Is outsourcing American jobs good for the US?

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Is the outsourcing of American jobs good for the US?


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shade

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#1
Outsourcing decreases the cost of living for US citizens. Everyone outsources. You probably didnt make the shirt you are wearing. Do you regret that you bought it from someone else at a lower price than it would have been for you to make it? Of course not.

Outsourcing frees up the US economy to work on new innovations, reduces cost of living, and makes a more friendly relationship with other nations that outsource to us, such as BMW, Nissan, and many others that employ millions of US citizens. Also, when an american company does it, their profit still comes to the US and is likely spent here. If you are worried about outsourcing, buy stock that pays dividends and get your money back.
 
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Big D

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#2
Hey, just writing a scholarship essay on this topic, and wanted to get some opinions.

Outsourcing decreases the cost of production in businesses across the country by giving them access to lower labor costs, and the government actually offers tax incentives that further motivate these companies to do so. The rationale is that companies will then be able to sell goods and services at lower prices, and/or at higher qualities, that will increase overall consumption in the US.

The flip side is that US workers lose jobs, and can have difficulty locating other jobs, or receiving the necessary training to do other jobs correctly. As well, the money spent in the purchase of these types of products is exported overseas in the form of wages, and our economy does not receive the benefit of these purchases. It can be argued that this is a social drag on the US that costs us billions in transfer payments such as unemployment, and that it also contributes to an increase in crime.

Where do you stand and why?


Edit: How'd you get above me shade?
 
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Instigator

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#3
shade said:
Outsourcing decreases the cost of living for US citizens. Everyone outsources.
Yes, it makes products cheaper. The flip side of that coin is that we have less money, because many of us have been laid off so an Indian guy or a Cambodian kid can do our work for less money.

Not to mention the human rights concerns with things like sweatshops. But that's not an issue to any successful businessman.
 

Sketcher

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#4
Instigator said:
Not to mention the human rights concerns with things like sweatshops. But that's not an issue to any successful businessman.
The question was whether or not is was good for the US.
 

wils0646

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#5
Instigator said:
Yes, it makes products cheaper. The flip side of that coin is that we have less money, because many of us have been laid off so an Indian guy or a Cambodian kid can do our work for less money.

Not to mention the human rights concerns with things like sweatshops. But that's not an issue to any successful businessman.
Who's we? The 5.4% Unemployed Americans? Don't deny the fact that this is great for the U.S. economy and much better for the consumer.
 

wils0646

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#7
And to note: Tell me Shade if I have this right. Some of this has to do with free trade and shipment of goods too? If we do lose production jobs here in the U.S. for product A that is cheaper in other countries, wouldn't we gain exporting jobs for product B that is made cheaper here to ship over to that country?
 

wils0646

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#8
Instigator said:
People employed by large companies...
Yes, but the overall effect of this outsourcing has much better good than bad. Don't deny that.
 
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#9
Instigator said:
People employed by large companies...

ahhh yes blame big companies that really has factually backed up.


Outsourcing ends up helping in the end.
 

Instigator

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#10
poopchow: "the us companies has factually backed us up"?

how?

And don't give me "creating jobs" bullshit. We all know that there were jobs before those companies.
 

wils0646

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#11
Instigator said:
poopchow: "the us companies has factually backed us up"?

how?

And don't give me "creating jobs" bullshit. We all know that there were jobs before those companies.
I was talking about free trade though. These two are related and if this is true....

-1 job for production in a different country
+1 job for exporting jobs in a different company
++++great for the consumer, great for the U.S. Economy

Edit: And you also have to realize the company has to compete with others in the same business. If they cannot get cheaper labor, they will die in the sea of dead companies, have to downsize, and they lose jobs anyway.
 
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Big D

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#12
wils0646 said:
I was talking about free trade though. These two are related and if this is true....

-1 job for production in a different country
+1 job for exporting jobs in a different company
++++great for the consumer, great for the U.S. Economy

Edit: And you also have to realize the company has to compete with others in the same business. If they cannot get cheaper labor, they will die in the sea of dead companies, have to downsize, and they lose jobs anyway.
Excellent point on the edit...many firms cost structures in competitive markets hold them to just barely turning an economic profit, if any at all. When other firms in the same industry adjust their cost structures through outsourcing, the choice is often to outsource, or to go out of business. But this does not deal with whether it was right in the first place for that first firm to outsource or not. That firms must follow is a almost given for firms in competitive markets.

I've been reading articles all night, and one suggested that outsourcing has hit low skilled jobs pretty hard, but that it has lead to an increase in demand for high skilled workers. Is it possible that outsourcing will just encourage a shift to a higher percentage of high skilled jobs, and that if for no other reason, this would benefit the US?
 

Big D

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#13
Instigator said:
Yes, it makes products cheaper. The flip side of that coin is that we have less money, because many of us have been laid off so an Indian guy or a Cambodian kid can do our work for less money.

Not to mention the human rights concerns with things like sweatshops. But that's not an issue to any successful businessman.
How important would you say the 5% or so workers who are unemployed are versus the 95% that are employed? I agree that outsourcing is a big problem for some families, but the percentage is small. Do we have a responsibility to this small percentage if our alternative is to force businesses to incur higher labor costs, which will then be transfered to all end consumers?

Also, interesting thought about human rights...I think sweat shops are terrible, but how could we prevent them from ocuring? The only way to stop a business man worth his salt from recommending outsourcing to these types of countries would be unfortunately to make it unprofitable through taxes, or through government regulation...
 
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#14
First of all for the loss of everyone one manufacturing job we do not gain an export job. It doesn't work that way. We lose manufacturing positions on a large scale from fabrication to assembly to packaging and import/export is just a small part of the entire production phase.

Also unemployment really isn't very representative of much in this case. Many people who had manufacturing jobs and lost them to outsourcing, now work at a place for a menial wage. My friend's father lost his job working in a manufacturing plant because of outsourcing. He was making enough money to support his family there. Now he has to work at Wal-Mart and a local State Store just to keep even. He doesn't care about unemployment because job quality goes down.

And finally the reality of the situation is that the top down approach doesn't work. First of all the added money that corporations make does not trickle down. Either they save it for their own or they use it to build capital in other countries which doesn't benefit the US at all. Also companies like Nike are making their products at next to nothing cost, but they sure as hell aren't providing those products and cheaper here. The additional profit just goes to corporate profit.
 

Big D

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#15
wils0646 said:
And to note: Tell me Shade if I have this right. Some of this has to do with free trade and shipment of goods too? If we do lose production jobs here in the U.S. for product A that is cheaper in other countries, wouldn't we gain exporting jobs for product B that is made cheaper here to ship over to that country?
This is correct in theory...through global specialization, each country should produce that which it is the most efficient at. If we are not as efficient in producing product "A" then we should reallocate our labor force into areas in which we are more efficient...product "B" for example.

The only problem with this is try telling that to an unemployed mill or steel worker, for example. Where are they going to get the skills demanded by today's economy as these "low skill" jobs disapear. Some would say this is an issue of natural selection and survival of the fittest. Many laborers are able to find employment in other industries, but not all of them do. Sounds like a pretty good deal for the US as a whole though...
 

shade

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#16
The flip side of that coin is that we have less money, because many of us have been laid off so an Indian guy or a Cambodian kid can do our work for less money.
And then hired by Jaguar or Acura, which is owned by Ford. Welcome to the global economy.

Not to mention the human rights concerns with things like sweatshops. But that's not an issue to any successful businessman.
Yeah those terrible sweat shop call centers in india :rolleyes:

Some of this has to do with free trade and shipment of goods too? If we do lose production jobs here in the U.S. for product A that is cheaper in other countries, wouldn't we gain exporting jobs for product B that is made cheaper here to ship over to that country?
Correct. Outsourcing is not just US companies hiring foreign workers, but the importation of goods from other countries. If I buy a shirt made in China, I outsourced my shirt and the jobs associated with it.

We all know that there were jobs before those companies.
And can you point to a time in history where we didnt have big companies?

How important would you say the 5% or so workers who are unemployed are versus the 95% that are employed?
Doesnt matter. In the US we consider 5% full employment.

There are two things the government can do to help prevent us losing jobs overseas. They both have positive and negative benefits.

1: Increase cost of importation. The old overused tariff. Tax imports. This artificially inflates the prices of imports so that US companies can compete. Good: Lets US companies compete. Bad: Increases cost of living. Pisses off foreign countries and can hurt our exports to them.

2: Decrease cost of doing business. Cut corporate taxes and eliminate any unnecessary regulations - for companies that keep workers here. Business works on a fine line of revenue - costs. If you reduce cost by opening a plant in india or by reducing taxes, it helps that company and they will do it. If cutting taxes lets them keep a plant in the US, they will. Bad: Unnecesary regulation is debatable. No, tax revenue will not decrease to the government because more people will be employed paying income tax, and people will be able to buy more, which employs more and gives more taxes, etc (MPC). Good: Cost of living goes down. Jobs stay in US.
 
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Big D

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#17
shade said:
Doesnt matter. In the US we consider 5% full employment.
My point exactly...we will always have frictionally unemployed people, and there will always be other people that just can't work. In the phillips curve, we note the trade off of the unemployment rate, and inflation. The costs to the economy of employing everyone would be devistating...


shade said:
1: Increase cost of importation. The old overused tariff. Tax imports. This artificially inflates the prices of imports so that US companies can compete. Good: Lets US companies compete. Bad: Increases cost of living. Pisses off foreign countries and can hurt our exports to them.
The bad is more realistic here in todays global market...we already chronically run a negative BOP, and this would only serve to have those country return a similar tariffs. We have to many trade agreements with other countries as well to cobat this issue by adjusting tariffs.

shade said:
2: Decrease cost of doing business. Cut corporate taxes and eliminate any unnecessary regulations - for companies that keep workers here. Business works on a fine line of revenue - costs. If you reduce cost by opening a plant in india or by reducing taxes, it helps that company and they will do it. If cutting taxes lets them keep a plant in the US, they will. Bad: Unnecesary regulation is debatable. No, tax revenue will not decrease to the government because more people will be employed paying income tax, and people will be able to buy more, which employs more and gives more taxes, etc (MPC). Good: Cost of living goes down. Jobs stay in US.
Wonderful ideas, but a lot of red tape in the way of these suggestions. One thing that I have found of interest that above and beyond failing to create the necessary incentives in many areas, the goverment actually offers tax incentives to outsouce jobs. I draw the line here, and will say that giving businesses extra encouragement, beyond what the market would dictate, to outsource is not right...
 
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#18
Instigator said:
poopchow: "the us companies has factually backed us up"?

how?

And don't give me "creating jobs" bullshit. We all know that there were jobs before those companies.

I meant

Dont blame the "big fat" cat companies all the time. And i meant that what you had just said wasnt factually backed up
 

shade

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#19
One thing that I have found of interest that above and beyond failing to create the necessary incentives in many areas, the goverment actually offers tax incentives to outsouce jobs.
I hear this all the time but have never actually read a situation where this is the case. In my finance class Im taking right now, we go over tons of ways to lower taxes and we have not covered a single thing about a benefit of outsourcing, taxwise. Could you show me such situations where the US government gives incentives to outsourcing?
 

Big D

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#20
shade said:
I hear this all the time but have never actually read a situation where this is the case. In my finance class Im taking right now, we go over tons of ways to lower taxes and we have not covered a single thing about a benefit of outsourcing, taxwise. Could you show me such situations where the US government gives incentives to outsourcing?
I'm having trouble locating really good sources online...I read about this in the Wall Street Journal, and my Economics professor made this claim as well...

Here's some links I found...

Tech Policy: Tax breaks for outsourcing ~ This site descibes this issue as more of a loop-hole than an emplicit tax break, but same result none-the-less.

U.S. Newswire - Kerry Says Job One is American Jobs ~ Don't know your affiliation, but you may find this one biased, and unbased. There really isn't any support for his position included in the article, but tax breaks for outsourcing are mentioned near the end of the article.

Economics Outsourcing ~ This one doesn't really deal with the tax break issue, but it has some relevant information relating to outsourcing in general.