Outsourcing will add more jobs in the longrun?

[white rice]

It's from an Indian newspaper and interviews two experts from Conservative leaning think tanks. It doesn't mention what type of jobs will be created as a result. You decide.

http://economictimes.indiatimes.com/articl...100,curpg-1.cms

-Diana Farrell, director, McKinsey Global Institute, said..."Offshore was about global wealth creation and integrating economies, she explained, adding that it would create more high-value jobs in the US than people could imagine today. "

Based on the research that the McKinsey institute had carried out, Ms Farrell said conservatively, for every dollar invested in the offshore space, $0.58 was directly saved. This could be either redistributed to investors or customers. But she added that there were indirect benefits to the US, in terms of the import of US goods and services into India by Indian service providers, and so there was some transfer of profit back to the parent in the US. She pointed out that the Bureau of Labour Statistics was predicting a job gain of 22m in the US by ’10, against a job loss of 2m due to offshoring.

-Daniel Grisworld, associate director, Centre for Trade Policy Studies, Cato Institute said, “People don’t understand what a great opportunity offshoring is for US companies. Apart from huge savings, it allows US companies to concentrate on their core competencies and the people (in the US) can move on to higher paying, more creative, more value generating jobs.”

[Bayou]

Well its 2004, that means for the next 6 years, the U.S economy will have to generate 3.4ish million jobs each of those years.
Thats a pretty steep hill to climb, especially for a nation who has not increased, if not decreased its spending in education and infrastructure relevant to help supply those higher paying jobs that the full article claims Americans will be able to take.

It doesnt help that they are quite vague on exactly what jobs these will be, let alone the products that countries like India will want to import from the U.S that they will not be able to get cheaper from say China.
Technological innovations to ensure efficiency of production perhaps? Is that a realistic prediction to make when the cost of labour is so low that it will take a considerable length of time(I am thinking longer then 6 years for sure)before wage pressures would make the cost of such upgrading attractive?
Other questions; have we reached the maximum amount of jobs that can be offshored, is it possible that 2 million jobs will be lost consecutively making the 3.4 million gain turning into actually 1 million a year or less?

I mean the irony is that had GWB not straight out eliminated the capital gains tax(stock tax), that at least the U.S government would be partaking in the economic bonuses that the investors are experiancing through this outsourcing and they wouldnt have an out of control deficit. This deficit which will in the long run keep investores from seeing the rose tinted colours that this article paints the future with.

[mlingley]

I don't get how outsourcing is supposed to be good for the U.S. either. The main advantage is supposed to be cheaper goods because of the cheap labor... Should the goal be to always make things cheaper? Seems like a downward spiral to me.. demand for cheaper goods means more outscourcing means less jobs means less money means cheaper goods means less jobs ect..

Sure if jobs stayed in the U.S. goods would cost more.. but there were be more jobs.. meaning more money in the economy so consumers could afford more expensive items.

[Black Fox]

"Sure if jobs stayed in the U.S. goods would cost more.. but there were be more jobs.. meaning more money in the economy so consumers could afford more expensive items."

Ah... but we don't know whether the extra money available to spend due there being more jobs will be outweighed by the extra cost of the goods available to buy, now that they are being produced at home.

Personally, my gut feel is to go for the most efficient way of doing things, i.e. the cheapest in the long term. It's the way man has always operated, and just because some service jobs are now under threat is no reason to change this. I mean, how come nobody was raising a stink when manufacturing jobs were going off shore?

[mlingley]

Manufacturing jobs are still going overseas.. that's what I was talking about. Alot of attention has been drawn to the service jobs.. aka telemarketers.. but the real problem IS the manufacturing jobs. Answering phones for a living doesn't pay nearly as much as a good manufacturing job in the US..

[Write Winger]

What everyone needs to remember is that they are not your jobs. They belong to the company that creates them. There certainly is no right to a job and any attempt to force companies into not exporting jobs based on their financial well being would be oppressive. If someone has a problem with overseas jobs they should start their own company and pay high wages here in the states.... they can always raise their prices to remain viable...good luck. The level of protectionism required to prevent overseas migration of labor jobs would ahve the rest of the world boycotting almost everything we made...not that we could sell any of it for export...it being 10 times the price of everything else. The Democrat Politicians and candidates for high office who tell the stupid masses (rank and file democrats) that they will keep the jobs in the states are simply fooling the foolish for votes. The world has grown much to bound together economically for the US to suddenly announce their intent to seal the economy. This isn't just about jobs...it is about importing goods. I think the entire argument is pretty ridiculous ....but hey.. it is the ridiculous that drives the political left. These are people who tell poor people that if we just confiscate the money of the prosperous the poor will prosper...morons.

[Toussaint]

</span><blockquote><span class="smallfont">Quote:</span><hr size="1" />Originally Posted by (mlingley,)
I don't get how outsourcing is supposed to be good for the U.S. either. The main advantage is supposed to be cheaper goods because of the cheap labor... Should the goal be to always make things cheaper? Seems like a downward spiral to me.. demand for cheaper goods means more outscourcing means less jobs means less money means cheaper goods means less jobs ect..<hr size="1" /></blockquote><span class='postcolor'>

No, because when jobs are outsourced to place that can perform them at a chaper cost, it frees up American labor to do something else. This is how are economy grows and how standards of living rise.

Outsourcing jobs is something we do every day in out lives. We outsource the job of producing and delivering our food to various individuals: farmers, truck drivers, supermarket workers etc. The fact that they can perform these jobs at lest cost (in money, time, and other resources) benefits us, because it frees us up to do something else productive.

This is an aspect of comparative advantage.

</span><blockquote><span class="smallfont">Quote:</span><hr size="1" />Originally Posted by
Sure if jobs stayed in the U.S. goods would cost more.. but there were be more jobs.. meaning more money in the economy so consumers could afford more expensive items.<hr size="1" /></blockquote><span class='postcolor'>

You assume that stopping outsourcing would lead to more jobs, when, unless one eliminates all outsourcing, other jobs would eventually be lost to foreign competitors anyway.

If one does indeed eliminate all outsourcing, such an action would be akin to producing all of your own goods in your own home. This would obviously make your household poorer in that you would not be able to afford as much as you could when you traded with others. Why? Because you only have so much time to produce the things you want and need. Time, like everything else in economics, is a limited resource. The effective use of this limited resource and others is what allows people to be "wealthy."

The amount of money one has does not make one richer. Money in and of itself has no use. Wealth is in what you can trade it for. Having money does not mean that what you want (goods or services) will be available, so more "money" in the economy is virtually meaningless.

[Edge]

</span><blockquote><span class="smallfont">Quote:</span><hr size="1" />Originally Posted by (Bayou,)
especially for a nation who has not increased, if not decreased its spending in education and infrastructure relevant to help supply those higher paying jobs that the full article claims Americans will be able to take.<hr size="1" /></blockquote><span class='postcolor'>

Let's see your data for your assertion that education spending is lower.

[Impenitent]

education spending is up under bush's leave no child behind plan... socialist teddy wishes it was more but bush's increase is higher than clinton's education budgets ever were...

[Write Winger]

Money down the rat hole of public education.

[Edge]

</span><blockquote><span class="smallfont">Quote:</span><hr size="1" />Originally Posted by (Toussaint,)
</span><blockquote><span class="smallfont">Quote:</span><hr size="1" />Originally Posted by (mlingley,)
I don't get how outsourcing is supposed to be good for the U.S. either. The main advantage is supposed to be cheaper goods because of the cheap labor... Should the goal be to always make things cheaper? <hr size="1" /></blockquote><span class='postcolor'>

If one does indeed eliminate all outsourcing, such an action would be akin to producing all of your own goods in your own home. This would obviously make your household poorer in that you would not be able to afford as much as you could when you traded with others. Why? Because you only have so much time to produce the things you want and need. Time, like everything else in economics, is a limited resource. The effective use of this limited resource and others is what allows people to be "wealthy." <hr size="1" /></blockquote><span class='postcolor'>
According to the US consumer, the goal IS to make things cheaper. If it were not, then walmark, kmart, target and the "dollar" stores would have a very different product mix.

To Toussaint's point. If you want to stop moving manufacturing jobs offshore, you can do that. All you have to do is get out of all of the trade treaties passed under Reagan, Bush, and Clinton and raise tarrifs. We will stop importing things, and we will also stop exporting things when the other countries retaliate. But will you like it when your computer costs twice as much? or when your new car costs more because we can't get steel or plastic so cheaply. Does any one remember how great the car companies were back in the 1970's when import restrictions kept out the US? Not a pretty sight.

As to the time constraint. I don't know that I agree with that. Time is productivity, and the US does it better than anyone else. The fact that companies are downsizing as they outsource leads me to believe that there is a lot of excess capacity out there. Why the outsource then?

I've been in manufacturing for close to two decades. I've been with five companies and garnered a reputation as a turn around specialist. I've never lost a plant, since the US currently has a productivity advantage. But I've seen new production go overseas, not for wages, but for regulatory issues. (I know this is ancedotal: don't give me a hard time, I'm just telling you what I've seen.) Risk management is very problematic in the US. Environmental and labor regulations change monthly, and that process that was legal last week could get you fined this week. The contractors and consultants that help keep your business alive, (regulatory services industry) are thriving, and they are being paid by the consumer. Consider:
http://fleetowner.com/ar/fleet_ergonomics_...ikely/index.htm
and
http://www.kssmallbiz.com/articles/article_142.asp
What I thought interesting in the second article is that the advocacy saved $4 billion. If that's what they saved, then what is the real cost?
According to the Competitive Enterprise Institute, that number was $688 billion in 1997. http://www.cei.org/pdf/1194.pdf In that year the GDP was only 8.1 Trillion, so regulatory costs were consuming 8.5% of the GDP. And that doesn't take into account the effect of the manufacturing sector lost to those regulation.

[Write Winger]

Since when did dollar$ spent on education translate in a better educated public?

[Impenitent]

they don't but it sounds good to the sheep... the more expensive it is, the better... NOT

[tusaki]

Public schools: argument moved to a new thread.

Outsourcing is capitalism at its best. You might hate it, but someone will like it, and in the end, the world will be better of. A job might be lost here, but is created somewhere else. So it has a 'leveling' effect overall. I don't think anyone can stop outsourcing, because, as a company, you cannot stay behind. When other companies outsource and as a result put a cheaper product on the shelves, you will do the same to compete. And when you stop national companies from outsourcing, foreign companies which can outsource will come with cheaper products. And if you want to put tarrifs on the foreign products to level the playing field, you will force the other countries to do the same to your products. End result: everyones export and thus: everyones economy is screwed.

</span><blockquote><span class="smallfont">Quote:</span><hr size="1" />Originally Posted by (tusaki,)
Public schools: argument moved to a new thread.

Outsourcing is capitalism at its best. You might hate it, but someone will like it, and in the end, the world will be better of. A job might be lost here, but is created somewhere else. So it has a 'leveling' effect overall. I don't think anyone can stop outsourcing, because, as a company, you cannot stay behind. When other companies outsource and as a result put a cheaper product on the shelves, you will do the same to compete. And when you stop national companies from outsourcing, foreign companies which can outsource will come with cheaper products. And if you want to put tarrifs on the foreign products to level the playing field, you will force the other countries to do the same to your products. End result: everyones export and thus: everyones economy is screwed.<hr size="1" /></blockquote><span class='postcolor'>
You seem to understand not much about what a nation is. When one group decides to behave in a manner disloyal and downright treacherous to a another member of the said nation, and such happens on a remarkably large scale, a nation will no longer exist. The relationship between one element and another is no longer one of mutual benefit, but rather one of direct opposition. Hence, a nation cannot exist under such conditions, as there can be no unity in such an environment as one significant portion of the populace is opposed to another.

[tusaki]

Yes, but that would only be true if it happens in a 'shock'. so "all of a sudden" all the jobs would be gone. This is not true. Because this happens over time, I think western societies will adapt. I dont pretend to know in which way, but we will cope somehow. And it will not be 'all' jobs.. or even 'all' jobs of a certain type. [which will go overseas] And the idea, as I have stated, of what will happen if you try to protect local jobs is still valid.

Adapt to what? What are the careers we should pursue that cannot be outsourced to Asia?

[Slapjak]

It is very sad that Americans lose their jobs because someone in another country can do the same job, just as efficiently, but cheaper...but I also understand that that is the name of the game... Have your product made or service done at the cheapest possible price. That part is easy for everyone to understand I would assume. But the question I've noticed simply comes down to "Which is more important, the companies well-being or the employees well-being?" Well when you think about it, if a company goes under because its costs are higher because they are in America and it cant compete in a market where everyone else is producing at a cheaper price because they’re costs are lower because they are overseas, then you are still in a situation where there are no jobs.


After reading over some articles I've found this note...and it makes sense. As the economy evolves it will embitter some people...but if some of the changes that have occurred over the years hadnt happened because of it's short term effects, where would we be as a nation and a world for that matter?
"Two hundred years ago, many people earned livings as hostlers, curriers, chandlers and lamp-boys. Today many people don't even know what those professions were. One hundred years ago, 33 percent of our workers were in agriculture. Today only 2 percent are. No doubt the loss of these professions embittered some. But would Americans today be better off without a modern economy?"
Here is the link to the entire article...Employment: Is Bush Trying to Push Jobs Overseas?