advertising campaigns, and expand their distribution network to allow them to sell the additional widgits. To do this they hire new marketing people, ware house employees, new accountants, and new managers, as well as contract new truck drivers and retain additional legal professionals. Guess who has all these new jobs...Americans!

In scenario B, the company has greedy share holders who vote to keep the additional profits as a dividend (paying them back for their investment, how criminal) instead of expanding. In this scenario, the executives and share holders pay tuition to send their privlidged children to private school, trade in their cars for newer models, some of them buy a new house, a couple a new yacht, and one of them a privte jet. These transactions payed the salaries of teachers, school administrators, salesmen, managers, insurance agents, loan officers, etc...all of them Americans!

Heh, how much of Bill Gates, Warren Buffet and thousands like them's billion are put back into economy? There is only so many billions they can spend and most of their money are put into real estate, gold, stock, bonds and funds, all saved up for their kids. And in your example A, company can choose to keep their billions to buy other company (and cut jobs after merger), give it back to stock holder in terms of dividend or stock buy back, or simply hold it like Microsoft's 30 somthing billions in cash/liquid shorterm investments.

It's true that America is doing pretty well in terms of employment rate recently. But if you take a deeper look at the wealth distribution of America, you will find the top 20% is getting most of the benefit out of the recent economic expansion and the bottom 80% is either left out or is actually adversely affected. The rich and the poor gap in the America is increasing, and this is a clear effect of overly pro-business/economic policy.

Now I am not pro-protectionist as well. I just think the government needs to consider the pros and cons of free market/ie outsource as much as companies want, and protectionist policy and make the right choice for the country at the right time. The worst thing a country can do is thinking that free market without any other consideration, like outsourcing without any limitation, is the miracle pill for any country at any given time.

 

[Rainsford]

Originally posted by: Skanderberg

Originally posted by: 6000SUX
It does not make economic sense to put most Americans out of work while businessmen grow rich and fat. Our country was founded based on notions of equality. In the extreme case of an entirely "virtual" corporation, the CEO may be a single American and make a mint, while thousands of workers in other countries perform the labor. The government is able to tax the profits (at a lower rate), but the thing that's missing is the sharing in the profits by the American people.

Call it protectionism or whatever you want. The Indian government is guilty of protectionism as well. They protect the interests of their citizens, as we should protect the interests of ours.

In addition, it is not the duty of the American people to upgrade the standard of living of people in other countries at their own expense.

Outsourcing may make financial sense in some cases, but that is often due to shortsighted thinking and by tax breaks from the government (which should be abolished). Many companies tried to offshore much of all of their in-house development, with a resulting backlash due to poor-quality production by the outsourcing partners.

"We" do not succeed if corporations become richer but fewer people can find work. You may be more successful if you are one of the antisocial businessmen doing the offshoring, but you are not the American people.

If so many jobs are being outsourced, how come America has one of the lowest unemployment rates among modern, industrialized countries?

Have you stopped to think that any creation of wealth in America creates jobs. The corporation is not an intangible entity that buries money out in the desert. A corporation is a group of people who employ other people in the pursuit of seeing profits. Corporations reinvest thier profits and hire more people.

Let's take two secnarios. In both scenarios, a company outsources it widget manufacturing plant to cheap foreign laborers earning them an additional $20 million in profit.

In scenario A, the company invests that $20 million in expansion allowing the factory (in the foreign country) to produce more widgits. This in turn gives them more product to sell requiring them to open new offices and ware houses, create new advertising campaigns, and expand their distribution network to allow them to sell the additional widgits. To do this they hire new marketing people, ware house employees, new accountants, and new managers, as well as contract new truck drivers and retain additional legal professionals. Guess who has all these new jobs...Americans!

In scenario B, the company has greedy share holders who vote to keep the additional profits as a dividend (paying them back for their investment, how criminal) instead of expanding. In this scenario, the executives and share holders pay tuition to send their privlidged children to private school, trade in their cars for newer models, some of them buy a new house, a couple a new yacht, and one of them a privte jet. These transactions payed the salaries of teachers, school administrators, salesmen, managers, insurance agents, loan officers, etc...all of them Americans!

Hmm, well your first scenario isn't bad, and it's actually a decent argument in favor of outsourcing. But it's not what's happening. The "wealth gap" between rich and poor is growing very rapidly, suggesting those at the top are often NOT taking company profits and investing them back into the company, but simply lining their pockets. Which brings us to your second scenario. I agree, there is nothing fundamentally EVIL about doing that, but neither is it as good for the economy as you suggest. They have ever right to do that, it's their company after all, but please don't pretend that trickle down economics is anything but a bunch of BS. Poor people spend money, rich people invest it. The idea that company share holders will go on a spending spree is silly, wealthy people invest and otherwise save a much greater portion of their income than poor and middle class people, and investment is generally not as good an economic stimulator as purchases. Really, we'd be better off with scenario C, where the extra money saved on producing the product translated into cheaper prices for the consumer (what a concept!).

 

[Skanderberg]

Originally posted by: Rainsford

Originally posted by: AnitaPeterson

Originally posted by: Rainsford

Originally posted by: dmcowen674
I'm all for outsourcing too, let's outsource Stunt to some remote Island with no Internets :laugh:

Here is what I like about outsourcing, it keeps us honest. For example, I think the situation 10-15 years ago, where computer science types were so in demand that they could name their own salary even if they had a degree from Bob Jones University, was a bad thing for the industry. The threat of foreign competition has removed part of the labor scarcity and forced people to really try and be competitive. I graduated about a year ago with an area of study that very few people in THIS country know much about, to say nothing of other countries. I'm secure in my employment, for a while at least, because I tried to not just be another guy with a generic set of skills. I'm not sure I would have done that had I been able to breeze through a generic CS degree and get a six figure job right away.

WHAT is your degree, mate? you really got me curious there... are you in Public Administration or something like that?

Computer engineering with a heavy security focus. I figure I'm catching the start of the trend with that, computer security is really starting to become a major deal, and employers are slowly discovering that hardly anybody with a CS, computer engineering, MIS, or similar degree has any knowledge at all of computer security. Even today, if you don't go out of your way to get some sort of computer security education, the computer programs at almost any university will pretty much ignore the issue.

Nice choice of study. Not only will computer security be an important part of the corporate world, but it is also important to the virtual battlefield of foreign policy in the 21st Century. You could do better to start your own Computer Security consulting firm than working for a corporate master who will exploit your talents.

 

[Rainsford]

Originally posted by: Skanderberg

Originally posted by: 6000SUX

It is not true that any creation of wealth in America creates American jobs, and it certainly doesn't necessarily create a good distribution of wealth. I don't know where you could have gotten that mistaken notion. A corporation which offshores jobs invests in foreign economies at the expense of our own.

Again, it is not the responsiblity of American workers to create foreign jobs at their own expense. Any person in a position of power who aids and abets this harmful redistribution of wealth is committing a crime against the American people.

Economics is not a zero sum game. The idea that the gain of one cuntry is the loss of another was abandoned by economists along with 19th Century mercantilism. As countries adopt more liberal trade policies their economy improves. Countries that proctice proctionism limit the growth of their economy.

The reason why you hear so much about unemployment even though it is low (and declining) is because someone who does not have a job has a lot of time to protest. People who are getting new jobs do not protest because they have something better to do with their time.

Well that's great chief, except when one country adopts liberal trade policies and the other is a bunch of communists who think protectionism is the way to go. THAT does not usually work out so well.

 

[Rainsford]

Originally posted by: Skanderberg

Originally posted by: Rainsford

Originally posted by: AnitaPeterson

Originally posted by: Rainsford

Originally posted by: dmcowen674
I'm all for outsourcing too, let's outsource Stunt to some remote Island with no Internets :laugh:

Here is what I like about outsourcing, it keeps us honest. For example, I think the situation 10-15 years ago, where computer science types were so in demand that they could name their own salary even if they had a degree from Bob Jones University, was a bad thing for the industry. The threat of foreign competition has removed part of the labor scarcity and forced people to really try and be competitive. I graduated about a year ago with an area of study that very few people in THIS country know much about, to say nothing of other countries. I'm secure in my employment, for a while at least, because I tried to not just be another guy with a generic set of skills. I'm not sure I would have done that had I been able to breeze through a generic CS degree and get a six figure job right away.

WHAT is your degree, mate? you really got me curious there... are you in Public Administration or something like that?

Computer engineering with a heavy security focus. I figure I'm catching the start of the trend with that, computer security is really starting to become a major deal, and employers are slowly discovering that hardly anybody with a CS, computer engineering, MIS, or similar degree has any knowledge at all of computer security. Even today, if you don't go out of your way to get some sort of computer security education, the computer programs at almost any university will pretty much ignore the issue.

Nice choice of study. Not only will computer security be an important part of the corporate world, but it is also important to the virtual battlefield of foreign policy in the 21st Century. You could do better to start your own Computer Security consulting firm than working for a corporate master who will exploit your talents.

Eh, I'll probably do that eventually, but I'd like to get some experience before starting out on my own. Plus I'm at a pretty good place right now...not feeling too exploited, and it's, ah, interesting work

 

[6000SUX]

Originally posted by: Skanderberg
Economics is not a zero sum game. The idea that the gain of one cuntry is the loss of another was abandoned by economists along with 19th Century mercantilism. As countries adopt more liberal trade policies their economy improves. Countries that proctice proctionism limit the growth of their economy.

The reason why you hear so much about unemployment even though it is low (and declining) is because someone who does not have a job has a lot of time to protest. People who are getting new jobs do not protest because they have something better to do with their time.

Whether economics is a zero-sum game has nothing to do with whether one country can exploit another economically. In your world, all countries always break even in economic exchanges, which is so ridiculous a concept it doesn't warrant investigation. You make broad statements without reason-- without cause and without rational thought.

People protest when they are disenfranchised. People who have gotten new jobs which are a significant step down from their previous ones are among the most vociferous protesters of offshoring. Well, duh.

 

[Skanderberg]

Originally posted by: 6000SUX

Originally posted by: Skanderberg
Economics is not a zero sum game. The idea that the gain of one cuntry is the loss of another was abandoned by economists along with 19th Century mercantilism. As countries adopt more liberal trade policies their economy improves. Countries that proctice proctionism limit the growth of their economy.

The reason why you hear so much about unemployment even though it is low (and declining) is because someone who does not have a job has a lot of time to protest. People who are getting new jobs do not protest because they have something better to do with their time.

Whether economics is a zero-sum game has nothing to do with whether one country can exploit another economically. In your world, all countries always break even in economic exchanges, which is so ridiculous a concept it doesn't warrant investigation. You make broad statements without reason-- without cause and without rational thought.

People protest when they are disenfranchised. People who have gotten new jobs which are a significant step down from their previous ones are among the most vociferous protesters of offshoring. Well, duh.

Quite the contrary...I do not claim that they break even. I claim that the cooperation of two countries results in more than the sum of their parts. When countries increase their trade it ALWAYS causes their economy to grow. Protectionism does not "protect" the interests of a country, it hampers its progress towards a more efficient economy.

Communist Russia and its political allies in Eastern Europe had the most protectionist form of trade policy and look where it got them. Look what happened to Japan at the end of the 19th Century when they opened up their country to foreign trade (at gunpoint). Look what has happened more recently to both China and India since they decided to adopt a more liberal trade policy.

I am not saying that any country has a perfect model. No country has complete free and open trade. I am simply pointing out that cuontires with a more restrictive trade policy have restricted economic growth. If we choose to regress from our open trade policy, be prepared for jobs to be lost, not created as a consequence.

 

[6000SUX]

Originally posted by: Skanderberg

Originally posted by: 6000SUX

Originally posted by: Skanderberg
Economics is not a zero sum game. The idea that the gain of one cuntry is the loss of another was abandoned by economists along with 19th Century mercantilism. As countries adopt more liberal trade policies their economy improves. Countries that proctice proctionism limit the growth of their economy.

The reason why you hear so much about unemployment even though it is low (and declining) is because someone who does not have a job has a lot of time to protest. People who are getting new jobs do not protest because they have something better to do with their time.

Whether economics is a zero-sum game has nothing to do with whether one country can exploit another economically. In your world, all countries always break even in economic exchanges, which is so ridiculous a concept it doesn't warrant investigation. You make broad statements without reason-- without cause and without rational thought.

People protest when they are disenfranchised. People who have gotten new jobs which are a significant step down from their previous ones are among the most vociferous protesters of offshoring. Well, duh.

Quite the contrary...I do not claim that they break even. I claim that the cooperation of two countries results in more than the sum of their parts. When countries increase their trade it ALWAYS causes their economy to grow. Protectionism does not "protect" the interests of a country, it hampers its progress towards a more efficient economy.

Communist Russia and its political allies in Eastern Europe had the most protectionist form of trade policy and look where it got them. Look what happened to Japan at the end of the 19th Century when they opened up their country to foreign trade (at gunpoint). Look what has happened more recently to both China and India since they decided to adopt a more liberal trade policy.

I am not saying that any country has a perfect model. No country has complete free and open trade. I am simply pointing out that cuontires with a more restrictive trade policy have restricted economic growth. If we choose to regress from our open trade policy, be prepared for jobs to be lost, not created as a consequence.

Jobs are being lost right now due to offshoring, forcing white-collar workers to seek less lucrative jobs. Where is the money going? Overseas and into the pockets of plutocrats. This does not represent an improvement in the economic situation of the United States.

Countries such as Japan restrict imports of US goods, but are happy to export to us without restriction. It's the laws in this country that are screwed up-- our politicians are not protecting us from exploitation.

You and others like you like to talk of economic growth, but what happens in offshoring is largely a redistribution of wealth instead of true growth. You cannot use the economic failure of communist states as evidence that economic integration to our detriment is actually a good thing.

 

[Skanderberg]

Originally posted by: 6000SUX
Jobs are being lost right now due to offshoring, forcing white-collar workers to seek less lucrative jobs. Where is the money going? Overseas and into the pockets of plutocrats. This does not represent an improvement in the economic situation of the United States.

Countries such as Japan restrict imports of US goods, but are happy to export to us without restriction. It's the laws in this country that are screwed up-- our politicians are not protecting us from exploitation.

You and others like you like to talk of economic growth, but what happens in offshoring is largely a redistribution of wealth instead of true growth. You cannot use the economic failure of communist states as evidence that economic integration to our detriment is actually a good thing.

Unlike you, I don't just read about Japan...I live in Japan. U.S. products are every where. McDonalds, Coca Cola, Disney, Nike, Intel, Microsoft, Procter & Gamble, Kellogs, Budweiser, just to name a few of the companies whose products I see on a daily basis.

The lack of U.S. cars in Japan is not because of protectionism, but because U.S. suto makers fail to make products that appeal to the Japanese consumers. Japanese car companies by contrast are very good at designing products for the American market. As I pointed out before, many Japanese companies employ Americans in their manufacturing plants. Do American auto companies have plants here in Japan? NO!

Who is outsourcing more...the U.S. or Japan. We have more jobs supplied by Japanese companies than the Japanese have jobs supplied by American companies.

As far as China goes, they are not as significant an ammount of our trade volume as you might think. We import much more from Japan, Canada, the EU, and Mexico. There are a lot of companies investing in China, but a lot f that investment is supplying their DOMESTIC economy. Ford and GM have both built several Chinese plants in the past ten yars, but neither of them imports a single car from China. Cars produced in these factories are sold in China and other Asian countries. Profits from these sales are repatriated to the U.S.

The trade imbalance is caused by the over valuation of the dollar, not liberalized trade. The over valuation of the dollar grew out of the gold standard started in Bretton Woods in the 1940s. When the gold standard ended in the 1970s (quite possibly the only good to come out of the Nixon administration) currencies began to have a floating value, but the dollar was already overvalued. Even though liberal trade has allowed the dollar to properly deprecate, the actions of central banks in foreign countries (especially Japan and China) cause the dollar to remain articficially overpriced. This makes imports cheaper than exports. Devaluation of the dollar will correct the trade imbalance faster than any fiscal or monetary policy that can be taken by the combned influence of the Federal Reserve and any Presidential administration.

edit: p.s. White-collar jobs are not lost when manufacturing jobs are outsourced.

 

[Rainsford]

Originally posted by: Skanderberg

Originally posted by: 6000SUX
Jobs are being lost right now due to offshoring, forcing white-collar workers to seek less lucrative jobs. Where is the money going? Overseas and into the pockets of plutocrats. This does not represent an improvement in the economic situation of the United States.

Countries such as Japan restrict imports of US goods, but are happy to export to us without restriction. It's the laws in this country that are screwed up-- our politicians are not protecting us from exploitation.

You and others like you like to talk of economic growth, but what happens in offshoring is largely a redistribution of wealth instead of true growth. You cannot use the economic failure of communist states as evidence that economic integration to our detriment is actually a good thing.

Unlike you, I don't just read about Japan...I live in Japan. U.S. products are every where. McDonalds, Coca Cola, Disney, Nike, Intel, Microsoft, Procter & Gamble, Kellogs, Budweiser, just to name a few of the companies whose products I see on a daily basis.

The lack of U.S. cars in Japan is not because of protectionism, but because U.S. suto makers fail to make products that appeal to the Japanese consumers. Japanese car companies by contrast are very good at designing products for the American market. As I pointed out before, many Japanese companies employ Americans in their manufacturing plants. Do American auto companies have plants here in Japan? NO!

Who is outsourcing more...the U.S. or Japan. We have more jobs supplied by Japanese companies than the Japanese have jobs supplied by American companies.

As far as China goes, they are not as significant an ammount of our trade volume as you might think. We import much more from Japan, Canada, the EU, and Mexico. There are a lot of companies investing in China, but a lot f that investment is supplying their DOMESTIC economy. Ford and GM have both built several Chinese plants in the past ten yars, but neither of them imports a single car from China. Cars produced in these factories are sold in China and other Asian countries. Profits from these sales are repatriated to the U.S.

The trade imbalance is caused by the over valuation of the dollar, not liberalized trade. The over valuation of the dollar grew out of the gold standard started in Bretton Woods in the 1940s. When the gold standard ended in the 1970s (quite possibly the only good to come out of the Nixon administration) currencies began to have a floating value, but the dollar was already overvalued. Even though liberal trade has allowed the dollar to properly deprecate, the actions of central banks in foreign countries (especially Japan and China) cause the dollar to remain articficially overpriced. This makes imports cheaper than exports. Devaluation of the dollar will correct the trade imbalance faster than any fiscal or monetary policy that can be taken by the combned influence of the Federal Reserve and any Presidential administration.

edit: p.s. White-collar jobs are not lost when manufacturing jobs are outsourced.

Fair enough, but how do we influence foreign banks...especially when they are, like China, trying very hard to keep things the way they are?

 

[Skanderberg]

Originally posted by: Rainsford
Fair enough, but how do we influence foreign banks...especially when they are, like China, trying very hard to keep things the way they are?

There is really not much of a need to. As long as they keep buying Treasury bills, they will support the U.S. trade deficit. If they stop buying dollars to support their currencies, the dollar will devalue and the trade balance will swing in the opposite direction. As prices on imports increase, the attractiveness of our exports will also increase (since foreign currency will buy more dollars). It's a self balancing system. Trying to control the 1,000 pound gorilla will only cause it to become imbalanced.

Please note that a trade deficit is not the same thing as a Federal spending deficit. While a trade imbalance being supported by investment (both foreign and domestic since many U.S. citizens and companies also buy Treasury bills) is not necessarily a bad thing, a government spending deficit being supported by government debt is not a policy that leads to economic health in the long run. That is a different topic all together.

 

[Rainsford]

Originally posted by: Skanderberg

Originally posted by: Rainsford
Fair enough, but how do we influence foreign banks...especially when they are, like China, trying very hard to keep things the way they are?

There is really not much of a need to. As long as they keep buying Treasury bills, they will support the U.S. trade deficit. If they stop buying dollars to support their currencies, the dollar will devalue and the trade balance will swing in the opposite direction. As prices on imports increase, the attractiveness of our exports will also increase (since foreign currency will buy more dollars). It's a self balancing system. Trying to control the 1,000 pound gorilla will only cause it to become imbalanced.

That was kind of my point though, I'm not really convinced them "supporting the US trade deficit" is a good situation for us to be in. Self-balancing systems are all well and good, but I'm not sure I see the benefit we gain from having a highly valued currency. And for that matter, why they WOULD stop buying dollars...the system just seem more beneficial to those with lower valued currencies.

Please note that a trade deficit is not the same thing as a Federal spending deficit. While a trade imbalance being supported by investment (both foreign and domestic since many U.S. citizens and companies also buy Treasury bills) is not necessarily a bad thing, a government spending deficit being supported by government debt is not a policy that leads to economic health in the long run. That is a different topic all together.

Yes, thank you, I am familiar with basic economic principles...

 

[Skanderberg]

I aimed tht last bit at others who might be reading...not at you directly.

 

[Skanderberg]

<sarcasm> Living in Japan I think that a strong dollar is great. I want to be able to buy 200 yen for my dollar since my company pays me in dollars and I pay rent in yen. </sarcasm>