Outsourcing cannot be labeled a bargain

Wednesday, August 22, 2007

The main argument in favor of outsourcing the manufacturing of products to other nations is that the cost to the American consumer is lower (due to the starvation wages paid to the foreign workers). This cost benefit would be true if the price paid by the consumer reflected the true cost to our society of outsourcing. Nothing could be further from the truth.

With our annual trade deficit flirting with the $1 trillion mark and our resulting national debt racing toward $9 trillion, the debt service alone adds no less than some $1 trillion to the cost of our "bargain" widgets. That's $1 trillion.

In addition to that, those millions of jobs that evaporated in the global stratosphere used to be good-paying, all-American, tax-paying and Social Security-contributing jobs. To my knowledge, China, India, the Philippines and Mexico have not so far been receptive to replacing those missing tax dollars and contributions toward the financial security of senior citizens.

In the end, what outsourcing accomplishes - through the public funding of our national debt - is the financing of inflated corporate profits by U.S. taxpayers and the elderly. That's not my idea of a bargain.

http://www.theadvertiser.com/apps/pbcs.dll/article?AID=/20070822/OPINION03/708220302/1014/OPINION

Thomas Hartman's book "Screwed" agrees with all of this.
http://www.mythical.net/screwed/

The price is set by the market, PROFITS are set by the labor cost. If wallymart would raise prices by 0.005% they could raise wages by $2 an hour. The only gain with outsourcing is HUGE profits by the corporations.

"The only gain with outsourcing is HUGE profits by the corporations."

You're absolutely right.

From Hartman's book:

So who is better off ? Well, between 1972 and 2001, the income
of Americans at the 90th percentile of the income distribution—
that is, college graduates, white-collar workers, and people
at the higher end of the middle class—rose 34 percent, or about 1
percent per year.

That’s not really enough to keep up with inflation,
so where did the money go? Krugman, quoting a Northwestern
University research study tells us:

Income at the 99th percentile rose 87 percent.
Income at the 99.9th percentile rose 181 percent.
Income at the 99.99th percentile rose 497 percent.

According to Krugman, the 2006 Economic Report of the President indicates that the
real earnings of college graduates actually fell more than 5 percent
between 2000 and 2004.” It’s just not true that those who are better
educated are much better off .