Why did the US send so much work overseas?

Discussion in 'Economics' started by noob_trad3r, Sep 15, 2009.

  1. Whats there a specific reason why the US decided as a whole to send overseas so many services and industries?

    Just curious why it was thought to be a positive long term plan?

    I am not an economist so maybe I do not understand what the pros were for this long term plan.
  2. it wasnt a plan. it was a reaction to competitive forces.
  3. sosueme


    Not true. It is a plan to become global and grab a slice of the growing global middle class

    Think "greed" and you can't go wrong
  4. aegis


    Umm, profits?

    Cheap labor = greater profit margin

    The economists will spout some bullshit about comparative advantage of course. Thing is, those "cost savings" don't always result in lower prices for the consumer.

    Same with union/non-union labor in the construction industry. Non-union contractors don't always pay their workers nearly as much as union contractors. However, they still have to bill the same hourly rate as the union contractor does. Well, that extra profit goes straight into the contractor's pocket.

    Comparative advantage works great in theory, but it doesn't work in practice.
  5. Because the unamerican welfare collecting white republican trash hate the educated employed middle class.

    The republican elite prefer the people to be illiterate and immoral like the tea-bagging and birther imbeciles.

    The export of jobs was a well orchestrated plan starting with Reagan to indebt and bankrupt the nation by useless spending on the military and borrowing from our enemies while making the population addicted to credit and oil.

  6. but at some point how do you make profits if your consumer base is unemployed or underemployed and no longer able to borrow?

    They never took that into consideration?
  7. actually you have to read David Ricardo's Principles of political economy and taxation. he explains it very clearly and figured it out 200 yrs ago.

    it is extremely counter intuitive but you will see it makes complete rational sense
  8. First.... motivated by desire to increase profit margin.... huge labor cost savings NOT passed onto US consumers (or if somewhat, not in proportion to cost savings) Same is true in services, wherever possible. I know of x-rays being taken in the US, digitized and sent to India to be read by radiologists there...

    Second... almost forced into it, as competing European manufacturers were doing the same

    Third... unintended consequences. We displaced a significant portion of our middle class... NEVER TO BE REGAINED! Economic impact is HUGE and lonnnnng lasting... though not yet acknowledged... (still hoping to "get things back on track"... ever hear the expression, "never happen, GI"?... applies here.)
  9. so is it possible the US will look like Mexico/brazil.

    With mansions and towers and shatytin roof cities in the horison?

    Ford said he wanted to pay a fair wage so his customers could buy his products. This seems to make the most sense to me.
  10. I'd say there are many reasons. One reason in particular involves the environment.

    A long time ago, Larry Summers wrote a paper advocating moving industries that also produce high levels of pollution to third world/emerging countries. This would accomplish two goals - we don't have to deal with the pollution ourselves and it's cheaper to build a factory in a country with weaker environmental constraints. I'll look up the source - I do remember Chomsky quoting this in one of his books - he referenced the paper Larry Summers wrote - it was actually leaked and pissed off quite a few people.

    Much of what we see today was on the drawing board so to speak, decades ago. Beginning with Nixon and Kissinger's visit to China almost 40 years ago. It's not as haphazard as you think. Are there unintended consequences? I think so.
    #10     Sep 15, 2009