What About Outsourcing?

Need a buzzword to punch up your conversations? "Outsourcing" could work for you. "Exporting jobs" is to "outsourcing" as "layoffs" is to "downsizing". The only reason we have such words is because the original words have what might be seen by some as having a somewhat negative connotation. Can't have that. Outsourcing is certainly, without question, the cause of some layoffs. It's been going on for decades but it's not always as bad as it might first seem. Try an imaginary example: Back in the 1950's, the lumber industry exported jobs to bring in cheaper foreign wood. Lumberjacks got laid off. Was that bad? A two by four now could be bought cheaper by a home builder and the cost of a home could now be lower as a result of using literally hundreds of cheaper two by fours in a typical house. The American lumberjack and mill worker were outsourced to a Filipino lumberjack and mill, but the carpenters, plumbers, roofers, landscapers, painters and electricians in the U.S. were having a massive building boom, so there was a net increase in jobs because some of the lumber industry got outsourced and people wanted cheaper housing. However the lumberjack still felt the pain of the layoff. What happened to him? If he insisted on remaining a lumberjack, he continued to feel the pain of being unemployed. At that point there was always the option of entering the house building industry and being a part of the employment boom rather than remaining a statistic of outsourcing. An employer really has no responsibility to keep anyone working for him. And what about the anti-job-export people buying houses in the `50's? When they bought a house, did they insist on spending more money for a house built with good ol' American wood? I don't think they ever gave it a thought. They were, after all, getting a deal on their shiny new house.

O.K., that was then and this is now. That was just a small example of how outsourcing is supposed to work. So if a little is good, more must be better, right? Fifty years later, almost every commodity is outsourced. Every day it's getting more and more rare to see "Made in the U.S.A." on anything sold here. And amazingly, it's still not all bad. For all the liberal ranting to the contrary, unemployment is at a very low level, actually on par with the so-called "booming 1990's", when the deity of the liberals, Clinton, was fumbling around trying to make everything seem wonderful. So is even more outsourcing going to be even better? Maybe, but there's a limit. Here are two (kinda long) reasons why:

1. Eventually, a downward spiral in prices will mean a downward spiral in wages and also a downward spiral in our general day to day quality of living. It has to happen. As more and more jobs are exported, and the costs of goods are reduced further and further, companies will try to find the next third world country to get the most from the least, because that's what their competitors are doing. Let's remember that this is what outsourcing is all about: Taking advantage of people in countries with absolutely horrible living conditions. Where getting burger flipper wages would be an unobtainable heaven. As prices (here) drop, let's say for clothing, the consumer (you and me) will look to see if the quality is good enough, and if it is, we'll buy the cheapest. Nothing wrong with that, but there's little or no thought given to the fate of the U.S. textile industry or to the fate of the third world textile worker (sometimes nearly approaching slave labor). As prices go lower and lower, so do profits, just to maintain competitiveness. Remember what happened in Japan after WWII? Loads of commodity items got produced in Japan after the war. The quality was terrible, and the U.S. citizen tried to refrain from buying "Made in Japan" items (for economic and nationalistic reasons). However, over time, the quality and acceptance improved to the point that today, a Japanese car is the epitome of quality in the automotive industry, and now, easily, a very justifiable automotive purchase. Also today, the Japanese economy is in the tank for many reasons (socialism is certainly a big one of them), and has been for years. Currently, the Japanese are actually outsourcing to the U.S. (think about Honda with about 24,000 direct jobs, 120,000 indirect jobs in the U.S., & Toyota, the fourth largest auto maker in the U.S.). Why? The economies of Japan and the U.S. approached a parity in the area of the auto industry, so the only way the Japanese car makers could compete here was to manufacture their cars here, thus saving money by, for example, eliminating shipping costs and sending jobs out of the hugely socialistic Japanese economy. Short term, the companies are doing just fine. Long term their nation is suffering badly.

2. Even more importantly, where do our next CEO's come from? It won't be from here. It can't be. Maybe it'll be from Botswana (current GDP - per capita $8500). Why? The U.S. won't have the industries for corporate mid-level managers to move into to get the experience they need so they can move up the corporate ladder to become the next movers and shakers. Is that O.K.? I don't think so, but the movers and shakers in Botswana might have a different opinion. They are the ones who will have the manufacturing facilities then, and the mid-level jobs that will teach their employees how to be the next top level managers. I somehow think that today's movers and shakers are not at all concerned about that. At this point, they already have their share. But what about the day after tomorrow? Sadly, I think there's no concern about that.

Outsourcing is a problem, albeit a small one now, but in the future, we'll end up having to deal with the ramifications of myriads of yuppie type decisions (I want it all and I want it now!) that will put us at a worldwide disadvantage.

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just a thought. bill brower, 20-Mar-2004

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