Posted by DR on July 23, 2005 at 09:21 [67.83.76.91]
In Reply to: Re: Brian goes on and on about stuff, posted by A. on July 23, 2005 at 07:46
Austin, I couldn't disagree with you moreso.
First, I'm not unsympathetic to those who lose their jobs to outsourcers. Nor do I ignore those who are underemployed in sectors that are on the decline.
But if Americans want to enjoy a greater and greater standard of living then they must be willing to do what is necessary including: improve their skill sets, change jobs, or relocate -- perhaps overseas. Markets are best driven by themselves, by supply and demand, and by fair play for consumers, and the employed must *forever* adapt to these changing conditions.
But to read your post, you infer that markets should be best driven by what's best for Americans. America possesses a disproportionate amount of the world's aggregate wealth relative to its population and resources -- however this will change over the next century. Simply said, LDC's *will* catch up, and America will have to deal with a smaller slice of the pie. That means that future Americans will pay more but receive less than the generation that preceded them.
Second, your comment that reductions in global prices are "not realized at home" is wholly incorrect. Many of the products you buy in the US are less expensive because they were produced abroad. Lower prices means increased competition and incentives for innovation or the creation of cost-reducing technologies. For example, advancements in electronics have moved at such a rapid pace due in large part to increased overseas competition. That you can buy a Dell computer today for less than $500 whereas twenty years ago the lowest priced computer was $1500 is a direct result of: new technologies, advancements in production management, fierce competition, and outsourcing.
I'll also add that outsourcing makes tremendous sense for a company like Dell, which could not possibly innovate in every aspect of computer manufacturing. Today's computers are simply *so* advanced as to require thousands of components, which are manufactured by thousands of disparate expert suppliers, which get their raw materials from thousands of other companies. Its simply unrealistic to expect that even the simplest of your modern products could be entirely produced domestically.
Third, your comment about the "appalling lack of worker protections" is way off the mark. Read my last post again. When in Rome, do as the Romans do. To apply our American standards to the rest of the world would be both hypocritical and unrealistic. Let's remember something about America -- it was built upon slave labor. Not just low wage labor, as you'll find in many LDC's, but slave labor. Conversely, as mentioned in my last post, US .50 cents per hour may be a "sweatshop" wage in the US, but in many LDC's, its a fair living wage and is appropriate to those job markets.
Fourth, you're exaggerating the efficacy of the devaluation of the Chinese Yuan. Surely world markets will feel the ensuing hiccup, as they did when Russia devalued the Ruble in 1998, and when Mexico did so with its Peso in the mid-1980's, but your reaction is typical of those short-sighted, armchair economists who can only focus on the issue-du-jour. Last year it was Social Security -- this year its Oil prices.
But these issues have been with us for much longer than 2 minutes ago. M. King Hubbert predicted long ago (1956 to be exact) that the supply of oil would one day reach its zenith, and production thereafter would follow the law of diminishing returns. Have we reached Hubbert's peak? Hard to say, but we've known for years that oil reserves are harder and harder to locate, mine and refine, year-over-year. Where were these armchair economists then?
My point is, don't bring oil prices into the discussion because its not specifically germaine to the subject of outsourcing, nor is it a new topic. Oil prices are determined in large part by OPEC, by speculation, seasonal demand, and as mentioned, supply and demand.
Fifth, your comment about murders in LDC's is a distortion of the truth. Does it happen? Yes, but not nearly with the frequency that you infer. Most sovereign governments welcome foreign direct investment openly, and protect it fairly and legally to create a stable infrastructure for further FDI. The Coca-Cola incident to which you refer is an anomaly -- the vast, vast majority of companies enter new countries without incident.
Sixth, your comment about "thousands losing their jobs to give Mr. CEO a bonus" does happen, but is also a distortion of the truth. You're obviously reacting to companies like Enron and Worldcom, but these do not represent global industry whatsoever. Corporations are under intense scrutiny by financial analysts, mutual fund companies, hedgefunds, private investors, and the media -- and its *really* bad for company PR when bonuses follow layoffs. And bad PR affects the bottom line much, much more than those bonuses do. I'll add that layoffs are generally considered a bad PR move, and most companies exercise that option only after examining every possible cost-cutting strategy.
But to conclude -- I agree with you only in that corporations must be more responsible to protect the environment, to protect shareholders, and to protect consumers. And while many corporations do have a social sense of responsibility, some do not, however we shouldn't lump them all into the same basket.