Offshoring U.S. Jobs

[Solitaire]

Tech Leaders Urge Congress Not To Act To Keep Jobs In U.S. (http://www.chron.com/cs/CDA/ssistory.mpl/business/2341724)

"There is no job that is America's God-given right anymore,"
Carly Fiorina, chief executive for Hewlett-Packard, said
Wednesday." We have to compete for jobs."

Yes, Yes. We knew it would happen.

Democratic front-runner Howard Dean said during a debate
last month that America needs a president "who doesn't think
that big corporations who get tax cuts ought to be able to move
their headquarters to Bermuda and their jobs offshore."

Biting the hand... Dear me... No teeth.

A Commerce Department report last month said increasing numbers of technology jobs are moving from the United States to Canada, India, Ireland, Israel, the Philippines and China, and predicted that "many U.S. companies that are not already offshoring are planning to do so in the near future."

Not that many just three million jobs per year.
Not telling my sources on that! :p

The problem is not a lack of highly educated workers,"
said Scott Kirwin, founder of the Information Technology
Professionals Association of America. "The problem is a lack
of highly educated workers willing to work for the minimum
wage or lower in the U.S."

They either learn to do so or they don't eat.

[Nasarius]

Originally posted by Synchronicity
They either learn to do so or they don't eat.

That's a bit harsh. Are you really suggesting that someone with a B.S. in Computer Science should be paid "minimum wage or lower"? Why spend $60,000+ on college when you can just work at McDonalds and get paid better...

Fortunately for me, it's not the only degree I'll be getting, even though CS is my primary interest.

[Cleon]

#$%^ these people.

I say, let's start outsourcing the CEOs to India...Then we'll see this trend reverse itself pretty damn quick. It's easy to whine "we have to compete" when it's not your job on the line.

[Jon_in_london]

Wheres Shanek to say this is actually a good thing for the economy?

[Chaos]

Originally posted by Jon_in_london
Wheres Shanek to say this is actually a good thing for the economy?

More important: where are all those who just cannot stop praising the virtues of capitalism?

[RussDill]

Originally posted by Cleon
#$%^ these people.

I say, let's start outsourcing the CEOs to India...Then we'll see this trend reverse itself pretty damn quick. It's easy to whine "we have to compete" when it's not your job on the line.

No doubt entire companies will continue relocating all around the world to more desirable locales, as they have been for a long time now.

[Badger]

I don't see the problem, frankly.

It's the way capitalism works. I do hope things have been learned from what went on in the north american auto industry....

[Luke T.]

I guess Howard Dean wants to tax the living daylights out of corporations and force them to stay in the U.S..

We will tax you to death and you will like it...

Many, if not most (hell, if not all), of the high tech jobs are non-union, so we can't blame them for forcing wages up, making the companies move outside the U.S..

The wages ain't so high right now, I can tell you. They are half to one-third what they were just a year ago in my area.

As for your 3 million technology jobs per year moved overseas, Synchronicity, I would like to see the source, tongue-sticker-outer smiley notwithstanding.

All the layoffs that have occured in my area were not the result of the jobs going elsewhere. They were the result of companies downsizing which was the result of the economy tanking. Nobody in Ireland or India got our jobs.

[Luke T.]

Just wanted to add that I worked for a corporation whose biggest customer was Intel. I worked in an Intel clean room. Intel has "fabs" all over the world. U.S., Israel, Ireland. Our company had our people working throughout Europe and Asia.

This is not a case of companies moving their entire workforces out of the country. They are spread out all over the place.

I do know that Intel, and a bunch of other high tech companies, moved a large chunck of their operations out of California into Oregon strictly because of taxes. They all moved into what is now called "The Silicon Forest."

But Oregon hasn't learned from California's mistake. They have been raising taxes two or three times a year in the last three years. And they are losing businesses in a major bleeding process. So they raise taxes to make up for the loss of revenue. And appear to be completely mystified why the economic situation is not improving. Oregon has had the highest unemployment rate in the country for some time now.

edited to add: It won't be long before the high-tech companies follow suit, and then Oregon will really be screwed.

[dsm]

Originally posted by Luke T.
All the layoffs that have occured in my area were not the result of the jobs going elsewhere. They were the result of companies downsizing which was the result of the economy tanking. Nobody in Ireland or India got our jobs.

How do you know? :confused:

Companies usually downsize because they are getting too much competition from elsewhere and have to cut costs. While the companies in your area may not be directly sending the jobs overseas, perhaps they've already lost out to someone who did...

:(

[Malachi151]

http://www.rationalrevolution.net/americanprosperity.htm

[dsm]

Originally posted by Luke T.
Just wanted to add that I worked for a corporation whose biggest customer was Intel. I worked in an Intel clean room. Intel has "fabs" all over the world. U.S., Israel, Ireland. Our company had our people working throughout Europe and Asia.

This is not a case of companies moving their entire workforces out of the country. They are spread out all over the place.


That's a ridiculous statement. Of course they are spread out "all over the place" as they look for wherever is most advantageous. As cost comparison between the US and other countries becomes more weighted toward the other countries, more jobs will go elsewhere.


I do know that Intel, and a bunch of other high tech companies, moved a large chunck of their operations out of California into Oregon strictly because of taxes. They all moved into what is now called "The Silicon Forest."


They also moved to Taiwan and other Far East nations.

Face it, the economics of having a work force in the US is too high in comparison to other nations. If companies thought they could get away with it now, MANY more jobs would permanently exit the US. As the economy becomes more globalized, the US will be screwed. By the time things even out across the world, it will be too late for the US worker. In the long run, your only hope is to take your nest egg and invest it wisely in the market...



:(

[Luke T.]

Originally posted by dsm


How do you know? :confused:

Companies usually downsize because they are getting too much competition from elsewhere and have to cut costs. While the companies in your area may not be directly sending the jobs overseas, perhaps they've already lost out to someone who did...

:(

I know because when I was laid off, I immediately began networking. I had a lot of contacts in the industry. The answer was the same everywhere. I finally had to take a much lower paying job outside the industry.

Also, there are only two other competitors who do what our company did. And they were downsizing, too.

Our company laid off 80 percent of its employees worldwide in two years! That is worldwide. The jobs were going nowhere. Just disappearing.

You can google for yourself and see what has happened to the hi-tech industry in the last few years.

[RussDill]

Originally posted by dsm

Face it, the economics of having a work force in the US is too high in comparison to other nations. If companies thought they could get away with it now, MANY more jobs would permanently exit the US. As the economy becomes more globalized, the US will be screwed. By the time things even out across the world, it will be too late for the US worker. In the long run, your only hope is to take your nest egg and invest it wisely in the market...
:(

I'm confused...why would the US be screwed? Many countries in the world are unjustly poor, and the system is balancing out, in the near future, india will be one of our huge trading partners. Do you think that when manufacturing jobs moved to the then impoverished south korea, it was bad in the long term for the US economy?

[Luke T.]

Originally posted by dsm

Face it, the economics of having a work force in the US is too high in comparison to other nations. If companies thought they could get away with it now, MANY more jobs would permanently exit the US. As the economy becomes more globalized, the US will be screwed. By the time things even out across the world, it will be too late for the US worker. In the long run, your only hope is to take your nest egg and invest it wisely in the market...
:(

And why can't they "get away with it now?"

Because cheaper labor is not enough to move jobs. Another country may have cheap labor but an unstable government, higher taxes, poorly educated laborers, lousy infrastructure, and on and on.

It will be a long time before those things "even out."

Originally posted by Chaos
More important: where are all those who just cannot stop praising the virtues of capitalism?

Right here.

It is a simple principle that you have to pay workers enough that they can buy the products you make to have a strong economy. If the cheap laborers elsewhere can't buy what they are being paid to make, and the U.S. workers are all unemployed, who is going to buy the stuff, eh?

[dsm]

Originally posted by Malachi151
http://www.rationalrevolution.net/americanprosperity.htm

How do we influence closed societies (like China)? Can that influence be mobilized fast enough to save (most of) the American workers who are losing their jobs to offshore companies?

[dsm]

Originally posted by Luke T.

And why can't they "get away with it now?"

Because cheaper labor is not enough to move jobs. Another country may have cheap labor but an unstable government, higher taxes, poorly educated laborers, lousy infrastructure, and on and on.

It will be a long time before those things "even out."


They can't be as blatant about it now as they might like not because of instability of other nations (and the like), but rather because an enraged American consumer would severely impact their bottom line. For example, while Microsoft (etc.) continue to move jobs overseas, they are removing their placards from the new localities to make it less obvious that they are doing that.

[Malachi151]

Originally posted by dsm


How do we influence closed societies (like China)? Can that influence be mobilized fast enough to save (most of) the American workers who are losing their jobs to offshore companies?

What do you mean by "we"? American-Chinese trade relations go back over 300 years. At one time the richest man in teh world was a Chinese opium lord, who helped to finance the American railroad system to increase opoum markets in Aemrica, he was aided by Bayer, the inventor of heroin (and asprin), and John Jacob Astor as well, the wealthy American trader, and first true "Bill Gates" of America.

American trade relationships with Chinese businessmen and families goes back hundreds of year and has been largely unbroken, even by the revolutions and wars.

They relatiosn were broken after WWII when Mao took over, but were opened back again under Nixon, and picked up where they had left off.

Every country has its people who are willing to work with foreigners to exploit their own people for profit, this is viewed as "progress".

China is not a closed to society to millionairs, never has been, except under Mao.

Western businessmen work with native Chinese to keep economic conditions poor and keep labor oppressed, American treaty agreements facilitate exploitation and work against the interests of workers, its the same as it has been for the past 500 years with all trading partner sof all Western nations.

That's how "free trade" works.

Changing the situaiton is easy, if those in power wanted it to change it could change tomorrow, but they are the ones making it the way it is in the first place. That should be self evident, all economies are the product of the ruling class and serve ruling class interests. We now have a global world economy, serving the ruling class intersts in all nations. The ruling classes of all trading nations are working together to support each other's ruling class.

http://www.rationalrevolution.net/articles/economy_web.htm

The wealthy in China are wealthy by their agreemnts and deals with Americans. The current agreements are mutually benefical for the parties involved. We, the working classes of the world, are not the parties involved, and our interests are not served. Actually America working class' intersts are served as consumers of the virtual slave labor of China, our new American colonial industrial plantation.

[Zep]

There are two things that have changed with respect to IT in the "old days".

First, the technology is now far more widespread worldwide, so with only a few exceptions, commodity computing and communications is far more pervasive in "low-tech" countries than ever before. And many of these countries have enormous populations, so the uptake is staggeringly fast. Countries like India, already having a core of world-class high-tech people, have the sheer weight of numbers to be able to be able to offer global high-tech services at what we would call bargain pricing. And they do.

The second is the commoditisation of computing and comms technology itself. The mobile phone (OK, cellphone), the PC, and digital comms have revolutionised global thinking and business operation. So the idea that a "company" is purely a "US company" or "British company" no longer has a lot of meaning.

What this means is that it is now a global playing field for the company, but the problem is that the workers are not thinking globally, only locally. The discussion above is only talking about "the US worker" but the (mythical) company is buying its cheap computers from China, putting its IT staff in India, its headquarters is in Delaware for tax reasons, and its sales staff are in Europe because that's where the client contact is required. I'm sure we can all relate to such companies.

My own worries about this are that divorcing the customer (anyone remember the customer in all this?) from the company by this method may actually lose the company its vital clientel, even though the company is saving millions of dollars operating that way. Ergo globalism is a very short-sighted and ultimately self-defeating concept if that's the result. And my own observations are that this is now happening to a number of "global" companies.

Just my 2c.

[shuize]

Originally posted by Zep

....My own worries about this are that divorcing the customer (anyone remember the customer in all this?) from the company by this method may actually lose the company its vital clientel, even though the company is saving millions of dollars operating that way. Ergo globalism is a very short-sighted and ultimately self-defeating concept if that's the result. And my own observations are that this is now happening to a number of "global" companies.

Just my 2c.

Zep,

Good post. However, I disagree with the very last paragraph.

At its core, capitalism is consumer driven. Companies that don't give consumers what they want, quickly lose lose them to other companies that do. Lose too many customers, and they're out of business.

If by saving millions of dollars the company is able to offer their product at a much lower price, I expect that's what will matter most to its customers.

But if not, as you predict, then the companies that do stay connected with their customers will be successful and the "globalization" trend will die off.

In my opinion, price matters much more to consumers than "connectedness." But the market will ultimately show us which view is correct.

I don't understand why either result should worry you, however, since it is all a process of meeting consumer demand.

[Grammatron]

This is something I do not understand. A lot of people on this forum clame USA to be an evil, greedy Empire that just wants to steal resources from other countries so those in the USA can live comfortably. However in order to do so it must move the jobs to other countries where there were none thus creating economies there and in the process pissing off American voters who can reverse the whole system. Please explain.

[dsm]

Originally posted by Malachi151
What do you mean by "we"?

The disenfranchised American worker...

(On the other side, I am not talking about "just" China.)


Changing the situaiton is easy, if those in power wanted it to change it could change tomorrow, but they are the ones making it the way it is in the first place.


Cynical. An enraged American consumer that understands what is going on is a considerable force in the market. The problem is educating the disappearing American middle class.

We, the working classes of the world, are not the parties involved, and our interests are not served.


But don't we have the ultimate power under the American political system?

Actually America working class' intersts are served as consumers of the virtual slave labor of China, our new American colonial industrial plantation.

Ultimately, this is not true. Initially, while the American dollar remains important for the bottom line of corporations, the American working class potentially benefit from the lowered costs of production in China. However, as more and more workers loose their jobs, the size of the American market shrinks until, eventually, it is no longer relavent in the overall global market. At that point, American supremacy vanishes.

[Malachi151]

The problem arises in the fact that capitalsits themselves operate in relation to self interests (that not the problem), and because of this the drive of a company is to buy labor as cheap as possible and sell the prodcuts of labor in a market where the cost of labor is high.

This means that it is to the advantage of capitalists that there always be a high and low labor market.

The separtion of the world into countries with separate economies facilitates this, allowing capitalists to compartmentalize labor markets.

The individual capitalist, because of competition, can't say, "well, if I pay the guys in Chinahigher wages they will have more money to buy more products from me 50 years from now", becuase if they try to pay them more, then the immediate effect will be an American company that continues to get lower priced labor outselling them in the established Western markets and eventually driving them out of business, so the status quoe is to constrantly keep tryign to get labor as cheap as possible.

This problem existed in America as well, and the problem was solved by the implmentation of a federal minimum wage, which actually worked to the benefit of established industry by taking a basic level of labor cost competition out fo the picture and enabeling the creating of a real national consumer base. The same will have to be done on a global sclae, or else what is going to happen all consumer bases are going to be destroyed as the competition for cheap labor drives labor prices down, as we are starting to see now in America s we comepete with China and India for jobs.

The only thing that has made the America "capitalist" system work over the past 60 years is state regulation. In order to make a global capitlaist sytem truely work it will require a "global state" to regulate it.

[dsm]

Originally posted by Zep
What this means is that it is now a global playing field for the company, but the problem is that the workers are not thinking globally, only locally.

In the real world, does the average worker have any choice? In the past, when there were still open spaces to move to, the call was to "go west, young man" -- in other words, follow the jobs. Today, it really is not possible for the American worker to move to (say) China or India to compete for jobs that used to be American. Even if the country in question allowed an influx of American workers (which most do not), the American worker would be at significant disadvantage in the new market as most countries (other than the US) do not provide assistance for things like learning the local language.

No, the US worker really has no option other than to think locally.

(I'll see your 2c and raise you 2c.)

[Zep]

Originally posted by shuize
Zep,

Good post. However, I disagree with the very last paragraph.

At its core, capitalism is consumer driven. Companies that don't give consumers what they want, quickly lose lose them to other companies that do. Lose too many customers, and they're out of business.

If by saving millions of dollars the company is able to offer their product at a much lower price, I expect that's what will matter most to its customers.

But if not, as you predict, then the companies that do stay connected with their customers will be successful and the "globalization" trend will die off.

In my opinion, price matters much more to consumers than "connectedness." But the market will ultimately show us which view is correct.

I don't understand why either result should worry you, however, since it is all a process of meeting consumer demand.

To an extent, you are right. But both price and customer satisfaction need to be provided for the company to survive. Real-life example:

HP Australia recently moved their whole Customer Phone Support centre to India. It's way cheaper in HR terms to do it there, and they have the comms structure and pricing to support it now. It's a good financial move for HP, but...lots of trained customer support staff here in Australia are now looking for work elsewhere and taking their customer inside knowledge and goodwill with them.

Time passes. Then we have an HP product problem and I call HP. I get a guy in Bangalore who is six hours behind me, doesn't know me from Adam or our company from dirt, doesn't know where Sydney is let alone which is the nearest support centre to my office. He tries to be helpful, but he has no ability to deal with anyone outside Bangalore, and so is up against problems he has no control over and cannot beat.

The thing is, my previous support contact did know all this stuff. We were even on first-name terms. He knew my company, our intentions, our ongoing issues, and could put us in touch with the right local support people if needs be. Sure, he cost more for HP to "run", but he also kept the customers satisfied and thus the money rolling in.

In summary, we used to get our HP problems solved in a few hours over the phone and we were happy. Now it takes days, many calls, much email, and may not even be resolved ever. HP may be managing their bottom line better, but this is one disgruntled long-time HP customer who is probably going to Dell next time we buy.

(Btw, if you get into the non-PC stuff that HP sell, it gets WAY worse than this!)

So do you see the importance of customer satisfaction in this equation? In the global economy, some companies are trying to finance-manage themselves straight into the ground...

[dsm]

Originally posted by Malachi151
This means that it is to the advantage of capitalists that there always be a high and low labor market.


Perhaps. However, it is not to the advantage of the capitalists to turn a high-priced labor market into a low-priced labor market as that cuts into the ability of the market to buy the capitalist's products.


The only thing that has made the America "capitalist" system work over the past 60 years is state regulation. In order to make a global capitlaist sytem truely work it will require a "global state" to regulate it.

But this may take too long to setup to be of benefit to the American worker. The reason is that the rest of the world will not see a benefit in the "global state" until long after the American worker is no more.

[dsm]

Originally posted by Grammatron
This is something I do not understand. A lot of people on this forum clame USA to be an evil, greedy Empire that just wants to steal resources from other countries so those in the USA can live comfortably. However in order to do so it must move the jobs to other countries where there were none thus creating economies there and in the process pissing off American voters who can reverse the whole system. Please explain.

Your incorrect assumption here is that the USA is in control of this situation. It is not -- the corporations are.

[Grammatron]

Originally posted by dsm


Your incorrect assumption here is that the USA is in control of this situation. It is not -- the corporations are.

Let's say that you are correct and corporations are in control. How would you explain the problems they are having? After all, they're not exactly raking it in right now. After all, if you take away jobs from Americans and Americans are the biggest consumers you destroy your biggest consumer market. Unless of course you mean to say that corporations are stupid and did not see it but are able to run the world.

[Zep]

Originally posted by Grammatron


Let's say that you are correct and corporations are in control. How would you explain the problems they are having? After all, they're not exactly raking it in right now. After all, if you take away jobs from Americans and Americans are the biggest consumers you destroy your biggest consumer market. Unless of course you mean to say that corporations are stupid and did not see it but are able to run the world. Ka-ching!

[dsm]

Originally posted by Grammatron
Let's say that you are correct and corporations are in control. How would you explain the problems they are having? After all, they're not exactly raking it in right now. After all, if you take away jobs from Americans and Americans are the biggest consumers you destroy your biggest consumer market. Unless of course you mean to say that corporations are stupid and did not see it but are able to run the world.

Your incorrect assumption here is that corporations cooperate with each other. Sometimes the field is too big for any one (set of) corporation to understand and, thus, they do what they think works for their bottom line in the short term.

[Malachi151]

Originally posted by dsm


Perhaps. However, it is not to the advantage of the capitalists to turn a high-priced labor market into a low-priced labor market as that cuts into the ability of the market to buy the capitalist's products.



But this may take too long to setup to be of benefit to the American worker. The reason is that the rest of the world will not see a benefit in the "global state" until long after the American worker is no more.

True, hence the problem. Its not to the advantage of corporations that Americans lose all their jobs, yet due to individual competition for cheap labor the companies don't want to increases wages for foreign workers either. Part of the key to success is always finding a cheaper way to make the products than your competition, and there are always short term goals driving the strategy.

There is always incentive to undercut, which is what has created the current situaiton. In the 9160s we had almost everything made in America, then by the 70s a few companies started outsourcing to China. As they did this they were able to undercut the competition and still make higher profits, thus, in order to compete everyone had to follow suit, and now virtually everything is foreign made.

Now, certian companies or individuals, or governments work to secure lucrative deals with local labor providers, those that DON'T do this, i.e. those that don't try to keep labor cheap, because there is no means of global enforcement of rules, cannot compete with those who do. That's how capitalism works, the factor of the lowest common denominator.

The past 50 years has been a "capitalist illusion" because of the high use of state control in all economies, including the US, and the Iron Curtian, whcih took large Soviet block out of the trading sphere, thereby aking the "free world" labor pool smaller, which is to the advantage of labor. Now that the labor pool has just explanded over the past 20 years as the Iron Curtians have come down, and in addition state regulation has decreased, the market is now "freer" than it has been since the 1930s in America, and once again its leading to disaster, as all "free" markets do.

This is just a fact of the operations of capitalism, its neither something that is wanted or desired, its simply what IS.

[Grammatron]

Originally posted by Malachi151

The past 50 years has been a "capitalist illusion" because of the high use of state control in all economies, including the US, and the Iron Curtian, whcih took large Soviet block out of the trading sphere, thereby aking the "free world" labor pool smaller, which is to the advantage of labor. Now that the labor pool has just explanded over the past 20 years as the Iron Curtians have come down, and in addition state regulation has decreased, the market is now "freer" than it has been since the 1930s in America, and once again its leading to disaster, as all "free" markets do.


Evidence that market is now "Freer" than 1930's.

[Grammatron]

Originally posted by dsm


Your incorrect assumption here is that corporations cooperate with each other. Sometimes the field is too big for any one (set of) corporation to understand and, thus, they do what they think works for their bottom line in the short term.

It's better to worry about the long-term bottom line, though. If corporation can have consistent sales it has a potential to increase its market share. It's the difference between a CEO making one big bonus and then nothing or bonus, after bonus, after bonus. If you think corporations are that greedy then surely the latter would occur more often.

[DavidJames]

I work for a company that is moving jobs to Canada, India and South America. It is being done for one reason, to save cost and increase profit. I know because I am very close to the situation. I'm talking help desk, programming and unix/nt system administration.

"Because cheaper labor is not enough to move jobs. Another country may have cheap labor but an unstable government, higher taxes, poorly educated laborers, lousy infrastructure, and on and on."

The countries getting our business don't have those problems and cheap labor is exactly why they are getting the jobs.

"After all, if you take away jobs from Americans and Americans are the biggest consumers you destroy your biggest consumer market. Unless of course you mean to say that corporations are stupid and did not see it but are able to run the world."

Corporations aren't stupid, but they have one goal, to make money, more money then last quarter (or the same quarter last year). I'm afraid your belief that they will sacrifice this quarters profits in favor of concern about future consumers is a bit (or maybe grossly) naive.

I have no problems with profits, I own stock and ideally the increased profits my company makes will make my options and shares more valuable. Hopefully, I'll make it to retirement and my kids will find a niche in some industry that has some longevity and pays well. I'm not predicting doom and gloom, but things in this area moving rapidly and many many people in the computer tech field will be affected. It appears the small technology shops will be least affected and I may end up needing to join one to make it to retirement.

[Zep]

Originally posted by Grammatron
It's better to worry about the long-term bottom line, though. If corporation can have consistent sales it has a potential to increase its market share. It's the difference between a CEO making one big bonus and then nothing or bonus, after bonus, after bonus. If you think corporations are that greedy then surely the latter would occur more often. You are being rational but to a different frame of reference! You are thinking long-term, but...

Most CEO's these days are drive-by managers. They are only there for a few years, and their bonuses are linked purely to the profit. They get wage AND share. Any problems left over after they leave is someone else's concern. So long-term planning extends only as far as this particular CEO can see into HIS/HER future, usually only a few dozen months.

This, in my opinion, is why companies always seem to try to do 180⁰ turns every couple of years or so. New CEO, new broom, new profit-generating method.

In addition, the obsession with "pleasing the shareholders" plays a parts too, especially if the shareholders are institutional investors with discretionary power. Lower profits mean less investment, or even shareholder withdrawal (landslide!). So ANYTHING to keep the profit rolling is "a good thing". In fact, this is usually embodied into the bonus schemes for the CEO's.

So... Customer service? Huh! Employee enrichment? Double huh! America (or any other country) first? Triple huh!

[dsm]

Originally posted by Grammatron
It's better to worry about the long-term bottom line, though. If corporation can have consistent sales it has a potential to increase its market share. It's the difference between a CEO making one big bonus and then nothing or bonus, after bonus, after bonus. If you think corporations are that greedy then surely the latter would occur more often.

How often is "more often"? Have you checked the difference between CEO salaries and the average worker salaries lately?

[Grammatron]

Originally posted by dsm


How often is "more often"? Have you checked the difference between CEO salaries and the average worker salaries lately?


Yeah it's quite large but the profit margins have not changed all that much even though according to your theories they should be astronomical.

[RussDill]

Originally posted by Malachi151

There is always incentive to undercut, which is what has created the current situaiton. In the 9160s we had almost everything made in America, then by the 70s a few companies started outsourcing to China. As they did this they were able to undercut the competition and still make higher profits, thus, in order to compete everyone had to follow suit, and now virtually everything is foreign made.


Really? has the economy improved, or gone down the tubes since the 60's? It used to be that everything was made in your own town, and that was it. Then towns traded. It used to be that you could really only get stuff in your own region or state, then states traded. It used to be that you could only eat perishable food from your own area, then railroads and refridgeration were invented. Now we are starting to trade more and more on a global scale. Each step was a increase in the quality of life, and at each step, jobs certainly moved around.

Economies are like forests, every now and then, you need a fire to go through, it takes out the old useless growth, and allows for the new (old jobs and methodologies being replaced by new). And like forests, if you put out all the fires, and let old growth take over, eventually, a fire will come along that will be an inferno, that you will not be able to stop, and everything will burn to the ground (This anology may only make sense to those in the US southwest, don't know).

[Shane Costello]

Originally posted by dsm:
How do you know?

Because in the case of Intel in Ireland no extra staff were hired as people were being laid off in the US. In fact investment in Intel's Irish operation (I live three miles from there and share a house with one of their employess) stalled, although IIRC there were no lay-offs.

Outsourcing to India and the like is a major talking point here too, since Ireland itself benefited from being a low cost location attractive to US multinationals, and there are fears that we'd now be the ones to lose out to low-cost countries. The multinationals are quick to point out that they've made major investments in their Irish operations and won't be going anywhere. I can see their reasoning. If Intel were to move their Irish operation to India, I doubt very few of their Irish staff would follow. Keep in mind that they've been in these parts for the best part of a decade, so their operation is by now established and efficient. Any move to India would entail quite a bit of downtime, as staff would have to be trained in and facilities set up. I'd imagine that the cost of shutting down an established operation and setting it up again from scratch somewhere else would be prohibitively expensive.

Originally posted by Chaos:
More important: where are all those who just cannot stop praising the virtues of capitalism?

Here's one. Investment by US multinationals in Ireland sparked an economic boom unprecedented in Irish history, and probably the history of any other western nation either. In 1993 unemployment was at 16%, seven years later it was below 4%. Income per head went from 60% of the European average to 125% now. Ireland had tried protectionism and statism for the previous seven decades, and the results were below par growth, falling incomes relative to other European countries, and perpetually high emigration and unemployment.

I've yet to see it satisfactorily demonstrated that free trade is a zero sum game, that job creation in India can only come with corresponding job losses in Ireland or the US. Another point made is that as incomes in these countries rise (these Indian software engineers won't be happy working for peanuts for very long) they'll want to by stuff that other countries make, and expensive stuff at that. A good example is that of Italy and Fiat cars. Giuseppe Agnelli died fairly recently, and the Italian correspondent for one of our dailies pointed out that as the average Italian became better of in the decades following WWII, the position of Fiat became rather more precarious. The reason was that foreign cars had a status that Fiat didn't, and as the average Italian acquired more purchasing power, he or she was more likely to buy a peugeot or BMW than a Fiat.

[Drooper]

Originally posted by Chaos


More important: where are all those who just cannot stop praising the virtues of capitalism?

Right here.

Dean is an economic illiterate and a danger to the US.

This shows all the signs of a healthy functioning economy. Something laypeople like yourself really need to learn from economists is that the decline of industries is a central part of process that increases incomes and prosperity over time.


Just as an historical tidbit. Did you know what kept you great great great grandparents awake at night? It was the threat that that upstart young America was "stealing jobs" and something had to be done.

Oh dear.

[Tmy]

You know who should get more flack for outsourceing work. HOLLYWOOD! DO they bother to make movies in the US anymore?

That Kurt Russel movie thats coming out, the one about the Miracle on Ice US Gold metal Hockey Team from the 80 Olympics. THEY FILMED IT IN CANADA!!!! A patriotic film about events that happened in New york, and they film it in Canada!! Im calling for a boycott.

Do you think Bill Orielly will join me. On one hand he can pickon hollywood, on the other hand that means attacking big business..


I know everyone will blame the unions but at a time when movies are making record money lets not forget the greed factor.

[Luke T.]

For a company to continue to survive, they must have continuous growth. That means they must find ways to sell more of their stuff to more people. And since they must sell more stuff, they have to make more stuff, and therefore have to hire more employees. Just because a company opens up a new manufacturing location somewhere doesn't automatically equate to a loss of jobs in that company elsewhere. At worst, it means a lack of growth in jobs at the old location.

[dsm]

Originally posted by Grammatron
Yeah it's quite large but the profit margins have not changed all that much even though according to your theories they should be astronomical.

Come again? How have I suggested that they should be astronomical? :confused:

[dsm]

Originally posted by Shane Costello

Because in the case of Intel in Ireland no extra staff were hired as people were being laid off in the US. In fact investment in Intel's Irish operation (I live three miles from there and share a house with one of their employess) stalled, although IIRC there were no lay-offs.

Outsourcing to India and the like is a major talking point here too, since Ireland itself benefited from being a low cost location attractive to US multinationals, and there are fears that we'd now be the ones to lose out to low-cost countries. The multinationals are quick to point out that they've made major investments in their Irish operations and won't be going anywhere. I can see their reasoning. If Intel were to move their Irish operation to India, I doubt very few of their Irish staff would follow. Keep in mind that they've been in these parts for the best part of a decade, so their operation is by now established and efficient. Any move to India would entail quite a bit of downtime, as staff would have to be trained in and facilities set up. I'd imagine that the cost of shutting down an established operation and setting it up again from scratch somewhere else would be prohibitively expensive.


Hmmm. Remember that you're dealing with a company that invests billions annually on new factories (and the like) to build the next new chip(s) using new technologies. They don't have to move out of Ireland tomorrow (as they didn't in Silicon Valley). Instead, if they decide Ireland has become too expensive, they can simply ramp down operations in Ireland to minimal levels as they build new factories elsewhere. For a company the size of Intel, the ramp down operation need not take more than a few years.

[Grammatron]

Originally posted by dsm


Come again? How have I suggested that they should be astronomical? :confused:

Well I believe the claim here is that companies hire cheaper labor to do the same job because they are greedy. One would expect it to make an impression on their profit margins.

[Ladyhawk]

Originally posted by Grammatron


Let's say that you are correct and corporations are in control. How would you explain the problems they are having? After all, they're not exactly raking it in right now. After all, if you take away jobs from Americans and Americans are the biggest consumers you destroy your biggest consumer market. Unless of course you mean to say that corporations are stupid and did not see it but are able to run the world.

This has been exactly my battle cry against outsourcing for some time! Corporations aren't stupid...they're GREEDY, boys and girls...very GREEDY. It is, as others have noted, a short term solution. Curiously enough, someone handed me an article the other day from Information Technology magazine, Jan 04 edition, I believe. (I have to find it...) Actually, it's rather ironic since it cites companies in India who are now outsourcing the IT work the US gives them and, apparently these India based companies have wised up and are already starting to charge US corporations more......

I can also tell you, working for a major IT solutions company on the healthcare software side that our experiments with outsourcing basic programming to India based companies has been nothing short of a disaster, so far. We've had some other experiences with outsourcing to Malaysia and that has been even WORSE!!!

[Thanz]

Originally posted by Tmy
That Kurt Russel movie thats coming out, the one about the Miracle on Ice US Gold metal Hockey Team from the 80 Olympics. THEY FILMED IT IN CANADA!!!! A patriotic film about events that happened in New york, and they film it in Canada!! Im calling for a boycott.


Filming a hockey movie anywhere other than Canada is sacrilege. The reason it was so cheap to film is that they don't have to pay for any extras. All the extra players do it for ice time, and the crowd gets to see some free hockey.

anyway.....

I hope that there is no boycott. I like seeing things like Sean William Scott explain to Chow Yun Fat that "This is America!!" when they are clearly standing in the middle of the square in front of Toronto's city hall.

[dsm]

Originally posted by Grammatron

Well I believe the claim here is that companies hire cheaper labor to do the same job because they are greedy. One would expect it to make an impression on their profit margins.

"Cheaper labor" making "an impression on their profit margins" does not necessarily equate to "astronomical" profits. It may simply be enough to keep them in business.

:p

(Edited to remove fallacy reference -- I always get them wrong.)

[Grammatron]

Originally posted by dsm


"Cheaper labor" making "an impression on their profit margins" does not necessarily equate to "astronomical" profits. It may simply be enough to keep them in business.

:p

(Edited to remove fallacy reference -- I always get them wrong.)

We can go in circles like this forever. My point is yes, corporations try to make profits (show me a business that doesn't). But their goals are not all that cynical, which is make a product which manufacturing coasts are as small as possible compared to production and marketing coasts. Corporations have been going to cheaper labor markets ever since they could -- which I believe is late 70's though I could be wrong -- and yet average person in USA has been getting richer not poorer.


P.S. As far as greedy CEOs go, I compared them to the likes of Carnegie, Rockefeller and Ford and none even come close to comparing with them.

[billydkid]

Originally posted by Chaos


More important: where are all those who just cannot stop praising the virtues of capitalism?

I look at it this way - in spite of being libertarian I find the notion of a world economy very scarey. It is not very far off from a world government. I believe in nationalism. I believe in free trade throughout the world. On the other hand, I believe corporations ought to be located someplace. I you want to be an American company, then be one. Don't be beholden to the rest of the world. There are many benefits to being an American based company. With that should come a certain amount of responsibility.

There is nothing wrong with capitalism. This is not really a capitalist issue. I believe companies should have a citizenship. What happens if there is a war with a country in which an "American" company has billions of dollars invested? I do not believe that free trade is at all synonymous with being able to ship your jobs overseas for the cheapest labor. I do not in anyway see how a company can be an American company and have a significant part of its workforce residing in and being citizens of a foreign country. Taken to its logical conclusion all "American" companies could consist of a handful of top tier executives living in America while their entire workforce lives in China or India. For American workers of all stripes this bodes very badly in my opinion. If you don't want to be American, then don't be American, but don't pretend you're an American company and send all your jobs overseas. In twenty years all of us Americans will be working at Walmarts and Jiffy Stops at this rate.

[WildCat]

Originally posted by Drooper


Right here.

Dean is an economic illiterate and a danger to the US.

This shows all the signs of a healthy functioning economy. Something laypeople like yourself really need to learn from economists is that the decline of industries is a central part of process that increases incomes and prosperity over time.


Just as an historical tidbit. Did you know what kept you great great great grandparents awake at night? It was the threat that that upstart young America was "stealing jobs" and something had to be done.

Oh dear.
Drooper, you are right on! Dean and the rest of the Dems really scare me when it comes to economics. All apparently believe it is a zero sum game, for every winner there must be a loser. They rail on and on about losing jobs overseas, with the implication that protectionist trade practices will solve all these problems. Actually, it will make it much worse. Take the recent Bush steel tarrifs for example - for every steel-producing job it saved 10 were lost in industries that used steel. Sugar is another example of protectionist policies costing jobs, especially here in Chicago which has a large number of candy manufacturers. One by one they're closing and going to Mexico or Canada, and the primary reason is the cheaper price, not of labor but of sugar. Just last week Fanny May announced the closing of their plant on the west side, and the loss of the 650 jobs it provided. All to protect a few sugar producers with political influence. Even Mayor Daley (a Democrat) saw the light and denounced the sugar trade barriers.

Free trade benefits all parties involved, it may cost a few jobs in the short term but produces much larger but less visible benefits down the road. It's not at all surprising to me that the Irish posters on this board understand that, given that they've had protectionism and free markets back to back and can see the results of both clearly. Ireland is even trying to bring emigrants back to Ireland because there are not enough workers for the jobs, I know a few sons and daughters of Irish immigrants who have been granted Irish citizenship as part of this effort. No one I know has moved there yet though.

[Luke T.]

Originally posted by dsm


Hmmm. Remember that you're dealing with a company that invests billions annually on new factories (and the like) to build the next new chip(s) using new technologies. They don't have to move out of Ireland tomorrow (as they didn't in Silicon Valley). Instead, if they decide Ireland has become too expensive, they can simply ramp down operations in Ireland to minimal levels as they build new factories elsewhere. For a company the size of Intel, the ramp down operation need not take more than a few years.

Intel fabs have a life expectancy of about ten years. Then they build a new one. There were rumors the fab I worked at was paid for in one month of operation.

The infrastructure necessary for an Intel fab is one of the strictest. And so is the skill level required.

[RussDill]

Originally posted by Luke T.


Intel fabs have a life expectancy of about ten years. Then they build a new one. There were rumors the fab I worked at was paid for in one month of operation.

The infrastructure necessary for an Intel fab is one of the strictest. And so is the skill level required.

The Intel fabs here in phoenix have been operational for longer than 10 years, they recently did an upgrade on one of them. Everyone complains about outsourcing, but phoenix sure seems to be a popular location (avnet, microchip, on, motorola, intel, sumitomo, etc, etc). Might have something to do with the low cost of living.

[Luke T.]

Originally posted by RussDill


The Intel fabs here in phoenix have been operational for longer than 10 years, they recently did an upgrade on one of them. Everyone complains about outsourcing, but phoenix sure seems to be a popular location (avnet, microchip, on, motorola, intel, sumitomo, etc, etc). Might have something to do with the low cost of living.

Yeah, they have one that is over 10 years old here, but it is really limping along. It has mostly been gutted.

[Zep]

This is a good post to respond to, so let me just insert some comments in it.Originally posted by billydkid
There is nothing wrong with capitalism. This is not really a capitalist issue.

Disagree. Ultimately, the goal of ANY company, anywhere in the world, as Gramma has said, is to remain profitable. That means it needs to trade, which leads inevitably to the issue of capitalism.

I believe companies should have a citizenship.

Alas, most multi-national American companies don't agree.

What happens if there is a war with a country in which an "American" company has billions of dollars invested?

They get "nationalised" by the other country, tossed out, or they appeal to the US government in the name of "patriotism" to help or bail them out in some way. The choice depends on the size, type of industry and government commitment. Aside: In a small, low-interference government situation as espoused by Libertarians, these companies MAY be left to fend for themselves.

I do not believe that free trade is at all synonymous with being able to ship your jobs overseas for the cheapest labor. I do not in anyway see how a company can be an American company and have a significant part of its workforce residing in and being citizens of a foreign country.

Alas, many American multinationals disagree with you on this. Effectively, they see "the globe" as their country, not America. That's a much bigger playing field, with many more opportunities for them, so they would be foolish NOT to take advantage of them, no?

Taken to its logical conclusion all "American" companies could consist of a handful of top tier executives living in America while their entire workforce lives in China or India.

Already happening, and has been for some time.

For American workers of all stripes this bodes very badly in my opinion. If you don't want to be American, then don't be American, but don't pretend you're an American company and send all your jobs overseas. In twenty years all of us Americans will be working at Walmarts and Jiffy Stops at this rate.

I have no argument with your patriotism and standing up for the local worker's rights - that is highly commendable. But can I just point out (with no value judgement attached) that you are actually espousing ideals here that are way more in line with many left-wing workers' groups and union policies than anything else in particular. Perhaps even the more left-leaning popular political parties may also publicly support that line as well.

[dsm]

Originally posted by Grammatron

My point is yes, corporations try to make profits (show me a business that doesn't). But their goals are not all that cynical, which is make a product which manufacturing coasts are as small as possible compared to production and marketing coasts. Corporations have been going to cheaper labor markets ever since they could -- which I believe is late 70's though I could be wrong -- and yet average person in USA has been getting richer not poorer.


First, there is no need to anthropomorphize corporations. The corporations do as the top management directs. Some management think long term and either cause the corporation to succeed in the long term or be buried in a short term blizzard. Other managers think in the short term and cause the corporation to possibly succeed in the short term (as far as the shareholders are concerned) or die off due to inadequate planning. Management can make or break the corporation.

Second, corporations have been moving to cheaper labor markets as far back as you want to go. However, when the "cheaper" market was (artificially) limited to the US, the difference in wages between the markets was not all that great and tended to quickly even out. The last 30 years of globalization, however, have opened labor pools where the difference is very significant. Also, the size of the labor pool is and will be growing way beyond the amount of new jobs that are generated. Unless new markets are constantly "grown", the labor market will be hurt.

Third, the management of many corporations have lost sight of the fact that wholesale loss of jobs will hurt the consumer base in the long run. The shareholder drive for short term profits is partially to blame for this as many people have significant money tied up in the stock market. Hopefully, there will be a correction in this attitude, but the expansion of the market (from the US to the world) may delay the realization.

Finally, it's true that globalization will bring significant new areas to market products to (as in the Far East, etc.), but it will also significantly expand the labor market. This will mute (if not eliminate) any real long term effect on the American labor market.


P.S. As far as greedy CEOs go, I compared them to the likes of Carnegie, Rockefeller and Ford and none even come close to comparing with them.

Do you include Bill Gates in this list? We need significant new markets (like the Internet) to be created in order to allow the new Carnegies, Rockefellers, and Fords to surface. Currently, though, with the demise of the Internet boom, I don't see much on the near horizon for significant new markets (that will also generate jobs).

AND nanotechnology could completely reshape the world labor market in 20 to 40 years. :eek:

[karl]

Originally posted by dsm
Third, the management of many corporations have lost sight of the fact that wholesale loss of jobs will hurt the consumer base in the long run.

Are you sure they really have lost sight of this? It seems to me that it would make perfect sense, even in the long run, for an individual company to increase its market share at the expense of a very small reduction in the total market, plus the risk of a tiny consumer boycott that will probably blow over in two weeks.

Of course, when a lot of companies do this it becomes a problem and everybody suffers, but that doesn't change that from an individual company's perspective it may very well be the optimal course of action. And that's not very encouraging. To generalize a bit, I'd say that if you have a system that breaks down in the event that everyone looks after only himself, there is reason to worry.

[Shane Costello]

Originally posted by Wildcat:
Free trade benefits all parties involved, it may cost a few jobs in the short term but produces much larger but less visible benefits down the road. It's not at all surprising to me that the Irish posters on this board understand that, given that they've had protectionism and free markets back to back and can see the results of both clearly. Ireland is even trying to bring emigrants back to Ireland because there are not enough workers for the jobs, I know a few sons and daughters of Irish immigrants who have been granted Irish citizenship as part of this effort. No one I know has moved there yet though.

In 2000 our Tanaiste (Vice Prime Minister) estimated that this country (population 4 million) would need to attract 200,000 immigrants (www.rte.ie/news/2000/0229/immigration.html) over the next few years. Now I'm arguably still at the spring chicken stage of my life cycle (25) but even in my short life the changes I've seen in this country are amazing. The country has got visibly more prosperous. People have the disposable income to paint and refurbish their homes and businesses more regularly. Restaraunts have sprung up in the most unlikely one horse towns. Second hand cars are rusting away in dealership lots as more people can now afford to buy new cars. Now compare Ireland's experience over the past decade to countries like Germany or France that continue to cling to statist regulation.

Originally posted by dsm:
However, when the "cheaper" market was (artificially) limited to the US, the difference in wages between the markets was not all that great and tended to quickly even out.

And this won't happen with cheaper markets now because........?

Also, the size of the labor pool is and will be growing way beyond the amount of new jobs that are generated.

How is this demonstrable? Ireland is a counterpoint to this scenario. Enough new jobs were generated for a rapidly increasing workforce (the Irish baby boom was during the 1970s) as well as returning emigrants. And according to the government we still need 200,000 more immigrants over the next few years.

It's worth pointing out that profits made by multinational operations will be repatriated back to wherever the corporation has it's headquarters. I've read that this explains the disparity between Irish GDP and GNP.

[dsm]

Originally posted by Shane Costello

And this won't happen with cheaper markets now because........?


Because not all markets play by the same rules where (in this case) employment is concerned, thus, putting some markets like (in this case) the US at a significant disadvantage competitively. Unlike in the US, redress for this inequity is not always available.


How is this demonstrable? Ireland is a counterpoint to this scenario. Enough new jobs were generated for a rapidly increasing workforce (the Irish baby boom was during the 1970s) as well as returning emigrants. And according to the government we still need 200,000 more immigrants over the next few years.


How long will this remain true? Is Ireland simply experiencing the same growth that the US experienced in the 80s and 90s? How will things change if an educated India and China come into the workforce in force??

[Shane Costello]

Orignally posted by dsm:
How long will this remain true? Is Ireland simply experiencing the same growth that the US experienced in the 80s and 90s? How will things change if an educated India and China come into the workforce in force??

Employment has held up very well, and is still below 5%. If educated Indians and Chinese come into the workforce then we will have to repsond to this challenge by innovating and exploiting these expanding markets. We could for instance market smoked salmon to the nouveau riche of Shanghai, or an indigenous biotech company might patent a new drug and benefit from an emerging market of two billion consumers. All these newly educated and upwardly mobile Asians might have an unquenchable thirst for foreign goods, and China and India could run up trade deficits. You make it sound as if competitive pressures are unprecedented in a free market. I'd wager that a few decades down the road that Indians and Chinese could well be fretting over how to respond to a reformed and economically emerging African continent.

Personally I think this argument about emerging Asian economies has a racist undercurrent. No one seems to be that worried, or even aware, about emerging low cost economies in Eastern Europe. What is it about Asians that's scaring people so much?

[Drooper]

Originally posted by dsm


Because not all markets play by the same rules where (in this case) employment is concerned, thus, putting some markets like (in this case) the US at a significant disadvantage competitively. Unlike in the US, redress for this inequity is not always available.


Look, in the economics of trade there is no "competition". There are no winners and losers, just winners. OK?



How long will this remain true? Is Ireland simply experiencing the same growth that the US experienced in the 80s and 90s? How will things change if an educated India and China come into the workforce in force??

As China and India become more educated, productive and wealthy, the US will become wealthier too. It's win-win.

[Drooper]

Originally posted by Shane Costello


In 2000 our Tanaiste (Vice Prime Minister) estimated that this country (population 4 million) would need to attract 200,000 immigrants (www.rte.ie/news/2000/0229/immigration.html) over the next few years. Now I'm arguably still at the spring chicken stage of my life cycle (25) but even in my short life the changes I've seen in this country are amazing. The country has got visibly more prosperous. People have the disposable income to paint and refurbish their homes and businesses more regularly. Restaraunts have sprung up in the most unlikely one horse towns. Second hand cars are rusting away in dealership lots as more people can now afford to buy new cars. Now compare Ireland's experience over the past decade to countries like Germany or France that continue to cling to statist regulation.

And this won't happen with cheaper markets now because........?



How is this demonstrable? Ireland is a counterpoint to this scenario. Enough new jobs were generated for a rapidly increasing workforce (the Irish baby boom was during the 1970s) as well as returning emigrants. And according to the government we still need 200,000 more immigrants over the next few years.

It's worth pointing out that profits made by multinational operations will be repatriated back to wherever the corporation has it's headquarters. I've read that this explains the disparity between Irish GDP and GNP.


FYI Shane.

AN economy will produce as many jobs as needed. In economic speak, a market based economy will tend to full employment.

Ireland's "need" for immigrants is not really a need at all. What the Irish Government don't want to admit, or fail to understand, is that a number of years of massive artificial demand stimulus (from monetary, fiscal and incomes policies) pushed the economy beyond full capacity (and into an inflation), so it makes it appear as if immigrants are needed.

[dsm]

Originally posted by Shane Costello
Employment has held up very well, and is still below 5%. If educated Indians and Chinese come into the workforce then we will have to repsond to this challenge by innovating and exploiting these expanding markets. We could for instance market smoked salmon to the nouveau riche of Shanghai, or an indigenous biotech company might patent a new drug and benefit from an emerging market of two billion consumers. All these newly educated and upwardly mobile Asians might have an unquenchable thirst for foreign goods, and China and India could run up trade deficits. You make it sound as if competitive pressures are unprecedented in a free market. I'd wager that a few decades down the road that Indians and Chinese could well be fretting over how to respond to a reformed and economically emerging African continent.


Very true. This goes to the point I'm trying to make -- that the amount of jobs in the world is much less than the number of people who could potentially fill them (assuming roughly equal education levels). In this, I draw a line between jobs that are necessary (food production, etc.) and those that are not (entertainment, etc.). Employment in the second is much more volatile than employment in the first. However, as productivity increases, the rise in necessary jobs increases more slowly. Therefore, eventually, most people in the world are competing for the highly volatile and (largely) unnecessary jobs!


Personally I think this argument about emerging Asian economies has a racist undercurrent. No one seems to be that worried, or even aware, about emerging low cost economies in Eastern Europe. What is it about Asians that's scaring people so much?

No racism intended. If I point to the Asian economies, it's merely that they are currently more known. China and India represent almost 1/4 of the world's population. As they become more educated, their need for other countries to supply goods and services go down and, in fact, the rest of the world's dependence on what they provide will go up. The exception to this rule is if they can find other goods and services that are cheaper than what they can produce. That ultimately means that wages will continue to be pushed down and, therefore, standard of living will be affected.

I'm rambling some in the above, but I hope my point is coming across. :(

[dsm]

Originally posted by Drooper
Look, in the economics of trade there is no "competition". There are no winners and losers, just winners. OK?


Explain. When someone begins "competing" with you to trade the same goods/services and they have an unfair advantage (remember, there is no global regulations), I would think you would be the "loser". No?

As China and India become more educated, productive and wealthy, the US will become wealthier too. It's win-win.

How? And how does that apply the the American worker?

[RussDill]

Originally posted by dsm


Explain. When someone begins "competing" with you to trade the same goods/services and they have an unfair advantage (remember, there is no global regulations), I would think you would be the "loser". No?


If you can't compete, then your corporation needs to shift focus, or the individual needs to shift focus. Because another company is now producing the product you used to produce, but for cheaper, consumers will have more money to spend, so there will be a niche for you to fill in. Also, these new producors overseas will want product too, further increasing demand.

[Grammatron]

Originally posted by dsm


Explain. When someone begins "competing" with you to trade the same goods/services and they have an unfair advantage (remember, there is no global regulations), I would think you would be the "loser". No?



How? And how does that apply the the American worker?

Look at Japan as an example. They started as cheap labors force now they have factories in USA that employ USA workers for various tasks.

[Grammatron]

Originally posted by Grammatron


Look at Japan as an example. They started as cheap labors force now they have factories in USA that employ USA workers for various tasks.

An addendum to this...Correct me if I'm wrong but isn't there some Chinese company that's planning to open a factory in the USA to build refrigerators or something?

[dsm]

Originally posted by RussDill
If you can't compete, then your corporation needs to shift focus, or the individual needs to shift focus. Because another company is now producing the product you used to produce, but for cheaper, consumers will have more money to spend, so there will be a niche for you to fill in. Also, these new producors overseas will want product too, further increasing demand.

What guarantees that there will be a niche to fill?

[dsm]

Originally posted by Grammatron
Look at Japan as an example. They started as cheap labors force now they have factories in USA that employ USA workers for various tasks.

The automakers may be an example of what you mean. However, why do they have factories in the US when production costs in (say) Taiwan would be cheaper? What drives them in this direction (no pun intended)?

[RussDill]

Originally posted by dsm


What guarantees that there will be a niche to fill?

It's the general trend. However, I can guarantee that if you legistate a nation into locked in jobs, and no global competition, the economy will go under. Because you aren't using the low cost parts available to everyone else, your stuff will be too expensive, no one will buy it, as a result, you will no longer trade with the rest of the world, your economy will collapse, you will become the modern amish.

A good example would be if we had kept the horse and buggy industry going as long as possible with subsidies, etc. Sounds silly? Reminds me of a union who recently went on strike because their employer was going to start using barcodes instead of having employees manually read off numbers.

[Grammatron]

Originally posted by dsm


The automakers may be an example of what you mean. However, why do they have factories in the US when production costs in (say) Taiwan would be cheaper? What drives them in this direction (no pun intended)?

Honestly, I have no idea. Perhaps someone else can answer that question.

[Solitaire]

Originally posted by Luke T.
Synchronicity, I would like to see the source,
tongue-sticker-outer smiley notwithstanding.

Sigh. My source didn't pan out. I couldn't confirm.

However, I did find something better:
A New Wave Of Outsourcing (http://repositories.cdlib.org/iber/fcreue/reports/1103/) by Ashok Deo Bardhan & Cynthia Kroll
Nasarius
That's a bit harsh.
Are you really suggesting that someone with a B.S. in
Computer Science should be paid "minimum wage or lower"?

No, not really. I was a bit cranky after reading that bit.
Cleon
I say, let's start outsourcing the CEOs to India...
Then we'll see this trend reverse itself pretty damn quick.
It's easy to whine "we have to compete" when it's not your job on the line.

I wish. I've owed stock in various companies.
The CEO appoints the board members and the board
members tend to be other CEOs who have ties to him.
All the choices sharehold gets is: For, Against, Abstain.
No competition at all.

[dsm]

Originally posted by Grammatron
Honestly, I have no idea. Perhaps someone else can answer that question.

My suggestion here is that the reason new factories (like Japanese auto factories) are opened in America is more good will than economics (but both play a role). There may be some economic benefit to the company to raise local wages and possibly stimulate the local economy into buying the company's goods. However, it is more likely that they hope they can offset the higher costs by generating good will within the country that will translate into a general buying of their product ("hey, that Japanese car was made in America -- maybe it's okay"). Right now, the economic muscle of America means that it's important for companies to try to generate this good will, but there is no reason it has to remain that way.

[dsm]

Originally posted by RussDill

It's the general trend. However, I can guarantee that if you legistate a nation into locked in jobs, and no global competition, the economy will go under. Because you aren't using the low cost parts available to everyone else, your stuff will be too expensive, no one will buy it, as a result, you will no longer trade with the rest of the world, your economy will collapse, you will become the modern amish.


There was a time when localities were largely self sufficient. Would that be so bad now?

No one is suggesting that we eliminate competition -- just that it may need to be controlled a little. The reverse to the scenario you suggest above is that we have totally unconstrained, global competition. In this case, corporations continually move to the location of least-cost resources and production. Behind them is left localities where resources have dried up and jobs have evaporated. Eventually, the localities recover from this (as cost of production relative to other localities comes down and resources come back), but it may be a very long time. What do the local workers do in the meantime?

:p

[WildCat]

Originally posted by dsm


My suggestion here is that the reason new factories (like Japanese auto factories) are opened in America is more good will than economics (but both play a role). There may be some economic benefit to the company to raise local wages and possibly stimulate the local economy into buying the company's goods. However, it is more likely that they hope they can offset the higher costs by generating good will within the country that will translate into a general buying of their product ("hey, that Japanese car was made in America -- maybe it's okay"). Right now, the economic muscle of America means that it's important for companies to try to generate this good will, but there is no reason it has to remain that way.
Good will has very little to do w/ it. It's quite expensive to build a car in Japan nowadays - plants are more expensive, raw materials are more expensive, it costs a lot to ship a car 6000 miles to it's destination, etc.

Bottom line, they can build it cheaper in the US.

[WildCat]

Originally posted by dsm


There was a time when localities were largely self sufficient. Would that be so bad now?

No one is suggesting that we eliminate competition -- just that it may need to be controlled a little. The reverse to the scenario you suggest above is that we have totally unconstrained, global competition. In this case, corporations continually move to the location of least-cost resources and production. Behind them is left localities where resources have dried up and jobs have evaporated. Eventually, the localities recover from this (as cost of production relative to other localities comes down and resources come back), but it may be a very long time. What do the local workers do in the meantime?

:p
Your economic model just doesn't hold in the real world. in general, nations w/ the fewest restrictions on trade are also the most prosperous. Doing everything locally doesn't make sense from an economic standpoint, just look at N. Korea or Cuba or pre-war Iraq as examples.

Fact is, we restrict trade w/ other nations as a tool to punish them!

Yes, there can be a short-term (and very visible) effects when a factory closes, but the long term benefits are much greater though not as obvious. Look at the steel tarrif example I gave earlier: In an effort to save 20,000 jobs for inefficient steel producers 200,000 jobs were lost in steel-using industries as higher raw material prices forced layoffs or even plant closings.

[dsm]

Originally posted by WildCat
Bottom line, they can build it cheaper in the US.

Yes, but can't it be built cheaper still in other places (say Mexico)?

[Shane Costello]

Originally posted by dsm:
Very true. This goes to the point I'm trying to make -- that the amount of jobs in the world is much less than the number of people who could potentially fill them (assuming roughly equal education levels).

You haven't provided any evidence to support your point, though.

In this, I draw a line between jobs that are necessary (food production, etc.) and those that are not (entertainment, etc.). Employment in the second is much more volatile than employment in the first.

Wrong. Food production i.e. farming, is at the mercy of a lot of things. Weather conditions, for example. Prices for agri-produce are notoriously volatile, fluctuating by the day. Not to mention the fact that technological advances mean that yields have increased while employment has decreased.

However, as productivity increases, the rise in necessary jobs increases more slowly. Therefore, eventually, most people in the world are competing for the highly volatile and (largely) unnecessary jobs!

Again, where's the evidence for this? And what exactly is an "unnecessary" job?

No racism intended.

I didn't mean to accuse you of racism personally. I just detect racist undercurrents in the broader argument being made that the "Indians/Chinese" are taking our jobs.

As they become more educated, their need for other countries to supply goods and services go down and, in fact, the rest of the world's dependence on what they provide will go up.

There isn't a shred of evidence to support this. But seriously, what would you have us do? Keep the developing world in perpetual poverty?

There was a time when localities were largely self sufficient. Would that be so bad now?

Yes, considering how "self-sufficiency" was a precarious enough existence. Localities in 19th century Ireland were self sufficient, but when blight effected the main food source, millions perished.