I have been working on an entry about outsourcing for some time. I find it difficult to make a concise and comprehensive declaration on the situation of jobs and outsourcing. Even more difficult is to make it attention grabbing. The truth of the matter is that it is not an attention grabbing subject unless one wants to use hyperbole. The only thing I can say that will grab attention is:
OUTSOURCING JOBS IS GOOD FOR THE AMERICAN ECONOMY!
also
PEOPLE WANT THE BENEFITS OF CAPITALISM WITHOUT ANY CONSEQUENCES!
There. I said it.
The complaint is that there are not enough jobs in the United States (and many European countries) and companies are sending jobs overseas. Some things I no longer have to clarify due to the nature of the news cycle. I had originally broken down how much these jobs pay but so many news stories have broken about the pay rates at Foxconn that this is no longer necessary.
I do believe that many people who have strong opinions about the situation of outsourced labour have a purely emotional response. It is this drive to resent the “other” and attach negative feelings on outsiders. When looking at the employment situation many aspects need to be considered. There is the aspect of Cost of Living (not CPI) and wages, economic theory, international relations, technology… it is terribly complicated. So, why the insistence that “Outsourcing is the problem” when analysing the employment situation?
Let’s look at this rationally: Foxconn employees make 31 cents an hour to assemble the iPhone. They work 12 hours a day, six days a week. I have heard the argument that American wages would only increase the cost of the product by 26%, but what most of these statements ignore is the situation that allows these phones to be assembled at such a high pace. When Apple needs new glass for the front of their phone, Corning can supply them with new glass the same day in China… the Corning plant is there, too. Most of the components are in Shenzen, or close to it. The cost of shipping components around the world would start increasing costs exponentially.
What many seem to ignore is all the wealth generated for Americans from these products. How many App Developers are now employed? Regardless of what many people think, most Apps are not developed by a 14 year old in his bedroom… they are designed by professionals, often teams of professionals. On top of that, what about all the jobs created by the iPhone itself? What about the longshoremen that have to unload the shipments? The truck drivers? The train operators? The store employees? And then there are the repairs of iPhones… and on top of all of that, what about the designers? Apple’s headquarters are in Cupertino, California. What about all of the people that work there?
In essence, when people complain about the outsourced jobs… are they asking that the designers be in China and that America produce the “cheap labour” to assemble products? The truth is… the world changed. I’ve gone on before about this… how slave labour was more expensive than wage labour. The antebellum South in the United States was really fighting to stop the world from changing, even though it already did. They wanted to live in a pre-industrial society… how could they not? They had invested everything into this pre-industrial plantation system and then the world says, “Oh, that’s too expensive, we found a better way.”
This is not a normative argument I am making. This isn’t about what I find ethically better. It’s not a claim of ethics in any way… it’s about economic prosperity. That said, does the United States want to remain a manufacturer, or a producer? This is the real decision we are presented with today.
The Fordist model is dead. Americans need to realise, THEY DON’T NEED YOU TO BUY THEIR PRODUCTS ANYMORE! There’s a global market now. They can outsource consumers as well as manufacturers. The model now is a global model of production and consumption. If Americans want these production jobs to “come back” to America, that is plausible.
So, when BMW, Mercedes, Volkswagen, Landrover, FIAT, Sony, Panasonic, Samsung, and every other company uses the United States to manufacture their products… all Americans will have employment. Won’t it be great to make minimum wage to put filaments in flat screens all day? Maybe if you work really hard, you can save up for four years and buy one of the products you helped put together.
Meanwhile, the engineers and executives of these companies will continue to generate increasing profits to their respective nations.
There is another option.
- Germany’s GDP
When a country invests in it’s own infrastructure it can yield a significant return. That’s why it is called an investment. We can look at a country like Germany and see a progressive tax rate that is between 0% and 45%. (I could put a chart of that up, too, but let’s be honest… people who understand already understand. People who are too daft to comprehend will ignore the chart, too.) Germany also have government funded Research and Development. They also have mandatory vacation time, universal health coverage, social safety nets… et al… This isn’t an advertisement for Germany, only a point that outsourcing and taxes are not the problem. If these variables were the reason for the decline in American employment and wages, it would be seen more significant in countries such as Germany. Instead, we see the opposite in Germany. So, why are so many Americans and American politicians touting the governmental system of Somalia?
The truth of the situation with jobs and income in America is really an ugly truth that no one wants to acknowledge. Instead we keep it under the stairs and ignore it. Employers are happier than ever with the situation. Right now, with so many people for every job, employers can select whomever they wish to employ and pay them whatever they wish and the people will thank them. Meanwhile, incomes for the people on the top continue to grow exponentially. Why would they want to “solve the job crisis”? They could easily do as much. It’s like when that uncle that owns a store creates a job for his nephew. The nephew needs a job and the uncle says, “I can pay him to do… [whatever].”
Like I have stated, this is not a normative claim. This is not about personal value judgements. What I see is a situation that will not change until an external variable shifts it. We have been in this situation before. (Insert Grapes of Wrath quotes, Mark Twain quotes, references to Robber Barons… et cetera) Last time, the variable was a mixture of labour riots and World War II. What is going to change things this time? Do we have to keep on waiting for the world to change?
The question people need to ask is not, “Who is going to bring back the outsourced jobs to America?” but “Who is going to invest in education and make more American innovators in the economy?” or “Are we going to let Europe and Asia take over the market in IT jobs, engineers, developers and science technology?”
Germany has cars that automatically avoid accidents when the driver is unable to do so. They have parking garages that automatically park cars on their own. We are arguing about bringing more jobs putting cheap phones together and flatscreen televisions?
