why outsourcing is good and hillary isn’t
by Jon Chun
Published: April 2, 2008
“I will fight for every single job in America, we can’t save them all, but were going to save a lot more of them than we have been lately. Then we are going to create millions of new, high-paying jobs that can’t be outsourced…”
Question: Who made the above mentioned statement?
A. An economic imbecile
B. A politician pandering to a Union
C. Hillary Clinton
D. All of the above
And the answer is… D. All of the above. If you answered correctly, congratulations, you have a functioning cerebrum.
First a definition:
Outsourcing: to obtain goods or services from an outside source.
Next, a short list of industries that have been hurt by outsourcing:
1. The Domestic Auto Industry
2. The Steel Industry
Now the hard part, the result of outsourcing (in the same order):
1. Tens of thousands of workers lost their jobs, their pensions and their future. That hurts. And for many of them, it still hurts. The city of Detroit is the poster child for the argument against outsourcing. Unions, affected workers and politicians in need of campaign contributions would have you believe that a Detroit-like meltdown is the only consequence we face from outsourcing - but there are two sides to this coin.
On the other side we see the Honda Accord, the Nissan Z and the Toyota Tundra. America outsourced its auto production to Japan and in return we received a higher quality automobile complete with better gas mileage and a lower price. In response, domestic producers retooled their shops and started churning out vehicles that could compete with their foreign counterparts. If they had not adjusted they would have been put out of business, which again brings up a sore point for some readers, who I’m certain believe that the Japanese stole our jobs, our wealth and our position in the world.
Wrong.
We didn’t “lose” jobs to Japan in the same way I haven’t “lost” my corn-growing job to a Kansas farmer. I could grow my own corn but it’s cheaper for me to buy the corn from the grocery store than it is to plow my backyard and do it my self. It turns out that “doing it myself” would impoverish me. If you disagree, tell me how many people you know who grow their own food, raise their own sheep so that they can sheer their own wool and sew their own sweaters, and mine their own ore so that they can manufacture their own frying pan and… do you get the point now? “Outsourcing” happens when we’ve determined that somebody else can do the job better. It frees up precious time and resources and allows us to focus on our strengths. Doing what we do best makes us wealthier not poorer. If you disagree, please fill in the blank with a brief explanation as to how individuals and nations are enriched by NOT employing their most productive resources:
your explanation here: ___________________________________
Still don’t believe me? Let’s check the other industry:
2. The steel industry is a shell of its former self. The term “The Rust Belt” exists for a reason. So who is making our steel, why are they making it and what about those jobs? It turns out that we buy steel everywhere, from Mexico to Singapore. That’s right, it’s cheaper to bring steel halfway across the world than it is to drive it around the block. That’s why they make it. They’re better at it. As a result, we pay fewer dollars for every product that has steel in it, from our commercial buildings to our egg beaters. Isn’t that cool? Again, we have saved billions of dollars by choosing to outsource our steel production.
Ah, but of course! You’re worried about the jobs. Well, it turns out that when we pull into Singapore to load up our boats with steel, they don’t use U.S. dollars. So before they release the steel, the ship’s captain goes to the bank with a suitcase full of Benjamins and he trades them for Singapore dollars. (That’s the real name in English: The Singapore Dollar. Copycats.) He then gives the manufacturing company a suitcase full of Singapore Dollars, they smile, shake hands and start loading the good captain’s ship.
Why would a bank accept a suitcase full of U.S. dollars? What do they do with them? Maybe they pile them in a room and laugh at us foolish Americans? We may have their steel but HAH! They have our green pieces of paper covered with neat pictures and numbers! HAH! They showed us!
Well… that would be absurd. What they really do with them is put them in their vaults so that people and companies in Singapore can buy products and services from America.
Now I know what some of you are thinking, “No they don’t! We have a trade deficit! We’re the ones doing all of the buying! It’s not fair!”
Wrong.
The trade “deficit” you’re so worried about is only a “deficit” because in its calculation “Services” are excluded. That’s right, the thing America is really good at, business to business consulting, is never calculated when computing the trade balance. If it were, you would see that the world buys just as much from us as we do from them, which brings me back to my original point:
Outsourcing is what Americans do when they’ve learned that holding on to a particular job is keeping them back. It’s just like what NBC did to the Cosby Show; it’s just like what the Giants did during the off-season to Bonds; it’s just like what America is trying to do to Detroit.
Hey, D-town, don’t take it personal. I drive a 2003 Ford Explorer. But I also have a 1997 Toyota Corolla. And if I had to bet money on which vehicle is going to last longer, unfortunately for you, my money’s on the Corolla.
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(11)
April 17th, 2008 at 10:58 am
WORD!!!
April 26th, 2008 at 9:54 pm
Yes.
I would also bet on the Corolla. But that’s because a Toyota is a Toyota. On the other hand Ford is what: American Ford, Ford of England, Ford of Germany, Ford of Australia. So is GM: Opel in Germany, Holden in Australia. The reason Corolla is a better product is because Toyotas is Toyotas wherever they are, and the Ford Focus is different depending on where it is produced. That’s got nothing to do with outsourcing.
Outsourcing is when you consume something you did not produce: As an individual, group, or society, with well defined borders (think NAFTA, and import tariffs). HP outsourced their IT to India in 2004. What are they thinking. They are/ want to be the premier IT provider to the US and the world and they outsource their own IT to India? Oops, Carly Fiorina, financial accountant was running HP at the time. Well Money talks and BS and everthing else -good, bad, or ugly- walks. You don’t know what you’re talking about so I suggest you don’t. BTW, after Carly left and engineer took over HP. One of the first things he did was outsource accounting to Poland; teGeeHaw!!
I’m not saying HillBilly’s any good BTW. Just that you have nothing to say about outsourcing.
-Rouli.
April 29th, 2008 at 3:13 am
“Outsourcing is when you consume something you did not produce.”
Wrong. The definition goes like this: to obtain goods or services from an outside source. Like from England, Germany or Australia. I can’t get any simpler. As for as your Toyota is Toyota wherever it’s produced and a Ford has many different versions argument - well… Toyota is produced all over the world too you know. So I’m not sure where your going with that. Toyota is better at producing cars no matter what country they’re in that’s for sure. But let’s not pretend that the Camry is made in one spot.
As far as HP’s decision to outsource their IT to India, if it’s a bad idea then the market will punish HP. So a stonger critique of their decision to move their IT department to India would have demonstrated the markets reaction to the move.
Rouli, your take on outsourcing was not strong. Take another swing at it.
April 29th, 2008 at 8:25 pm
Have you heard of TPS? That’s why I say a Toyota is a Toyota: Anywhere it’s produced. No, not Lean Sigma (GM) or whatever Ford calls theirs. You obviously don’t understand that.
Another thing you don’t understand is that your Labor is your Market. Even Ford understood it: The man, not the company. Hence the consumption something you didn’t produce.
There is no market reaction. HP, Dell, and IBM have a captive audience. You need PC’s, where do you go? Oh yeah, both HP and Dell’s main outsourcing PC manufacturing contractor is FoxConn (Taiwan). IBM sold their PC business to Lenovo (PRC). I guess it’s just Foxconn and Lenovo.
Foxconn also makes Apple products (Imac’s and more), Nokia products, Sony products (second gen. Playstation 2’s and probably 3’s also), and God knows whatever else (maybe they also make Sony-Ericsson phones). BTW, Foxconn is a privately held company with no safeguards associated with a publicly held company like Dell and HP -If it matters to you-. Foxconn got to be where it is through outsourcing.
In terms of PC’s, It doesn’t matter if you buy an HP or a Dell, you’re going to get a Foxconn: YOU HAVE NO CHOICE. At least IBM is honest about it. They didn’t outsource; they sold out. Good for them. Guess what I’m typing this on.
Wow. This is reminiscent of alt. usenet back in the 80’s. A lot of talk: No walk. Chill man.
-Rouli.