Outsourcing

[ku]

Read the Wikipedia piece below

 

http://en.wikipedia.org/wiki/Outsourcing

 

Which do you think is more convincing, the argument for offshore outsourcing or the argument against?

[Pangloss]

My opinion is that there's no argument. We have to compete in a global marketplace. That's going to mean that outsourcing sometimes happens. But it hasn't hurt us as much as more people seem to think. We have 95% employment in this country and if outsourcing were so evil then the standard of living and average income levels would be falling like a rock instead of basically holding steady.

 

Don't get me wrong, I think those two areas are major problems in the economy, no question about it. But radical suggestions like "jobs are a right" and other socialistic radicalisms are just pointless. It's obvious that the market works. It could perhaps use a little tweaking here and there, but it works.

 

I have no problem with some-time incentives to deal with spot problems in outsourcing. Helping hands for people who get laid off due to outsourcing (retraining incentives, for example) are a good idea as well. Our citizens are our greatest asset, and we should help them because helping them helps all of us. A good aircraft mechanic, for example, can often become a good computer technician or even a programmer.

 

But outsourcing is not evil. And over time, if we can't do it, then we lose our ability to compete. At that point it's just a matter of time before we really do see average income and standard of living fall like a rock.

[YT2095]

as a "contractor" or Outsourcee if you like, I don`t see any problem with it at all. I don`t tread on any toes with other Firms, my overheads are low and I have to answer to no-one, thus the work is often executed faster and for a lower price

there are other firms that will "solve problems" or "Fix" things, sure, but they`re all answerable to Costs and greif from the boss blah blah blah, I have no particular timetables, I can say No when I want to, I can charge what I like AND I can promise that corners will NOT be cut and that the "job" will be done with excellence!

oh yeah, and occasionaly for some jobs, I outsource too

 

so yeah, consider me an advocate of it

[Phi for All]

Let's define our terms here. What we're refering to is actually "offshoring". Outsourcing is simply hiring someone outside your firm to do some work. To its critics offshoring is "sending our jobs overseas", to its proponents it's "competing in a global marketplace".

 

From a moral standpoint, how can the US press for exports and then deny offshoring work? It's usually the desire for our exported goods that has other countries wanting to expand their economies with offshore jobs.

 

Economically, if someone can do the job faster/cheaper/better, competition will favor them. To say it hurts our economy is to start down the road to nationalism. Nationalists never look at both sides of the equation. They want to keep jobs here but don't want to pay $30 for a t-shirt.

 

In the long run, offshoring will help us define which jobs can never be outsourced and will eventually help in re-educating those who've lost jobs. The US will have a more stable workforce with more versatility in terms of competition and competence. And if companies offshoring parts of their work allows them to grow, it helps the overall economy.

 

The company I work for offshores drafting work for architects to India. We may take a US drafting job away, but more buildings get built because the costs are lower, so ten construction jobs open up. And I can't imagine how an electrician or a carpenter could ever have his job offshored.

[Pangloss]

Here's a great example of someone who doesn't get it. It's Harold Meyerson's column in today's Washington Post:

 

http://www.washingtonpost.com/wp-dyn/content/article/2005/09/27/AR2005092701467.html?nav=rss_opinion/columns

 

He's talking about the JetBlue incident last week and the issue of offshoring American airline maintenance, which is a big issue these days. At first blush, it looks like a great point. There have been a number of maintenance-derived issues lately, and it certainly appears to be a valid concern. But in fact Meyerson is completely wrong.

 

A couple of quotes from the article:

 

When JetBlue first took to the air in 2000, rather than hire its own long-term maintenance department, the company subcontracted that work to Air Canada and the Central America-based TACA. It's certainly cheaper: According to a Wall Street Journal story last January, the Salvadoran mechanics make $300 to $1,000 a month -- far less than their U.S.-based counterparts. Roughly one-third of the Salvadoran mechanics have passed the exam that qualifies them for the Federal Aviation Administration's license, while in the United States, such licenses are required for all mechanics employed directly by the airlines.

 

He's absolutely right in suggesting that poorly trained mechanics are a problem. But he's missed something really critical, which becomes a little more obvious in the following quote:

 

But such licensed, in-house mechanics are increasingly the exception at U.S. airlines. About half of the long-term maintenance on the planes of U.S. carriers is outsourced, and much of that work takes place overseas, where FAA inspections are a sometime thing. Indeed, the point of this story isn't that JetBlue's decisions are in any way exceptional. To the contrary, by going abroad for work that would previously have been performed at home (and except for maintenance, JetBlue doesn't fly outside the United States), and by prioritizing costs over more closely inspected maintenance, the airline is an exemplar of 21st-century capitalism.

 

See how he's leapt from "lack of licensing" to "outsourcing" as the issue? He draws no connection between the two. In other words, in his mind the simple fact that outsourcing has taken place IS the issue. That's all that matters.

 

Never mind the fact that incidents like this took place even when all maintenance was done within the US. Never mind the fact that airplanes maintained by offshore facilities are clearly flying along just fine in the overwhelming majority of cases. No, in Meyerson's mind, offshoring makes reliable maintenance *impossible*, without any further exploration of the facts.

 

And it gets worse. In his view the problem is not offshoring at all, but *capitalism*!

 

No, the point of this story is that 21st-century capitalism has plunged us into a world of great and avoidable risk.

 

What the heck does he think it was when American workers fixed planes? Socialism? What an idiot!

 

I do agree with some of his points, such as the way shareholder power (and the demand for increasing stock value over resposible growth and reasonable profit-taking) has become an issue. But he's way off in Kool-Aid territory on the airplane thing.

 

There's a lot of this nonsense out there. It's up to us to cut through it and get to the truth, however unpopular it may be.

[Pangloss]

From a moral standpoint' date=' how can the US press for exports and then deny offshoring work?

[/quote']

 

Excellent point. That's the kind of hypocrisy that really irks me.

[YT2095]

Swings and Roundabouts, what`s sauce for the Goose is Sauce for the Gander also

 

it can`t Moraly be ALL one way, can it???

[mezarashi]

Which do you think is more convincing, the argument for offshore outsourcing or the argument against?

 

I think outsourcing is just part of the bigger picture, globalization. With the introductin of globalization, you get products from all over the world, retailers from all over the world making their land locally trampling over local merchants who cannot compete with the economies of scale. In the end there is an "improvement" in the quality of products and services in third world countries.

 

A reciprical phenomenon is happening in more developed countries however. As third world nations, especially China become better educated, EVERYTHING is going to become outsourced. At first it was manufacturing, then it was R&D, and now even design. Remember how Apple engraved on each iPod, "Designed by Apple in California"? Apple probably believes that it's a selling point to show it is one of the few companies who are not simplying buying out designs from Taiwan technologist companies like many of its competitors are.

 

So what happens when China can do everything the US can for cheaper labor? Those in the US are going to have to work for less or get screwed. In a sense, China is evening its standard of living with the US. If the China guy can live on $200 a month, why do you need to live on $4000. I take this as an effect of globalization.

[Mokele]

Personally, I'm very, *very* for outsourcing/offshoring/whatever you want to call it, but for demograhic reasons. For a number of years, I was what I called a "post-environmentalist", the position of which boiled down to "the eventual Malthusian nightmare that awaits all humanity will result in the eventual destruction of everything we're working to save, so screw it, the sooner this species breeds itself into oblivion the better." Can we say "pessimism", everyone?

 

Anyhow, after a while I realized that the problem wasn't developed countries or undeveloped countries, but ones in the transition, who have the low death rates of developed countries but high biths like undeveloped countries, the so-called 'demographic transition'. While they're no payed a good wage by our standards, outsource workers are usually still getting more than they would otherwise, and this will help raise the standards of living.

 

So basically, I see the loss of jobs to overseas as a small price to pay to divert the malthusian dystopia oherwise bearing down on us.

 

::offers green wafers:: Soylent Green, anyone?

 

Mokele

[Pangloss]

Mokele, no! Soylent Green is PEOPLE!!! Bad reptile!

[Cap'n Refsmmat]

I'm just wondering why 3/4 of the posts in this thread are by moderators.

 

Anyways,

It's rather selfish to say "let's keep all of our jobs in America" or whatever. Capitalism, people. If you don't like it, find a way to do better than the alternative workers and make more money. That's why it's a free market economy. If we were to put regulations on outsourcing and all that fun stuff, everybody would complain because now they have to pay more for their products.

 

Capitalism.

[Skye]

Well it's not so much capitalism as free trade. And that's only in effect to a limited extent in any case, and only where it is in the interests of the nation. Clearly it would make economic, and perhaps 'moral', sense for the US to trade with Cuba, but it's not in the interests of the US to do so. Clearly it would be fairer if China deregulated its currency and stockmarket, but it's not in China's interest to do so. So I don't really think we have to think of free market ideals as being an unavoidable moral obligation that can't be shirked, we're all sinners as it is.

[YT2095]

I'm just wondering why 3/4 of the posts in this thread are by moderators.

 

We Tried to outsource this thread to other users, but no one liked the rate of pay

[Pangloss]

hehe

[Phi for All]

I'm just wondering why 3/4 of the posts in this thread are by moderators.

It's our unspoken policy to flock towards controversial subjects to alert trollers that the thread has lots of Moderator attention. Apparently there is not as much controversy about offshoring as we thought.

 

It's also a habit of the wise to speak to the most intelligent people in the room. * ducks for cover *

[RVonse]

We can not continue to outsource to 3rd world countries the way we are doing it or the U.S. will become bankrupt soon. I am not against efficient or freedoms to economic opportunities. But sooner or later, the management of the companies are about to extinguish the middle class and also their primary product consumers.

 

According to the economic classroom, the displaced worker simply finds another job and everything is great. Well I think thats a bunch of crap. The reality is a displaced factory worker making $25/hr can not so easily become something else at that same wage without a lot of education and expense. It is those costs that most economists do not take into account.

 

I think we desparately need more Henry Fords right now. Ford had the vision to know well paid manufacturing workers would buy the products they helped to build. Up until that time, most people could not afford an automobile and so it was his own employees who bought a lot of them. Ford paid his employees way more than market rate but in the end his vision rewarded him handsomely.

[Pangloss]

Henry Ford didn't have Japan to deal with, so that's actually a perfect example of why outsourcing is a good thing! Thanks!

[RVonse]

Henry Ford didn't have Japan to deal with, so that's actually a perfect example of why outsourcing is a good thing! Thanks!

 

I don't see your point. In the first place I consider Japan a 1st world economy and their workers are getting paid pretty close to the U.S. There are many Toyota and Honda plants in southern states that employee U.S. citizens. Even though they are making Toyota's in Alababma, the workers are paid enough to be able to afford to buy those same cars.

 

Contrast that to Wal-Mart and China. Here we have a non-union company that pays rock bottom wages here and child slave labor wages in China. Yes, they end up having the best prices on their shelves. But none of that matters if the end result is poverty and low income taxes for the state. China benefits but we don't.

 

So if we must outsource, we should atleast do it with 1st world economies or we are just racing to the bottom of the barrel.

[Pangloss]

What you're forgetting is how Japan went from being like China is today.

 

No, what we should do is make the best products that we can make and we should make them at a profit, because if we don't then someone else will. The rest is a self-correcting problem.

 

Don't get me wrong, I'm not a pure capitalist or objectivist -- I believe in a strong federal government doing more than just enforcing contract law. But I don't believe for a moment that stomping on outsourcing is going to (as you put it) prevent this country from going bankrupt. More likely the opposite is true.

[Phi for All]

We can not continue to outsource to 3rd world countries the way we are doing it or the U.S. will become bankrupt soon.

I thought NAFTA bankrupted us. Oh, that's right, nationalist thinkers only thought it would bankrupt us. They, like you, don't give enough credit to free market economic structures.

I am not against efficient or freedoms to economic opportunities. But sooner or later, the management of the companies are about to extinguish the middle class and also their primary product consumers.

I don't know how this would happen, considering that improving the economies of third world countries creates more markets for consumer goods.

According to the economic classroom, the displaced worker simply finds another job and everything is great. Well I think thats a bunch of crap. The reality is a displaced factory worker making $25/hr can not so easily become something else at that same wage without a lot of education and expense. It is those costs that most economists do not take into account.

"A lot of education and expense"? Now who is oversimplifying? Retraining HAS been taken into consideration, and it's one of the things I give kudos to Bush for. He has expanded Trade Adjustment Assistance to workers who have been displaced by the movement of production facilities abroad.

I think we desparately need more Henry Fords right now. Ford had the vision to know well paid manufacturing workers would buy the products they helped to build. Up until that time, most people could not afford an automobile and so it was his own employees who bought a lot of them. Ford paid his employees way more than market rate but in the end his vision rewarded him handsomely.

Buying products is not a problem for manufacturers today. Global markets are expanding so rapidly that it's hard for most to keep pace with demand.

 

What is a problem is insistence on "more than market" wage by US workers for increasingly sloppy and inferior work habits. I'm appalled by the number of people in service jobs in the US (the kind that can't be outsourced, like clerks, wait staff, mechanics, etc) who don't care about the job or it's performance as long as they get paid. This will destroy the middle class, not offshoring.

 

You are looking for a nineteenth century solution to a twenty-first century problem. Henry Ford may have shown us how mass production could improve lives, but the Japanese showed us how it could rebuild whole countries. We need to keep pace instead of holding on to the past.

[ecoli]

Companies are moving offshores to avoid American taxes. They move out of the US, costing american jobs, the government tax dollars, and paying "foreigners" low wages under terrible conditions.

 

Conditions in free-trade zones in South america closely resemble those in the industrial days in America's 1900's. Workers cannot unionize, have no job security, no benefits. They are treated little better then slaves. their houses consists of shanties erected around the factories. They have no healthcare. Tell me again how globalization is helping everyone?

 

http://en.wikipedia.org/wiki/Free_trade_zone http://www.cleanclothes.org/urgent/01-09-23.htm

Some examples of conditions for workers inside the zones include: * Being forced to work long hours of overtime to reach unrealistically high production targets; * Denial of legal entitlements, with leave being extremely difficult to take; * Excessive fines and penalties: ranging from being late; sick; not reaching production targets and refusing compulsory overtime. Bonuses, fines and penalties are complex and workers frequently can not calculate how much they will earn each month; * Repression of the right to organise form a union or bargain collectively; * Poor or non existent Occupational Health and Safety practices; * Frequent sexual harassment and imposition of inhumane restrictions such as a time limit per week for going to the toilet; * Lack of transportation, especially after late night shifts; * Misrepresentation by the Board Of Investment (BOI) of labour law and frequent attempts to circumvent the law or to make it more "flexible" for employers.

[zyncod]

It's helping CEOs. They took a big hit after the internet bubble burst, when they went from being paid 500x the average worker's salary to only 350x the average workers salary. But thanks to globalization, tax rebates, and the Republican Revolution, we hope that one day that number might hit 1000x. Or 1000000x! There's no theoretical limit - what with global warming and myriad other looming ecological, disease, and famine disasters, the "average" person might one day be as poor as the Chinese workers are now.

[Pangloss]

Companies are moving offshores to avoid American taxes. They move out of the US' date=' costing american jobs, the government tax dollars, and paying "foreigners" low wages under terrible conditions.

 

Conditions in free-trade zones in South america closely resemble those in the industrial days in America's 1900's. Workers cannot unionize, have no job security, no benefits. They are treated little better then slaves. their houses consists of shanties erected around the factories. They have no healthcare. Tell me again how globalization is helping everyone?

[/quote']

 

I'm reminded of the building of the transcontinental railroad, as described in Stephen Ambrose's wondeful book "Nothing Like it in the World". He describes the horrid, despicable conditions under which Chinese immigrants worked on the Southern Pacific in the Rocky Mountains. The odds against their survival. The rotten pay. The miserable benefits.

 

And the fact that every single one of them, without exception, wrote home to China, pleading with their family, friends, and anyone else who would listen, to beg, borrow or steal their way onto the very next ship heading over.

 

I think sometimes that people are so concerned about "conditions" that they forget what the word "improvement" actually means. You should go ask the thousands of Mexicans flocking to the US border, not to cross into the US, but to work in the new NAFTA-generated factories on their side, what "horrible working conditions" are. I'll bet they have some hair-raisers about the places they used to work.

 

So tell me again how globalization is hurting everyone?

[RVonse]

I thought NAFTA bankrupted us. Oh, that's right, nationalist thinkers only thought[/i'] it would bankrupt us. They, like you, don't give enough credit to free market economic structures. I don't know how this would happen, considering that improving the economies of third world countries creates more markets for consumer goods..

 

As Ross Perot said there would be "a giant sucking sound" to Mexico. He was almost right but the sucking sound is going to China mostly. As for being bankrupt, our deficit spending is so out of control right now each U.S. citizens has now borrowed $20K+ and a lot of that from Japan, China, and South Korea. Those are the countries that save and make the money, we are the country that spends and borrows the money. It is a situation that can not continue much longer.

 

"A lot of education and expense"? Now who is oversimplifying?

 

After a person loses his high paying manufacturing job then has to re-train for another field. At a minimum' date=' he would have to get a 2 year AA degree in some sort of technical discipline. So he loses 2 full years of wages plus the expense of college plus the experience he had in the manufacturing job. This probably doesn't sound like much to you but it adds up to a lot of people and some of them have changed careers more than 1 time. Thats a lot of waste that economists conveniently don't mention.

 

Retraining HAS been taken into consideration, and it's one of the things I give kudos to Bush for.

 

 

If Bush was really interested in helping the middle class he would offer tuition assistance or free college for high school graduates in need.

 

 

 

What is a problem is insistence on "more than market" wage by US workers for increasingly sloppy and inferior work habits.

 

Perhaps but I am appalled by the lack of performance of CEO's and their corrupted pay system. They head companies that go into the toilet and then make millions anyway. Is that pay for performance or corruption? Or perhaps this is your version of capitalism?

 

You are looking for a nineteenth century solution to a twenty-first century problem. Henry Ford may have shown us how mass production could improve lives' date=' but the Japanese showed us how it could rebuild whole countries. We need to keep pace instead of holding on to the past.[/quote']

 

It looks like our current crop of leadership is showing us how to unbuild the U.S. right now. Whatever they are doing, its not working.

[ecoli]

I'm reminded of the building of the transcontinental railroad' date=' as described in Stephen Ambrose's wondeful book "Nothing Like it in the World". He describes the horrid, despicable conditions under which Chinese immigrants worked on the Southern Pacific in the Rocky Mountains. The odds against their survival. The rotten pay. The miserable benefits.

 

And the fact that every single one of them, without exception, wrote home to China, pleading with their family, friends, and anyone else who would listen, [i']to beg, borrow or steal their way onto the very next ship heading over[/i].

 

I think sometimes that people are so concerned about "conditions" that they forget what the word "improvement" actually means. You should go ask the thousands of Mexicans flocking to the US border, not to cross into the US, but to work in the new NAFTA-generated factories on their side, what "horrible working conditions" are. I'll bet they have some hair-raisers about the places they used to work.

 

So tell me again how globalization is hurting everyone?

Improvement is one thing, but compared to our standards, is practically slave labor. Why should they not enjoy our standard of living, just because it MAY BE better then how they lived before. (please note, that I wrote "may" because you did not source your argument.)