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July 4, 2015

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Letter to the editor:

Outsourcing is a national nightmare

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With all of the jobs that have gone to other countries so the employees over there can sometimes be paid 21 cents an hour, it seems just impossible that the U.S. workforce will ever get back on its feet. Or that big business will ever bring back those companies to the U.S. And now those big business owners do not want their taxes increased and seem to be holding us ransom and are pushing us over the “fiscal cliff.” It seems like a terrible nightmare in which we are unable and hopeless to recover from.

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  1. I wonder if Marlene really understands our system. In a market driven capitalistic system, the goal of business is profits. For most of the last 150 years business had to employ people where the business was located to be successful and create profit. There was less expensive labor to be had but it could not be accessed because of lack of communications, shipping and technology. When the less expensive labor became accessible, business accessed it and outsourcing became possible. It's not evil. It's our system.

    At approximately the same time, many formerly 'backward' nations made economic progress due to the same technology that allowed outsourcing. This produced inexpensive goods and services that Americans wanted and purchased that competed with American made goods and services, made by businesses here who paid higher wages and benefits. Businesses here started to struggle to compete. Again this isn't evil. It is our system.

    At this point, America is still struggling to adjust to this new global economy and it is painful. I don't know if we will make a successful adjustment, but I do know our 'old' way of doing things is just about as relevant and as effective as my old 1960's transistor radio would be today.


  2. There are a few basic shopping rules to follow to reduce dependence on outsourcing: Buy American; Support local Mom and Pop stores rather than the big box retailers; and most of all, avoid Chinese made goods. It's slave labor without the guilt.


  3. "but I do know our 'old' way of doing things is just about as relevant and as effective as my old 1960's transistor radio would be today." @ Micheal

    Funny you should say that. My younger sister lives on the shore in New Jersey. And when Sandy hit, the only phone and transistor radio that worked throughout the storm were both vintage 60's. She proudly told me the latter I gifted to her when they first came on the market.


  4. Perhaps overcoming the outsourcing problem is hopeless. At least that is what corporate America wants you to believe.
    The problem is undoubtedly complicated, but the power of lobbyists and your politicians' absolute need for re-election money virtually ensure that the majority of American (and Canadian) workers will slip inevitably down the ladder of success.
    Corporations have adopted the disgusting sole goal of maximizing shareholder value, and that works to the detriment of workers and communities.
    I wish governments had the guts to offset the corporate greed by being nimble with the laws. For example, permitting American companies to avoid taxes by claiming on paper that their head offices are in Switzerland, is grossly adding to your almost insolvable debt problem.
    I stop at calling outsourcing evil, but the results on the American citizenry are nothing but negative. The richest 2 percent own the vast majority of corporate stock and reap the only benefits.
    For once I solidly disagree with the poster Michael Casler on this issue. In my opinion it would not be particularly difficult for your government to reverse the trend to outsourcing jobs by enacting appropriate laws.

    Donald Desaulniers (FromBellevilleCanada)

  5. Globaloney was a bad idea, it just destroyed any kind of sustainability for the poor worker in any country. We have conservative democrats and all republicans to thank for that.

  6. As long as American companies can produce cheaply made products in countries like China, expect Americans to be out of work.

    Profits are the number one goal for American companies who are outsourcing jobs overseas.They have no concern for the American worker,just profit.

  7. Marlene.. You're worrying way too much. As Mr. Freeman correctly states the data on outsourcing is cloudy but best guess estimates a couple million jobs over the last 30 years. That's not much considering a workforce of 150 million. In addition the trend is reversing. Workers in the Third World, especially China are scoring double-digit pay increases and benefit increases yearly. Many industries like textbooks and technology are starting to come back.

    The old man Dr. Scholl's socks that I bought at Walmart were made in the USA. My new air-conditioning system was made in Tyler Texas. My wife's BMW truck in Spartanburg South Carolina. The plastic knives and forks at the Chipotle Grill were made in the USA.

    The threat of outsourcing has depressed wages in the United States. That combined with the financial crisis have reduced aggregate demand and led to a below trend economic recovery. The people that work for businesses are also the people that buy the products that those businesses sell. You're going to see much higher wages in the United States and less outsourcing over the next 30 years.

  8. Donald,

    I don't think we really disagree. Part of the 'adjustment' could be legislation that removes some of the ways large companies use to avoid taxes and maximize profits, such as the ruse you mentioned...having corporate headquarters in foreign nation.

    However, those ruses will never be addressed as long as Americans are asleep at the switch, we don't enact term limits and public financing and we don't get lobbying reform. These powerful interests will just keep buying our representatives as long as we allow it.

    Marlene just bemoans what has happened. Our economic system did not fail... the world around it changed... and that is my point. We need to make some changes to deal with the new realities. So far, we are doing a poor job.


  9. One adjustment that should be made is in the "tax deferrals" that US corporations get on their foreign subsidiaries, although tax havens love them.

    Competition is the name of the game. For jobs and profits. It is a wild west game of survival, and get what you can for yourself, while you can. One of rise and fall, with the objective to keep rising at all costs.

    The problem is that American values have changed and the old ones are fading out of sight. There may still be a remnant of 40-60's values, but not much. Now there is a different struggle arising for the fearless Americans which represents this new age, maybe the gradual return to the days of the wild west. The question is how much damage will need to be done before one later generations think they have had enough and see to it changes are made. Cycles, all cycles, with a new twist, or promotion, at some point.

    Could it be that we might one day be classified as a "developing" country, or even an "undeveloped" country rather than an "developed" country? A backward step, but possible if we consider the effects of globalization and offshore outsourcing with all the tax advantages.

  10. LOL, Michael, we crossed thoughts and posts.

  11. I believe that "free trade" is only possible between equal trading partners. Free trade basically works (in concept) within our own borders, everyone plays by the same rules (for purposes of this discussion.)

    However, as soon as international trade enters the picture there are different rules for different players. In particular, in the interest of what the WTO calls "fair trade" the developing countries are intentionally given an advantage with regard to tariffs, etc. The underlying premise is that the wealthy developed nations should assist those who are trying to move up.

    This creates a built-in incentive for companies to move operations offshore if possible. To make matters worse, it doesn't really matter if a company's management has a liberal or conservative bent.

    A "progressive" agency (such as the WTO) actually wants a company to locate in the developing country to help them achieve what the developed countries have. A "conservative" company simply wants to take advantage of what the rules permit. Either way, no one in power (either corporate or political) really wants to change how this works.

    So in my opinion, the real problem is that in trying to help developing countries (such as China) we have skewed the rules in such a way that we *must* lose. Worse, we did this without taking into account that we were no longer the world's leading exporter, but was in fact running close to a neutral trade balance (early and mid 70s.)

    And though it might be said that companies that outsource are exploiting the cheap labor of other countries, the greater employment and economic opportunities gave rise to a middle class built on labor.

    The real question is this: do we care more for the middle class of other countries or our own?

  12. It does not stop with China, Vietman, Cambodia and India will be the next cheap labor exporters in the years to come. Companies will continue to shift production for the best price becuase if they do not they could be out of business like the textile mills in the 60's and the steel mills in the 80's. I saw recently South Korea had a 3.6 unemployment rate, wonder how they do that? Nobody ever complains about goods comming from them...The USA has to figure out what we can sell and who to sell it is a global market.

  13. Bradley,

    I hope you understand that I do not favor completely unrestrained Capitalism. I was instead pointing out the fact that in a Capitalist economy, business will seek out profit and part of that will be to seek out inexpensive labor. When a giant and inexpensive pool of labor became available in 3rd world nations through technological advances, it was to be expected that business would access that labor pool.

    I lost my job as a callcenter director because the company I worked for decided to outsource their callcenter to India to reduce costs. The market and American's purchasing decisions drove that move. Americans decided they wanted the least expensive goods and services they could get and when those goods and services started to be offered from former 3rd world nations at a cost that could not be matched by companies utilizing higher cost labor, many businesses here were placed in a position to outsource or die.

    There are things the government could and I think should do to businesses that use gimmicks to avoid paying US taxes on their profits, such as place their headquarters in a foreign nation but do the lions share of there business in America.

    If Americans want high paying jobs here, they will probably have to be willing to choose higher cost goods and services over what is being offered by low cost foreign providers and so far, they have not been very willing to do that. Import taxes and trade barriers can be used to mitigate the effects of foreign competition but they too have downsides to our export industries. Over time, the labor in 3rd world nations will become more expensive and as it does, te playing field will begin to level out, but until them, the road is going to be rough.

    The ugly side to Capitalism is that people and companies chase profits. Government can and should keep that chase for profits from running completely out of control, and more should be done in that area, but unless one favors going to a different system, there will always be a tension between the positives and negatives of Capitalism.

    I just wanted to clarify my view. How other people feel about it, I will leave to them.