One of the best articles I have ever read on the subject of outsourcing and where it will lead us.

[airplaneman]

I wanted to share this article. I have read it many times. I have not seen this stated as well in any other form. I really think the last 30 years has given us a change we will ultimately regret.

http://www.321gold.com/editorials/gaines/gaines092004.html

Tipota
-Tipota (greek) = Nothing
Nothing for Something
Bamboozlement by Corporate America
Dean Gaines
September 20, 2004

-Airplane

[RKP5637]

1. This is an exceptionally excellent article. And the last two paragraphs say

a lot about the future of the US given the present course. In essence, we have given up.

"The day is coming when the countries that possess all of our manufacturing capabilities will say to us: "the facilities are ours, they are on our sovereign soil, we will produce the products you want at the quantity and price we dictate... take it or leave it." We will have no choice because our ability to produce any product on our soil will have vanished.

So, because of a few fast-talking CEOs who convinced corporate America of globalization, outsourcing, and that a service-oriented society is the next step to economic security (and loaded their pockets with cash in the process) they have left US (the U.S.) with Tipota for something. That something is (was) our economic heritage."

http://www.321gold.com/editorials/gaines/gaines092004.html

[dkf]

2. I doubt it. You can manufacture anywhere...but if you don't have the raw materials that is when you

are stuck.

If it gets too expensive to manufacture over there, it will move to a less expensive area. That may very well be the US given enough technology to boost efficiency.

[RKP5637]

4. That's quite true, but increasing technology to boost efficiency does not

equate to more jobs for the masses. If, this is the case, then the US will eventually need to revamp what a job means and what financial rewards that entails in relation to purchasing power and standard of living.

[dkf]

7. I have no doubt we will be seeing this happen.

At least it makes sense if manufacturers want to sell to the US because logistically its easier to be closer to the user.

But if the target market is the emerging countries then maybe not. They will just find somewhere more amenable.

[airplaneman]

6. I see the problem as something much bigger than you can manufacture anywhere.

We used to have about 25 refineries that processed mineral concentrates. We have lots of mineral resources. They have all been decommissioned and torn down. It takes 10 years and $100 million+ dollars to make one. China is now limiting rare earth metals. In reality we have gaping holes in our manufacturing capability. I think that for a society to create wealth we must produce more goods and services than we consume and we must save. We consume 30% more than we produce and we do not save - this is the definition of the destruction of wealth shown by the statistic that 50% of Americans now only own 1% of the wealth. Manufacturing used to be a vehicle where wealth was shared. In the 70's a company was content with 6% profit and sharing the wealth with workers. Outsourcing produced 30% profit and now companies like GE are no longer willing to share the wealth with its employees and more productivity just means more wealth also. Its all going to the top.
Cheers,
-Airplane

[dixiegrrrrl]

3. and this:

"Not only are they giving up the ability to produce the products they once produced, they have given the technology of producing those products away. Another area in which we are not too astute in is that the folks that we have given these capabilities to have no regard for patent rights, trade marks, copyrights, or proprietary information. It's going to be humorous watching high-priced New York lawyers spouting their rhetoric in foreign kangaroo courts."

Highly recommend article.

[RKP5637]

5. We've seen a lot happen in our lifetimes. I recall when young if you

didn't have some type of job generally one had a drinking problem, had said really irrational things to management or some other problems, a really poor performer, etc. ... but generally some type of job was available. And US based manufacturing created all types of jobs, hands on, clerical, management, sales, R&D, all types of jobs.

[Locrian]

8. reading James Michener's "Caribbean"

Was struck by this quote (page 213) - in reference to the Spanish and the way they were running around the Caribbean in the 1700s':

Erroneously the king and his advisers believed that the prosperity of a nation rested in its control of bullion; the more gold and silver the galleons brought to Sevilla, the richer the nation would be. This philosophy overlooked one timeless truth: the wealth of a nation derives from the hard work of its citizens at home, the farmers, the leather workers, the carpenters, the ship builders and the weavers at their looms; they create the usable goods which measure whether a nation is prospering or not.

Seems like nothing changes.....

[reformist2]

9. There are two problems:

1) Labor arbitrage - businessmen selling out US workers - their own fellow citizens - for cheap labor elsewhere.

2) Decreasing need for labor generally - This one, our current economic system has no clue what to do about - what if there aren't enough jobs to go around???

[Locrian]

10. right

>>>>2) Decreasing need for labor generally - This one, our current economic system has no clue what to do about - what if there aren't enough jobs to go around???

That's only a "problem" (very real) in a society of zero sum game -ie capitalism.

Needing less labor to live in general should have allowed us (all) to live better. Not compete for the scraps from the rich.

[reformist2]

12. Exactly - we should be sharing/enjoying the wealth, not getting increasingly frantic.

[1-Old-Man]

11. The argument fails in the third paragraph

The fellow has a fairy-tale impression of why people invest in stocks ->

"It used to be that people who had money to invest would naturally seek out those companies which produced good products at reasonable costs and shared their success in business by way of dividends to the stock holder."