Am I the only one who is getting sick to death of all the outsourcing-bashing going on in today's local and national political campaigns?
First of all, I wish someone would explain to the American public that "outsourcing" and "offshoring" are not the same thing. Maybe it is just semantics, but it bugs me!
Now to the meat of the issue. America is not just a democracy, but an industrialized society. We have gotten to the place we are today -- whether or not it is actually a "good" place is up for debate -- in large part due to the industrial and technological advances made by business pioneers like Henry Ford, J.P. Morgan, John D. Rockefeller, etc. These individuals built businesses and industries to provide products and services that promoted growth, convenience, luxury, and wealth. And they succeeded, perhaps even beyond their own expectations, because they traded value for value. A desired product or service in return for a fair, and profitable, compensation.
But somewhere along the line, things changed. Consumers began to demand more value for less, while workers and unions demanded greater compensation for the same or even fewer man hours of labor. After squeezing as much efficiency as possible out of their processes and suppliers and paring profits to a barely sustainable level, manufacturers were left with little choice but to seek alternative means of supporting their bottom line. This was not -- and is not -- a matter of greed, but simple economics. A business cannot survive if it is not profitable.
For decades now, American consumers have been more than happy to look the other way and ignore where products were made just as long as they got what they wanted -- cheaply. I remember as a kid, there was just about no electronics product that wasn't "Made in Taiwan." Today, it's "Made in China," often for US-based businesses. Is it really so different? Why, now, is this being treated as some form of economic treason?
People lament the lost manufacturing jobs. Yes, the unemployment rate in the US is at tragic levels. But, that is not the fault of those who sent manufacturing offshore. What is their option? Maintain their manufacturing in the US and pay wages four to five times higher than in low-cost regions, pay exorbitant fuel and tax rates, and maintain huge legal teams to navigate the mire of regulations imposed by the government? Where do people expect that money to come from? There are only two options: off the bottom line or from the consumer's pocket in the form of higher prices.
If manufacturers carry the loss internally, they fail to live up to their fiduciary responsibilities to shareholders, fall behind in innovation because they do not have the resources to invest in R&D, and eventually go out of business. If they pass it along to the consumer, their sales plummet, profits decline, and they eventually go out of business. Which one of these scenarios serves the US economy or its workers? No wages, no tax revenue, and no product.
Instead of playing the role of victim and blaming those businesses that have "followed the money" offshore for the decline in US manufacturing dominance, perhaps it's time for the US worker and government to step up and admit the role they have played in forcing manufacturers to abandon their homeland.
Labor unions, once the defenders of the blue-collar worker, have grown so big, powerful, and demanding that they put a stranglehold on manufacturing management. The government's corporate tax structure, lopsided import/export policies, and inaction in the face of currency manipulation by our economic competitors have further disenfranchised the nation's largest manufacturing enterprises.
We reap what we sow; if you take away a business's ability to make money, you remove the incentive to innovate and produce. I can't say exactly what can be done to bring manufacturing back to the US, but I do believe that if you make it profitable, they will come.
It is pathetic to see you semi-literate people oscillate between the two extremes of Marx and Rand - both foreign Agitators and nothing in between !
If you want to understand their firebrand extremism / AgitProp, you need to first read up on their lives and motivations. Ayn Rand was a Russian Jew emigre and practiced a pretty licentious lifestyle after moving to NYC including snaring acolytes like Alan Greenspan. All our 401 (k)s have suffered from Greenspan's laissez faire tolerance of "irrational exuberance" by Wall St. shysters. Ayn Rand is at least partly responsible FOR IT.
It is a sign of America's corn-fed provincialism and the naivete of our first-generation college grads from State U.s / Community Colleges that they fall for Jewish AgitProp in Academia while missing the core of American values that made us great through the 1960s.
That is using hard work and application of science to convert our ( ill - begotten ) natural abundance into the mass production of rugged products and then distribute them at very low markup. These are very German virtues ( who made the Mid-West the industrial power house it used to be ), which is why Germany ( and not the Brits ), keep doing so well in Manufactiuring against any comers.
Since WW II, using real or contrived claims of persecution a trading / speculative community have taken over and gradually taken control of distribution as well as Academia / Media. Having surreptitiously carried out these coups they have turned off the productive capacity of America in order to conslidate their hold on the economy and next create artificial shortage and drive up prices.
Outsourcing is just a part of that scheme.
It is not an accident that it is Heinrich Kissinger who has been the most active Agent of Communist China and have advocated for outsourcing to China at least since the 1980s. His minions have spread through Wall St. and influenced Corporate boardrooms by luring them with the bonanza from China.
To their early converts, that bonanza never came and once great Electronics Co.s like Motorola lost their shirt in China ( technology pirated, wafer fabs hijacked ) and were destroyed.
We need to understand that Outsourcing to China is fundamentally different from same to Japan, Taiwan etc. because China is huge and nuclear armed. It has pretensions of restoring its past importance by pirating US technology and Wall St. is co-operating with them. They are investing in China in preference to the US because of China's lower labor cost, transferring US technology to make the Chinese more capable even though it damages US competitiveness.
To the average US consumer outsourcing saves at most 10 % over US manufacture because the Distributors in US & Wall St keep most of the 30 to 40 % cost reduction due to cheaper Chinese labor. Then they invest a part of that loot to buy politicians to prevent any halt to our suicidal Outsourcing to China and spread lies through the media including "Free lance Writers".
For the last 15 years China has run a trade surplus of $ 350 billion per year over us. But the real loss when you factor in the damage done to US economy as a result of outsourcing to China ( loss of Taxes, unemployment benefit, having to pay 2 or 3x more for commodities like oil, grain and beef due to higher consumption by the Chinese who we have made rich by outsourcing !, higher Defense budget to block Chinese delusions of grandeur,.. ).
"Free Market" is a slogan that does not work if it becomes one - sided and makes the whole system unstable.
Even England, the birthplace of Adam Smith, became anti Free-market when its pitfalls became obvious. A suggestion for those who are "historically challenged" - read up on what the Brits did in the 18 th century when their trade deficit with China shot up because they were importing far too much Tea.
@Susan I wouldn't consider it self-esteem so much as a devotion to self-actualization and all it entails. Her protagonists are more concerned with realizing their visions in design, industry, and business than in amassing a fortune. They don't make money by brokering and investing but by creating and producing. Their satisfaction came from seeing what they did put to use -- and the money was really secondary, though she stressed that profit is essential for selfishness -- and thereby the economy --to flourish and was vehemently opposed to communism. Of course, one doesn't have to agree with all her values, but Aristotle supposedly said, "It is the mark of an educated mind to be able to entertain a thought without accepting it."
It looks like that you forgot to follow the money. First chech the wealth distribution before arguing that profits are at a "barely sustainable level". Apple has more than $117 billion in cache. You could easily pay a US worker instead of supporting the biggest legal slave factory. For the moment the problem is just greed.
But Ayn Rand's argument on Selfishness is quite controversial. She believed that Selfishness is synonym with self-esteem. I tend to think that keeping a balance in everything is always the right answer. I have my doubts that Selfishness can be considered a Virtue, as she put it.
@Barbara, completely agree with your comments. There is a vast difference between offshoring and outsourcing. Many times political parties just make use of people's ignorance or limitations.
Of course she wouldn't think of selfishness as greed. in fact I think selfishness is fine, the limiting consideration is 'decency'. And that is often thought a weakness. I am selfish when I do 'good', as I enjoy the feeling that comes from helping others. But THAT is not 'greed'.
@Azmatmalik "Coming back to ground level: when outsourcing one needs to be sure that the lower costs are not just teaser rates, and that one factors in the 'cost' of loss of flexibility and control." Excellent point!
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Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
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