Outsourcing (Merged)

[Joey D]

While it's ruined Michigan's economy I can't blame many of the companies that do it. Let's take GM for example, which at one point in time was the biggest employer in the state of Michigan, everything used to be built right here in Detroit. Now you are hard pressed to find more then 50% of the car even built in America. Why the change? Well the UAW played a big part in that.

Now if you were the owner of a company or in the case of GM the majority share holders would you want a bunch of overpaid workers doing a sub par job? No you wouldn't. Why wouldn't you send your work to Mexico when they will work for cheaper, build a better product, work more hours, and not complain about working conditions? It just make economical sense.

I think unions have ruined the American automotive industry and thus why many "American" cars aren't really American at all any more.

All I know is that if I owned a company and wanted to maximize my profits I would probably outsource. We live in a world that has a global economy, why not take advantage of the resources you have in order to make money? I don't care where my products are made, as long as they are priced reasonable based on what they are I really don't care.

Does it make it right though? No, but I'm looking at this from a purely an economical point of view, not a moral one.

 

[Philly]

Looking at it from an economic standpoint, does it hurt the companies themselves to outsource. Like GM. Does it hurt them to manufacture all of their cars overseas? Not necessarily long term, but more in the short? Maybe there are a lew less people who can afford a GM car? Or having more money leaving the country might slow the economy and hurt longterm sales?

 

[YSSMAN]

Philly, welcome to Michigan; This topic is discussed constantly here at Aquinas, and I'm sure its much the same at Hope.

---

On GM:

Personally speaking, I can neither defend nor advocate GM's position. On the one hand, it makes perfect sense for them to go out and build cars, in theory, for less (by using cheaper labor) and pass that savings off to the consumer. But, given that so many of the plants they closed to do so have effected millions of people here in this state, it makes you rather angry how it worked out.

As far as I know, a pretty fair number of GM's vehicles are still built (as in final assembly) in the United States. Its the parts that are being made increasingly outside of the US, closing many of the other industry-dependent companies around the state. Cars that did go out of town usually, at least for GM, go to Canada... IMO, that isn't as bad as going to Mexico, like what Ford has done.

We still build them well here in Michigan; All of the Lambadas are built in Lansing, and so are the Sigmas as well. The Pontiac G6 is screwed together in Lake Orion, not to mention the trucks built in Pontiac, and the handbuilt engines thereabouts as well. They still build plenty of cars in Illinois, Maryland, Tennessee, California, and Kansas as well...

 

[Philly]

Philly, welcome to Michigan; This topic is discussed constantly here at Aquinas, and I'm sure its much the same at Hope.

I haven't run into anything on this subject yet, but I wouldn't be suprised if I did.

On GM:

Personally speaking, I can neither defend nor advocate GM's position. On the one hand, it makes perfect sense for them to go out and build cars, in theory, for less (by using cheaper labor) and pass that savings off to the consumer. But, given that so many of the plants they closed to do so have effected millions of people here in this state, it makes you rather angry how it worked out.

As far as I know, a pretty fair number of GM's vehicles are still built (as in final assembly) in the United States. Its the parts that are being made increasingly outside of the US, closing many of the other industry-dependent companies around the state. Cars that did go out of town usually, at least for GM, go to Canada... IMO, that isn't as bad as going to Mexico, like what Ford has done.

We still build them well here in Michigan; All of the Lambadas are built in Lansing, and so are the Sigmas as well. The Pontiac G6 is screwed together in Lake Orion, not to mention the trucks built in Pontiac, and the handbuilt engines thereabouts as well. They still build plenty of cars in Illinois, Maryland, Tennessee, California, and Kansas as well...

I can kinda tell what you guys are going through; the same thing has been happening in Seattle. Boeing is building more and more planes elsewhere. I think there are plants outside Seattle that we are mad about, not to mention the HQ move to Chicago. We had to fight to keep the 787's final production here. Most of that will be build all around the globe. This has resulted in massive layoffs.

We may also be in trouble with Microsoft soon too. With India's techonogy industy growing, Microsoft will probably be moving more and more jobs there.

"Will the last person leaving Seattle please turn out the lights!"

 

[niky]

At least no one's complaining about the incomprehensible Filipino at the other end of the line.

A lot of new jobs over here were created by this outsourcing craze. Actually, the argument here is reversed...

Sure, rich first-world companies are giving third-world people jobs, but the profit created by those jobs is going to the pockets of first-world businessmen, not the third-world nation.

From an economics point-of-view, it makes sense to outsource non-critical jobs to where labor is cheaper... which is why all services and products will eventually be supplied by China...

Morally, who's to say? Who needs the work more? Blue Collar Worker "A" or Blue Collar Worker "B"?

Businessmen are in business for profits. Whatever makes the most profit is what they'll do. It's governments and consumers who often force businessmen to make business decisions with moral content (Interventionism, Naderism, Patriotism, Environmentalism, whatever). If they don't need to consider moral or ethical factors (where such factors can remain hidden from the public or the government, or if such factors do not affect consumer demand for their product (because consumers can't understand the ethics)), they won't.

 

[///M-Spec]

Merging with existing topic.


M

 

[Danoff]

To repeat myself from earlier in this thread (from how many years back?) American workers are more expensive largely because of the socialization our government.

I find it somewhat ironic that the average blue collar worker votes for the government to give him more - thereby increasing how much it costs to employ him - thereby making it more likely that his job will be eliminated altogether. Unions carry a very similar irony. Similar to the French with their "you can't fire me" laws. Did anyone stop to think such a rule might make it extremely difficult to get a job in the first place?

Yes, it may be cheaper to employ people in India to take our phone calls, but isn't it better if we kept that money in the US?

Actually no. It's much better for us to run a trade deficit. If we ship lots of little green pieces of paper overseas and they send us goods in return, who benefited? We can make green pieces of paper all day and ship them overseas, and as long as we keep getting goods in return it keeps being a winning strategy for us. They should feel free to hold on to our cash while we inflate it. Then they can buy less from us in the future when they want to cash back in.

Money isn't really the object here. Products and productivity are.

 

[niky]

What really benefits a capital economy is how much profit you can make with that capital. If US companies can become more efficient by paying peanuts for overseas labor, it makes them more profitable, which makes them more competitive, which means they have more money to pay taxes with or spend inside the US (or at least, their investors will...)... money spent inside the US helps the economy, even if it's made by employing people outside the US.

While workers do vote themselves more rights, that's the same in almost any country. The more developed an economy, the higher the cost-of-living, thus, the higher the minimum wage.

Even with fairly strong unions or wage-laws, wages in third-world countries will always be lower due to cost-of-living. Operational expenses are also often lower.

 

[Danoff]

What really benefits a capital economy is how much profit you can make with that capital. If US companies can become more efficient by paying peanuts for overseas labor, it makes them more profitable, which makes them more competitive, which means they have more money to pay taxes with or spend inside the US (or at least, their investors will...)... money spent inside the US helps the economy, even if it's made by employing people outside the US.

While workers do vote themselves more rights, that's the same in almost any country. The more developed an economy, the higher the cost-of-living, thus, the higher the minimum wage.

Even with fairly strong unions or wage-laws, wages in third-world countries will always be lower due to cost-of-living. Operational expenses are also often lower.

I don't really disagree with any of what you wrote, but the tone with which you wrote it bothers me a bit. You seem to be suggesting that this is normal and good and that nothing can or should be done about it. Union overhead or socialization laws represent an inefficiency in the market. Outsourcing represents an attempt by employers to rectify that inefficiency. Yes, it is more likely to happen the more developed the country is, but that doesn't mean that when it happens because of burdensome laws or laws that protect burdensome unions that it's at all desirable.

If you think it is, I'd say that the poorest people in this country would likely disagree with you. This is the great irony in the position of liberals who favor high taxes, government handouts, minimum wages, and union protection laws. Each of those things harms the poorest in the country far more than any other demographic - because each of those things makes it harder for them to find jobs.

 

[Philly]

Wouldn't regulation from the government keep that in check?

 

[niky]

I don't really disagree with any of what you wrote, but the tone with which you wrote it bothers me a bit. You seem to be suggesting that this is normal and good and that nothing can or should be done about it. Union overhead or socialization laws represent an inefficiency in the market. Outsourcing represents an attempt by employers to rectify that inefficiency. Yes, it is more likely to happen the more developed the country is, but that doesn't mean that when it happens because of burdensome laws or laws that protect burdensome unions that it's at all desirable.

If you think it is, I'd say that the poorest people in this country would likely disagree with you. This is the great irony in the position of liberals who favor high taxes, government handouts, minimum wages, and union protection laws. Each of those things harms the poorest in the country far more than any other demographic - because each of those things makes it harder for them to find jobs.

Minimum wage is a reaction to cost-of-living. If it's too high, then it's not reactive enough. I'm sorry, I'm not familiar enough with minimum wage in the US... are you required to give full minimum to part-time and casual employees, too?

Union protection laws... well, I've personally got a low opinion of Unions, but it's the constitution...

Personally... regarding outsourcing, I can't say whether it's good or not.

While it's happening, it's bad for poor Americans, good for poor third worlders. And soon, when the Chinese learn English, good only for the Chinese (because they've got their currency pegged so low). I'm actually on the fence whether outsourcing is good or not. I recognize that they may add cash to our economy, but there's no reason for the companies to stay here once they find a cheaper job market... it would be better if new jobs within our economy are generated by local businesses.

But the thing is, economic development from a capitalist point of view is spurred by creating a consumer base. By denying jobs to your main consumer market, you're hurting yourself in that market... but in a globalized economy, there are so many markets that it doesn't matter if you shaft them here, there are lots of new consumers there, there and there.

Businessmen are often in business for themselves. Unless there are regulations that force them to consider using local labor for local products, or to use a certain quality of labor, they'll always employ the lowest bidder.

I'm not in favor of tight government control (government has no business being in business), but there needs to be some outside mechanism or factor to help stem the increasing use of outsourcing. I kind of like how Toyota is doing it now... they're decentralizing production for some product lines, reactivating redundant factories to build local supplies for certain markets.

Maybe expensive oil will do it?

 

[YSSMAN]

Wouldn't regulation from the government keep that in check?

Possibly, but the problem is that it goes completely against everything our country has stood for when it comes to economics... That is, until the Great Depression, but for the most part, we prefer not to have government involvement whenever possible.