The problem of outsourcing: what should be done?

[Shi Huangdi]

Recent as you guys all probably know outsourcing has been more and more prominent. The newest figures show the trade deficit at an all time high of $43 billion. We've seen a recovery for a long time now, but still we are not seeing more jobs recovered. In fact, were it not for people giving up looking for work and public sector hirings, the unemployment rate would have risen significantly. There are now more then 400 companies that have labor done overseas, and it seems more and more fields such as accounting and even law jobs are being exported overseas.

The orthodox economic wisdom would be to simply wait for more job to arrive, that it is good if services that can be done more efficiently abroad are done abroad, and that the excess labor can open up new more productive fields. Still it seems worrying, so quickly after manufacturing jobs fled the country and destroyed many well-paying blue collar jobs, more and more service, white-collar, and technical jobs are being sent abroad. Some economists have posited that with the factors of production being more mobile then ever, that production will simply move more and more to where an absolute advantage can be found; which in more and more cases seems to be the third world.

Still, beyond doing nothing, there hasn't been nearly as many proposed solutions to the problem as mentions of it. And there is of course the problem that if we did encourage more expensive US labor to be used when third world labor could be used, and other first world countries use third world labor, we risk that they get an advantage over us. So what do you guys think, if anything, should be done about this?

[Frankychan]

1st thing, get rid of Bush.

[Harry Tuttle]

Specialization? I know for one thing that the more rudimentary tax returns get shipped overseas to be done by pseudo-professionals. Perhaps U.S. companies need to learn how to be more specialized and not just the historic mass producers they have always been.

[Harry Tuttle]

Originally posted by Frankychan
1st thing, get rid of Bush.

YEAH! because that'll solve EVERYTHING...

[St Leo]

Introduce a tax for inappropriate profit:employee count ratio?

[Shi Huangdi]

Originally posted by Frankychan
1st thing, get rid of Bush.

I didn't mean for this to be a political thread, rather an economics thread of what policies if any should be used to correct the problem, rather then whether Bush or Kerry should be put into power to solve it.

[Frankychan]

Originally posted by Harry Tuttle

YEAH! because that'll solve EVERYTHING...

Heck yes it would.

And not to steer this into the political realm Shi, but if you look at the administrations policies, they say outsourcing is a good idea!---while also saying that "outsourcing is bad". Two-faced? You bet.

But to get this into an economic discussion....what about giving tax breaks to incentivise companies to keep their jobs in the U.S.

[Harry Tuttle]

If anyone mentions the idea of "stakeholders" I'll crush your head with my index finger and thumb...

[Harry Tuttle]

Originally posted by Frankychan
Heck yes it would.

and if the same phrase wasn't repeated every election cycle it might hold some water.

and what kind of tax incentives? They would have to be huge to cover the cost savings in wages.

[Nubclear]

Be the good capitalists you are and do nothing.
I mean....if the US can't keep its jobs in an open market, then why does it deserve them?

[Frankychan]

You know.....

to respect Shi Huangdi's thread, I won't turn this political.....

....as for your second question/statement. I'm not an economist, I'm just trying to promote discussion.

[Frankychan]

Originally posted by Comrade Tassadar
Be the good capitalists you are and do nothing.
I mean....if the US can't keep its jobs in an open market, then why does it deserve them?

As much as I don't like this, I have to agree. You made your bed, now lie in it. That's what sucks when you have a laissez-faire market.

EDIT: But I still think some sort of tax break would help the companies in some way.

[Shi Huangdi]

Originally posted by Frankychan
You know.....

to respect Shi Huangdi's thread, I won't turn this political.....

....as for your second question/statement. I'm not an economist, I'm just trying to promote discussion.

Thank you.

[Shi Huangdi]

Perhaps a propoganda campaign could be of some value? In the past our automotive industry was given relief agaisnt foreign imports with a strong "buy american" campaign. Perhaps if consumers were provided with a list of major outsourcers and encouraged to not buy from them and if a revival of the old "Buy American" campaign were done it could be put to good effect. In some sectors where it is truly more profitable to outsource it may still happen, but perhaps with that and tax incentive it may lead to some marginal firms where the benefit isn't as clear cut to keep jobs in the US?

[Nubclear]

In the age of Wal-Mart, all consumers care about are low prices.

I find it very hypocritical of the US....They went around the world, overthrowing democracies and killing thousands to defend capitalism and now they whine when jobs leave their nation.

[The Templar]

(1) Pull out of every trade agreement.

(2) Only open markets with respect to countries that have comparable environmental and labor protections.

(3) Allow unions to proliferate and exist across national boundaries (like the longshoreman's international) just as corporations do. Workers will have more clout when they join with workers for other countries to collectively bargain together.

(4) Repeal Taft-Hartley. Allow for secondary boycotts and closed shops so that unions can bargain for their companies to deal only with other union companies.

(5) Create a new WTO that enforces open markets, labor protections, and environmental protections - where members have to meet high minimal standards of protection as well as open markets. No more "regulatory taking" arguments.

(6) Aid to developing countries so that they can jump right into minimally polluting technology quickly.

I figure this will bring India and Mexico up to US and Canadian standards of living instead of bringing ours down.

[Drake Tungsten]

The problem of outsourcing: what should be done?

We should ban China and India.

[Adam Smith]

Originally posted by The Templar
(1) Pull out of every trade agreement.

So we can have a Smoot-Hawley situation which contributed to the Great Depression?

(2) Only open markets with respect to countries that have comparable environmental and labor protections.

Environmental and labor standards vary with income, and we're imposing ouors on them. Shouldn't you be screaming "economic imperialism" at about this point?

(3) Allow unions to proliferate and exist across national boundaries (like the longshoreman's international) just as corporations do. Workers will have more clout when they join with workers for other countries to collectively bargain together.

Unions are labor monopolies. Monopolies reduce overall national income.

(4) Repeal Taft-Hartley. Allow for secondary boycotts and closed shops so that unions can bargain for their companies to deal only with other union companies.

By this reasoning tying should be legal, so there is no such thing as the Microsoft antitrust case.

(5) Create a new WTO that enforces open markets, labor protections, and environmental protections - where members have to meet high minimal standards of protection as well as open markets. No more "regulatory taking" arguments.

See #2.

(6) Aid to developing countries so that they can jump right into minimally polluting technology quickly.

Well, one out of six ain't bad.

I figure this will bring India and Mexico up to US and Canadian standards of living instead of bringing ours down.

Not likely.

[Inverse Icarus]

genocide, of course.

what doesn't a mass killing solve?

[Imran Siddiqui]

Indeed, Uber!

Also, if we conquer the entire Third World, then these companies won't be outsourcing anymore !

[Nubclear]

Population decline.

[Ben Kenobi]

(1) Pull out of every trade agreement.

Right.

Like the US can do without Canadian free trade.

[Lawrence of Arabia]

1. outsourcing isnt a problem
2. therefore, you cant fix it if its not a problem.

[Inverse Icarus]

Originally posted by Comrade Tassadar
Population decline.

kill all females who refuses / cannot reproduce every 9 months. watch population rise within the year.

[Nubclear]

That would hardly be a mass-killing.

[Inverse Icarus]

there's like 3 billion females in the world. thats pretty mass.

[DaShi]

The mass of them are pretty.

[TheStinger]

well of course the US and indeed other major economies who have a problem with outsourcing would have to close down all those foreign owned plants and sack all the workers to be consistent.

[Ned]

Outsourcing is simply more of the same thing that has been happening not only to the US but to Japan and other industialized countries for decades.

There is literally nothing one can do to stop it unless one completely shuts down trade by demanding that everything be produced in the US. Any such action is would be, let us say, more than idiotic.

The "anybody-but-Bush" clear thinkers propose forcing our labor and environmental standards on developing countries.

How?

Cut off trade?

Really??? Cut off trade with the second and third world? My God, we should be helping these folks -- foreign investment and business is exactly what these countries need to grow.

The bottom line, this "outsourcing" issue is pure demogoguery, mostly designed to get Republicans out of power. Anyone with half a brain can smell a rat here.

[TheStinger]

My God I agree witeh Ned and GULP Bush. outsourcing is free trade and free trade is good.