The American Economy: Outsourcing

[The Cid]

I realize that my very presence in the PACE board is riddled with dissent. Of course, I'm talking American politics, and dissent is the only option anymore if you're not in the almighty Party, whichever one it may be.

Now, let's get down to business here, and discuss a big shadowy monster that will, sooner or later, threaten the US economy. That threat is outsourcing (or, for those of you not familiar with the term, the loss of lower-level service and manufacturing jobs to other countries).

My feeling on this matter is that the United States will continue to lose jobs in this fashion if nothing is done to stem the tide. The more jobs that are lost, the bigger the disparity is between the richest Americans and the poorest Americans. In those words it might not sound like a big deal, but anybody who has been through Pennsylvania after the mid 1990s knows exactly what I'm driving at.

Plain and simple: if we do not do something about this problem, there are going to be parts of this nation that resemble the Third World.

Now, the big question here is why so many companies are setting up workplaces in, for example, India. The answer, of course, is cost. Paying a worker in India costs a mere fraction of what it costs to pay an American. Something, in one way or another, has to be done to even this cost out.

First and foremost, some Americans might have to get used to a lesser standard of life. I know that sounds harsh. But it's either work with LESS money, or work with NONE. This outsourcing problem might give us no choice.

The way I see it, there are three major categories under which one can propose a method of fixing this problem. The first is setting up a series of tarriffs that will make outsourcing extremely expensive. I, personally, find that to be a terrible idea. Another major idea? Lowering the cost of doing business domestically. What do I mean by that? It's simple. If we are to keep American jobs in America, we're going to have to find a way to SEVERELY cut the Income Tax. We may even have to drop it altogether. This means that a company can pay their employees a lower wage, and the employees STILL might have more money in their pockets. The third category involves cutting those minimum wages without cutting taxes.

So what do you think? What should be done about outsourcing? Am I overreacting, or is it a major economic crisis?

[workmad3]

From what I've read about outsourcing in britain(at least in the computer industry, not sure about other industries though) is that its more a phase. Some companies will still outsource, but I expect the majority will move back to US labour as it will probably be of a higher standard than the other countries they go to. If the US government makes it more attractive to move back to US labour, then it will shorten the span and mean less companies stick with it. At least, thats my best guess, although I havent exactly read much into it, and am not an economist or anything either.

[The Cid]

workmad3, you make a good point. As a matter of fact, just yesterday a good friend of mine made a similar point. His assertion was that as more work is sent to these "underdeveloped nations," the wages in those countries will rise. That's a basic economic principle. The thing is, wages in these countries are so far below that of the US (or Britain, for that matter) that even an increase over there wouldn't make a dent in the problem.

Fortunately, both the United States and the United Kingdom have a veritable braintrust of the best economists in the world. Here's hoping one of them figures it out.

[HTRN]

Outsourcing isn't a "phase" it's a wholesale move by big money to put more of it in their pocket.

Myself, and probably Cosmic Hippo are probably the two most vulnerable people here to outsourcing - we both work in Manufacturing. Don't kid yourselves, though, if your job can be shipped overseas, it will be. In the last 5 years, I've seen Medical billing, Xray reading, Income tax prepartion, Tech support, Computer programming, etc, make wholesale moves out of this country. If you deal in handling or manipulation of information in any way, expect layoffs in the next ten years, either from software, or from outsourcing.

About the only jobs that are truly resistant to outsourcing are jobs that abosolutely require human bodies in the United States like Construction or Retail/food service.


HTRN

[Blaze]

Yeah, but there's an upper limit, HTRN.

These company's primary markets are in the US. If enough jobs are outsourced overseas, their primary consumer base becomes unable to support them. And they know that.

There is a limit at which they have to stop funneling money out of the market.

[HTRN]

Yah, I know there's an "upper limit".

Doesn't stop whole industries from collapsing(like the textiles industry) and killing the economies of entire regions(certain areas of the Carolina's in the case of textiles).

What I said was neither an accusation nor an endorsement: it was rather an observation.

The problem isn't the Corporations, they're only supposed to be serving their stockholders. The problem is things like NAFTA, and other Trade aggreements that allow the Corporations to choose between an American making $12/hr and a Chinese worker making $3/day. WHat do you expect the employer to do?

Americans aren't helping the matter by buying stuff "made in China" - I for one, will not shop at places like Walmart. The job I save may be my own one day.


HTRN

[Blaze]

It can't really be avoided to buy international products, but I do my best to choose one "made in the USA", whenever the option is available.

[SunTzu]

When i was in "grownup kindergarden" (where you go to get welfare if you're over 18, but not yet 20), they had this inspirational speech week. A guy came along one day, and was talking about how the market was going up up up, and how in MAX 5 years we would all have jobs. Problem is, he had no response on how to end the biggest "threat" to western economies, outsourcing. Ergo, he depressed me.

It's a matter of money, and when its about money, owners and CEOs have no problem outsourcing. If they earn money doing it, they will, and they're outsourcing more and more. India is a prime example for the software industry, they're skilled, driven and underpayed. Of course companies will move there.

And yes, it will stop. It will stop when India, China etc are on a near even economical status as the western world.

[Bigity]

Or, you can get a job in an industry that can't be outsourced

Defense department, anyone?

[SunTzu]

Not in sweden, they cut funding by like 40% last year

[Bigity]

Yea, I guess you have to be in a country that keeps an army around, yeah.

[JeppZer]

Sweden is so great there.. "hey, we're in this big shizznit called the EU, the other member countries have armies, why should we have one?!"

[SunTzu]

Hey! Our army have kicked your armys ass everytime we've practiced JeppZer, back me up!

I heard a funny story from a friend who was doing service on a submarine (you know, one of the Gotland class subs that you've hired) during an interntional training exercise. The sub "sunk" of US ships in short time, and after that the american commander exclaimed: "They're cheating! They've got more then one sub in here!" and left the exercise There was no other sub

[Bigity]

That's like one time. What terrain? What units? What situations? Sounds funny though, I bet the commander got hell of a ribbing from his buddies.

[JeppZer]

Too bad we won't have many subs and only like 3 cannons after the cutdowns
but bah, we kick major ass anyways! WOO! jsut look at the 16-1700's