|Job Exports?! BS!
| rev. 12.27.2009
|Back to Lessons
Cut the Crap...... Nobody's Exporting Jobs.
From John Mauldin, quoting Business Week Magazine: 03.13.2004
"Business Week tells us that for each 1% rise in productivity we lose up to 1.3 million jobs a year. Of the 2.7 million jobs lost over the past three
years, foreign out-sourcing has only been responsible for around 300,000 jobs, or around 11%."
But foreign out-sourcing has been responsible for about 90% of Democratic presidential candidate's rhetoric. John Kerry's line is the "Benedict Arnold CEOs."
Excellent article on the subject by Thomas L. Friedman, in the San Jose Mercury News, 02.27.2004, originally at
no longer seems to be available.
What really happened is this:
- The Internet
- State and Federal Government regulations
- The Internet
- But not necessarily in that order
Here's the real deal, and you may be able to judge for yourself if what I'm saying is true. Give it a look.
- Unions have bargained for higher wages and better working conditions throughout most of the United States and Europe.
- States' and Federal Legislatures have passed laws making companies more liable for workers' safety, health care payments, retirement plans, sick pay, maternity off-time, day care, and you-name-it.
- States and Countries' governments have seen the sales numbers for large companies, and concluded that taxes on that revenue would create a large flow of money for states' projects and other financial needs and commitments.
- Unions have bargained for job security in combination with higher wage and benefits packages, shorter working hours, etc.
- In some US states, unions are not as powerful, organized or influential as in others.
- In some countries, unions are not as powerful, organized or influential as in others.
- Many companies have moved their manufacturing and/or engineering from more-expensive states or countries to less-expensive ones.
- Some countries outside the USA have monetary systems which value their currency lower than that of the USA, making costs, especially wages, lower in those countries than in the USA.
- People outside the USA or [insert the name of your country] are as bright as people inside the USA or [insert the name of your country], and would like to enjoy higher standards of living, wages, benefits, etc.
- The Internet's infrastructure has made possible the movement of information and data around the world at such high speeds that it is no longer necessary for many people in many kinds of jobs to be physically on-site in order to perform many jobs.
- When people can do the same work remotely, whether it's writing a program, designing a chip, handling an order processing transaction, evaluating an x-ray image, or doing an operation by remote control, they can not only work from home, their home can be anywhere in the world; in any country on any continent where there's enough bandwidth and reliable enough power supply for their PC to get the job done.
- Once this happens, any job that does not require in-person or face-to-face presence is at risk of being offered to someone in another country to do for a lower price.
- When another state or country offers as hard-working and/or as bright people willing to work for lower wages or lower total cost, companies will move their manufacturing to those states or countries. Witness the moves of manufacturing from Europe to the USA for automobiles, and manufacturing away from California and Washington State to the US Southeast and South Central areas, such as Georgia and Texas.....
- It is in the best interests of all companies to make this decision, for the benefit of their stockholders, who are owners of the companies. If the same job can be done for a lower price, the companies' profits may be higher, all other things held equal. [beware that assumption, by the way.]
Therefore, the expansion of the Internet around the world has allowed low-income countries with educated citizens to bid lower prices for work that can be done remotely. Companies are not exporting jobs in order to damage the US economy or deliberately put people in the US out of work, although there are many side-effects of this, and many are not good for the USA.
Stop blaming companies for "exporting jobs."
That's not what they're doing.
They're reacting to financial pressures and motivations provided by State and Federal Governments, and making financial decisions in their best interests: the best interests of their stockholders.
A lot of hot air has recently been blown about this subject in California, especially in light of the campaign to recall the current Governor, Gray Davis, and replace him with one of well over 100 candidates currently [08.22.03] running for election.
The one solution which nobody is talking about, and which, I feel must be talked about, is the only solution to consider:
What can the State of California [or insert the name of your state or country....] do to make it a more hospitable place for business. A place where businesses are easier to create, cheaper to run, easier to employ people, easier to do the paperwork needed to run the business and create "necessary reports", etc.... How to make California a state that's at least as attractive as its neighboring states, and hopefully more so, to do business in!
Cruz Bustamante has clearly stated his intent to do the opposite: his plan to solve state financial problems is to raise income taxes and taxes on business.
Governor Davis was bright enough to negotiate the longest-possible energy contracts for the State at the peak of the "Energy Crisis", when prices were highest. I don't know about you, but I think it's a bit stupid to NOT think of recalling a Governor with that lack of business sense.
Over the past ten or more years, many tax-paying companies have left California. Cruz Bustamante wants to raise the taxes on the remaining few as a reward for not leaving for lower-taxing states. Is there a doctor in the house who can do an IQ transplant?!
We need government, both in California and throughout the USA and the Federal Government, who can grasp the concept that jobs are leaving the USA because government regulations and union bargaining have made the USA non-competitive in world markets. Until steps are taken to reverse that trend, there is only one choice left for our citizens:
Many, many years ago, I visited Sweden. I was traveling with a sales rep, and you could guess that I would ask him something about how he liked the world of socialized medecine, etc., in his country. He admitted he liked that very much.
- If you possibly can, get into or stay in a job or career which can not be done from anywhere where you're not.
- A simple example that comes to mind is "home remodeling." That one ain't gonna outsource to India or China.
- Next, services, like electrician, plumbing, bricklaying.
- After that, unless the US government wakes up, all other "portable" jobs are completely at risk of "export". Take Germany and France's word for it. 35-hour workweeks? Four or five weeks of vacation? Strikes at the drop of a workman's hat? Not a long-term winning solution.
Then I asked him if he minded the high tax levels he had to pay to get those benefits. "Well, let me put it this way," he replied, "A while back, my boss offered me a raise. I asked if I could have more vacation time, instead."
See? The taxes were so high that they had reached the point where more work for more money was discouraged. People didn't want more money for more work. They'd rather work less hours than get a raise. Now, that is certainly an interesting challenge for anyone who's given the job of increasing productivity, isn't it? What would you do?
02.11.2004: Here's a quote from Michael Lombardi of Lombardi Publishing:
"2.2 million jobs are gone for good. They are on "permanent vacation" (to quote the economist Max Webster) overseas.
They will not be returning, and it is more than likely the exodus will continue, as long as we Americans insist on being paid ten times more than
our global neighbors for completing the same task.
Real economic change is underfoot in America. No President dares address it; no incumbent will speak its horrible name.
This nation raised itself to the top because of our agrarian might. We toiled and the land provided a bounty which we sold abroad. We prospered. Then America became an industrial powerhouse, making and mining more than we needed. We grew rich and, perhaps, complacent. But now we are on a new
road... a road with an uncertain destination.
The greatest resource Americans have left is the ability to innovate, think, and solve problems - to invent and create. We have shown the world that we can do this like no other. And now we will have to structure an economy around those proponents. We will have to invent a new economy, with very
well educated elements, using a very well educated work force. We will have to discard the blue-collar mentality of years gone
Meanwhile, the longer those who control our daily economy remain deluded about the great change we are going through, the higher the price of gold will go and the lower the U.S. dollar will drop.
The old guard has fallen back on old tricks. They won't work and they will only delay the inevitable."
Some of you still don't get it, do you? You're trying to say this isn't true or that this is reversible.
Please explain, in detail, how, without another Smoot-Hawley Tariff?