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Forum Post: How would you stop outsourcing?

Posted 2 years ago on Feb. 10, 2012, 2 p.m. EST by JJJJEEEEE (0)
This content is user submitted and not an official statement

I know some of you are probably pro-outsourcing, but I imagine the majority are not. How would you stop/slow down outsourcing.

Ideas -Tax breaks for companies creating domestic jobs -Cheaper college education for middle wage jobs

143 Comments

143 Comments


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[-] 8 points by nucleus (3291) 2 years ago
  1. End the foreign investment tax credit that rewards companies for overseas investment. Tax foreign profits of US companies as a penalty for overseas production.

  2. End participation in NAFTA, CAFTA and all so-called "free" trade agreements.

  3. Fix the exchanges rate for the dollar to protect US production prices. For example, set the exchange rate with the yuan at 1:1 (it is currently set by China at $.16 to).

  4. Use import tariffs to protect US manufacturing from low-cost foreign sources.

  5. Enact Medicare for all as a universal health insurance system. This would free domestic employers from having to provide health insurance for their employees and reduce their labor costs.

That should fix it.

[-] 1 points by MattLHolck (16833) from San Diego, CA 2 years ago

mostly, I have a hard time believing outsourcing exist

it exist on the idea the US is the center of production, factories and ideas

when any place in the world can be innovative

.

public health care would help business in the US

any place in the world can have factories

[Removed]

[-] -2 points by smartcapitalist (143) 2 years ago
  1. The foreign tax credit is available only for earnings from investments in foreign countries.

  2. Yeah right. Get an idea about the terms of those FTAs before making such uninformed statements.

  3. Oh this one is genius one. What a great and hilarious start to the day you have provided me with. I will even get into why this is absurd and stupid because I am not sure where to begin and where to end.

  4. There already are. Not or everything but on a good deal of stuff. Import tariffs are not the silver bullet for making domestic industries competitive.

  5. And the money from that is going to come from? Taxes right? And the taxes would come from? The same employers.

[-] 2 points by nucleus (3291) 2 years ago
  1. Investments like auto plants in China.

  2. You got nothing ... and you proved it.

  3. More nothing, and you proved it again.

  4. Never said it was a silver bullet, used it as part of a package of actions. Try to read more carefully and understand more fully.

  5. Taxes on everyone, not just employers. Employers would pay into the same system as everyone else. Try not be be such an ignorant buffoon.

Are you really as stupid as you appear?

[-] 0 points by smartcapitalist (143) 2 years ago

You told me once you are an engineer, if I remember correctly? Seriously, who gave you a degree? Community college? For an American arguing for scrapping of FTAs, one has to be unimaginably stupid. Which news channel did you pick up that FTAs are evil? Dude, at least try and understand those FTAs from an academic perspective before making such stupid comments. And fixing exchange rates, are you nuts? Do you know what that can lead to? Someone who does not have the slightest clue about economics would make such statements.

And I am happy you think I am stupid. Because I can figure what your definition of a smart guy would be and to fit into that description a terrible nightmare for me.

[-] 1 points by MattLHolck (16833) from San Diego, CA 2 years ago

5 . government employed doctors

[-] 3 points by grapes (2826) 2 years ago

The way to bring jobs back to the U.S. is to have U.S. consumers impose exquisite and custom product requirements so mass production overseas will simply not cut it. I learnt this from looking at some companies' job advertisements to certify foreign workers to work in the U.S. under the H1B visa. They have huge long lists of requirements all printed in extremely fine prints. We the U.S. consumers can start a cold "trade war" without having our government look trade-protectionist at all because we still hold the purse strings.

[-] 2 points by SparkyJP (1646) from Westminster, MD 2 years ago

Our "free trade" policies is what sends jobs overseas. American manufactures are at a huge disadvantage. They are taxed at a rate of 25% while imports are taxed at 2.5%. Thank your corporate congress for cutting Americans throats.

[-] 2 points by notaneoliberal (2269) 2 years ago

How much did GE pay in taxes last year? answer less than zero. They got money back. GE is one of the biggest outsourcers in the country. The tax issue is a red herring. The motivation to outsource is cheap labor. Only import tariffs or outright embargo will solve the problem.

[-] 1 points by 1sealyon (434) 2 years ago

BTW China is already a great market for our products as their middle class booms. Just ask Ford, GM, and Apple. Eliminate the tariffs. As the French say, "if goods don't cross your borders soldiers will".

[-] 1 points by 1sealyon (434) 2 years ago

The problem is solving itself. As demand increases there is wage pressure in places like China and India. Southern China is already un competitive with places like Vietnam. Ten years ago a five start hotel room in Shenzhen was $25 now it is $200. Keep the goods flowing freely from other countries and in 7 years there will be no labor rate advantage between Shanghai and Kentucky.

[-] 1 points by notaneoliberal (2269) 2 years ago

I have to disagree with your assertion that it will take care of itself. The price of a hotel room has little to do with the price of labor. While pay has increased marginally in certain areas in China, it still is no where near what we would consider a living wage here. Then, as you,yourself pointed out, if the wages get a little higher in China, it just gets moved to Vietnam or Korea or where ever slave labor is available. Since the recession, the rate of outsourcing has increased. I don't think we have seven years to wait even if it was going to fix itself.

[-] 1 points by 1sealyon (434) 2 years ago

China has over 300 million people in what we is the equivalent of the middle class in the US. That is as many people as in the entire US that are receiving way above merely a living wage. Plus they are more like the US than we are.

I do a fair amount of business in China, particularly in the South East where the economy is booming, and I had an interesting discussion with one of my friends there. He argued that his life is more American than mine. He asked me what % of my income was taxed. I told him, and he said, "not just Fed income tax, all taxes". I said, "well that could be 40%".

He told me that he makes $ 23,000 a year which is roughly equal to $115,000 per year in the US, and his total tax is $ 0. If you make under $25,000 in China you pay no tax, none at all. So he smiled and said to me “who has a bigger affect on their lives by the Gov, me or you?”

So I said, "wait a minute, your Gov has repressive laws, like the suppression of free expression by the people".

He said to me, "you don't get it. There are 1.4 billion people here with one central Gov made up of only a few people. Every once in a while they catch one guy doing something wrong and they make a big public trial for him to make an example. He gets the usual sentence (capital punishment, China executes about 5000 people per year, more than any other nation) but the average person does not worry about breaking these laws because the chances of getting caught are like the chances of hitting the lottery (which is also legal now in China, along with private land ownership)”.

So in the end he argued that China beats the US when it comes to limited Gov intrusion on their lives, low or no taxes, and freedom of expression and movement (you can’t drive in the US if the Gov takes away the money you need to pay for gas and monthly car payments).

[-] 1 points by notaneoliberal (2269) 2 years ago

Yes, I've seen this post before you re-pasted it here. You are trying to make a case from a single anecdote (the one guy) that is not an accurate representation of China as a whole. The important fact here is that China does not buy anywhere near from us what they sell to us. That is the problem.

[-] 1 points by BradB (2693) from Washington, DC 2 years ago

we have little export to China and everywhere ... because we produce little product to sell anymore.... tariff is not an answer now... let's say we tariff-ed everyone and they did not respond in kind... we still have little to sell ....

and we have little to sell because we have little manufacturing and that is only because we do not have access to capital to manufacture

[-] 1 points by notaneoliberal (2269) 2 years ago

Brad, point one; we don't really have to worry so much about the response to trade barriers. We are one quarter of the market of the entire world. We need to recapture that market. We are still the number 2 manufacturer and were still number 1 until 2010. There is plenty of capital. If it became clear to investors that the place to invest in factories was the US, and that the citizens were not going to allow the government to give our economy away any more, the capital would come out of the US bond market (where much of it sits today) and be invested in real wealth producing industry.

[-] 1 points by BradB (2693) from Washington, DC 2 years ago

I don't see how we are near #2 in manufacturing .... maybe if you consider the American owned companies who manufacture overseas as American manufacturing ???? and if so.... it's only a matter of time before those facilities are replaced by local competition

as far as the rest... ---> and that the citizens were not going to allow the government to give our economy away any more .... it looks to me like the corporations are who is giving that away ...

[-] 1 points by notaneoliberal (2269) 2 years ago

Here's a link about top manufacturer. Yes it is corporations, but Congress sets trade policy. If Congress were to enact some protectionist measures, the outsourcing will reverse. .http://www.wealthwire.com/news/global/888

[-] 1 points by BradB (2693) from Washington, DC 2 years ago

that doesn't make sense .... the outsourcing has already taken place ... there is little left to outsource...

[-] 2 points by notaneoliberal (2269) 2 years ago

Considering entire cities and towns have been virtually shut down, it would seem so,but I guess we still have some of it left-so far.

[-] 1 points by 1sealyon (434) 2 years ago

Why? We pay them with money that they lend us. In the end all accounts must balance. If they stop lending us money, we stop buying their stuff.

[-] 1 points by notaneoliberal (2269) 2 years ago

The amount China lends is only about ten percent of the treasuries sold. Try reading this and tell my what you think. http://www.cbsnews.com/8301-505123_162-43556445/keyness-nightmare-how-the-huge-us-trade-deficit-stifles-the-recovery/

[-] 1 points by 1sealyon (434) 2 years ago

Agreed, but we still owe them a lot ( $ 1.2 trillion). They use the rest of the money to buy our products ($100 billion per year, they are our second largest trading partner next to Canada), products from other countries that accept US $ (since Yuan never leaves China), buy stuff in the US (Chinese investors are quietly buying up bargain real estate all over the US, but like Japan in the 80's they can't take it with them), and also oil. All of the oil in the world is traded in US $. In the end all accounts must balance.

Are you worried about the US Federal Debt?

[-] 1 points by notaneoliberal (2269) 2 years ago

As to your last question, there is a point where budget deficit becomes a big problem. I think we are probably there. I am not a deficit hawk. I understand that a balanced budget deficit is not necessary. As to your "it all has to balance out" statement- it isn't The trade deficit continues to grow. Also, none of that addresses the employment aspect. You probably are also aware of some attempts to reject the US dollar as the worlds reserve currency.

[-] 1 points by 1sealyon (434) 2 years ago

Here is an interesting treatment of the significance of the Federal Gov National Debt:

Average US household Debt: $ 20,900 Average US household equity: $ 165,000 Household debt to equity ratio: 13%

National Debt: $ 15 Trillion Total US Equity: $ 350 Trillion (Estimates for this number vary between $200 and $ 1400 Trillion, $ 350 looks like a reasonable value in order to err on the low side) National Debt to Equity Ratio: 4%

Relative to our own personal finances the National Debt does not look too bad.

BTW, 70% of the American debt is owed to Americans.

[-] 1 points by 1sealyon (434) 2 years ago

As the EU fumbles I worry less and less about the rejection of the US $ . What currency will they pick, the Real?

All accounts do balance, albeit there are US Bonds on one side of the ledger.

Job growth right now in the US has as much to do with productivity as anything else. Would we be having this discussion if the un-employment rate was 6.2 % instead of 8.2%? A 2 % increase in productivity is almost a 1:1 offset for job growth. We have seen good productivity growth over the last 3 years. I guess we can blame un-employment on our fellow Americans for working too hard. France tried to fix this with a mandatory maximum 35 hour week. Didn’t work out well. They have 10% un-employment. The Gov should just stay out of the free markets (the operative word there after-all is free).

http://www.bls.gov/lpc/

[-] 1 points by notaneoliberal (2269) 2 years ago

Perhaps needless to say, I don't agree,but if you feel all is well, so be it.As for the word "free", I am not confused by semantic games. Free for whom? Free to do what? Free to exploit? Southern slave owners thought they should be "free" to own slaves.

[-] 1 points by 1sealyon (434) 2 years ago

Things can, and usually do, get better. People in the US live longer, we have better medicines and medical treatments, we have healthier food, anybody that yearns for the olden days should hearken back to the state of dentistry 100 years ago. We keep improving the standard of living, we certainly own more stuff and gadgets that entertain, inform, and occupy our leisure time.

The only time better than today to be alive is tomorrow.

All of this happens in spite of the problems, injustices, and yes even crimes committed by some people that operate in the free market system. It is in fact the free market system that we have to thank for these improvements. Laws are necessary to discourage crimes, but I have seen little evidence that the Gov has successfully meddled in free markets. The Gov really does not have the capability to compete intellectually or proportionally with the hundreds of millions of people that drive the markets. The people simply out-gun and out-think the Gov. Free markets are the ultimate power-to-the-people vehicle.

Lot of info here on how much we owe to free markets:

http://www.nytimes.com/2011/11/27/books/review/civilization-the-west-and-the-rest-by-niall-ferguson-book-review.html?pagewanted=all

I have two technology predictions for you about the next 100 years:

  • Medical technology will exist that will allow a child born today to live 180 years. Not such a big stretch.

  • Everybody will be able to kill anybody. This sounds like a bad thing, but after the first use of atomic weapons in 1945 the % of the population killed in wars dropped for the first time in 1000+ years, and has remained at a low level ever since.

http://voices.yahoo.com/article/9216583/nuclear-weapons-ironic-peace-comes-having-10616185.html

[-] 1 points by BradB (2693) from Washington, DC 2 years ago

what can China buy from us anymore? our only industry left is banking and finance... and they don't need that

[-] 1 points by 1sealyon (434) 2 years ago

China buys $100 billion worth of our stuff every year, and it is growing. They are our second biggest trading partner and as their middle class numbers swell (now at 300 million +) they represent a huge opportunity for the US. Just ask Ford, GM, Boeing, and Apple. They are all doing great business today in China.

http://useconomy.about.com/od/tradepolicy/p/us-china-trade.htm

[-] 1 points by richardkentgates (3269) from Fort Walton Beach, FL 2 years ago

You should create a post(thread) just for this info. Seriously.

[-] 1 points by 1sealyon (434) 2 years ago

This is the first blog-forum that I have ever spent time with. I am learning a lot ( not sure exactly what a troll is but I have a general idea now), and am afraid that I am becoming addicted . If I start a thread I will feel obliged to keep up with it.

I must admit this is thought provoking and also pretty fun.

[-] 1 points by BradB (2693) from Washington, DC 2 years ago

looks like an accurate article... thanks

[-] 1 points by 1sealyon (434) 2 years ago

Another cool thing about China? When they sell us stuff we pay them in US $. That is a really cool deal for the US and partly due to the fact that by law the Yuan can't leave China. So what do they do with those $ that they earn selling us stuff? They can buy US products, they can buy US Bonds (thanks for the loan), or, maybe most importantly, they can buy oil, because all of the oil in the world is sold in US $. Which is another very cool deal for the US.

[-] 1 points by BradB (2693) from Washington, DC 2 years ago

hmmm... good 2 know ;)

[-] 1 points by notaneoliberal (2269) 2 years ago

Indeed, and that's the problem. Banking doesn't create real wealth.

[-] 1 points by BradB (2693) from Washington, DC 2 years ago

almost agree... banking does create some wealth... every industrial thing does... it's just that banking alone doesn't create enough wealth... or jobs ... we need it all .... or it will definitely fail

[-] 1 points by MattLHolck (16833) from San Diego, CA 2 years ago

jobs can be made efficient some everyone is not required to work to produce product

people need money to buy food and pay rent

jobs can produce that money but need not be the soul means of making sure people get what they need

food, shelter and health

[-] 1 points by BradB (2693) from Washington, DC 2 years ago

a "Social Reserve Bank" is an easy fix

[-] 0 points by smartcapitalist (143) 2 years ago

In theory of course unskilled labor would be outsourced to whatever cheap country there is but that's theory. You need an entire ecosystem in place to serve as a outsourcing hub. China has it's infra, a determined govt and people who want to migrate from loss making agriculture to somewhat better paying jobs and hence it's rise as a manufacturing hub. India has it's English speaking college grads who would otherwise not get any decent jobs joining call centers while the ones with any measure of engineering education getting into IT companies. China is unable to replicate India's success in IT and BPO and India is unable to replicate China's manufacturing prowess. So being dirt cheap is a necessary condition but not the sufficient condition for outsourcing.

And in a decade time both India and China will also be in our boat. Their costs are rising fast (wages are increasing at 10% and inflation is 4% in China and 8% in India) and soon there cost arbitrage will disappear They too, like us, will have to move up the value chain or perish.

[-] 1 points by notaneoliberal (2269) 2 years ago

If we wait till labor arbitrage is no longer an issue, and meanwhile allow corporations to shift to the slave wage third world country du jour,we won't have an american middle class left. We have already surrendered much of our manufacturing capacity and with it the wealth generating capacity that goes with it, not to mention the jobs. Why do you think China i swimming in cash and we're broke. I suggest you put Mankiw and Friedman to the side and read Keynes. Particularly his admonition against trade deficits.

[-] 0 points by smartcapitalist (143) 2 years ago

I am confused. When did the American middle class solely consist of people manning retail stores, or working in factories or low level IT and BPO people? Sociologists William Thompson and Joseph Hickey estimate an income range of roughly $35,000 to $75,000 for the lower middle class and $100,000 or more for the upper middle class. Most of these jobs aren't going anywhere. And how many jobs will you protect? IBM is developing a software that can identify routine illness without a doctor. Once they start selling it, doctors income would diminish because won't need to visit a doctor for routine check up, some doctors may even lose jobs. Would you protest then too?

We haven't surrendered out wealth generating capacity at all. That's patently false and I dare you to supply data to support your argument.

Why is China swimming in cash? Not because they have manufacturing jobs. Sorry thats not the answer. Do you know what China's average household savings rate is? 75%. What is the average American household saving rate? I don't know but I would be surprised if its even 20%. That's why Chinese banks have a lot of cash and can provide cheap loans. Why do people save so much? The American consumerist culture hasn't affected them much yet. Besides, the Chinese govt does not allow it's citizens (retail investors) to invest in foreign stock markets (why? thats another story) so the only place they can store their money is in the bank. Hence China is swimming in cash. Their internal consumption is very limited and therefore the health of their firms is dependent of exports and every bump in the world economy affects them hugely.

As for Mankiw and Friedman and Keynes, I read all of them and then some. As for trade deficits, it fine to maintain one. Many of the Asian tigers did that, much against the recommendation of World Bank.

[-] 1 points by notaneoliberal (2269) 2 years ago

Now I'm just repeating the obvious. If I have to explain that the trade deficit it self is an indication of our reduced wealth generation. If I have to point out that declining standard of living and a high unemployment rate are not the hallmarks of a healthy economy, then I have to conclude that you are just an ideologue and can't see the outside your illusions. As for Keynes, I think you missed the part about "leakage". http://www.cbsnews.com/8301-505123_162-43556445/keyness-nightmare-how-the-huge-us-trade-deficit-stifles-the-recovery/

[-] 0 points by smartcapitalist (143) 2 years ago

Oh so according to you any country that runs a trade deficit is generating less wealth? Any figures to support that, like say a declining GDP or GNP or something? And for which segment of the society is the standard of living decreasing (though since you havent provided any data which means you expect me to go by your word)? Not for everyone, not even for a majority. It is for the unskilled workers that this is happening and it is expected. The farmers saw their standards of living drop when the country industrialized. Happens all the time. And the high unemployment is a temporary thing, we are recovering from a recession remember? What was the unemployment rate in say 2006? Much less. So jump to conclusions so fast. He have had much worse unemployment rates many times in the last 150 years.

As for me being an ideologue, I am sure anyone who brings well established economic theory to the table appears to be an ideologue to you. Similarly, I think you are a nut job.

As for the leakage effect in this article, it's correct. However, maintaining a trade deficit is not necessarily bad. In a globalized economy, such 'leakages' cannot be prevented but sure you could decrease those to some extent.

[-] 1 points by notaneoliberal (2269) 2 years ago

Here's a link. You really should learn how to do your own research. Google is your friend. http://www.bloomberg.com/news/2011-09-13/poverty-in-u-s-climbed-to-17-year-high-in-2010-as-household-income-fell.html

[-] 0 points by smartcapitalist (143) 2 years ago

Your research skills are fab. Why don't you come and do it for me so that I can go and play on my Kinect? I get bored staring at 6 screens all the day.

[-] 1 points by notaneoliberal (2269) 2 years ago

You're a funny guy.

[-] 0 points by smartcapitalist (143) 2 years ago

I know. thats how I have kept my job for the last 5 years, what with my poor research skills, as you so rightly pointed out.

[-] 1 points by notaneoliberal (2269) 2 years ago

You might want to make plans to move to China, since they will soon have all the money to invest.

[-] 0 points by smartcapitalist (143) 2 years ago

No thanks mate. Shanghai stock ex is a mess. Companies do not give out proper data about their operations and therefore any analysis you do is basically hitting a randomly moving target in a dark room with your eyes closed. Besides, they buy US bonds so all their money is here ;-)

[-] -1 points by Farleymowat1 (19) 2 years ago

Obama put that man in charge of GE into his jobs czar position. Obama is not for the little guy.

[-] 1 points by notaneoliberal (2269) 2 years ago

Yes, Jeff Immelt. A real insult to the people who supported him.

[-] 1 points by outsource (1) 2 years ago

Stop outsourcing IT jobs. It is hurting our family mentally, emotionally,physically and financially..I have done my masters in computer science from US and have over 10 years of working experience but still having problems to find an IT development job that I am interested in. please help stop outsourcing and give the jobs back to US citizens who are well qualified and deserving.

[-] 1 points by FriendlyObserverB (1871) 2 years ago

A cap on sales profits would reduce outsourcing.

[-] 1 points by shield (222) 2 years ago

End the United States' control over working conditions, allowing "job providers" to give the jobs that they are giving to people in other countries to people in this country. Right now companies are not allowed to hire people in this country under the same conditions that they would be able to hire people in other countries. If you want to move jobs here, repeal the United States' authority to regulate commerce. Of course, what you're really advocating is not the transfer of jobs from overseas to here, but a system which rewards businesses for considering "national interests" (nationalism) above good business sense. I always hear people talking about a system in which the United States might offer rewards to businesses that hire here instead of overseas but let's think about this for a second. That would imply that the taxes of the middle class should be funneled to business which cannot possibly hire EVERYBODY, so that those few that they CAN hire (at a higher wage than they would be able to outside of the country) can work. Either those US funds would go towards subsidizing the difference in cost between hiring workers here and overseas or they would not, in which case the company would have to raise its prices here and abroad in order to make up for what it loses, doubly negatively affecting the middle class. First their money is taken by the US to pay for company A to subsidize the more expensive labor and then (if that that subsidy is not sufficient) they have to pay more for those goods as well.

[-] 1 points by TrevorMnemonic (5827) 2 years ago

Stop passing trade agreements that continually make outsourcing easier and cheaper.

[-] 1 points by MattLHolck (16833) from San Diego, CA 2 years ago

mostly, I have a hard time believing outsourcing exist

it exist on the idea the US is the center of production, factories and ideas

when any place in the world can be innovative

any place in the world can have factories

[-] 1 points by nightwindrc (13) 2 years ago

Stop doing business with companies that outsource labor. That is the only way. If we impose more tariffs, on say China, they will just devalue more to offset.

Quit shopping at Walmart, Lowe's, Home adepot and the other retailers thatinsist to sell us foreign made goods.

[-] 1 points by Mooks (1985) 2 years ago

That is not that easy. Say I need a new TV or computer. Do you really think you can find one that was made in the US. And even if you can, I doubt I would want to pay the higher price.

[-] 1 points by grapes (2826) 2 years ago

Do not quit shopping at Walmart, Lowe's, Home Depot but go in there often and ask for exquisite custom-made products so they get the message that their mass marketing products made overseas are not making it here, hurting their bottom-lines.

[-] 1 points by ARod1993 (2420) 2 years ago

Possibly; what I was thinking was a Living Wage Tax Credit, in which corporations would get back $12.5K per job created in the US, provided that the job in question goes to someone unemployed for 30 days or more and pays at least twice the federal minimum wage. Alongside that I would eliminate all tax deductions to corporations doing more than 20% of their manufacturing overseas and assess a $12.5K penalty per job cut and twice that per job outsourced. That's hardly the sum total of what I'd do, but it's the part I think could actually get through DC.

[-] 1 points by BradB (2693) from Washington, DC 2 years ago

forget about the outsourcing ... it has already taken place ... the little manufacturing that is left here will not make enough difference to recover our economy... we need to make new ... we need to build new industries ... and we are capable of that right now... there is tons of new ventures sitting idle for lack of capital ... our biggest & best solution is to fund these new enterprises

[-] 1 points by vats (107) 2 years ago

The president should tax the companies out sourcing to india and china now

[-] 1 points by oureyeswideopen (7) 2 years ago

Western Corporation have to stop paying slave wages to other people in poor countries (think Foxconn)

[-] 1 points by Spade2 (478) 2 years ago

Why? Who's gonna make them? The US?

[-] 1 points by Rizon (1) 2 years ago

Incentives for domestic job creation is a great idea but I'm not sure how cheaper college education for middle wage job would stop outsourcing.

[-] 1 points by notaneoliberal (2269) 2 years ago

I think everyone should look at the history of tariffs in the US. It tells a lot about were we've been and how we got where we are. http://en.wikipedia.org/wiki/Tariffs_in_United_States_history

[-] 2 points by JoeTheFarmer (2654) 2 years ago

You need to read up on the Smoot Hawley Act. The highest tariffs in US history were enacted in 1929.

In May 1930, a petition was signed by 1028 economists in the U.S. asking President Hoover to veto the legislation.

As it passed the House of Representatives in May 1929, boycotts broke out and foreign governments moved to increase rates against American products, even though rates could be increased or decreased by the Senate or by the conference committee. By September 1929, Hoover's administration had received protest notes from 23 trading partners, but threats of retaliatory actions were ignored.

In May 1930, the greatest trading partner, Canada, retaliated by imposing new tariffs on 16 products that accounted altogether for around 30% of U.S. exports to Canada. Canada later also forged closer economic links with the British Commonwealth. France and Britain protested and developed new trade partners. Germany developed a system of autarky.

Both Reed Smoot and Willis Hawley were defeated for reelection in 1932, the controversial tariff being a major factor in their respective losses.

[-] 1 points by notaneoliberal (2269) 2 years ago

I'm well aware of the Smoot-Hawley tariff story, as well as all the misinformation that has been circulated about its' effect. It did not significantly change what was an already high tariff structure that was in place and primarily affected agricultural products. http://www.youtube.com/watch?v=UJThSA59uqI

[-] 1 points by JoeTheFarmer (2654) 2 years ago

Trust me. If we put high tarries in place other countries will do the same. There are plenty of consumers in India, Europe, Japan, Korea, and China. We need to sell more products to those markets.

[-] 1 points by notaneoliberal (2269) 2 years ago

Joe, let's do the math. In 2011 the US had a 558 Billion dollar trade deficit. So if we were to end all trade, both imports and exports, we would be 558 Billion dollars richer. We need to sell more products to ourselves. To do that, we have to make them ourselves. Trade war? Bring it on.

[-] 1 points by JoeTheFarmer (2654) 2 years ago

Do you really think it is that simple?

Are you a Nationalist? Perhaps a Socialist and a Nationalist?

Perhaps part of the National Socialist Workers Party? http://tinyurl.com/n3drc

It sounds like the same self centered rhetoric of the party.

[-] 1 points by notaneoliberal (2269) 2 years ago

As to your suggestion that protectionism is somehow associated with the nazi party, that would make George Washington, Alexander Hamilton, Abe Lincoln and almost all American Presidents fall into the same category. All were protectionist.

[-] 1 points by JoeTheFarmer (2654) 2 years ago

What I am saying is that party used the same rhetoric. That their nation was somehow better than the rest of the world. The built a strong national movement with the the promise of a job for everyone at the expense of the countries around them. As they grew stronger they grew more ambitious and decided to expand their nation.

[-] 1 points by notaneoliberal (2269) 2 years ago

I do not wish to dis-empower others in in the world for the benefit of only Americans. Neither to hold to the idea of "American exceptionalism". I am not however, willing to see ever greater numbers of my fellow American become unemployed, have their wages and standard of living destroyed, and sink into poverty so some corporation can make a short term gain. I would like to see working people all over the world enjoy a decent standard of living, but what we are doing is exploiting them. To China, I say, if you want a market to sell your goods, raise the wages of your workers. You will then have plenty of people who can afford the goods they produce. China has four times as many people as we do. Why do they need our market?

[-] 0 points by JoeTheFarmer (2654) 2 years ago

They unemployment rate is going down The hiring rate is going up. We do not need to cut off all the others to better our situation. The situation in China will not improve because we stop buying play stations, cell phones, zinc, nickel. Just as Japan improved after WWII so will China. There people will demand better working conditions and the world is already putting the pressure on. As more and more Chinese earn a decent wage their trade deficit with the US will decline. It has been declining for the past six months.

Isolationism and Nationalism are not the answer. Putting up walls will not make the world a better place.

[-] 1 points by notaneoliberal (2269) 2 years ago

You are mistaken on all counts. The deficit is not going down. Real unemployment is not going down. When people demand better in China, they tend to be met with tanks. Ever heard of Tienanmen Square? http://www.registerguard.com/web/business/27597295-41/exports-percent-growth http://www.baltimoresun.com/news/opinion/oped/bal-fudging-the-numbers-on-une

[-] 0 points by JoeTheFarmer (2654) 2 years ago

The hiring rate is going up which implies the jobless rate is going down. More jobs were created than were lost in January at the highest rate in 3 years.

[-] 1 points by richardkentgates (3269) from Fort Walton Beach, FL 2 years ago

http://4.bp.blogspot.com/-TJJkggygntA/Tyv7kYDVrtI/AAAAAAAABsw/bHI-4qdI-O0/s1600/US%2BEmployment%2Bto%2BPopulatioon%2BRatio%2BJanuary%2B2012.png

yeah man, employment ain't look'n so hot. A lot of people no longer qualify for unemployment so naturally they don't apply. To say that means they are working, it's a stretch.

[-] 1 points by JoeTheFarmer (2654) 2 years ago

I understand that people are unemployed for a long time however if the rate of hiring is greater than the rate of firing, we are heading in a positive direction.

[-] 1 points by richardkentgates (3269) from Fort Walton Beach, FL 2 years ago

I hope so. The data doesn't always paint a clear picture for such a short snapshot.

[-] 1 points by notaneoliberal (2269) 2 years ago

Sir, that only refers to those that apply for unemployment benefits. It does not count all unemployed. Did you read the article?

[-] 1 points by JoeTheFarmer (2654) 2 years ago

If the rate of hiring is greater than the rate of firing, we are heading in a positive direction. This has been the trend for six months. Each month more people are employed because more people are hired than are let go.

[-] 1 points by notaneoliberal (2269) 2 years ago

You also have to account for population growth. From my understanding, we need 300,000 per month to make any serious headway.

[-] 0 points by JoeTheFarmer (2654) 2 years ago

You also have to account for the fact that the baby boomers are all retiring.

[-] 1 points by notaneoliberal (2269) 2 years ago

It's not quite that simple, but its not that complex either. No, I.m not a member of any political party. Part of that trade deficit is due to oil imports. Tariffs would not be appropriate there, but the manufacturing is my main concern. That is nearly half of that deficit.

[-] 0 points by smartcapitalist (143) 2 years ago

Tariffs have a similar trend for every economy that has developed. We are not being any more generous than others. We are conceding just as little is necessary

[-] 1 points by notaneoliberal (2269) 2 years ago

Your first sentence is true. Your second sentence is insane. We have a shrinking economy, a declining percentage of adults in the workforce,a massive trade deficit, more people sinking into poverty. Wake up.

[-] 0 points by smartcapitalist (143) 2 years ago

Simply increasing trade barriers (or blocking it altogether) may arrest trade deficits but it will increase domestic prices substantially. And no we are not a shrinking economy, even now the economy is growing albeit slowly which is expected for a country that is recovering from a recession.

[-] 1 points by notaneoliberal (2269) 2 years ago

We could argue about what "substantially" is, but there is another issue at stake. The money paid to US workers tends to stay in the US economy,thereby increasing domestic aggregate demand. Who are your customers? How many are US citizens? The people you (we) put out of work by outsourcing are our potential customers.

[-] 0 points by smartcapitalist (143) 2 years ago

What you are arguing for is effectively a closed economy and this country isn't big enough to be closed economy. The former USSR with its huge size could afford to be a largely closed economy, we can't.

Sure the jobs will stay here and so will the money paid for those jobs. But the question is how many? Most of these jobs are low end manufacturing, IT (where unemployment is already pretty low at 3%) and call center jobs. What percent of the US workforce is that? What fraction of the US workforce is that? I don't have the figures readily available and would like to guesstimate but if you have the figures from a credible source, do provide. Besides, unemployment is high mostly with people without a grad degree (http://www.prb.org/pdf08/63.2uslabor.pdf). So all your tariff barriers would do is ensure employment for people who very likely have no degrees and work in low skilled jobs. But the effect of this tariff barriers would be that our prices would increase substantially and that price increase would effect everyone, including the people whose jobs you are trying to protect. Also since, this particular segment of people would now have higher wages demand would rise sharply. So on one hand you have stunted supply and on the other you have increased demand thereby increasing prices. Prices would also further increase because the cost of labor would go up in your bid to protect jobs. Also countries exporting raw materials to us to run our factories would probably not take kindly to the tariff barriers and that would increase the cost of imports for our companies thereby driving prices further. Further, since we have increased our tariff, other countries would follow suit (remember national treatment and WTO? Not to mention we will be violating dozens of WTO rules in the process but then we are Uncle Sam and may be we can get away with it, may be not) and foreign markets for American products and services would fast disappear. Therefore profitability of our firms would go down. All of this because you want to engage in the lofty goal of protecting a small fraction of American jobs. Bravo.

I can go on and on as to how corporate and treasury bond prices would fall and so on and so forth and how the whole economy would go into deep shit, but I believe you get the picture. Now of course I would expect any reasonable person to figure this out but this is the OWS forum and therefore reason and logic have taken a hike.

[-] 1 points by notaneoliberal (2269) 2 years ago

The US is about 5% of the world pop. The US market is about 25% of the total. That's not enough? 5x the world average? You are comparing the US to the former USSR. I don't think that's very valid. No two points in history are identical, but I prefer to look at what worked in the past in this country. Take look at the stats for the US in the 1950s through the 1970s. We had far more even distribution of wealth, a growing middle class with increasing wages, low inflation and little or no trade deficit. Granted, coming out of ww2 we had little competition in manufacturing, The US also ceased to be an oil exporter and became an importer in 1970. But far prior to that from 1792 tariffs remained high. It was under these conditions that the US went from a agrarian economy to the top manufacturer in the world. That status was lost in 2010. The dire predictions you make were not born out in the past and as you say yourself, most of the jobs are low skill. That means many unemployed Americans could step into them with little or no training.

[-] 0 points by smartcapitalist (143) 2 years ago

I meant large in terms of area. The USSR was so large that it could satisfy its requirements for raw materials as well as consumers for the finished goods all within it's boundaries. The US cannot. What worked in 70s cannot work now. The world has changed a lot. Yes I agree that income distribution has skewed quite a lot and much of it has to do with some of the population getting better education and moving up the ladder while a large portion did not bother to. We have a 99% literacy rate and yet only 27% of the work force has any graduate degree (of this the number of grads having degrees in sciences or engineering is even less). The rest 83% would obviously find it harder to get jobs because in a developed economy there are very few old economy jobs. You cannot stop the inevitable. people will have to move up the value chain or perish. As simple as that.

[-] 1 points by notaneoliberal (2269) 2 years ago

I don't accept that. An economy only needs so many graduate degrees. I don't see what you see as inevitable to be so. You simply state that what worked in the seventies will not work today. Actually it was before the seventies, but irrelevant. There are current examples of protectionist measures working.but it seems maybe this information is all new to you. I understand you have been steeped in dogma. Do some research.

[-] 0 points by smartcapitalist (143) 2 years ago

Protectionism should only be applied to infant industries. For mature industries, protectionism only means taxing the consumer, increasing producer surplus at the cost of consumer surplus. I like the way you guys throw around the word research, particularly when you are talking to an investment analyst, of all people. You have guts, I give you that.

[-] 1 points by notaneoliberal (2269) 2 years ago

Who's you guys?

[-] 0 points by smartcapitalist (143) 2 years ago

OWS

[-] 1 points by notaneoliberal (2269) 2 years ago

I wouldn't assume the people on this site are the people on the street. I probably have more in common with you than the administrators of this site. I'm not a kid. I'm not an anarchist. I'm a small business owner who doesn't like the direction of this country.

[-] 0 points by smartcapitalist (143) 2 years ago

Well. Some other time then. :)

[-] 0 points by smartcapitalist (143) 2 years ago

The last 3 years we returned upwards of 21%. Thats pretty good actually.

[-] 1 points by notaneoliberal (2269) 2 years ago

That is pretty good, unfortunately I lack liquidity.

[-] 0 points by smartcapitalist (143) 2 years ago

You can expect to outperform S&P by a healthy margin ;-)

[-] 1 points by notaneoliberal (2269) 2 years ago

No offence, but that's not saying much. It's flat.

[-] 0 points by smartcapitalist (143) 2 years ago

Well if you are worth more than $10m I would be happy to sign you up as a client ;-)

[-] 1 points by notaneoliberal (2269) 2 years ago

What kind of returns can I expect?

[-] 1 points by carlsor (1) 2 years ago

All outsourced jobs overseas that provide support to customers in the USA or business activities in the USA should be required to pay all employer and employee payroll taxes for social security, Medicare, etc as if the job were in the USA. Companies export jobs but an individual's need for welfare assistance, medical care and financial security in retirement is not exported. This tax would raise Govt revenues and cause some jobs to be brought back to the USA.

[-] 1 points by craigdangit (326) 2 years ago

Gladly. I run a small business. I've sent jobs overseas, the times I've done it meant the difference between having something to sell and not having something to sell. Labor costs around $2/hour in China, current payroll taxes are ~7.5% for the employer, ~7.5% for the employee. So my goods I'm buying in China under your proposition will cost me ~15% more. I'll still buy them there.

[-] 1 points by saboro (12) 2 years ago

I would implement import certificates or something like that and balance the trade. That would take care of the problem for the most part. Of course, an item or service produced in another country would be considered an import, no matter where the producer's headquarters are.

The only free trade is balanced trade. Check votersway.com

[-] 1 points by freewriterguy (882) 2 years ago

we need to lower the cost of our homes and land, this takes the lions share of our money, not the products we manufacture and sell. Especially when 80% of our mortgage goes towards interest payments to banks that never put up anymoney towards our house, do to their counterfeiting money called "fractional banking".

Then we would be able to afford to bring the jobs home because we could afford products, services, and home mortgages, what about that?

[-] 1 points by notaneoliberal (2269) 2 years ago

We can afford to bring the jobs back. I'ts not bringing them back that we can't afford.

[-] 1 points by freewriterguy (882) 2 years ago

when the dollar crashes, then the jobs will come to america, as everyone will want to hire our cheap labor. Its funny how things tend to balance themselves out, with exception of that outrageous bank bailout there was no balance there.

[-] 1 points by notaneoliberal (2269) 2 years ago

If the dollar crashes I don't think it will be pretty. I think the odds of getting a job would be even lower. I hope it doesn't come to that.

[-] 0 points by smartcapitalist (143) 2 years ago

fractional banking is counterfeit money, is it? Please enlighten me how

[-] 1 points by freewriterguy (882) 2 years ago

well banks can take a hundred thousand dollars of deposits and loan out 90,000, as they are only required to keep 10,000 in reserve, but since most loans, people dont actually take the money out of the account, it shows they still have 100,000 in deposits, so banks make a 2nd loan on the original 100,000, but the 2nd loan is only for 90,000 caukse on their books they show 10k in reserve, they can then reloan 81,000 (showing 8,100 in reserve on their books for a 3rd loan on the 100,000 and so on up to nine times, without paying any interest on any of it, in effect creating money out of thin air. If i could do that with my bank deposits, It would be able to finance alot of my daily expenses.

[-] -1 points by smartcapitalist (143) 2 years ago

And what is wrong in the banks engaging in this practice? And theoretically you too could do something similar.

[-] 1 points by freewriterguy (882) 2 years ago

do tell how can i do similar, im all for it

[-] 0 points by smartcapitalist (143) 2 years ago

Well theoretically, you could go to a Notary and issue me a signed document saying I owe you $100. Now suppose instead of one document, you get 10 documents each claiming I owe you $10. I agree to pay you in installments of $25 which is also in the document. So this $100 is your asset (my liability) and the documents are your proof.

Now suppose Sam wants to borrow $100 from you which he shall use over 10 months, $10 each month, while Pam wants to borrow $15 for 6 months (total $90). Since I know that neither Sam nor Pam would use all the money upfront I can service both of them. I use your $25 and break it down to $15 and $10 and then go to a notary and get similar documents for each. Then I give that document (or even the money provided I have it) to Sam and Pam and they can use that as legal tender (theoretically again because Walmart sure won't be bothered to accept that). In the first 4 months, you get 4 $25 from me and give $10 to Sam and $15 to Pam. For the next 2 months, you give $15 to Pam and $10 to Sam, twice. Then on the 7th month Pam pays you the whole $100 and you can use the remaining $10 receipts to service Sam and Sam pays you back $100 in the 11th month.

As long as you don't have to pay someone all the money at the same time, you can do it. That's why banks can do it because the depositors aren't all going to come and demand all their money simultaneously.

[-] 1 points by Algernon (26) 2 years ago

The theory (or, if you prefer, "bogus claim") of free-traders is that both the U.S. and China benefit from free trade between the two countries. The reality is that China is booming (growing wages, low unemployment) and the U.S. is being ground into powder. One solution is to increase tariffs until it is clear that both countries are gaining from free trade. One stumbling block is that CEOs at G.E. and Walmart are enjoying increasing profits by replacing American jobs with Chinese jobs. As long as the CEO's are happy, and as long as they contribute big $$ to politicians' election campaigns, it does not matter what is happening to the rest of the country.

[-] 2 points by 1sealyon (434) 2 years ago

The problem is solving itself. As demand increases there is wage pressure in places like China and India. Southern China is already un competitive with places like Vietnam. Ten years ago a five star hotel room in Shenzhen was $25 now it is $200. Keep the goods flowing freely from other countries and in 7 years there will be no labor rate advantage between Shanghai and Kentucky.

BTW China is already a great market for our products as their middle class booms. Just ask Ford, GM, and Apple. Eliminate the tariffs. As the French say, "if goods don't cross your borders soldiers will".

[-] 1 points by freewriterguy (882) 2 years ago

great points, i remember seeing a documentary on kfc like in 2007 or 2008 or maybe 2009, anyways, they claimed they were the first american fast food restaurant to open in china, i think mcdonalds was 2nd, anyways, in the video it showed video footage from i dont remember how many years ago where most of the chinese were riding bikes, and there were few cars on the roads, and then after so many years later, and tens if not hundreds of kfc's later, it showed the streets in china loaded with cars, this was verifiable proof to me from an outside source (kfc documentary) that the demand for oil in china as well as probably the rest of the world is what increased the price of our gasoline. Then in 2009 or 2010, I read glenn becks book which basically said the same thing.

[-] 1 points by 1sealyon (434) 2 years ago

KFC is huge in China. The biggest KFC I've seen is in the Hong Kong airport. It has to be 3000 sq. meters. The biggest KFC in the world is in Beijing.

[-] 1 points by Algernon (26) 2 years ago

The same way that NAFTA sorted itself out? http://economyincrisis.org/content/nafta-jobs-losses-continue-mount

[-] 1 points by lithosere (65) 2 years ago

Don't just stop outsourcing, bring back all the industries US citizens depend on and make production domestic. We'll see how much we like our total local environment being murdered by poisons and our workers being subjected to slavery. By the way that isn't sarcasm. Let's do it.

[-] 1 points by GildasSapiens (266) 2 years ago

I think you mean offshoring (i.e. the practice of moving certain business activities to foreign countries as a way to lower costs, avoid taxes, etc.) - not outsourcing (i.e. purchasing (goods) or subcontracting (services) from an outside supplier or source), which can happen within the domestic market.

[-] 0 points by jrhirsch (4714) from Sun City, CA 2 years ago

It should be up to the people to decide to limit or stop outsourcing by not buying goods and services that are produced by the outsourcing. Direct Democracy in action.

[-] 0 points by DKAtoday (34988) from Coon Rapids, MN 2 years ago

Supporting promoting aiding the abuse of people is not defensible.

http://www.care2.com/go/z/e/AGcTB/zmCt/B18Bb

Speak-up, Speak-out.

[-] 0 points by DKAtoday (34988) from Coon Rapids, MN 2 years ago

Protest to the Government ( every Government ) that to allow outsourcing to foreign businesses that operate sweat shops is corrupt, that these sweatshops are abuser's oppressors of humanity and are no different than the ruler of Syria, no different than Saddam Insane, no different then the illegal military government of Egypt, no different than Gaddafi, No different than the oppressive government of North Korea.

It should be illegal to support the misuse and mistreatment of people. Sanctions should be in-placed not lifted. Restrictions enforced against companies ( business ) that support the abusers.

[-] 0 points by commonsense11 (195) 2 years ago

Penalties against companies that do outsource.

[-] 0 points by Gillian (1842) 2 years ago

I tend to believe that any real and long lasting change in stopping or minimizing outsourcing will be dictated by US consumers. Quit buying stuff made by China and supporting companies that outsource their customer service and learn what other options are available. Heck, Ebay has awesome things for sale that are better quality than new items purchased at a big box store. I realize that this is not easy to do ( thought, from my own experience, it does get easier with practice) but making even one change in your purchases makes a difference. Vote for America with your purchases.

[-] 0 points by craigdangit (326) 2 years ago

A more important question: How will you stop people from smuggling lower cost goods into the US from other countries after you raise the price of goods in the country 500% by ending importation?

Yes We Can turn plastic forks into a black good.

[-] 1 points by notaneoliberal (2269) 2 years ago

The average cost of labor in manufactured goods is about 15%. An Iphone, if made in the US would cost about $65 more, minus the cost of shipping it across the Pacific ocean.

[-] 1 points by craigdangit (326) 2 years ago

Yes 15% -to the last stage of production-. You're not counting the labor involved in raw materials acquisition.

[-] 1 points by notaneoliberal (2269) 2 years ago

Possibly, but depending on what your defining as raw materials, they would tend to be of relatively uniform price anywhere.

[-] 1 points by craigdangit (326) 2 years ago

You'd be surprised. Pretty much every cost is labor, when you get down to it, unless you factor in the availability of goods. The machines to dig raw materials out of the earth could not be imported, the machines to process raw materials, all the workers could not drive cheaper foreign cars, their cost of living would rise, etc. We would see an increase in lithium prices on the orders of magnitude, as would rare earth materials, as we have virtually none here and could not import any from other countries. All fair trades are free, not all free trades are fair. But most are.

[-] 1 points by notaneoliberal (2269) 2 years ago

Ok, after your statement about "pretty much every cost is labor" which I somewhat agree with, except I would put energy in there as a different commodity. you kind of lost me. The machines from where couldn't be imported to where? workers could not drive cheaper foreign cars? Lithium and rare earths? Somehow we went from the general to the specific. Could you clarify?

[-] 1 points by craigdangit (326) 2 years ago

Sorry, I did get a little incongruent there. What I meant was, most goods are price-controlled by the cost of labor. What I meant was, suppose I am digging coal out of my back yard and selling it. (This sounds stupid, bear with me...) I can produce one hundred pounds of coal per hour. Suppose I am working on a fixed wage, decided by someone else for all of the workers in the country. My wage is a dollar an hour. That coal now has a labor cost of one penny per pound. I am breaking even at this cost, including the cost of the shovel I wore out during that hour, and my flashlight used three batteries. So suppose whoever controls the wages raises them by ten percent. I am now making $1.10 per hour, but the coal does not just cost $.11 per pound, because my batteries also cost me at least ten percent more, as does my shovel.... Maybe this sounds as stupid as my first reply, but what I am saying is that imposing price floors and tarrifs on goods raises costs exponentially, not just the cost of the finished goods.

[-] 1 points by notaneoliberal (2269) 2 years ago

I'm still a little unclear on how you feel this applies to the issue at hand. Tariffs would or could be imposed on manufactured items and not raw materials. Would that help the picture?

[-] 1 points by craigdangit (326) 2 years ago

Yes, greatly. If raw materials, and partially assembled goods were freely traded, it would not have as catastrophic of an effect on the economy. I just started a thread about it, here you can see if you like: http://occupywallst.org/forum/is-outsourcing-always-universally-and-unconditiona/

I think we agree.

[-] 1 points by notaneoliberal (2269) 2 years ago

500% not. Smuggling was a manageable problem when we had tariffs in the past.

[-] 1 points by craigdangit (326) 2 years ago

500%? Watch me. I import goods. The same part I buy in america for $3.00 costs me 27 cents in china with shipping.

[-] 1 points by notaneoliberal (2269) 2 years ago

If you want to be a smuggler, "watch me" is probably a phrase you should avoid.

[-] 1 points by craigdangit (326) 2 years ago

I don't mean "me", I mean smugglers. Think like one to defeat one.

[-] 1 points by notaneoliberal (2269) 2 years ago

Humor, dude.