[A well-researched and well-thought out piece reflecting contrasting view on the virtue and vice of outsourcing in America. kes]
Shafts of sunlight poured through the glass ceiling of the
hotel conservatory. Hanging plants
filtered the rays as they illuminated white tablecloths and wicker chairs
below. Golden glass chandeliers added to
the dazzling beauty of the wedding reception.
Roslyn and Gary were finally married and around the family table the two
happy moms and dads sat gazing at the gathering of people celebrating the union
of their two families. The band belted
out an earnest rendition of “New York, New York”.
“Great couple,” remarked the groom’s father, Arthur
Kilbain. He and his wife Sue were seated
across from Nick and Elise Johnson, parents of the bride. Both couples enjoyed a splendid panorama of
the dance floor, the band across the room and the wedding party seated behind
the head table to their right.
Arthur was impeccably dressed in a black tuxedo with a white
shirt and yellow tie. His brilliant
white hair contrasted with tanned skin and dark eyebrows. He was a tall, fit man with a seemingly
molded-on “Hi, How-Are-Ya!” smile.
Arthur had worked his way up to CEO of the Tomlinson Corporation through
a series of increasingly more responsible jobs in Fortune 500 companies.
“Yah, great pair,” smiled Nick Johnson. Nick rose to applaud Gary’s dance with his
new bride. A great big tank of a man,
Nick’s once flourishing red haired pate was shaved clean. He sported a grey goatee. His rough skinned face reflected years of
labor at the General Motors plant in Lordstown, Ohio. He had the feisty demeanor of one who had
forged his way up from the assembly line to shop steward to a full time union
management position with the Northern Ohio Chapter of the United Auto Workers.
“You know, Nick,” continued Arthur, “The world Gary and
Roslyn are living in is quite different from the one you and I faced.” “Sure is,” replied Nick. “Gone to the dogs,
if you ask me. The economy is permanently tanked. Legislators can’t agree on anything, and jobs
are being shipped overseas with the full support of the government. It’s unbelievable. How do you grow jobs if the government
promotes sending them overseas! The rich
just get richer and the middle class suffers.”
Failing miserably in an attempt to maintain decorum
appropriate for the occasion, Arthur blurted out, “Well, you have to admit, the
American worker has to some degree cooked its own goose by demanding high wages
and not keeping up with training to be competitive with world workers.” He winced as Sue’s foot found his shin.
Nick’s face turned a deep red and his eyes started blinking
uncontrollably, opening wide like a pair of camera lenses trying to collect any
light possible from a scene of darkness and desolation. Elise, caught in the middle of a sip of Moet,
tried unsuccessfully to muffle a choke.
A stay-at-home mom, she was the stuff that kept the family of seven
together, an expert at resolving disputes and keeping everyone on an even
keel. A smiling, content woman with
short blond hair worn in a simple bob, her eyes set her apart. They were at once cheerful and skeptical, and
one felt she could see through any false pretense one might conjure. Roslyn was her oldest.
Nick took a long moment to compose himself. “American workers are the best in the
world. How come the Japanese have done
so well with automobile plants for their cars in America? Besides, the gap in the cost of manufacturing
labor between our country and others has decreased greatly over the years. We should bring all that manufacturing back
home.”
“The thing is, Nick,” replied Arthur, “our companies need
the increased productivity that outsourcing brings in order to make money so
that the economy can grow. This benefits
the entire population. Look, I’m
responsible to provide current quarterly income growth for my
stockholders. They want it now, not
later, so I have to do what’s going to make the most money in the short
term. Besides, many employers are not
sure truly competitive manufacturing can happen in the US. Workers here snub repetitive jobs and want
too much time off. Overseas in India and
Malaysia, workers are more willing to accept changing work hours and take on
tough jobs. Employers can even find
skilled mid-level engineers and suppliers there, along with low wage
employees.”
“Well, I’ve read studies which say the effect of outsourcing
jobs on overall productivity is questionable,” retorted Nick.
“Hey guys, it isn’t just manufacturing that has been shifted
overseas, white-collar outsourcing is hurting us as well,” Sue injected. Sue ran her own programming company, writing
financial and operations software for medium sized manufacturing firms. Her shoulder length brown hair framed a
rather intense face with dark eyes. She
wore a jet-black dress. Gary was her
only child.
“Not too long ago, I could hire overseas programmers for 10%
of what I could here,” she began.
“Corporate clients would ask ‘Are
you employing outsourced programmers?
Because we really don’t want to pay the rates of domestic programmers.’ What was I supposed to do? Today more and more countries are offering
not only skilled programmers, but data-input and call center people as well and
the difference in cost is still quite large.”
“Outsourcing of white-collar jobs is good for US
corporations but not for domestic white-collar workers,” she continued. “In fact, many of us assumed that shipping
dangerous repetitive manufacturing jobs overseas was actually good for our
workers. They could be retrained for
more gratifying jobs like those in the technology world. Now we see that those jobs are going
elsewhere as well.”
Arthur was feeling considerably outgunned. “Just look at
Apple, and Nike, and all the overseas manufacturing that they do,” he
asked. Can you argue that they haven’t
added greatly to our economy?” Besides,
our tax code actually rewards us for moving operations overseas!”
“Just how does that work?”
Sue questioned, growing more flustered.
“Well, our code allows companies with multinational
operations to report profits in foreign countries with little or no tax
rates. Countries like the Netherlands,
Ireland, Cayman Islands, Luxembourg, Singapore, Bermuda and Switzerland have
tax rates all under 4.5%. The top marginal
corporate federal rate in the US is 38%.
What’s more, multinationals can defer payment of taxes on profits in
such countries. That gives the company
more funds to invest in research and assets so it can generate greater profit
down the road. You’ve got to hand it to
these nations, they’re trying to attract more investment and they’re
succeeding.”
Nick leaned forward, almost standing. “We need more companies like Intel. Intel does not outsource, employs mostly
domestic production workers and is certainly successful!”
“We need to penalize manufacturers who ship jobs overseas,
not reward them!” he exclaimed. “And we
need to place protective tariffs on all imports which would threaten domestic
product sales at home. We can send our
sons and daughters off to war, but when it comes to economic warfare, we
balk! Here’s another thing, our
government needs to support our businesses in a better manner. Look at Germany. The German government actually funds domestic
businesses during economic downturns so they can keep employees on staff, with
benefits!”
Arthur stiffened himself.
“Now, wait a minute Nick. Many
Germans are scraping along at subsistence level incomes under
government-supported programs when they could be out looking for new and better
work! Protectionist trade theory just
doesn’t make sense. If we put tariffs on
goods coming in to the US, other countries do the same and everyone
suffers. We still lead the world in
attracting global investment.
‘In-sourcing’, letting foreign companies invest here, is a boon to our
economy! In fact, the amount of foreign
investment in the United States is twice our investment overseas. Major foreign companies are building plants
in the US. That means more jobs for
American workers.“
Exasperated, Sue interjected, “So now you’re arguing for
out-sourcing and in-sourcing at the same time?
My head hurts. Why we can’t get
good numbers on this whole matter? So we
can see the real impact of outsourcing?”
“First, the Bureau of Labor Statistics hasn’t found a good
way to report on outsourcing,” Nick stated.
“Second, companies themselves are reluctant to publish their own numbers
out of fear of hostile responses from customers. We’re really flying blind in this area!”
Elise Johnson had been studying the three antagonists, and,
as was her habit, looked for a way to calm troubled waters. After all, this was a wedding! Her daughter’s wedding! She thought about all the family turmoil she
had navigated. Billy, if you give Laura 3 play coins for your five knights, I’ll bet
she’ll share the toys she wants with you.
Or, Nick, we’ve got to do the shopping for your mother after her
fall. Will you take the kids Saturday
morning so I can go to the ShopRite?
Mustering her resolve, she declared, “We really can’t solve these
problems at such a broad level. At that
level, you just get polarization of views and divisiveness. We all know what we want: Spur the economy, create jobs, cut the
deficit, support critical infrastructure, provide basic education, maintain
adequate defense.”
“Leadership has got to approach both the budget and pieces
of legislation on a case by case basis,” she continued. “Get lawmakers from both parties together and
hammer out the right solution for the greatest number of people at the time. That way, everyone feels like they are part
of the process of management of the country so they work in a positive manner
to achieve results. It’s called
productivity, working together. I mean,
that’s the way we always did it at our house.”
Nick, Arthur and Sue all stared blankly at Elise. In the background, above the din of the
partygoers, the band began playing an old Johnny Nash song. “Buh
Bah, ba ba buh buh…. Buh Bah, ba ba buh buh.” At a loss for something…anything, to add, Sue
raised her eyebrows and shrugged her shoulders.
As if on queue, Arthur was up from his chair and rocking back and forth
to the beat. The two grinned at their
new in-laws and started to sing. Nick
and Elise jumped up from their seats and joined in with the rest of the
crowd. “I can see clearly now the rain is gone…I can see all obstacles in my
way.” “May I have this dance, Sue?”
inquired Nick. “How ‘bout it, Elise?”
offered Art. The four strutted arm in
arm to the dance floor, parting the crowd of admiring guests. ...”Gone are the dark clouds that had me
blind…it’s gonna be a bright, (bright), bright, (bright) sun-shiny day!” And they danced on into the night.
-------------------------------------------------------
Resources:
Fisher
Center for Real Estate and Urban Economics – U of CA – Berkeley – Fall 2003
The
New Wave of Outsourcing http://escholarship.org/uc/item/02f8z392
The
Heritage Foundation – Bringing the Jobs Back Home; how the left created the
outsourcing crisis and how we can fix it.
Todd Bucholtz. 2004 2005-03-09-Bringing-the-Jobs-Home-How-the-Left-Created-the-Outsourcing-Crisis-and-How-We-Can-Fix-It.rm
The
Heritage Foundation -Time to Safeguard Ourselves from Rising Protectionism - http://blog.heritage.org/2012/08/01/time-to-safeguard-ourselves-from-rising-protectionism/
The
Heritage Foundation – Let’s be honest about Outsourcing - http://blog.heritage.org/2012/07/19/morning-bell-lets-be-honest-about-outsourcing/
The
Heritage Foundation – When Trade is Free US Gains in Investment and Jobs - http://blog.heritage.org/2011/04/13/when-trade-is-free-the-u-s-gains-investment-and-jobs/
The
Globalist – White Collar Outsourcing: Myth vs. Reality - http://www.theglobalist.com/storyid.aspx?StoryId=6931
BLS
– The effect of Outsourcing and Offshoring on BLS productivity measures - http://www.bls.gov/lpc/lproffshoring.pdf
NPR
– American Dream Betrayed by Bad Economic Policy - http://www.npr.org/2012/08/06/157063512/american-dream-betrayed-by-bad-economic-policy
The
World is Flat – Thomas Freidman -http://en.wikipedia.org/wiki/The_World_Is_Flat
Center
for American Progress - Outsourcing Statistics in Perspective
Outsourcing
– Stains on the White Collar - James Kirkegaard - Institute for International Economics. 2004 http://www.iie.com/publications/papers/kirkegaard0204.pdf
Center
for American Progress - 5 Facts about overseas outsourcing http://www.americanprogress.org/issues/2012/07/overseas_outsourcing.html
Center
for American Progress – Conservatives undermining our Economic Recovery - http://www.americanprogress.org/issues/2012/07/conservatives_economy.html
Center
for American Progress – Why we Need a Minimum Tax on Foreign Profits http://www.americanprogress.org/issues/tax-reform/report/2012/02/10/11064/why-we-need-a-minimum-tax-on-u-s-corporations-foreign-profits/
Outsourcing
Jobs leaves the American White Collar Worker Behind - http://www.eurekalert.org/pub_releases/2008-06/riot-ojl061308.php
Working
for America Institute – Outsourcing America; Ron Hira - http://www.workingforamerica.org/documents/connections_files/jan2006d.asp
Kay Strong, Ph.D., Southern Illinois University, M.T., University of Houston, M.A., Ohio University; Associate Professor at Baldwin-Wallace College; Areas of expertise: international economics, contemporary social-economic issues, complexity and futures-based perspectives in economics. E-mail: kstrong@bw.edu