Economists are an odd bunch. I've worked with a few over the years and can vouch for that special brand of "oddness" among them. We often read differing views from economists on the hot sociopolitical economic issues of our day; however, a survey was conducted that finds agreement among them on a few issues. Surprise!
For the protectionists among us, this is probably not good news: Ph.D. Members of the American Economic Association were surveyed; 90.1 percent disagree with the position that "the U.S. should restrict employers from outsourcing work to foreign countries."
As a free-trade advocate, this leads me to ask: Isn't it time Americans start paying attention to the US job market so that we can re-train ourselves into fields that are in demand in our own country? Isn't it our responsibility to ensure we are employable?
PS: I'd like to provide you with a link to the full survey but the AEA is a subscription-based site. Dang those secretive economists!
For the protectionists among us, this is probably not good news: Ph.D. Members of the American Economic Association were surveyed; 90.1 percent disagree with the position that "the U.S. should restrict employers from outsourcing work to foreign countries."
As a free-trade advocate, this leads me to ask: Isn't it time Americans start paying attention to the US job market so that we can re-train ourselves into fields that are in demand in our own country? Isn't it our responsibility to ensure we are employable?
PS: I'd like to provide you with a link to the full survey but the AEA is a subscription-based site. Dang those secretive economists!
Comments
I am glad that I cannot be linked to the AEA website. What I mean is, I am glad that their survey won't get out into the public domain.
I am not a fan of outsourcing work to foreign countries. I am a fan of the theory behind "free trade." However, as is the case with many things that work on paper, some things are harder to execute with those same "paper" results.
I don't understand why USA can't have "free trade" with NO outsourcing. To me the problem isn't necessarily "free trade" but the problem lies in the tax incentives that corporations get to move out of this country. Those are two separate issues.
Here's my thesis no the matter. Have "free trade." Steer clear of import/export tax. Give additional tax incentives to corporations that stay in this country and train & re-train employees on a regular bais.
The problem is when you have free trade and tax incentives for corporations to MOVE outside of USA.
Face it, corporations are lured into outsourcing for these reasons:
1. Don't have to pay employees any benefits.
2. Don't have to pay US wages.
3. CAN run a manufacturing plant as a sweat shop. (No $$ spent).
4. No OSHA to demand safety for employees. (No $$ spent for safety)
5. No FICA, Federal or state withholding.
6. No child labor laws to contend with.
7. No import tax of goods back into USA to pay (free trade).
That's the short list. My proposal is to keep free trade on import/export taxes BUT ... legislate that if a US company outsources, those goods produced by outsourcing IS subject to import tax.
Dawn, you said, "we can retrain ourselves into fields that are in demand in our own country."
My question to you is this: If we outsource everything from manufacturing to white collar professionals (and everything in between as we do now) what are the fields that would be in "demand" in our country?
We already outsource technology, manufacturing, economists, certain medical needs - what "field" or goods or products are left for the USA to capitalize on? In other words, if we outsource everything what is left?
Yes! Exactly so! I fear terrorism, not globalization. American companies outsource in order to increase productivty (by skirting some of the restrictions listed in the first comment, but I'd like to address those in another comment) thereby increasing profit and expanding their operations to... hire more Americans!
For example, Wal-Mart does enormous business with China (in both labor and products,) yet remains the largest single employer of Americans at the same time. I've never seen a protectionist adequately explain that anomaly.
I'm happy to hear that 90.1 percent of economists agree. This is a Free Trade coup, Dawn! The paradigm is indeed shifting.
First commenter asks: "If we outsource everything from manufacturing to white collar professionals (and everything in between as we do now) what are the fields that would be in "demand" in our country?"
The trick is to look for jobs dependent on geographic location.
I, myself am slightly worried (at the micro level, i.e. "I don't want my job going to India") about outsourcing, so I work in an industry that's geographically dependent: Namely, construction, possibly the ultimate "safe job."
Other "outsource resistant" (to coin a corny phrase) jobs would include:
-Private security
-Campus faculty/staff (Harvard is older than the country itself, it's not going anywhere)
-Government, local, state, federal, (especially Defense and Intelligence, public education, and Postal services)
-Landscaping
-*shudder* Lobbyists! *shudder*
-Consulting
-Pharmaceuticals (though this one is likely to remain American through protectionism, I'm actually A-OK with that. R&D is hella 'spensive and requires big bucks, so the best drugs in the world are made in the USA and Europe. Here, they're developed with private funds leading to rich and happy American workers. In Europe, they're made with State funds and the employees riot over vacation days. I prefer our method, even if it's a bit protectionist ;)
There' also:
-EMS
-Police
-Transportation
-Fire fighting
-Park staff
-Lumber harvest
-Oil drilling
etc, etc, etc. Not to mention all the admin/managerial jobs providing organization for these industries.
There are plenty of "outsource resistant" industries to focus on.
"Face it, corporations are lured into outsourcing for these reasons:
1. Don't have to pay employees any benefits.
2. Don't have to pay US wages.
3. CAN run a manufacturing plant as a sweat shop. (No $$ spent).
4. No OSHA to demand safety for employees. (No $$ spent for safety)
5. No FICA, Federal or state withholding.
6. No child labor laws to contend with.
7. No import tax of goods back into USA to pay (free trade).
That's the short list."
And what a negative list it is!
No 1. is disingenuous. Americans employing workers overseas may not be required to provide benefits, yet many do so anyway.
No 2. is also disingenuous. Without a state-enforced minimum wage here, companies wouldn't feel the need to export jobs for this reason.
No 3. "Sweat shop" has a specific definition. "Exploiting a captive labor pool with no alternative option." What if two competing American companies outsource jobs into the same region? In this scenario, outsourcing would result in a social engineering "good" by elevating working conditions as well as wages. Free markets rock the devil! Hence Dawn's enthusiasm, and mine.
No 4. OSHA, while well intentioned, is essentially anti-business. See The Death of Common Sense. OSHA hinders productivity with bureaucratic nonsense. Because silica (sand) is classified as a "hazardous material," sand providers must weld shut the doors to their silos?! At a cost of $5000 a quarter?! When every worker there knows not to open the friggin' door?! I can't fault companies who seek less regulatory countries to produce such a basic product.
No 5. I'm not especially opposed to withholding, but make no mistake, this policy disguises to yer average American just how much he makes every week! And it's not the Free Trade advocates who're exploiting how "little" the average guy takes home. It's union activists who keep hammering away about a "living wage."
No 6. American corporations exploit children! Not here much anymore (thank God,) and isn't this practice so demonized here in America as to dissuade corporations in practicing child exploitation abroad? Not saying it doesn't happen, (it does) but wouldn't a competing American company, working the same region (see above) go a long way towards reducing child labor? Again, free trade rules!
No 7. I haven't followed import/export taxes very closely. So this is the very weakest of my objections to your list.
The other point I'd like to make --I sort of "heard" this in your post -- is that it's easy to panic at the thought of job loss here in the States. The truth is that the unemployment rate here is miniscule compared to historic lows and NAFTA and other free trade agreements have been in effect for a decade or more. If you read up on some of the economic concepts at play in free trade, you might find that the distribution of foreign dollars and the use of foreign workers in addition to the US workforce are all good things. They're less frightening and more positive than they might otherwise seem.
Also, for the record, most companies would prefer to do their manufacturing and production here in the US where there is (a) a stable representative government and (b) stringent laws against corruption. In third-world countries like Mexico where the labor is undoubtedly cheaper, graft and corruption are the norm. A business pays "protection" money to local officials and takes a huge risk on possibly losing their investment in manufacturing facilities overnight if the government changes hands.
When I studied economics in school, we were referred to a "Corruption Perception Index" that was very interesting. This index ranks countries by the perception that they are corrupt. The perceptions are culled from business people doing business there and from analysts. You should take a peek at it:
http://ww1.transparency.org/cpi/2005/cpi2005.sources.en.html#cpi
(I've really got to get better about writing the link tags... sorry for the inconvenience!)
At any rate, thanks for your comments, "Don't See It." It's important for free-trade advocates to understand the objections of those who fear global free trade; I hope the converse is true as well.
Thanks again for the outstanding and informative commentary in response, Kadnine! You rock!!
If I don't keep an eye out for my employment prospects, who will? Right?
An excellent point! You and I are on the same page, I think. Though I would have phrased it slightly differently... I'd say that we live in a culture that abhors corruption and that culture manifests itself in "stringent laws against corruption." Unlike other spots in the world, which have a different hierarchy of values.
In any case, I agree that most companies would prefer to operate here, and for the reasons you stated.
"... thanks for your comments, "Don't See It." It's important for free-trade advocates to understand the objections of those who fear global free trade; I hope the converse is true as well."
Doh! I should have said it at the tippy-top, but Dawn beat me to it. Thanks for your comments, "Don't see it." Dawn's right. The purpose of our discussion here is clarity, not conversion.
You both raised excellent points. I don't agree on all the points and will address those "challenges" below.
Kad gave an answer to my question of what jobs would be left. And while Kad gave an excellent list of jobs - none of the jobs listed help increase the GDP or GNP. That could be a big problem.
Ok, now to address the item points that you both agree on but I find a few ... opinions about. (Wow, it is confusing being a democrat on a republican blog - but rather insightful - so bear with me).
I, too, am a white collar employee. But, my heritage is from blue collar (sort of). One of my grandparents was a Union organizer back in the 20's, and my other set of grandparents fled Germany under Hitler in 1943. Once they were safe in the USA they helped Jews escape Germany, via the underground, gave them "false documents" and spread the refugees out across America. - So, what's this got to do with economy? Well, maybe nothing except that, my grandparents raised me (I was yo-yo'd between both sets) and I see the world as they taught me.
Forward now,
First, USA was the first to develop technology. We then sold the technology to China & Japan. After we sold our technology they began to manufacture tv's, stereos etc. Through a manufacturing technique developed by Edwards Deming of statistical quality control, Japan became a major manufacture known for their QUALITY and PRODUCTIVITY. The Japanese saw the need for quality. This was after WWII that Deming went to Japan. Before Deming left for Japan he tried to convince the US manufacturers of the importance that his methods could provide. The US manufacturers balked at his ideas, and the US Corp or Engineers sent Deming to Japan to help them with their Census. While in Japan, Deming described his manufacturing methods to the Japanese and they had Deming train their engineers his methods. At that very same time in the USA our quality of manufactured goods went down BECAUSE US manufacturers were more concerned with quantity produced as opposed to quality produced. Moving fast forward, the US manufacturers were feeling a little left out of the global market due to poor quality so FINALLY in the late 80's, slowly but surely, US manufacturers sent their engineers to be trained on the Deming Methods. As an obvious consequence the quality of US products increased.
Summary, we sold our technology to Japan ... and lost ALL the profit that could have gone with it. We gave them Deming and lost all the profit that could have gone with his methods. Finally, the USA caught on to Deming and trained their engineers his methods. Evaluating the scenerio, there is an eerie similarity to ME between losing our technology & our quality back in the 50's to outsourcing our GDP & GNP to other countries right now.
Now to address the line items from Kad
1. Not to disagree with you, but I don't know any manufacturer that offers benefits to their outsourced manufacturing plants. The only benefits I know of are for their white collar engineers & plant managers that they send to said country. Not to the blue collar guys and gals. In the USA benefits are NOT required either.
2. Exactly my point. In other countries they pay their workers 1/5th of US wages. For a manufacturer that amounts to paying around $0.80 - $1.25 per hour. Hence, they save money (god almighty dollar) by paying MUCH cheaper wages elsewhere. In fact, I have a friend that had an "illegal" Mexican Live-in maid/sitter. She paid the woman $30.00 per month?!?!?! Needless to say, I lost a LOT of respect for my friend after that.
3. As was seen in the USA when there were no labor laws and no labor unions, manufacturers in the same location did NOT give rise to the social engineering "good" by elevating working conditions. It just did NOT happen. That is why FDR FINALLY pushed a Bill through the Legislative Branch that it would be "illegal" to NOT recognize Unions. There were NO labor laws to prevent workers from demanding safe working conditions. There were no "good" hearted manufacturers that gave a darn about whether or not a worker stayed or went, BECAUSE if the employee quit they just picked up someone else. Now with labor laws there is not a significant need for unions. But, don't kid yourself into thinking that manufacturers competed to give rise to the social good, they simply did not have to.
4. Your example of Silica is interesting. Silica which is the nickname to Silicon Dioxide IS a hazard and should be considered a hazard thus is deemed a hazardous waste. You see, exposure to Silica gives rise to a debilitating, non-reversible lung disease called silicosis. You would NOT want to get that disease. It would be a painful and horrible way to go. So, OSHA set standards in place to minimize the exposure to Silica by requiring things like the use of respiratory gear. Different silica exposure give rise to different standards set in place by OSHA. While wearing respiratory gear may slow your work down, it does NOT slow you life span down. So, when an employee puts the dollar before the safety of the worker I can "fault" them for leaving this country.
I never have put money before the safety of human life.
5. You are right, Unions do take a healthy share in dues. I agree on 5.
6. The reason there is no child labor in the USA is because of the labor laws passed by Congress. As I said above, I don't think manufacturers are competing in other countries for workers and thereby doing the right thing by safe working conditions, fair wages & no child labor. The way see it, US manufacturers KNOW that if an employee leaves some other blue collar person will come in behind them. No laws and companies do NOT do the right thing. I have seen the God Almighty dollar WIN too many times.
7. No comment to your no comment.
I hope you both take my comments as written for respect to my two cyber pen pals on the opposite side of the aisle. No disrespect intended in any of my thoughts.
"So, when an employee puts the dollar before the safety of the worker I can "fault" them for leaving this country."
Note: "employee" should have been employer.
Respectfully, no. Not true. I think you're conflating stability with stagnation. The jobs I listed are stable in that they're "outsouce resistant," but they're not stagnant. With our rising population they're positively dynamic! We just passed 300 million according to the census. More people means more workers, more workers means a greater GDP. Even if all the workers work in stable fields like the ones I listed.
"Wow, it is confusing being a democrat on a republican blog - but rather insightful - so bear with me"
Nice to have your comments! Comment away.
[RE: technology to Japan, quality vs. quantity; "errily similar to today"] Look, I'm a fairly young guy, but I still remember the great "Japan is outproducing us!" scare of the 80's. And in the 90's our economy flourished, while Japan's tanked. No more scaremongering after that. I don't want to sound dismissive, but I don't see the connection to outsourcing, the topic at hand. Unless you're saying that today's outsoucing "scare" will turn out to be just as unfounded as the "Japanese menace" of 1985? In which case I'd wholeheartedly agree!
[RE: unions]
I should point out that I like the idea of unions. Their hard-won victories in halting abusive practices in the teens and twenties and thirties is a legacy we all share. What I dislike are modern day union activists, who, to my mind are trying to extort private companies. Should government intervene in every private dispute? No! I'm a "small government conservative." This puts me at odds with today's unions who are actively lobbying for even more government regulation in matters that should rightly be between private employers and private employees.
I'm suspicious of unions today in much the same way you're suspicious of corporations. Both are "in it for the money," it's just that the corporations are up front about it.
But, we agree on 5 ;) I shouldn't have spent so much time on this point.
[RE: OSHA]
Frankly? I hate OSHA. I hate OSHA as I hate Hell itself. I've worked in manufacturing and I saw countless man hours wasted worshipping at the alter of OSHA. Profits down the drain, profits that might have gone towards increased wages, profits that might have paid an employee's child's college tuition!
Common sense says, "Don't breathe silica dust."
I don't need a government agency to tell me what I already know!
**************
Whoa! I'm way too worked up about this. So I'll stop right here.
Thank you for responding. You make good points, and I don't want to scare you off.
As for the other points you made, "My epic," they are interesting. It seems to me that you're not taking into account the evolution of the economies we impact by doing business in those countries. Changes (labor laws and regulations) happened in the US as they were needed. Some of those changes are now outdated and have more negative impact than positive in my opinion. I have little doubt that changes will happen in other countries as the economy evolves thanks to free trade.
Patience is a virtue; only time will tell. Pardon the cliches but I do believe they are very valid when it comes to seeing the real benefits of true global free trade.
You have misinterpreted my statement, "God Almighty Dollar." I have seen all too often where money has come before human life. Not just in the USA but all over the world and even as far back as when time began. Therefore, my statement was that SOME people do NOT simply view the dollar for what it is ... the power behind civilization.
Instead, some people (not all) view the dollar as a "GOD." Therefore, when a person puts the dollar before human life I interpret THEIR actions as "bowing down and praying" to the dollar.
Cortez put the God Almight "dollar" (gold back then) before the human lives of the Aztec. That was 6000 years ago.
Fast forward, I have seen and have been personally involved in operations where manufactures INTENTIONALLY manufacture goods that will HARM and or KILL humans for their profit ... (GOD ALMIGHTY DOLLAR.) I have been involved with forcing, FORCING manufacturers to do INTERNATIONAL recalls on goods that they KNEW could maim/kill large groups BEFORE and DURING their manufacturing of the good - Just so their PROFIT would increased. That was the job I had. And that is NO exaggeration and NO scare tactic.
I am not making that up nor am I inflating the magnitude of the seriousness with which some manufacturers INTENTIONALLY produced goods that they KNEW (before and during manufacturing) would harm/maim/kill the consumer. They simply did not care because a)they cared MORE about increasing their profit and b) they thought their actions would be too hard to prove in a court of law.
Not meaning any disrespect to you or anyone else reading, but that is the job I had every day for many, many years. I saw too many manufactures KNOWINGLY put the consumers life/health at risk simply to increase their profit. After all of the many, many incidents I saw personally, I dubbed their mentality as being such that they “bow down and pray” to the dollar. Hence the phrase, “God Almighty Dollar.”
I wish I were exaggerating, but I am not.
I can certainly see why you are upset with corporations who conduct business that way. I can't imagine how frustrating it must be to do what you do for a living!
Obviously, some laws are necessary because SOME companies prove them necessary. I simply think that we've allowed certain bureaucracies to run amok at the federal level which causes a lot of grief for the law-abiding companies who are simply trying to conduct business, keep people employed, and keep shareholders happy.
You are also correct that SOMETIMES bureaucracies runs amok at the federal level. Unfortunately, we have to take the good with the bad.