How is outsourcing jobs competitive for America?
Jason C asked:
Sure, Chinese labour is cheaper. However, after World War 2, American labour was the most expensive and yet, America was still competitive without outsourcing any jobs.
Sure, Chinese labour is cheaper. However, after World War 2, American labour was the most expensive and yet, America was still competitive without outsourcing any jobs.
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Yes, but it was a bubble, USA cant compete anymore, an evidence of what I say is the gargantuan commercial and budget defficit USA has.
US wages are higher than other countries and that has no reason to occur , the outsourcing is a proof of it.
From a Marxist viewpoint, we forcasted all this mess,We said that the rebuilding of Capitalism in China would create a huge crisis in all advanced Capitalist countries sending crisis inside them.We said , and it is written , that “USA is epicenter of the World crisis”.
What would the unemployment rate have been if it was not for the bubble built over the subprime loans?USA is living from a bubble ( dotcoms) to another bubble ( housing). [who]
It isnt the absolute price of labor that makes it compeditive. Its the output per unit cost of labor. So labor can earn higher wages if it is more productive. Our labor is generally productive due to higher educationa nd more equipmetn ad technology available and thats why most jobs can compete; however, low skill, labor intensive manufacturing such as in textiles, is not done compeditively in this country. So the market naturally allocates those tasks to foreign countries where labor is cheaper. The US has a compeditive advantage in high skill capital intensive production. Most of our manufacturing are things like constructon equipment, aircraft, high end electronics, bio tech and so on. Also we have high skill service industries like finciancial services, and medicine. We are the largest net and gross exporter of services in the world.
So the money that is saved by sending low skill labor to other countiries is carried over to the counser via lower prices increasing the standard of living of the consumer. The money saved is then spent on other things that the US makes driving demand and creating jobs in those sectors. Thats how despite outsourcing we still have an unemployment rate of under 5%, because new jobs are created in their place.
Now there is a transision cost. A factory worker cant just automaticaly become a financial analyst. Educationa nd adpatablily has to be better in the US system. But int he long run, allowing this transision means higher wages for americans and higher wages for foreignors as both concentrate on the comparative advantage that each country has via specialization. [who]
the simple and short answer is that due to globalisation and more integrated and liberalised trade, using expesive labour no longer works (after world war 2 the global industries were not a threat, most competition came from within the country therefore they all had to endure the same high labour costs).
therefore for america to maintain its competitveness today it has to cut is production cost through using cheaper labour and raw materials to compete with international businesses.
hope this helped. [who]
Well, you first have to distinguish what you are talking about: outsourcing is taking work that needs to be done in your company to another place/company that can do it better. OFFSHORING is when you take the work global and use other markets/resources to complete the task.
Either way, the company does it for lower and more efficient costs. For employment, it does take jobs away from America, but compared to WWII, we have shaped into a service-based economy, so you have to take the development of our market into consideration when comparing the two.
At the end of the day, the people outsourcing/outsourcing are thinking as businessmen, so I’m sure its in the best interest of the company. [who]