View Full Version : 787 Dreamliner teaches Boeing costly lesson on outsourcing
Hopper
02-27-2011, 06:21 AM
The problem is not companies choosing to outsource their labor to countries where it is cheaper. That is just the best economic decision they are forced to make under the existing circumstances. If a few companies do it, all other companies have to do it also to stay in business. The problem is what created the circumstances under which companies are forced to do this. Those circumstances are the existence of totalitarian regimes which run on slave labor, which they are currently prepared to offer to companies based in capitalist countries.
In a global free market system, if there was one, socialist countries would not be able to compete. A socialist country cannot compete economically with a free-enterprise country. The socialist system is economically stagnant. Communist regimes have existed as long as they have only because they have been continually propped up, aided and protected by capitalist governments and big corporations under various kinds of pretexts. A major source of this support is bank loans, which keep those countries financially dependent on western bankers and keep despotic regimes (to whom the money goes) in power. Remove Western aid to communist regimes and the system will collapse. If there were a free-market example in Western countries for them to follow (there isn't - the West is largely socialist too), people in those countries would adopt that system in place of socialism.
Corporate cartels cannot exist in a free market. They rely on government favoritism to prop them up. Large corporations are too inefficient and continual merging of smaller companies into larger combinations cannot be sustained. Cartels disintegrate without government controls to keep them together. So monopolism relies on government support. Monopoly capitalism is the opposite to free-enterprise capitalism. They are two separate types of system. Monopoly is by definition the absence of competition whereas free enterprise runs on competition. Monopoly relies on government intervention whereas free enterprise is by definition the absence of government intervention.
So monopoly capitalists and socialists are natural allies. Monopoly capitalism and socialism are basically the same kind of system: The ownership and control of all industry by an elite minority. Socialism is sometimes called "state capitalism". And we all see daily that Western corporations are doing very well out of foreign socialist regimes. David Rockefeller once said (when asked) that his favorite political system is socialism. Socialist countries are so easy to do business with - you only have to talk to one person.
Via the twin agendas of globalism and globalization they wish to merge all countries of the world together. They have long ago stated that they will merge countries first into regions (EU, NAFTA, CAFTA, FTAA etc.) and once that is done, merge them into one world system. They can only do this if the difference in living standards between capitalist and socialist countries is removed. So the elites are deliberately transferring wealth away from capitalist countries into socialist countries. One of the means of transferring this wealth is outsourcing Western jobs to socialist countries. Another is placing restrictions on industry in Western countries (which creates the need for that outsourcing in the first place) in order to decrease wealth in those countries. Another is to provide government aid from Western countries to "developing" socialist countries.
Where Western companies base their manufacturing is largely determined by what situation their own governments are creating at home and abroad.
Hopper
02-27-2011, 06:44 AM
No, it's not stupid. American companies should only hire Americans. If they don't do this, then they are unpatriotic. especially if they are taking AMERICAN TAX BREAKS FROM AMERICANS. Many of these companies are getting tax breaks while they send jobs overseas.
I stand by what I say and don't think it's stupid. Any company sending American jobs overseas are traitors. I know quite a bit about economics, probably more than you.
Not all other countries are communist or enemies of the U.S., so it's not treason to hire outside of the U.S. Ironically the requirement for American companies to only hire American employees is unpatriotic, since it free enterprise requires the freedom to hire whomever one wishes. Does this extend to allowing American companies to buy supplies from only other American companies?
The notion that everyone should buy only American made products to protect American companies and jobs is actually very wrong. Each country should manufacture or provide what it produces most efficiently and buy from other countries what they produce most efficiently. This is the best economic arrangement for all, since it assures the lowest prices and the highest quality. This is the same thing on an international level that we do individual level. We don't practice total self-sufficiency, we make use of specialists for all of our needs, because it saves us the most money and time and gives us the best standards. America doesn't lose jobs or money to foreign countries or companies, since if the other countries buy from America, it evens out.
Buying only American would actually be damaging, because costs increase and quality goes down. It does not benefit American companies, because those companies are also buyers, meaning they have to buy American too, regardless of whether it is for the best price and quality. If they pay more and get lower quality supplies, they are forced to produce lower quality goods and services and also raise their prices to cover the extra costs to themselves. In other words, American companies don't benefit because they make the same sacrifices as their customers do by being loyal to them.
This is NOT the same things as "globalization" or "free trade", which are actually a set of legislative restrictions (i.e. not free enterprise or trade) devised to arrange world manufacturing bases and trade conditions to the benefit corporations, not countries and all people in them.
Kellydancer
02-27-2011, 02:09 PM
Not all other countries are communist or enemies of the U.S., so it's not treason to hire outside of the U.S. Ironically the requirement for American companies to only hire American employees is unpatriotic, since it free enterprise requires the freedom to hire whomever one wishes. Does this extend to allowing American companies to buy supplies from only other American companies?
The notion that everyone should buy only American made products to protect American companies and jobs is actually very wrong. Each country should manufacture or provide what it produces most efficiently and buy from other countries what they produce most efficiently. This is the best economic arrangement for all, since it assures the lowest prices and the highest quality. This is the same thing on an international level that we do individual level. We don't practice total self-sufficiency, we make use of specialists for all of our needs, because it saves us the most money and time and gives us the best standards. America doesn't lose jobs or money to foreign countries or companies, since if the other countries buy from America, it evens out.
Buying only American would actually be damaging, because costs increase and quality goes down. It does not benefit American companies, because those companies are also buyers, meaning they have to buy American too, regardless of whether it is for the best price and quality. If they pay more and get lower quality supplies, they are forced to produce lower quality goods and services and also raise their prices to cover the extra costs to themselves. In other words, American companies don't benefit because they make the same sacrifices as their customers do by being loyal to them.
This is NOT the same things as "globalization" or "free trade", which are actually a set of legislative restrictions (i.e. not free enterprise or trade) devised to arrange world manufacturing bases and trade conditions to the benefit corporations, not countries and all people in them.
I have no problem with American companies dealing with other countries, what I do have a problem with is companies dealing with third world countries for cheap labor which affects all of us but makes them richer. There's always been trade between countries (such as US and Canada) that makes sense import=export. However, now the USA imports more than they export especially to China. I don't want to support China, which is what we are doing when products are made there. I also have a problem with companies getting tax breaks to outsource jobs. There are people dying in the USA because there aren't as many jobs as there needs to be.
Melonie
02-27-2011, 03:41 PM
what I do have a problem with is companies dealing with third world countries for cheap labor which affects all of us
The underlying question here is the 'real value' of labor. In the US, Canada, Europe etc. the basic cost of labor is boosted by embedded costs of mandatory employee benefits, by worker safety compliance costs, by mandated working hours and/or job scope rules etc. A major reason that Asian labor is so much less expensive is that the actual cost of Asian labor is much closer to its 'real value'. If you want jobs to return to America, somehow this inherent 'all in' labor cost differential needs to be reduced ! Current US gov't policy in this regard appears to be the trashing of the US dollar's exchange rate / purchasing power, which will eventually cut the 'real value' of US worker paychecks in half ( same paycheck dollars, but doubled US dollar prices of gasoline, food, and every other world market commodity ) thus reducing the 'all in' labor cost differential after a 50% exchange rate correction of US dollars versus Indian Rupees, Brazilian Reals, Korean Won etc. This will also help future Boeing sales to foreign customers paying in foreign currencies ... well it will as long as Airbus doesn't experience a similar devaluation of the Euro !
As to companies actually getting US tax breaks to outsource jobs, this is a matter of interpretation. It's certainly true in the case of a US company's products being made in America and exported ( thus subject to US corporate tax rates ) versus a US company's products being produced in Asia for sale in Asia ( thus infinitely deferrable US corporate taxes ).
eagle2
02-27-2011, 08:58 PM
Again, you're making things up. There is no "real value" of labor. The value of labor is what someone is willing to pay for it. If car manufacturers are willing to pay American workers $20 an hour + benefits, that is the "real value" of their labor. As always, you keep bringing up the US government's "trashing of the US dollar's exchange rate", but you never mention China keeping their currency artificially low.
eagle2
02-27-2011, 09:01 PM
If businesses in the US started paying employees what you consider the "real value" of labor, our economy would collapse because there would be nobody to buy the products businesses are selling.
nelly33
02-27-2011, 09:29 PM
I think that is her point... nobody is willing to pay 20 an hour plus benefits, meaning no company values the labor that highly.
That's the way I interpret it anyway.
If businesses in the US started paying employees what you consider the "real value" of labor, our economy would collapse because there would be nobody to buy the products businesses are selling.
You are exactly right. People in the United States cannot be expected to compete with unskilled laborers in other countries, because US workers would no longer be able to maintain the standard of living they are used to. The day of being an unskilled laborer and living a middle-class American life is over, for better or worse. Learning a skill is the only way to survive in the economy. When there is little or no skill involved, then why not give the job to the lowest bidder, from a companies perspective? The difference in quality is minimal.
eagle2
02-27-2011, 09:51 PM
I think that is her point... nobody is willing to pay 20 an hour plus benefits, meaning no company values the labor that highly.
That's the way I interpret it anyway.
There are. That is approximately what foreign and domestic auto makers pay American workers. Steel workers in the US make that much or more. Constructions workers do. In some industries, such as textiles, most producers won't pay they much, so they produce their products overseas, but there are many industries where businesses will.
As more and more manufacturers start producing goods in China, the demand for labor will increase, and so will the cost. This is especially true with China's very low birthrate. As wages in China increase, so will the demand for goods and services, which will put more upward pressure on wages. Eventually wages in China will be comparable to wages in the US. The same thing happened in South Korea. South Korea was once a low wage country. Now wages there are close to American wages. A minimum wage worker in South Korea earns close to $11,000 a year, not far off from what a minimum wage worker in the US makes.
http://en.wikipedia.org/wiki/List_of_minimum_wages_by_country#Minimum_wages_by_ country
nelly33
02-27-2011, 10:13 PM
fair enough, and then outsourcing will go somewhere else... Bangladesh has been very big in outsourced labor. As for construction, much of that HAS to be done inside the US, because it is not feasible to create large buildings and ship them over to the US. Autoworkers are also unionized, creating a salary which is not value based.
eagle2
02-27-2011, 10:16 PM
Autoworkers for foreign-owned car manufacturers, such as Toyota and Honda, aren't unionized.
Melonie
02-28-2011, 03:48 AM
People in the United States cannot be expected to compete with unskilled laborers in other countries, because US workers would no longer be able to maintain the standard of living they are used to
^^^ I rest my case !!! ^^^
For a fact, unskilled Americans already compete with unskilled labor in other countries by proxy ( imports ) ... and American labor loses badly ! This is why America now has 20%+ unemployment rates among younger workers. This is also why America illegally employs millions of illegal immigrant workers at 'globally competitive' but illegally low pay rates.
For a fact, this assumed 'entitlement' to some minimum acceptable US standard of living is the true root of a whole bunch of US economic problems, from lack of new jobs to lack of business growth to state budget deficits. In essence, US gov't social welfare program subsidies provide tens of millions of relatively unskilled Americans with a higher standard of living in exchange for 'doing nothing' than the standard of living available to relatively unskilled workers in Asia, Africa, South America etc. for 'full time' work. However, these subsidies are not without cost. Funding these subsidies requires that skilled US labor rates be higher than their international counterparts in order to pay the taxes necessary to fund these subsidies !!!
In the final analysis, if a consumer is given a 'blind' choice between a domestically produced product which must sell for $100 due to these taxes and regulations, or an outsourced product that can sell for $70 in the absence of these taxes and regulations, all else being equal the outsourced product is going to be chosen.
The same principle now applies to aircraft production, with GE jet engines from China, with Honeywell hydraulic valves from China, with Hughes avionics from China etc. now being utilized in Boeing's 787, the Airbus 380, and the soon to be available Chinese airliner alike. Thus attempts to still produce a fully American aircraft not using these offshore sub-assemblies are going to result in an unsalably high 'break even' price in the worldwide market. Well, there is one exception ... the US gov'ts decision to pay a much higher price for its new US made 767 based tanker aircraft than they could have attained from Airbus ... but hey what does the gov't care it's only US taxpayer money, and union workers will be building the 767 and it's American made sub-assemblies.
~
Hopper
02-28-2011, 05:51 AM
Again, you're making things up. There is no "real value" of labor. The value of labor is what someone is willing to pay for it. If car manufacturers are willing to pay American workers $20 an hour + benefits, that is the "real value" of their labor. As always, you keep bringing up the US government's "trashing of the US dollar's exchange rate", but you never mention China keeping their currency artificially low.
I think what Melonie means by "real value" is the free market price it would have, which would be minus all the costs due to the relevant industrial regulations. What companies pay for labor now is not what they are willing to pay for, but what they are compelled to pay. Or more accurately, they are willing to pay it under the circumstances (since obviously they do) but they otherwise would not have to. If the government holds a gun to a company owner's head and says "You will either pay extra costs for labor or close your business" you can't argue that it is the cost the company is willing to pay. That is like robbing a store at gunpoint and later explaining to the police that the owner gave you the money because he wanted to.
Whatever China does with it's currency, the fact remains that the U.S. government is doing it's part to trash the U.S. dollar.
If the market were completely free, companies might be paying their labor more, not less and their wages would purchase more because the unit of currency would be greater in value. And communist countries would not even exist. The only thing which allows communist regimes to exist now is support from capitalist governments, off the backs of businessmen and employees in those countries, and from top corporations, especially banks, whose loans are made possible by immoral government banking and currency legislation.
Hopper
02-28-2011, 06:23 AM
I have no problem with American companies dealing with other countries, what I do have a problem with is companies dealing with third world countries for cheap labor which affects all of us but makes them richer. There's always been trade between countries (such as US and Canada) that makes sense import=export. However, now the USA imports more than they export especially to China. I don't want to support China, which is what we are doing when products are made there. I also have a problem with companies getting tax breaks to outsource jobs. There are people dying in the USA because there aren't as many jobs as there needs to be.
There are two problems with this line:
(1) Where do you draw the line on what type of government a foreign country may have and what working conditions employees have in order for U.S. companies to be allowed to trade with it? Who decides on this and with what particular criteria or standard? Although they are not fully under communist regimes, most countries of the world now, in both "blocs", are largely or wholly socialist. The U.S. itself is largely socialist and run by traitors. Many "western" countries are socialist, though the level of oppression by the governments varies. Even if there is no deliberate policy of enslaving workers (communist China itself doesn't officially and openly have such a policy), the fact is that under socialism, people are slaves. The government doesn't have to say it, it doesn't even have to think it - it is just a natural fact of the system itself. Socialism is by it's very nature oppressive.
(2) Although the economic situation in these countries is being exploited, there are reasons for why western countries using this slave labor is humane. Businesses from outside provides an income which the system in their own country cannot provide.
Personally I believe communist countries should be embargoed on the grounds that they are sworn military enemies. But it would be enough simply do withdraw support for these regimes from the U.S. government and remove legislation which indirectly provides support for them in other ways, such as that which enables top western merchant banks to provide massive and repeated loans to support these regimes in their own interests. This by itself would lead to the collapse of socialist regimes (and also western cartels, which also exist because of government intervention) everywhere and the emergence of free markets in those countries in their place.
If the "capitalist" bloc went free market, then there would be no moral qualms about western businesses using cheap labor in communist countries, because the communist regimes would be on their way out and foreign business in those countries would merely be speeding up the process - giving the subjects of those regimes a branch to hold onto as the system disintegrates.
Hopper
02-28-2011, 06:30 AM
As more and more manufacturers start producing goods in China, the demand for labor will increase, and so will the cost. This is especially true with China's very low birthrate. As wages in China increase, so will the demand for goods and services, which will put more upward pressure on wages. Eventually wages in China will be comparable to wages in the US. The same thing happened in South Korea. South Korea was once a low wage country. Now wages there are close to American wages. A minimum wage worker in South Korea earns close to $11,000 a year, not far off from what a minimum wage worker in the US makes.
http://en.wikipedia.org/wiki/List_of_minimum_wages_by_country#Minimum_wages_by_ country
The difference is that South Korea is not communist. The cost of labor in China may increase as demand increases, but that doesn't mean the workers will see all of the money. It goes through a lot of hands before it gets to the workers and the Chinese government has a lot of other things to spend it on.
Melonie
02-28-2011, 03:27 PM
What companies pay for labor now is not what they are willing to pay for, but what they are compelled to pay. Or more accurately, they are willing to pay it under the circumstances (since obviously they do) but they otherwise would not have to. If the government holds a gun to a company owner's head and says "You will either pay extra costs for labor or close your business" you can't argue that it is the cost the company is willing to pay.
Political issues aside, there are two key points to be 'unpacked' here. The first is that many US companies did indeed agree to pay extra costs for US labor rather than close their business ... resulting in unprofitable US operations ( remember GM's bankruptcy ? ) ... in order to buy themselves enough time to develop much lower cost offshore sources for sub-assemblies used in US products as well as to develop fully independent foreign production facilities for products to be sold in the foreign country that would allow for profitable future operations. Thus while high priced US labor rates may still be employed by US corporations, the trend is that US production for export is being replaced with foreign production, and that US production of sub-assemblies for domestic product is being replaced with foreign production of sub-assemblies. In both cases, at some point, high priced US jobs will permanently be eliminated.
The second point is that 100% US produced goods MUST carry the embedded price premium necessary to cover higher priced US labor and higher cost US regulatory compliance in order for the company to remain in business. Thus any US prevention of competing foreign imports via quotas, and any US 'levelling of the playing field' via tariffs, will result in the minimum price of every product sold in the US increasing substantially over current price levels of no quota no tariff foreign imports. For US workers, retirees, welfare recipients etc. unlikely to receive significant 'pay raises', higher prices for all products versus a stagnant 'income' level equals a declining standard of living !