What would you about global outsourcing?
 

With the economy becoming globalized, I think it would be tough to control the flow of jobs. Despite the fact it hurts, I see outsourcing the same as free trade. If you don't want outsourcing to India, then we need to stop importing cheap goods from China. Do we have the right to the best jobs AND access to the cheapest goods?

The crying wasn't so bad when factories were being exported to Asia, but when professionals started losing jobs, there were many tears shed.

In addition, if we restrict global outsourcing, should we also eliminate/restrict domestic outsourcing? I read domestic outsourcing to 'independent' contractors has also grown in the past few years.

Jürgen

It's all about the money. Modern CEOs do not look at the long term picture. Short term economies that eliminate jobs at home affect not only those displaced, but all the other suppliers down the chain, including the grocer, the home improvement centers, etc since those who were displaced canot afford the luxuries they once did, and those who still can tend to pull back and not spend, anticipating the worst. Assume the worst case. Country "A" gains all the manufacturing jobs that were once in Country "B". Unemployment in Country "B" increases, and the citizens no longer can afford "luxuries" that are now produced in Country "A". Country "A" unemployment increases in the long run, due to the fall in demand. A lose-lose situation. There has to be a middle ground somewhere. There are people who would pay more for an appliance made in the USA, simply out of loyalty, and these people should be given a choice. As nice as it is to see a 27" Chinese TV set (APEX, another word for "Zenith"...a ripoff?)selling for $200, I would be willing to spend more for one built here but, alas, there are no domestic manufacturers left. When I was a kid, there was Zenith, Motorola, RCA, Philco to name a few. A partial solution is not to shop for price alone. I would wager that an enterprising manufacturer could do quite well manufacturing quality electronics here, given the current public concern for jobs and economic stability, something which the current crop of corporate leadership simply doesn't seem to understand.

Just to start a good discussion, I would also predict that there will be a wave of "protectionism" in the next decade as a result of job loss and also to terrorism. The economic impact of the latter has been underestimated by many. What is the cost to an airline of a cancelled trip? That plane sitting on the tarmac earns nothing for the carrier. What will be the impact when every cargo ship must have 100% of its containers inspected prior to offloading? The results will be interesting to watch, raising the cost of imported goods due to delays and the additional handling.

Any thoughts?

I would overtax companies that outsource, making it much less advantageous, but still giving them a little advantage over those who don`t. That would make the choice not a nobrainer anymore, and maybe the CEOs would think about long term strategy instead of short term profits. A free market is like any other freedom: it needs safegurads.

Protectionism ? That could be a way to reequilibrate the trade deficit. Another `unexpected` benefit from the war on terror ;)

Aurel

That would have to be an incremental wave on top of the HUGE wave that's already been going on for the last five years or so. Free trade notwithstanding, just take a gander at the fisticuffs with Canada over softwood lumber and take a look at the state of the candy manufacturing industry. Punishing sugar tariffs to protect US growers have priced sugar at multiples of world value, chasing an entire industry outside of US borders.

which presidential hopeful mentioned taxing outsourcing companies?

I don't believe domestic manufacture can be competitive when the difference in wage rates is so high, exchange rate unfavourable and so much government assistance is offered in locations such as China.

I have a couple of clients making out like bandits by outsourcing and others that have been squeezed so much by their clients that they have to outsorce simply to survive. They can then find themselves competing with the companies they originally outsourced too!

Others are trying to compete by automising as far as possible, this in operations that a few years ago would have been considered little more than cottage industry.

As much as I am in favour of free trade and allowing market forces to work I think that Aurel's tax concept may be the only way forward if the West wants to maintain a manufacturing base.

The loss of professional jobs is a seperate and probably more complex issue. Perhaps we need to accept that some white collar jobs became overpaid for the work that was really being done?

Not by me, I have been the one saying that Terrorism could topple this house of cards thing we call a financial system.

I have NO ANSWERS for U. I have no suggestions. All I can say is that Corporations owe no allegiance to Nation States, only to Shareholders.

When I was going to UCSB back in the mid 70's I had a Pol Sci Prof by the name of Jorge Nef who was wanted by the Chilian govt, because he was a friend of Allendes and a Communist. His thrust of study was on the MultiNational Corporation. Basically what he said has come to pass.

The future in the USA is a further decline in the Middle Class, our wage structure will more closely resemble that of the rest of the world. The rich will get richer while the Middle class get further squeezed. The trend will take time.

The best advice I can give is that everybody should take a good look around and see whats happening and make plans for themselves to insure their own economic future...that means boyz if you have a choich between buying that Porsche or saving the money...you'd better save the money and invest it.

Moneyguy I have one thing to add...Country A population will have gotten more or less richer and will be able to buy some of their own product as Country B goes in the tank. The hope has been that wages in the rest of the world will be pulled up to somewhat match the wages in the USA...but everything being = wages here will decline.

I think you'll find that by-and-large this is not true, either. "Corporations"--that is, the executive officers--owe their allegiance only to themselves, and to hell with the stockholders.

Enron
Worldcom
ImClone
NYSE
etc...

See Parmalat for the latest on that one.

You notice I said Corporation not CEO. Also for every Corp that a scumbag ripped off the shareholders one can cite..Bill Gates at Microsoft, Andy Grove at Intel, Steve Jobs at Apple, Elliason at Oracle to name a few.

You miss my point....corporations are run by the officers. The officers choose the direction they want the corporation to go and execute to that plan.

"Corporations" have no will or loyalty. They only do what their officers tell them (if they're lucky). You're trying to anthropomorphize a concept. Concepts don't like to be anthropomorphized.

If the officers of a corporation don't perform by making a profit, they get replaced. Do I need to elaborate?

Tabs..You do get the point..If the one country that has lost the jobs cannot afford the goods available from the other, then "garage industries" in the first will emerge, probably even beginning a "barter" type of economic environment. Over the long haul, the situation may stabilize. As for the movement of "professional" jobs...Ever try to deal with a service rep located in India? It is getting to the point that many people will not even consider a "Dell" computer for this reason. Bad enough the job is overseas, you can't even understand the individual with whom you are speaking.

Here is an idea for world peace. Every country will be limited to the types of things it does best. One manufacturers motor vehicles; another food; another clothing and so on. How could there be a war when you depend on your global "neighbor" for necessities that he alone produces? Idealistic, I admit, but that would be true globalization....

AS for CEOs and the like, until a few of these criminals actually do hard time (and not Club Fed), I have a difficult time believing that ANY federally elected official has my interests foremost in mind. As much as I hate generalities, I do believe that most if not all of them are self serving hypocrites, perhaps not starting that way but becoming such over time. When I got my Master's, we took courses in business ethics. Either these courses are no longer mandatory, or these clowns sleep through them. I marvel that former employees, destroyed by these individuals haven't created mayhem and done bodily damage to these folks. Going Postal may broaden to include other groups feeling they have been mistreated. Which brings up on more observation. I think things would be diffeent if more people stood up to these individuals and exposed them for what they are. I have advocated buying one share of a company you do not like, attending the stockholder meetings and speaking out. Might not change the environment immediately, but it just might give others the courage to do the same. There are far too many sheep in our society, willing to lie down and play dead.

Few people realize that tarrifs were the means that third world products were properly penalized for the fact they were being produced by countries with non-existant regulations, wages and taxes.

'Free Trade' is nothing more than the false mantra used to promote the dismantling these regulatons and restrictions for the treasonous purpose of maximising the profits for transnational corporations while screwing our nation (and others).

What is the purpose of the US having environmental and labor laws meant to protect and advance our way of life when they can be bypassed by any company willing to ship US jobs overseas.

Hehe, I work for Unilever (they own Bestfoods in the US) and they outsourced the accounting to India. It's hillarious, the little buggers couldn't count past 10, let alone do decent accounting, and we have had to hire a most of the staff back as highly paid contractors to sort out the mistakes, LOL.

Bill, a lot of this outsourcing is going to come back to bite these "Captains of Industry" in the butt. Sooner or later, even a complacent public can get aroused.

All I want is the right to sell tickets to the public hangings.

Right now the public is more concerned about some old hag's nipple than the livelihoods of thousands of their compatriots.

Down Sizing:
Nobody here seems to remember all the jobs that were lost during Billy Clintons first term....you also don't remember all the high paying jobs that were being replaced with Burger King Button puncher jobs that paid minimum wages...that was the job growth in the 90's. How soon we forget.

Out Sourcing:
You might say this trend of losing jobs to the wogs overseas, has been going on for the past 20 years.

First the Corporations in the late 80's got lean and mean when it looked like the Japs were about to take over the world. Now they hire the wogs in the 3rd world to cut payroll costs. Forst it was the blue collar worker who got the axe now it is the skilled high tech worker...Gawd forbid that the next CEO of Ford should be a foreigner HEHEHEHE.

RE what Bill said about outsourcing accounting functions to India.

I read about this trend in Forbes recently and was aghast. Oh yeah, and these folks are CPAs...yeah, right. I'm an astronaut because I saw a satellite last night.

How do you perform accounting/financial statement preparation if you know nothing about a company's operations?

Hopefully the following will occur and put an end to this false economy:

-Cash accounts (bank) and investment securities magically disappear during routine reconciliations;
-Massive financial disclosure errors causing investigations, investor lawsuits, and management replacements;
-Industrial espionage. Every part of a company's operations leaves a paper trail that goes through accounting.

Also, Parmalat has several plants in the U.S., including one here in Atlanta, GA and one in AL.

Bob

I don't get it, you mean this is a surprise? Companies AND laborers making obscene profits and paying equally obscene wages cannot compete on a global scale? I for one am aghast! How did this happen?