.....there were many thousands of factories, manufacturing an almost infinite variety of Widgets. Labor, the largest element in the cost of production, averaged
$10 per widget, which sold at $20 each, a 100% mark-up on labor, and the enterprises
prospered, and grew. One day, one of the managers decided to explore lowering the labor cost while keeping the sales price the same---a sensible idea. So he went to China, which had an enormous agrarian population, and asked if they would be willing
to move some of those people to a factory town where they could make his widgets,
thus earning a living. Of course wages would be very low, by our standards, and
labor laws, and benefits, non-existent. China said whoopee, and the stampede to
outsource our manufacturing base began. Now widgets would have a labor cost of $5, making the labor mark-up 300%. The manufacturers asked the administration in Washington if the move would be OK. Of course they were told, that is the American Capitalist way. And we will even give you tax subsidies to move.
There was only one flaw in the process. The people who purchased Widgets used the
money they earned making them to buy them. No wages, no buying! Worse, the unemployed
refused to die when they were fired. They continued living to become recipients
of Social Security and unemployment benefits, but no further taxes were being
payed on their disappeared wages. They could no longer meet mortgage payments.
Banks, whose role had been to lend money to make widgets, turned to creating
imaginary assets which they sold at great profit, and which later decimated
whatever assets the unemployed had accumulated.
Meanwhile, the forces which had set the disaster in motion, mixed a potion
of deceit and hate, and convinced the victims to drink it, turning them into accomplices in their own destruction.
Subscribe to:
Post Comments (Atom)
1 comment:
A recent piece bemoaned the use of cheap foreign labor as a detriment to our economy. It reads like a Presidential address to members of powerful unions like teachers and automobile workers.
Well, the days of the Edison phonograph are gone. Our music comes via mp3 files over WiFi for use in a playing-card size iPod.
Our 21st century has a freelance global economy where outsourcing is a new way of doing business.
With electronic gadgets like iPods, cellphones and HD-TV we must rely on the affordable assembly skills of foreign workers, hence outsourcing abroad. My Toshiba laptop costs $500 not $5,000 .
Economic pressures spurred by the rise of the developing world as a global competitor have forced all business firms to reevaluate their way of doing business and to consider outsourcing.
Important note: outsourcing applies equally to American workers. The social revolution of the Internet makes it easy and possible nowadays to assemble and manage remote teams of American workers in the US.
With internet outsourcing, independent people who need or want flexible schedules in an at-home setting, stay-at-home parents or people with disabilities have a way to earn money for their skills.
Homesourcing lets companies save money on pricey urban salaries. It attracts additional workers who do not fit the 8-5 office pattern. This trend is compensating for having U.S. jobs sent overseas.
Just answer an online offer for “work at home”, whether you are 20 or 80, and you’ll be deluged by unsolicited phone calls and buckets of spam.
Our global economy requires new rules of engagement.
Jacques
Post a Comment