Outsourcing & Jobs Report

Discussion in 'Economics' started by limitdown, Mar 5, 2004.

  1. Inspite of the highly biased coverage this morning before the jobs report being released, CNBC and its commentators did themselves a tremendous disservice in showing their highly optomistic biased views towards the jobs reports and the current economic conditions as they are in reality.

    Their views were more a-kin to dreaming and wishful thinking than reality.

    The jobs reports were far worse than terrible and show that the complex issues of this Outsourcing wave, Tax Incentives to Outsource, no jobs in this so-called recovery and other economic evidence just aren't producing anything positive.

    The AFL-CIO commentator made some very important conclusions:
    1) the seed investments in new technology that are tax incented here in the US are being used to grow industries in other countries instead of in the US

    2) these trends have crept up from simple (high-school educated) factory jobs into the highly degreed Engineering and Technical jobs sectors

    3) the benefits of Walmart's low prices to the US consumer really does not allow those consumers to choose another source retail supplier because of the heavy handed tactics that Walmart uses in forcing their suppliers to move their manufacturing operations offshore, just like Walmart did.

    We're in deep kimchi here in the US.

    Last night on one of the business channels, one of the US based firms that provide outsourcing links to India, Ireland, China and other countries was touting that outsourcing has moved even higher upstream into:
    1) Investment Banking Research jobs
    2) Medical advanced Imagery Analysis
    and other key high tech sectors not previously discussed.

    How do you see this being played out?
    Should the tax incentives to create jobs offshore be continued, revoked or back-dated and revoked?
    Should these trends be allowed to continue when your own children and neighbors children graduating from college will not have jobs in their degree fields?
  2. taodr


    Heard an interesting figure this morning. For every dollar a company spends outsourcing outside the U.S.A., it "SAVES" 85 cents in wages. The only way to stop this is buy made in America products if you can find them and especially DON'T buy at Walmart !
  3. CalTrader

    CalTrader Guest

    I dont think the report indicates anything "terrible". We are still undergoing a structural re-alignment in some labor markets. My ancedotal evidence suggests that we are continung with a slow slogging job growth picture as people displaced from work that has (and is) being offshored move to other fields. US economic conditions continue to improve. Signs still point to contnuing improvement in hiring: just keep in mind that the we will not see a large change in labor conditions going forward - just a gradual improvement. Everyone keeps looking for a big spike up or down in hiring : its much less exciting to just admit that conditions will slowly continue to improve. Also, these conditions are actually the ideal since they dont require large adjustments in interest rates.

    As far as the kids go .... they (as well as everyone else) will optimize their postiion for the current and future realities of labor markets - more volatile than in the past and where skill sets of any type will have limited marketable lifetimes.
  4. Were your grandparents buggy whip makers? Or maybe farmers? Did they perhaps make vacuum tubes?

    I hope you get the point. Technology drives our economy but it has its ugly downside of creating new and destroying or displacing old jobs.

    For a much better read on this, consider this book:




    "The prime reason we have economic forecasts is that it makes astrology respectable."

  5. Mecro


    Oh please, there is not even a comparison. It's nice to fool ourselves by looking back at history of how the US workforce migrated from farming into manufacturing into high tech labor. I used to believe the same but after researching the matter, it's not like that at all. Look at the time scales and what exactly happened and it is NOT the same situation.

    The industrial shift was one huge wave that just needed to happen. That was within the country itself, barely even related to today's situation. NEXT
    50-60 years later, Japan started gobbling up manufacturing blue collar jobs. HOWEVER, there was already an expanding work force in the finance/accounting, research, computers & legal industries.

    Now we have almost every white collar job you can think of on its way to being taken out of this country by our own companies. The Japan situation was Japanese companies creating cheaper goods hence killing the American competition. Not the same situation. Especially since Japanese companies started moving some of the factories into US.

    Forget the IT bubble jobs for now. Scumbag US CEOs want to take finance, accounting, medical, legal jobs out of this country. We are talking about mass exodus of any task that can be performed without extensive person to person interaction. That's a HUGE number of jobs.

    All thats left is sales/advertising, service and management. Oh yeah, and the wonderful higher level executives. Not that many jobs left. Take a company, almost any company and think "what can I outsource?". Code writing - gone, number crunching - gone, tech support- gone, legal analysis - gone, tax crunching - gone, call center- gone.

    It's just hysterical. The companies accomplish great earnings from debt infused consumption. Ok then the CEO gets a huge chunk of it, the shareholders get a tiny bit and the rest goes into investing into the company infrastructure in India. Does anyone else see the idiocy behind this? Why don't we just throw money at India and associate the debt to the American Joe Shmoe.
  6. simstim


    i agree, it's not the fact that it is happening, but at the speed at which it is happening. it will eventually right itself, but there will many people that will suffer more than they should have because of a lack of some needed intervention.
  7. fan27


    Did anyone see the segment on Lou Dobbs last night where he interviewed Mark Anderseen (creator of Nestscape) on the jobs issue? Mark gave Lou a serious spanking in my opinion.

    The way I look at it, if someone can produce something for $1.00 in China/India, and it costs us $5.00 to produce that same good/service, it makes sense for them to produce it.

  8. There is a reason to look at history. This time around it does not seem much different except that it is happening very fast.

    Is there a solution short of another Smoot Hawley?

    CEO's are not doing it just for more money; in many cases it is survival of the company. Look at Maytag's recent decision to close its Newton plant and fire 170 people. Why? Their labor cost was in the $20/hr neighborhood while the new location is under $5/hr. If they did not relocate, their competitors will if not already, and then Maytag becomes non competitive.

    We may as you imply become a country that is dominated by the "Management and Marketing." It seems to be what we do best and I would add that we also lead the world in innovation and forming new companies. Seems like that is where we are headed.

    India needs our ability to use capital to create companies that use their local talent. India does not seem to be very good at forming companies.

  9. Mecro


    It's not just the speed it's also that something like this has never happened before. US company takes jobs and reinvestment profits out of US and into a foreign country. Meanwhile they make their profits primarily in the US.

    How can an economy function when even its own capital is flowing out of the country thanks to its own corporates?

    The only possible way is to create or exponentially grow an domestic industry that can suck in foreign capital and employ the domestic work force. Can anyone even try to imagine an industry like that?

    Only things I can come up with is Hollywood/television, financial engineering, advertising & service/entertainment. Neither of these has even the slightest potential grow enough and actually employ to make up for this disbalance. Well maybe, just maybe, US can evolve the Hollywood and service/entertainment aspect enough to become a huge foreign tourist trap. But then, this coutnry is not that beautiful, not even close.

    Or this country takes a turn toward extreme high tech research & development. That takes an education restructure (hmm possibly more jobs). But this is a process that could take decades and already has quite some competition (Europe, Russia, India).

    Look the reality has to be faced sometime. This GDP number is pure bullshit. And I do not even try to claim to be the all knowledgeable economics guru. All I know is that common sense, flows of money and debt tell exactly what is going on.

    I wonder what the US government has up their sleeves. Now if I were in charge, I would seriously look at anything that can spur true tax revenue, jobs, tourism. Drugs, sex & gambling come to mind. Legalization of marijuana would create big growing companies like in Holland, free up millions & millions of dollars and create enourmous tax revenue. As for sex & gambling, look at Vegas, an area simply unaffected by the recent economic worries.
  10. Mark sounded like a complete jerk IMO. He did not seem to be able to shut his mouth for a second and did not say anything intelligent either....

    "We are going to create jobs, because we used to create jobs in the last 20 years and we are not creating jobs because of the recession but we will definitely create those miraculous jobs in those miraculous new fields cause we always did." And so forth for 20 minutes. I thought better of him.
    #10     Mar 5, 2004