Why did the US send so much work overseas?

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

  1. aegis

    aegis

    The US will look like something in between Mexico/Brazil and what it currently looks like, as will most of the world.

    The ultimate goal for these corporations is to eliminate every inefficiency that once existed in the market. Without those inefficiencies, the little guy won't stand a chance at ever competing.
     
    #11     Sep 15, 2009
  2. Outsourcing is the way of the market to find ways around the migratory restrictions that were put into place in the 1900's.
    If you don't let people go where the high paying jobs are, the companies that have the high paying jobs will go to where the cheaper workers are.
     
    #12     Sep 15, 2009
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    #14     Sep 15, 2009
  4. S2007S

    S2007S

    All the millions of jobs outsourced to third world countries will never come back to the US. Why would any company risk their bottom line paying some worker $12.50 an hour + benefits etc etc when they can outsource it 5000 miles away to someone they can easily pay $100 a month too.

    I call up customer service about once or twice a month whether its a credit card company or my local bank and all I get is someone from a third world country THAT I CANNOT UNDERSTAND, I tell them 1000 times to repeat what they have said, I have gone far enough to ask that when I do call that I get transferred to someone I CAN UNDERSTAND, usually they are based in Canada or somewhere mid west in the US.
     
    #15     Sep 15, 2009
  5. It's just a backdoor way of allowing expansion of credit/money supply.
     
    #16     Sep 15, 2009
  6. American Labor is overpriced, and overrgegulated.
     
    #17     Sep 15, 2009
  7. outsourcing is better for many companies, especially ones that do not depend on a domestic market for revenue.

    comparative/absolute advantage is the most efficient way to operate, it just changes over time. If you work in an industry/field that has reduced its advantage over time then you may be subject to structural shift and can lose your line of work to another company or other employees. On the bright side a recession with reduced wages could bring back the advantage and thus bring back jobs.

    I see unions as the greatest instigators in reducing comparative advantage where it should have not been reduced. Other countries didn't change, laborers just demanded too much from the employer. Which brings up a point when dealing with strikes, if the employer is willing to offer one dollar better than they can get on the market elsewhere then that is all the work is worth, strike solved. If you want more than your worth through bullying your no different than a monopolist.

    Also, the willingness of foreign countries to give out qualifications through certifications/degrees to be another leading cause when there should have not been a change in comparative advantage.

    Most of the time at solid US institutions one has to compete with the best and brightest imported from around the world, not just the best in Hyderbad.
     
    #18     Sep 15, 2009
  8. What happened is a bunch of guys sat around the big table.

    and the conversation went like this.

    How can I make billions more a year than I do today?

    Well lets go to china and some third world countries and see if we can get them on board.

    On board with what?

    We send our factories there, and train them on or industrial know how, and educate them here in the US as well.

    But wont that kill off our consumers?

    No, we just give everyone lines of credit so they can keep borrowing to make up the difference in lost wages and diminishing purchasing power.

    Great idea, and our equity will rise with the weaking dollar over the years.

    Wont people be run out of credit? and the US collapse?

    No problem our factories will be overseas and with the future of electronics we just transfer our wealth and move to Switzerland.
     
    #19     Sep 15, 2009
  9. If you don't think Ricardian economics works well in practice then you don't understand it. Comparative advantage doesn't claim that the price will be lower, only that the COST will be lower. Someone who doesn't understand economics easily confuses the two terms.

    Price is dictated by supply and demand, and is more specifically controlled by the price elasticity for a given product.

    Cost of production really doesn't have anything to do with the price of a product, except for to say that manufacturers will not produce a product if it costs more than the price they can sell it for.

    Comparative advantage revolves around the idea that the job will go to whomever/wherever the opportunity cost of production is the smallest. The goal of the manufacturer is to increase profit margins, not reduce the market price of his product.

    The market price is only reduced when another manufacturer realizes the profit potential and copies the first. Thus, supply is increased, which results in lower prices.

    In the end, long-term our economy is not hurt by the outsourcing of jobs, but actually helped by it. We consistently outsource mostly the low paying jobs and keep the higher paying jobs here. We maintain healthy levels of unemployment, and actually grow increasingly rich relative to the countries that we are outsourcing the jobs to.

    If unemployment were to get out of control here, then unemployed workers would suppress wages, and more of the jobs would come back from oversees. Unfortunately, our g-ment then disrupts this natural mechanism by implementing controls which pretty much ensure that it will always be more expensive to employ low income workers domestically.
     
    #20     Sep 15, 2009