Merry Christmas from corporate America

by William Penwell 23 Replies latest social current

• 

  expatbrit

  Sorry, but the idea that sending jobs to low-cost countries (known as offshoring) is damaging to the economy is wrong. Free trade in goods creates wealth, so will free trade in services, Luddite moaning notwithstanding (time and skills are merely another form of commodity).

  As usual, what is visible is the relatively few people who will lose jobs because they have become overpriced and obsolete in the developed economy. What is not so visible, but just as real, are the benefits to a far greater number of consumers, and the forced impetus for Western workers to increase their skills, thereby driving technologocal advancement.

  While everyone would no doubt love to have guaranteed jobs and set incomes, this is a recipe for stagnation. Just study the medieval economy if you doubt that. Advancement requires uncertainty and change.

  Now, here is a link to a study by the McKinsey Institute that shows that a US dollar spent offshoring results in a benefit to the US economy of between $1.12 and $1.14: http://www.mckinsey.com/knowledge/mgi/offshore/

  If you want the full study, registration is required, but hey, you get access to a good source of economic data (useful for inoculations against politically correct but wrong socialist leanings).

  Here is a summary of the study results from the Economist:

  

  Expatbrit
• 

  frenchbabyface

  OK, firstly, why do you think this is just a US issue?

  If it is me you are talking about ... never said that ... (Forget about US ONLY) I'm talking about OUR COUNTRIES ...

  And secondly, I'll give you some positive spin. Why does 10% of the world believe they can hold 90% of the wealth? Developing countries are maturing. You will see a world where you have to compete with them, some of these countries are very poor, something people don't like to think about until it affects them personally. Some people around the world would do anything for a job "flipping burgers".

  I agree ... (only one category knows that they have nothing to lose and everything to win - it's still a problem)
  
  but what I agree with also totally is what MAV said ... WE HAVE THE SAME PROBLEME HERE (that is why I'm saying take care things are changing ...) today you don't care about the poor ones - tomorow you may be the poor one.
• 

  Simon

  erm ... I agree with the sentiment to some extent.

  ... but you should know that the study you are quoting was commissioned by Nasscom, a group made up of Indian tech companies as well as IBM's Indian services unit (as they are trying to spin the transfer of 40,000 out of 160,000 jobs by 2005)

  http://news.com.com/2100-1011_3-5133261.html?tag=nefd_top

  What is more likely to happen is that US companies (and the small number of people who own / run them) will benefit big time from lower costs and increased profits. Ultimately, in a globalised economy, prices and wages will have to become closer aligned so after a while you won't see Chinese / Indian costs and US prices which will mean cheaper prices for consumers ... and lower income for the companies ... and lower wage packets for the workers.

  But hey, the rich will get richer won't they !

  What the real problem is, is the unfettered and poorly controlled greed of corporates at the expense of the little people. But when you swallow the propaganda and put in power the people that the corporates want in power ... well, what do you expect?

  This isn't good for India either - university graduates now make more working in a call centre than training to be a doctor which means the best and brightest will be lost to less important areas from fields such as medicine.
• 

  lastcall

  What the real problem is, is the unfettered and poorly controlled greed of corporates at the expense of the little people.

  Simon,

  Dead on, this fact has been showcased in the last few years by companies like Enron, Worldcom, Tyco,etc....it is truly sickening.

  LC
• 

  frenchbabyface

  
  Ooops I've just got a phone call from one of my rich uncle ... ??? Weird ... Today ... He never called me in my entiere life ... What's going on ??? He asked for news and what I've been doing, doing now and stuff and the weirdess part of it was that he was like especting me asking something to him ... money maybe ? ... LOL I could feel it ... I didn't ... and then ... finally ... he asked for my mother (his sister). Ok now I got it maybe he was just polite maybe ... Now I feel that they are about to talk about a field that belong to the whole familly, my mother included. Sure he wants to buy my mothers part (for cheap) to sell it (+ $$$$)... whatever ... (this is the second time the rich uncles from the familly called me, the first time Tony was 9 (his is almost 22) - to find my mother to allow one of them to use the field !!! FOR FREE ... maybe now they want more (my mother is the poorest of the familly they threw her away)
  
  Sorry need to vent !!!!!!!

  ... I didn't read the last postes before to post what have written before the call

  ... the idea that sending jobs to low-cost countries (known as offshoring) is damaging to the economy is wrong ...is damaging to the economy is wrong.

  I agree ... (that is why staying in a logic of war instead of focusing on economy is wrong and expansive)
• 

  expatbrit

  but you should know that the study you are quoting was commissioned by Nasscom, a group made up of Indian tech companies as well as IBM's Indian services unit (as they are trying to spin the transfer of 40,000 out of 160,000 jobs by 2005)

  Well an interesting attempt at "poisoning the well", but McKinsey Global has an excellent reputation for its scholarship, and no need to pander to special interests. Why not see if the study itself stands up?

  What is more likely to happen is that US companies and the small number of people will benefit big time from lower costs and increased profits.

  Lower costs benefit consumers. Consumers make up the vast majority of society. Increased profits benefit shareholders and investors. In today's Western societies, this is again a very large segment of the population. It shouldn't be forgotten that while companies are seperate legal entities, they are still just mechanisms to achieve a purpose. They are owned by people, frequently large numbers of people.

  Ultimately, in a globalised economy, prices and wages will have to become closer aligned so after a while you wont see Chinese / Indian costs and US prices which will mean cheaper prices for consumers ... and lower income for the companies ... and lower wage packets for the workers.

  Yes the wages and prices will become closer aligned. That's good! It means that China / India and other equivalent nations will have advanced. Their economies will have developed closer to Western standards. That will be good for their populations, reducing their grinding poverty and health problems. Isn't that a good thing? Why is it that the same people who protest about the West creating poverty in the third world also protest against the methods of developing third world economies? This is just protectionism: one of the greatest causes of frustration to third world governments at trade summits.

  Also your statement contradicts itself: if wages become closer aligned, they will rise in the third world. Thus there will not be lower wage packets for the workers there. In the West, workers will relocate to other more advanced employment, because they will have to. Greater skills = higher wages. This is one of the strengths of free trade: it tends toward meritocracy. A few will no doubt not be able to make the transition, a meritocracy seperates the smart and industrious from the stupid and the lazy, and provision should be made for them. But to hinder the majority for the benefit of the few is madness.

  This isn't good for India either - university graduats now make more working in a call centre than training to be a doctor which means the best and brightest will be lost to less important areas.

  Have you seen evidence of this happening? It may, but then again, it may not. And why shouldn't people have the freedom to make decisions like this which benefit themselves?

  What the real problem is, is the unfettered and poorly controlled greed of corporates at the expense of the little people.

  Oh come on! This "greedy corporations vs. the little people stuff" is old and tired. Economic class hatred. Corporations are merely mechanisms, legal entities for a purpose. That purpose is to make money. The corporate mechanism has created much of the wealth we all enjoy. There is no such thing as "the little people".

  Expatbrit
• 

  little witch

  First of all, Thanks for discussing this important topic. As economics and trade is a complicated subject, I appreciate the opportunity to discuss and read opine about it.

  I am torn on the matters...On one hand, I am greatful that third world countries are going to benifit from global trade. I hate to see and hear of families living in poverty, the likes of I cannot even begin to imagine. To see children with worm expanded bellies, living in cesspools is more than I can take.

  I consider myself lucky to live in a better place. Sure there is homelessness, hunger, and lacking medical care in my country, but people have resources here to keep this sort of thing from happening. Those poor folks have no saftey net.

  My husband was a painter for many years, in the construction trade, and we have seen the decline of the trades go from pride and good wages, to poor workmanship and peanuts..It hurt us badly. Living in the USA, what happened was, Mexicans took over those positions to save the contractors money, and the work is shoddy...

  I don't hold a grudge though. We can go to school with grants and loans to improve our economic well being, and compared to third world countries, that is a blessing.

  I feel that if the Mexican economy can prosper, then there will be fewer illegal aliens coming in, and that things will work out in the long run.

  Yes, it has hit our family hard, but we have a roof over our head, food to eat, and resources to make up for our hardships. I am very blessed compared to people in Africa, Mexico, and India. I see it as a transition to equality in the world. I hope to see the day that starvation is a thing of the past. I hope to see the day that children do not die of easily treated disease. I willingly give up my excess to help someone more in need.

  "We must live simply, so that others may simply live"...Ghandi
• 

  lastcall

  Expatbrit has made some excelent points..alot to think about.
  

  It really can come down to your point of view.

  Corporations can be viewed as a mechanism, a sort of generic inhuman machine like term.

  I view corporations as a group of people, because ultimately that is what a corporation is, a body, with different appendages that work for the purpose of profit. Why do people work together to achieve profit as a group? So that the individuals of that corporation can sustain and benefit and secure their personal survival and enrich their life and the lives of people they love. (.yes cororations are about love!)

  This includes everyone from the maintnence worker to the CEO.

  So you see corporations, as I view it, aren't as mechanical as they are human.
  

  The corporate mechanism has created much of the wealth we all enjoy. There is no such thing as "the little people".

  I don't view it that way...it is the creative mind, those that create, those that build, those that fix, those that maintain, that have created the wealth that we all enjoy.

  It is the folks that sweat it out everyday that make this world turn, not a bunch a people sitting in a board room.

  What happens if all the corporate officers in this world stay home for a week.what happens to the economy?

  What happens to the economy when factory workers, engineers, draftsman, welders,electricians, garbage collectors and police stay home for a week?

  LC
• 

  frenchbabyface

  Expat : In the West, workers will relocate to other more advanced employment, because they will have to. Greater skills = higher wages
  You just can't believe that other people can take advantage on the West on this matter or what ?
  the west is not god ... other people are showing already how skilled THEY ARE ...

  Because they will have to ??? ... no, no, no I would say : IF THEY CAN ! not the same ... again the west is not god !
  
  GLOBALISATION IS GOOD FOR ECONOMY ... I have nothing against the globalisation ... as for no such thing as "little people" ... it should not existe but it does because our systems are pyramidal systems from the gov to the corp even socially, add no true justice (any way) and it is then just logical to have "little people' on the pyramidal and economical sense.
• 

  frenchbabyface

  LASTCALL :
  I don't view it that way...it is the creative mind, those that create, those that build, those that fix, those that maintain, that have created the wealth that we all enjoy.
  
  It is the folks that sweat it out everyday that make this world turn, not a bunch a people sitting in a board room.
  
  What happens if all the corporate officers in this world stay home for a week.what happens to the economy?
  
  What happens to the economy when factory workers, engineers, draftsman, welders,electricians, garbage collectors and police stay home for a week?

  EXACTLY ... WELL SAID !!!And I just don't understand why people feel like they have to thank those people, or fighting for corporation !!! for economy yes, but not for corporations (not the same).