How offshoring CREATES jobs

[Deja Q]

http://www.globalservicesmedia.com/sections/sm/showArticle.jhtml?articleID=196702076

Employee unions and various politicians have long blamed offshoring for overall job losses in the U.S. economy. Business lobby groups who perceive “labor arbitrage” as a means for cutting cost and a sure-shot way to impress Wall Street, have defended it vehemently. They have used studies by thought leaders to argue that in the long-term offshoring creates value for the U.S. economy. McKinsey Global Institute, in a study three years ago, estimated that for every dollar spent on offshoring by the U.S. companies, $1.47 worth of value is created for the global economy, out of which close to $1.14 comes back to the U.S. economy. Free-trade proponents, among them economists like Gregory Mankiw and Jagdish Bhagwati, have also maintained that offshoring is not very different from any other international trade, and at the end, everyone gains. President Bush, during his India visit, defended offshoring by saying, it creates markets for American products.

Boy, that 14 cents is really worth it. :crazy:

Interestingly, the figure was highest for research and development, where it was 106%, meaning in some cases, jobs actually got created onshore because of offshoring.

Anybody notice this? :shrug:

[RB TexLa]

1. Well let's get to building a north, south, east, and west wall around the US

And close ports, end all immigration, etc, etc...

[Deja Q]

3. Well, I was hoping for more coherent answers, but okay...

I'll remember your name when your job is offshored and you can't find another.

:sarcasm:


But sarcasm and walls aside, how do you think we should resolve the bleeding of our country?

[Parche]

17. solution

Its either health insurance, or taxes, and sometimes the wage issue.
We need to get health insurance for all Americans, I finally got mine this month.
Taxes are another issue, I dont want to tax a corporation so much that the leave for
another country, but on the other hand, they still do need to pay their fair share.

[HughBeaumont]

11. Ah, "you're either FOR free trade or FOR protectionism. It's JUST THAT SIMPLE".

SIGH. Black and white much?

Please quote where any pro-FAIR trader on DU has said "close the borders".

[OhioChick]

2. Creates jobs, my ass.

:grr:

[Deja Q]

5. Well, it creates jobs if you can get past the profiling tests for Officemax, Walmart, Petco, et al.

:(

[liberal N proud]

4. When it comes back to the U.S. economy, who...

who are the recipients of this benefit?

Only those who invested in the outsourcing I suspected.

[Deja Q]

6. I must agree.

The middle class, who supports 66% of the US economy, won't be able to spend to prop it up.

And do those who invest in it really benefit in the long run? Time will tell, but I am inclined to say 'nope'.

[bluewave]

7. Riiiight... Hidden in there though

is to where that extra $0.14 goes. I suspect corporate salaries, dividends, etc.

[54anickel]

8. Bernays lives on.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=364&topic_id=3020366&mesg_id=3020366

http://video.google.com/videoplay?docid=-2637635365191428174

[brokensymmetry]

9. We're cutting our own throats.

This is why our infrastructure is in decay...
Part of why the deficit is out of control...
A big part of the trouble with Social Security funding...
A big part of the loss of health care and other benefits.

We're trading good jobs with benefits for cheap
crap. There will be an additional installment, due
and payable soon.

The cost? Nothing less than the American dream.

[depakid]

10. First of all, so called "free" trade does NOT create comparative advantages

of the type envisioned by classical economists like Ricardo (who would have been appalled at the flight of capital from the country).

Second, the burgeoning current accounts (trade) deficit is MORE than going to eat up that supposed 14 cents. In addition, I'm quite sure that this sophistry doesn't take into account the multiplier effect, wherein dollars that circulate in local communities actually increase in value every time that they change hands.

These folks are hucksters and corporate shills, plain and simple.

[Turbineguy]

12. In the long run we're all dead

and in the really, really, really, long run, they are right.

[dave_p]

13. Source

Here's that MGI report, if anyone's willing to wade through it. McKinsey's ruined more than its fair share of clients, so you might want to take anything it says with a pinch of salt.

In this case, it's a pretty straightforward matter that outsourcing can eventually create more onshore jobs, if a sufficient share of production cost savings is used to create more onshore jobs.

In the McKinsey example ($1 of service-sector spend offshored to India in 2002), India gets 33 cents in wages, profits, local purchases and taxes. The US gets 67 cents (cost savings, sales to the offshore subsiduary, and repatriated profit). The other 45-47 cents is projected "value from US labor re-employed", and is estimated "based on historical reemployment trends from job loss through trade in the US economy".

So the real issue is whether, having already saved substantially by offshoring the old jobs, employers will be moved to forego the lure of further similar gains when reinvesting their winnings. MGI claims that's happened in the past, but seems to be comparing past temporary job losses from trade with a future in which they suggest it's OK that offshoring should be a norm.

[HughBeaumont]

14. You know who supports offshoring vehemently? The fucking WEALTHY.

. . . and those who think they're not peasants.

I mean, let's face it. It's not like Marc Andreesen, Greg Mankiw, David Dreier, Carly Fiorina, Mike DeWine, Jack Welch, the BFEE, Elaine Chao, every idiot at the Heritage and Cato institutes, Thomas Friedmann, etc, etc, are ever going to be in danger of losing a job. They're never in danger of starving, forced to train their replacement for severance pay, being hounded by bill collectors, having their utilities shut off, have their life stopped dead in it's tracks, forced to scrap up money and time to train for a new career (never mind that they may have loved what they did previously, or the fact that the career they're training for likely isn't location-safe), be constantly in fear that this may be your last day on the job . . .

Of course they support it. They're on the firING side of the desk, not the FIRED side. America's victimizing ownership class never take it personally when they fire someone or hundreds of people; it's something far worse. It's that they simply don't care and think not one iota about it at all. All they give three shits about is pleasing the fat white rich old men who own their companies. There's no concept of empathy in them. They're all cold-hearted bastards who drained their souls for greed and wouldn't veer from that numbness if one of their relatives died right in front of them.

Who the shit is from the middle class and can say "job offshoring is a GOOD thing" with a straight face? What's even MORE unbelieveable is that there are supposed DEMOCRATS thinking this way????!? If you were cattle, would you have a shit-eating grin all the way to the slaughterhouse? You think that .14 is going back to the workers? PLEASE. Offshoring jobs destroys corporate morale, makes rich men insanely richer, expands nothing but the rich-poor gap, fattens CEO pockets (Chainsaw Carly proved this in every company she ran), ruins communities and small businesses and more to the point, further allows imperial corporations to yet again thumb their nose at their economic, societal and cultural responsibility (and make no mistake, they do have some). This is why it's good for the economy . . . because THEY ARE the economy and we're on the outside looking in.

Just remember that if you wish to defend this very detrimental and Republican business tactic.

[ItsTheMediaStupid]

15. Ofshoring does create jobs. In India, Pakistan, China, El Salvador, etc

nm

[Ian_rd]

16. Translated ...

Original:

The results are revealing. It found that while offshoring of simple back-office functions did lead to some job losses, it was much less when it came to higher-value functions. Even in Human Resources (HR) and Finance and Accounting (F&A) outsourcing, where the job losses were maximum, in as many as 54% of offshoring cases, there was no job loss. The figure of “no job lost” offshoring increases as it moves to higher-value functions. In engineering services, for example, in as many as 70% instances there was no job loss. That figure is 74% in product design and 87% in marketing and sales.

Interestingly, the figure was highest for research and development, where it was 106%, meaning in some cases, jobs actually got created onshore because of offshoring.

Translated:

In Human Resources (HR) and Finance and Accounting (F&A) outsourcing, where the job losses were maximum, in at least 46% of cases there was job loss. In engineering services, at least 30% of cases led to job loss. In product design, 26% of cases led to job loss and in marketing and sales, 13% of cases led to job loss.

Conclusion: Off-shoring results in job loss in every scenario studied except for the small area of research and development, in which case 6% more jobs were created. This can be attributed to the United States retaining its status as a nation with high quality education. This situation will be remedied soon with the decline of public education and skyrocketing costs of higher education in the U.S. and nations like India are fast reaching the ability to work these jobs as well for less money.

This issue is not complicated despite the strenuous efforts of corporate consulting firms like Booz Allen Hamilton trying to portray the loss of jobs in the United States as a good thing that benefits everyone, and not just the stockholders who don't work for a living and corporate executives who most likely would not outsource their own job.

The bottom line is this: If a corporation can pay less payroll costs by shipping your job overseas, they will. They only jobs they will create for us here are those that cannot possibly be performed overseas (i.e. cleaning their bathrooms and serving them meals) or jobs that other nations simply cannot perform (i.e. R&D, which will soon be fixed).

Anyway, do we trust this study to be accurate in the first place?

[omega minimo]

18. "thought leaders"?

:wow:

[rman]

19. ...creates markets for "American products" - Made in China

This global racket has to end. Governments should never have mandated corporations to regulate their own transnational trade activities.