Offshoring U.S. Jobs

[Drooper]

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]

In 2000 our Tanaiste (Vice Prime Minister) estimated that this country (population 4 million) would need to attract 200,000 immigrants 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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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 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]

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]

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?

 

[WildCat]

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]

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?

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]

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.