Out-sourcing and the idea of REAL COST... (1 Viewer)

[casper_t_f_g]

Been to WalMart recently? Amazed at great deals on all sorts of goods? Me too.

I remember this concept I learned in college--Real cost. What you pay for an item is independent from what the real cost of that item is. There is the cost of producing the item, then the cost of shipping it to the store, then the cost of the labor to sell it, the overhead for the store, the cost of the liability of selling the item, the profit margin for both the producer and the retailer, etc.

We are fixated on sticker price. Low sticker price means great deal, right? Well, not really. WalMart (and others) tries to cut costs around the board by matching cost of producing as much as possible with sticker price. This is fine, as long as only american goods are bought and sold. This is not the case. They outsource their labor to China in order to avoid having to pass on the cost of humane working conditions to us.

The real cost of shopping for goods at places like WalMart (all retailers do it, I use Walmart as an example b/c they are the biggest) is in american jobs. We are rotting out the core of our economy. The government should prtect us by raising the cost of trade with other countries. We would then have to pay the actual cost of goods, and that would benefit us in the long term.

 

[Naughty Nurse]

Been to WalMart recently? Amazed at great deals on all sorts of goods? Me too.

I remember this concept I learned in college--Real cost. What you pay for an item is independent from what the real cost of that item is. There is the cost of producing the item, then the cost of shipping it to the store, then the cost of the labor to sell it, the overhead for the store, the cost of the liability of selling the item, the profit margin for both the producer and the retailer, etc.

We are fixated on sticker price. Low sticker price means great deal, right? Well, not really. WalMart (and others) tries to cut costs around the board by matching cost of producing as much as possible with sticker price. This is fine, as long as only american goods are bought and sold. This is not the case. They outsource their labor to China in order to avoid having to pass on the cost of humane working conditions to us.

The real cost of shopping for goods at places like WalMart (all retailers do it, I use Walmart as an example b/c they are the biggest) is in american jobs. We are rotting out the core of our economy. The government should prtect us by raising the cost of trade with other countries. We would then have to pay the actual cost of goods, and that would benefit us in the long term.

Oh what a shame. I thought for one precious moment you were going to argue against the expoitation of cheap labour in poor countries. But instead you're wanting to protect only your own country at the expense of poorer countries. Sad.

 

[anomaly]

Been to WalMart recently? Amazed at great deals on all sorts of goods? Me too.

I remember this concept I learned in college--Real cost. What you pay for an item is independent from what the real cost of that item is. There is the cost of producing the item, then the cost of shipping it to the store, then the cost of the labor to sell it, the overhead for the store, the cost of the liability of selling the item, the profit margin for both the producer and the retailer, etc.

We are fixated on sticker price. Low sticker price means great deal, right? Well, not really. WalMart (and others) tries to cut costs around the board by matching cost of producing as much as possible with sticker price. This is fine, as long as only american goods are bought and sold. This is not the case. They outsource their labor to China in order to avoid having to pass on the cost of humane working conditions to us.

The real cost of shopping for goods at places like WalMart (all retailers do it, I use Walmart as an example b/c they are the biggest) is in american jobs. We are rotting out the core of our economy. The government should prtect us by raising the cost of trade with other countries. We would then have to pay the actual cost of goods, and that would benefit us in the long term.

What you are talkng about would raise the cost of consumer goods in in the USA. In such a consumerist society, do you really think the public would go for that?

 

[casper_t_f_g]

I am not in favor of the exploitation of third-world workers. I don't see a good way for our government to fix working conditions in other countries. If you could propose a solution to that, go ahead. My only idea would be to require a working condition grade on goods sold in the usa, not unlike the nutrition panel on every food item. Require products to be labelled with place of production and working environment statistics--average age of employees, average wage, etc. I still feel this would not deter buyers if it saved them a dollar or two. By raising tarifs on imports, jobs could be created in the US, and we could increase guest workers to fill them if we need to. We can't just allow the current situation to continue, we are cashing out our future, big time.

As far as raising the cost of goods, yes that is exactly what it would mean. This is something most americans won't get. It would be tremendously unpopular, and any politician to proposed or supported the idea would be voted out of office at the next election. That is why we'll have to learn the lesson the hard way. Politicians don't fail us because they are bad people, they fail us because they have to get re-elected. One of the occasional negatives of democracy. Every politician's to do list looks alike at the top:

1) get re-elected.
2) cater to the interests of those who fund my re-election.
3) look good on camera, just in case I decide to run for president
4) make my opponents look bad, just in case they decide to run for president.
5) keep the mistress on the DL
6) secure a segment on cable news tonight. come up with clever rhetoric.
7) get my name on lots of important-sounding legislation
8) master double-talk, so everyone thinks I agree with them
9) protect and defend the Constiution ... blah blah blah, that stuff.
10) serve my constituents, even if the idea is unpopular in the polls.

Okay, its late, and I always get (much more) cynical when I should be sleeping.

 

[Connecticutter]

I find it hard to believe that these foreign workers would be better off if they were not exploited by our companies. How can we claim to help these impoverished workers in the third world by bringing our companies home if we cut off their best bet for making a living?

In terms of losing American jobs - I'm yet convinced that this is going to be a problem. We have a strong economy and people that get layed off will be able to find new work.

If wages are cut because we are competing with third world workers - wouldn't that be offset by the reduction in prices that outsourcing permits?

 

[LaMidRighter]

I find it hard to believe that these foreign workers would be better off if they were not exploited by our companies. How can we claim to help these impoverished workers in the third world by bringing our companies home if we cut off their best bet for making a living?

In terms of losing American jobs - I'm yet convinced that this is going to be a problem. We have a strong economy and people that get layed off will be able to find new work.

If wages are cut because we are competing with third world workers - wouldn't that be offset by the reduction in prices that outsourcing permits?

You bring up an interesting argument, outsourcing kinda scares me because we don't know how far the process will go, anything economically that tips the balance can be a major problem, but the lower price argument also is pretty airtight it would make sense that the added savings to those who just got outsourced may give them a breather till they can replace said job. But I don't know, the complexities of the situation are staggering. As far as the "third world exploitation" thing goes, I don't think that someone working for a more valuable currency than their own will complain to much at any rate, so I absolutely agree with you on that point.

 

[LaMidRighter]

I think that it is important to understand, at the most basic level, what labor is, and what jobs are. Companies don't give jobs just to be nice. Firms are consumers, and what they consume is labor. The workers are the supplier, and they have the option to sell this labor at any given price, as long as it's higher than the price floor (minimum wage).
Now I'll explain this all in cigarette terms, so if you don't understand the analogy, let me know, and I'll try another one. American labor is better than Chinese, because the unions do require certain standards in their members. But the Chinese do it cheaper. So in describing labor, let's say America is Marlboro, and China is GPCs. If you want a nice cigarette, you buy Marlboro, but if you just need the nicotine, you get the GPCs.

So is it really fair to raise the cost of labor for a group that all they have as an advantage is that they're willing to do it for less? And is it unfair to use cheap labor if the laborers are willing to work for that amount?
Just look at the current state of the Japanese economy, and you'll see the effect of an isolationist stance on economics.

I really don't think there's anything else to add galenrox. Great post! :applaud

 

[aquapub]

I had my arms up in the air, confused during Election 2004, when liberals touted outsourcing as a Republican flaw.

DEMOCRATS make hiring Americans unaffordable (needlessly) by supporting so thoroughly, the only legalized mafia left in America-labor unions. Union bosses help themselves while the worker, the company, and the country all get screwed.

DEMOCRATS promote the unreasonably encumbering regulations, bureaucratic red tape, and high taxes that drive businesses out of America.

DEMOCRATS refuse to let even the mildest of tort reforms put a leash on the epidemic of frivolous lawsuits wrecking our health care system and killing jobs.

Democrats are almost single-handedly WHY we lose jobs to China and India. Republicans should treat this as one of THEIR issues.

 

[ALiberalModerate]

I had my arms up in the air, confused during Election 2004, when liberals touted outsourcing as a Republican flaw.

DEMOCRATS make hiring Americans unaffordable (needlessly) by supporting so thoroughly, the only legalized mafia left in America-labor unions. Union bosses help themselves while the worker, the company, and the country all get screwed.

DEMOCRATS promote the unreasonably encumbering regulations, bureaucratic red tape, and high taxes that drive businesses out of America.

DEMOCRATS refuse to let even the mildest of tort reforms put a leash on the epidemic of frivolous lawsuits wrecking our health care system and killing jobs.

Democrats are almost single-handedly WHY we lose jobs to China and India. Republicans should treat this as one of THEIR issues.

In 1980 CEOs on average earned 45 times the pay of the average worker. It was a different time back then though, Labor Unions still had some strength, and most Americans held the FDR philosophy that corporations had a responsibility to their communities and nation as well as their stockholder. That however was before the Cheap Labor Conservatives “Culture of Greed”. Today, CEOs on average earn 241 times as much as the average worker. Yep, the average CEOs income has grown to 241 times as much as the average worker despite all those unions and regulations. Much of their income comes from stock options and dividends. So now, thanks to their Republican buddies in Washington, they on average pay a far lower percentage of their income in taxes than most of us in the middle class pay.

Americans work harder, longer hours, and with less vacation time than workers do in any other industrialized nation on earth. The reason we live in the greatest nation on earth and have the strongest economy on earth is simply because we work harder than anybody on earth. It is absolutely disgusting to me to hear someone actually try to blame outsourcing on the American working man. It’s just shameful. There is one reason jobs get outsourced and that is Greed. Of course to today’s crop of Republicans, greed must be a virtue. That’s probably why you have the tax code structured so that it is a tax advantage to outsource your labor. That’s why House Republicans have fought so hard to ensure that companies who have outsourced their labor or who have relocated their headquarters to some obscure location offshore just to avoid taxes are still eligible for lucrative government contracts paid for by the American Taxpayer.

I mean you are so full of it. I work in IT, we don’t have unions or a great deal of regulation other than Sarbanes-Oxley in the event that you are publicly held. Yet American IT jobs are being outsourced to India at a higher rate than any other industry. Millions of IT programming jobs have been outsourced to India in the last 4 years. This is despite the fact that America produces by far the best programmers in the world.

 

[stsburns]

Yep, my Information Technology job and jobs I have seeked have got shipped overseas, now someone in India has it. So does anyone need a computer repair, its only $40!

 

[DannPM31]

Been to WalMart recently? Amazed at great deals on all sorts of goods? Me too.

I remember this concept I learned in college--Real cost. What you pay for an item is independent from what the real cost of that item is. There is the cost of producing the item, then the cost of shipping it to the store, then the cost of the labor to sell it, the overhead for the store, the cost of the liability of selling the item, the profit margin for both the producer and the retailer, etc.

We are fixated on sticker price. Low sticker price means great deal, right? Well, not really. WalMart (and others) tries to cut costs around the board by matching cost of producing as much as possible with sticker price. This is fine, as long as only american goods are bought and sold. This is not the case. They outsource their labor to China in order to avoid having to pass on the cost of humane working conditions to us.

The real cost of shopping for goods at places like WalMart (all retailers do it, I use Walmart as an example b/c they are the biggest) is in american jobs. We are rotting out the core of our economy. The government should prtect us by raising the cost of trade with other countries. We would then have to pay the actual cost of goods, and that would benefit us in the long term.

You have to see that outsourcing brings cheaper goods into the US for our consumers. When consumers have more money left over after buying staple goods that places like walmart provides, they have more money to spend on discretionary items, which is what really drives the economy. Jobs may be lost in the US, but they are not good jobs that are lost, they are jobs like, package stuffer and other low skilled jobs. The lesser skilled jobs bring down the economy as a whole, as they are low paying. Outsourcing forces these low killed workers to gain skills wheater it be in History or Heating nad AC. Outsourcing also rasies the standard of living for the whole United States by bringing us lower priced items.

Dann

 

[stsburns]

Alright, so you're the best, but you're not the cheapest. The companies want the cheapest, not the best. So why should they have to hire you? You're not what they want.

I didn't take their $300 dollar certification test! :mrgreen: I never stated I was the best, Thank You! I was stating my self employment.

 

[DeMaxx]

Now I'll explain this all in cigarette terms, so if you don't understand the analogy, let me know, and I'll try another one. American labor is better than Chinese, because the unions do require certain standards in their members. But the Chinese do it cheaper. So in describing labor, let's say America is Marlboro, and China is GPCs. If you want a nice cigarette, you buy Marlboro, but if you just need the nicotine, you get the GPCs.

galenrox, There is one problem with your analogy. If you happen to work for one of the 1000's of companies or plants that has been closed down due to outsourcing to cheaper suppliers from other countries. Then you can't afford to buy Marlboro or GPC.

I come from a small textile town in the south. At one time about 10 years ago there were 15 plants in our area. now there are 2 still operating. Tell those people that outsourcing is a good thing. People have lost their homes, their jobs, their dignity. People can't buy when they have nothing to buy with. DeMaxx

 

[DeMaxx]

And I'm sorry, I really don't want to sound callous, but that's just how it is. What do you suggest instead? Forcing people to purchase labor from people that do not meet their current needs?

Thats the problem that may be the way it is, but it doesn't have to be that way. Someone else wrote that it was only taking away low paying jobs. That is also incorrect. There are professionals losing theirs jobs, managers all the way down to the low paying jobs. This country used to use tariff taxes to even the playing field so that other countries couldn't do what is happening to us right now. This is all due to Free trade agreements with other countries. Who are the winners in all of this not the people, but the rich. The people like the Waltons (walmart). who are taking advantage of this. DeMaxx

 

[SixStringHero]

I looked into the debate of outsourcing around election time. I trust FACTCHECK.ORG who is an independent and non-partisan organization, and they had much information and statistics that stated that outsourcing accounts for less than 1 percent of the total job losses in America.
Or at least that's what I rememeber.

So what's the problem?

 

[Stherngntlmn]

Been to WalMart recently? Amazed at great deals on all sorts of goods? Me too.

I remember this concept I learned in college--Real cost. What you pay for an item is independent from what the real cost of that item is. There is the cost of producing the item, then the cost of shipping it to the store, then the cost of the labor to sell it, the overhead for the store, the cost of the liability of selling the item, the profit margin for both the producer and the retailer, etc.

We are fixated on sticker price. Low sticker price means great deal, right? Well, not really. WalMart (and others) tries to cut costs around the board by matching cost of producing as much as possible with sticker price. This is fine, as long as only american goods are bought and sold. This is not the case. They outsource their labor to China in order to avoid having to pass on the cost of humane working conditions to us.

The real cost of shopping for goods at places like WalMart (all retailers do it, I use Walmart as an example b/c they are the biggest) is in american jobs. We are rotting out the core of our economy. The government should prtect us by raising the cost of trade with other countries. We would then have to pay the actual cost of goods, and that would benefit us in the long term.

Bravo.... well stated... the proliferation of walmart as a central employer and retailer in this country has begun to destroy us. The fact that the main future goal they have is growth in countries like China scares me even more. We need higher tarriffs now. I don't think barely any of the population realizes that the money they are saving now is creating a trade deficite dependancy which is one of many factors that could allow one of our greatest future adversaries the ability to single handidly crush our economy. After China puts us into true depression, inflation skyrockets, and unemployment booms... will saving that $1.05 on the garlic roasted cheezits and lawn chair really seem like it was worth it?

 

[DeMaxx]

But what do you suggest? Employers are simply consumers, and if you force them to hire here, that would be like if you were forced to buy a Bentley when you want a Toyota, they want something else.

galenrox, sorry I wasn't able to respond yesturday, there are things that this country can do. and has done that that actually created this situation.

1. Tariff taxes. This tax has always been used to level the economic playing field. By taxing imported goods, Making it just as desirable to purchase U.S. goods as it does goods produced over seas. In other words using your analogy. It would cost the same for the pack of GPC as does to purchase the Marlboro's. Before you make the argument that would take money out of the U.S. consumers pocket. lets look at plain economics. Since the start of the North American trade agreement went into effect. It cost more to live today than it did 12 years ago. the influx of cheaply produced goods have not really trickled down to the consumer.

2. One of the main reasons for the job loss, isn't particularlly because of companies in other countries are producing cheaper goods. The trade agreement produced tax loop holes inwhich U.S. companies took advantage of. They now can open thier plants over seas, have the same product produced at a much reduced labor rate, not paying the tarriff taxes and not really passing the savings along to the U.S. consumer. Big business found a way to get richer. They closed plants in the U.S. and open them in other countries.

The following came from the Economic policy institute.

-- Through the end of 2002, the U.S. lost 879,280 jobs as a result of NAFTA - jobs that formerly existed and were eliminated as well as those that were created in other countries instead of here as a result of the growing U.S. trade deficit. Nearly four-fifths of the job losses were in manufacturing industries.

You ask what do I suggest? A lot of reform. DeMaxx

 

[Shamgar]

The real cost of shopping for goods at places like WalMart (all retailers do it, I use Walmart as an example b/c they are the biggest) is in american jobs. We are rotting out the core of our economy. The government should prtect us by raising the cost of trade with other countries. We would then have to pay the actual cost of goods, and that would benefit us in the long term.

Oh but in a "democratic" world everyone is equal . . . .so they lower the standard of living in this country to make it "equal" to the third world countries . . . .

 

[Konstantine]

<<We would then have to pay the actual cost of goods, and that would benefit us in the long term.>>

A trade war with nations across the globe would not help us in the long run. Although Bush's steel tariffs were admittedly nothing more than a campaign ploy, those tariffs do illustrate the hardline reaction on the part of the EU and Japan. Protectionism is flawed and the global economy is too interconnected for the US government to unilaterally (remember that word?) and artificially increase the cost of global trade.

 

[Konstantine]

The premise of this article is absurd. How does the outsourcing of kitchen appliance manufacturing equate to a significant loss in the US high tech sector?

 

[DeMaxx]

A trade war with nations across the globe would not help us in the long run. Although Bush's steel tariffs were admittedly nothing more than a campaign ploy, those tariffs do illustrate the hardline reaction on the part of the EU and Japan. Protectionism is flawed and the global economy is too interconnected for the US government to unilaterally (remember that word?) and artificially increase the cost of global trade.

The U.S. has to protect trade with other countries. It also has to protect it's own economy and it's jobs. The trade agreements were originally created with the intention that free trade would go both ways and it would increase sales of U.S. goods. This all sounds great. It didn't work anything like what was expected.

This goes back to one of my eariler post. The U.S. was not prepared for the influx of cheaply made goods, and the effects that would have on the sell of U.S. made goods. Another effect is that it created favorable conditions for companies based in the U.S.. To close down thier plants here and move them over seas for cheaper labor rates, hince creating a loss of U.S. jobs and the saving's are really not being passed on to the U.S. consumer.

Oh but in a "democratic" world everyone is equal . . . .so they lower the standard of living in this country to make it "equal" to the third world countries . . . .

If the U.S. doesn't make some changes in it trade policies we will become one of these third world countries. Where people won't have jobs. and we will have to struggle to be able to purchase the necessities of life. DeMaxx

 

[DeMaxx]

It's cool, don't worry, I don't keep time limits on when you can respond :lol:
I think you're missing the overall concept of what outsourcing actually is. Everything done in commerce, at its most basic level, is buying and selling. And just about no one just buys or just sells. In the case of labor, the worker plays the role of the supplier, and the employer plays the role of the consumer, and the employee is selling the employer his/her labor, capital (in this particular instance it's his/her education or experience), and entrepeneurship (ability to take risk).
And thus any action on behalf of the government to try to make hiring someone more or less appealing than anyone else would be similar to the government making any cheap foreign product less appealing than the more expensive (and probably higher quality) domestic product. As a consumer, if you wanted to by a cheap New Zeland apple, but the government stepped in and removed that option, how would you feel. It's the exact same thing.
And let's look at the economic effects of such isolationist tactics, common from nations who are now stuck in an economic downward spiral for those reasons, such as Japan. As nations we work on the ideas of absolute and comparative advantage. Absolute advantage is we can make more of something than you for fewer resources, like Japan can make 4 cars a day, while America can only make 3, hypothetically speaking. Comparative advantage is a little more complex. Take the previous example of Japan vs. America in auto production, then let's add into it that Japan can produce 14 DVD players, while America can only produce 8. So Japan can either dedicate all of their resources to making 4 cars at the opportunity cost of the 14 DVD players that they could've made, or they could make the 14 DVD players at the cost of the 4 cars, and America can make 8 DVD players at the cost of 3 cars, or 3 cars at the cost of 8 DVD players. That means in Japan the opportunity cost of making 1 car is 3 and 1/2 DVD players, and the cost of making a DVD player is 2/7 of a car, while in America the cost of a car is 2 and 2/3 DVD players, and the cost of a DVD player is 3/8 of a car, and thus as long as the cost of a car is between 2 and 2/3 and 3 and 1/2 DVD players, it is better for America to just produce cars and Japan just to produce DVD players.
This works in all forms of commerce, not just nation vs. nation, and tarrifs only throw these things off. The only purpose of a tarrif is because a nation cannot compete in a global market, and with an economic super power, such as the US, that claim is absolutely proposterous!
Plus the ramifications by global organizations, such as the WTO, would be swift and heavy. Any nation that our jobs would be going to would have justification to file complaint, and be granted billions in damages, which they could apply in tarrifs anywhere, still driving people out of work.
Every country has the ability to place tarrifs, and if we start doing it on major markets (and labor is by far the biggest market in the world) it will only cause problems, and the people whose jobs you were trying to save would end up unemployed, because the increased cost would just cause people to just consume less, thus requiring fewer workers to make fewer things.
As far as not passing their savings on to the consumer, they only pass along as much savings as we ask of them. As far as businesses, the only companies required to pass on savings any more than the market determines they should are regulated monopolies, such as utility and cable companies. Other than that, it is solely supply and demand in determining how much of their savings we get back. Since these companies are competing, the only real response is to buy less, become less consumeristic. Show them that as their prices go up, we will buy considerably less, and show that we don't really need their **** as much as they need to sell it to us, and then we'll get those savings.

I completely agree with the sentiment of what you believe. I believe that it's a sad day when companies value profit over American quality of life. I think Bill Gates said something interesting when he spoke about the increased acceptability of outsourcing, when he said "As a business owner I am ecstatic, but as an American, I weep" or something along those lines.
But the fact is the laws of economics still do and always will apply. And getting discouraged and trying to go around them to find an easy solution to a complex problem has never EVER worked for the better of anyone at all. The only suggestion I can make is study up on economics, learn why this stuff is happening, and try to find out how to, with minimized cost to society, encourage American companies to hire American workers. Right now, the easiest answer that I can think of is just don't buy from companies who outsource their labor. But once the government gets in on this, we are all ****ed.

I have to agree with with alot of what you say, but ! Not all of it.

encourage American companies to hire American workers. Right now, the easiest answer that I can think of is just don't buy from companies who outsource their labor.

Thats exactly what were talking about here. Finding ways to stop outsourcing jobs. Tarriffs are one way and maybe not one of the best ways. maybe only by putting tarriffs only products and goods that are in direct compitition with U.S. products.

Another way is to stop giving tax breaks that is giving cheap labor to U.S. companies. Make the cheap labor oversea's look less attractive.

Bill Gates said something interesting when he spoke about the increased acceptability of outsourcing, when he said "As a business owner I am ecstatic, but as an American, I weep" or something along those lines.

This such a true statement. He knows as a business man he's will make even more money. My question is if he wasn't to outsource his product, would he not still be the worlds richest man?

U.S. companies were making money before the outsourcing happened. if trade agreements had not of happened U.S. companies would still have made money. like I said before we need reform. A middle ground, not all or nothing, the way it is now. Something like we will offer free trade with China companies if they will open a percentage of plants in the U.S. and also allowing the U.S. to open plants in their country. Thats give and take. it creates as on both sides. Then both countries grow, and the free trade will be equal.

What I main point is outsourcing is a problem and something needs to to be done about it. DeMaxx

 

[128shot]

One thing I want to mention is the fact that we aren't letting enough forgein investors in. We are denying a whole lot of Chinese businesses from opening up on our shores, you know.

Unions are another thing entirely though, and I won't touch on that....

 

[Nemo]

Greenspeak: Outsourcing is a major source of leisure time for those it replaces.

 

[Tim_B]

Millions of IT programming jobs have been outsourced to India in the last 4 years. This is despite the fact that America produces by far the best programmers in the world.

This is so true. It amazes me that outsourcing has affected more of the "high paying" tech careers, as opposed to just call center jobs. I read an article from Florida Today that said Hewlett-Packard plans to lay off 14,500 jobs, most of them to be affected in the IT department. Do you think the company plans to outsource those IT jobs to India? I remember when getting a IT degree or computer science degree was a good idea, but now economics has become the leading major in universities and colleges, mainly because it comes with better job security. Understandably, India will be cheaper for American companies to hire, but it is still disturbing that this country will sacrifice its' own people to save a buck.