What would happen If offshore outsourcing was made illegal?

[SlitheryDee]

Preemptively I would like to say that I have NEVER taken an economics class.

What if every company and corporation in the US were required to manufacture or procure all goods and services that they need domestically. Wouldn't this arbitrarily create more jobs within the country? Wouldn't the overall higher cost associated with domestic labor/products/services be offset in the longterm by the necessary increase in industry?

If none of that's true then exactly how does offshore outsourcing BENEFIT the country as a whole? I'm not talking about benefits we may see immediately as individuals (cheaper XXX), but benefits to the country as a whole.

Maybe it's a dumb question but it's one that's been rattling around in my peon brain for some time now. I have seen that there are quite a few peeps around here who are well versed in economics, so maybe you can enlighten me.

 

[MrChad]

No. It would likely cause unemployment to rise. Because you're raising prices not only for consumers but for businesses as well, they would be forced to make cost cuts, likely by large layoffs.

You need only look to countries in Europe, notably France, to find examples of stifling labor laws that are politically popular but economically disastrous.

 

[nutxo]

Outsourcing or offshoring? There's a huge difference that most people seem to have the inability to comprehend.

 

[EKKC]

i think he meant offshoring.
i would open up a bottle of nice Dom Perignon

 

[ultimatebob]

US IT support folks like myself would probably get a decent raise for a short while, because we wouldn't need to compete with folks willing to do our jobs for US equivalent of $9.50 an hour. Hey... In rural India or China, that's good money!

That said, most of us would eventually get laid off because our services would end up costing twice as much as our foreign competitors.

 

[SlitheryDee]

Originally posted by: MrChad
No. It would likely cause unemployment to rise. Because you're raising prices not only for consumers but for businesses as well, they would be forced to make cost cuts, likely by large layoffs.

You need only look to countries in Europe, notably France, to find examples of stifling labor laws that are politically popular but economically disastrous.

Businesses might need to lay people off at first, which I see would cause unemployment to rise in the short-term, but they also would have to divert their labor and supply to domestic sources. Doesn't it seem logical that this would increase the revenues of the businesses that they choose to replace their foreign sources with? Wouldn't that create more domestic jobs in the long-term?

 

[SlitheryDee]

Originally posted by: EKKC
i think he meant offshoring.
i would open up a bottle of nice Dom Perignon

Yes I meant offshoring (which I understood to be short for offshore outsourcing anyway).

So why would this be a good reason for you to celebrate?

 

[AgaBoogaBoo]

I think they'd just bring more people into this country in larger quantities to get around all that political mumbo jumbo

Immigration folk would be buried with papers!

 

[DaWhim]

here is an example:
a firm has 100m to work with.
tech support cost 50m.
after outsouced it to india, it only cost them 10m.
now, the firm can use this saved 40m to do other things. it could be creating more jobs in the states.

 

[SlitheryDee]

Originally posted by: AgaBoogaBoo
I think they'd just bring more people into this country in larger quantities to get around all that political mumbo jumbo

Immigration folk would be buried with papers!

Legal immigrants would still be entitled to minimum wage no? Since we're talking about a hypothetical world let's say that illegal immigrants are off limits for businesses that are looking to replace foreign labor.

So the best they could do is to do all the lobbying required to get lots of minimum-wage tax-paying workers into the country to replace the much cheaper offshore labor. Would that be so bad?

 

[MrChad]

Originally posted by: SlitheryDee

Originally posted by: AgaBoogaBoo
I think they'd just bring more people into this country in larger quantities to get around all that political mumbo jumbo

Immigration folk would be buried with papers!

Legal immigrants would still be entitled to minimum wage no? Since we're talking about a hypothetical world let's say that illegal immigrants are off limits for businesses that are looking to replace foreign labor.

So the best they could do is to do all the lobbying required to get lots of minimum-wage tax-paying workers into the country to replace the much cheaper offshore labor. Would that be so bad?

And these minimum wage workers would be magically trained with the necessary skills and still only demand minimum wages?

 

[HardcoreRobot]

more jobs / money here, but since we charge more, price of goods go up as well, so all that more money being made gets spent on the more expensive goods

 

[neutralizer]

Things get more expensive because we can't get them made as cheap.

 

[Amtrak]

Limits need to be set, Im so sick of calling Verizon and speaking to morons in India and the Phillipines.

 

[SlitheryDee]

Originally posted by: DaWhim
here is an example:
a firm has 100m to work with.
tech support cost 50m.
after outsouced it to india, it only cost them 10m.
now, the firm can use this saved 40m to do other things. it could be creating more jobs in the states.

Ah I see where you're going with this but couldn't the firm also use that extra 40m to expand it's services by purchasing MORE outsourced labor and product? I mean 40m=40m here but maybe it equals 80m in singapore. Making that dollar go as far as it can is good business sense on an individual level and I wouldn't expect any business to do any less...unless it were illegal to do so.

 

[Christobevii3]

If we became a closed economy inflation would go up and standard of living go down. Think of like russia in the cold war

 

[SlitheryDee]

Originally posted by: HardcoreRobot
more jobs / money here, but since we charge more, price of goods go up as well, so all that more money being made gets spent on the more expensive goods

So things remain the same relatively speaking? Many who are currently living unemployed and in poverty would then be employed and still in poverty?

I'm having trouble seeing how a higher percentage of the population being able to find work could possibly be detrimental to our economy. Stuff might cost more but the increase in industry and productivity would ultimately mean that there would be more to go around right?

 

[91TTZ]

Originally posted by: DaWhim
here is an example:
a firm has 100m to work with.
tech support cost 50m.
after outsouced it to india, it only cost them 10m.
now, the firm can use this saved 40m to do other things. it could be creating more jobs in the states.

More likely, they'll just be pocketing the 40m as pure profit and bonuses to execs.

 

[JS80]

create trade war, foreign countries say fvck you and do the same, international trade goes bust, global economic meltdown, world ends.

 

[SlitheryDee]

Originally posted by: JS80
create trade war, foreign countries say fvck you and do the same, international trade goes bust, global economic meltdown, world ends.

This seems highly plausable to be honest. Are we really so dependant on other countries that purely domestic labor at least is unfeasable? Is this dependancy not at all related to our use of short term offshoring benefits?

 

[sdifox]

PRC and India would collapse closely followed by USA. WWIII.

 

[GodlessAstronomer]

Fucking spammers.

 

[DangerAardvark]

here is an example:
a firm has 100m to work with.
tech support cost 50m.
after outsouced it to india, it only cost them 10m.
now, the firm can use this saved 40m to do other things. it could be creating more jobs in the states.

Like give bonuses. And that would create several new positions at the company as the CEO's personal ball-washers.

 

[God Mode]

We would go even futher broke paying back the debt from various countries. If we suddenly closed the doors on international trade, I'd imagine our debtors would become mighty pissed.

 

[Sea Moose]

Fucking spammers.

or spanners?