The Electric Commentary

Tuesday, July 06, 2004

Tax Cuts, Labor & Globalization

I am so very grateful for my tax cut. Perhaps I can justify eating at a decent restaurant given my financial windfall; then again, I wouldn’t want to spend it all at once. I know that the much larger tax cuts given to those who are far wealthier than I will come back to me in my overall quality of life, sprinkled onto me like supply-side fairy dust. Those benevolent rich folk will start up businesses that will give me and my trench digging brethren low-wage service jobs, so that we may purchase cheap goods at Wal-Mart which were manufactured in China. I am thrilled that I will be able to afford an extra pair of socks; I wouldn’t have been able to buy as many, but thankfully the manufacturer moved jobs overseas where businesses aren’t saddled with silly things like 8 hour work days or weekends. I am so very grateful for my socks.

Until we demand from other trading nations the same worker conditions that are law in this country, job outsourcing will continue.

3 Comments:

  • I said I would respond to this puppy, so here goes. I actually agree somewhat with the tz cut criticism. I think it was too big (especially considering the war and all) and had a negligible economic impact. That's where you lose me.

    First and foremost, what is a "trading nation?" Is it any nation that we trade with? If they include poor countries with bad working conditions and low wages (likely, given your context) how do you suppose we go about raising their standards? Militarily? Embargo? Tariffs? If it is either of the last 2, why rail against George? He has imposed hundreds of tarifs to support our nice paying steel industry, sugar industry, seafood industry, and countless others. If this is the case do you support the price increases that come wth it. Walmart, after all, is patronized in large part by "poor people." If prices go up, it hurts them a disproportionate amount. They may have to give up their socks, or milk, or bread. These people already have the ability to vote against Walmart by shopping elsewhere, and chose not too. Are the poor to be looked down on for supporting Walmart and hurting...the poor?

    And as far as rich people getting rich at the expense of poor people, how do you feel about keeping those high paying outsourced jobs out of the hands of poor Non-Americans? Most of those outsourced jobs are very well paying compared to what's available in the local economy. It generally drives wages up when an American company outsources to an impoverished land.

    If you restrict the ability to outsource, you deprive poorer nations of their greatest asset - their poverty. Their currency is worth less, and regulations less strict to make goods more attractive. It's how poor nations grow. Take that away and you condemn them to thrid world status forever. Impose wage levels and working conditions and that business will not go there.

    So what is so bad about outsourcing? If some other country can do something cheaper than we can, why shouldn't they? Why should we produce at a loss?

    By Blogger PaulNoonan, at 12:40 PM  

  • "First and foremost, what is a "trading nation?" Is it any nation that we trade with?"
    Yes.
    "how do you suppose we go about raising their standards?"
    Conditional embargo: if they meet our working standards, open trading, no tariff. If they want to beat domestic prices with hard work, new ideas, and efficent organization so be it. If they only beat us because they work 12 hrs/day for poverty level wages no dice.
    As far as Wal-Mart goes, people will always choose the cheaper alternative; I don't blame anyone for that, but if all employers were forced to pay a decent wage for entry level workers maybe there would be a few Execs willing to take a small paycut in order to offer the lowest price.
    "These people already have the ability to vote against Walmart by shopping elsewhere, and chose not too."
    It's not the same as a "vote" when there's a financial motive attached.
    "And as far as rich people getting rich at the expense of poor people, how do you feel about keeping those high paying outsourced jobs out of the hands of poor Non-Americans?"
    The reason they're outsourced is so they can pay less, so they're not as high paying anymore.
    "It generally drives wages up when an American company outsources to an impoverished land."
    Companies founded in America take advantage of our publicly financed police, military, infrastructure, and schools. When they take advantage of that system and then move operations overseas once they can afford to, are we supposed to feel happy in some way because they raised the standard of living in a country that has substandard conditions a minimal amount?
    "It's how poor nations grow."
    Once they grow, do they lose what you call their greatest asset: poverty?
    "Why should we produce at a loss?"
    I'm not saying we should. I don't believe that the only way that businesses can make money is through worker exploitation. I think that's selling ourselves short.

    By Blogger RyanSimatic, at 9:45 PM  

  • "Yes."
    Just making sure you were not using some term of art I was unfamiliar with.

    "Conditional embargo: if they meet our working standards, open trading, no tariff. If they want to beat domestic prices with hard work, new ideas, and efficent organization so be it. If they only beat us because they work 12 hrs/day for poverty level wages no dice."

    If a thrid world nations is destitute, how are they going to come up with new ideas, and especially new technology to make work more efficient? Isn't a 12 hour day "working harder?" Frankly, a 12 hour day sounds pretty good to me. And if you impose an embargo, these "exploited workers" will return to be "exploited unemployed people" very quickly. The reason companies outsource labor is that it's cheaper. If it is no longer cheaper, they just won't do it. It wil raise prices here, and leave those lacking said jobs destitute.

    "As far as Wal-Mart goes, people will always choose the cheaper alternative; I don't blame anyone for that, but if all employers were forced to pay a decent wage for entry level workers maybe there would be a few Execs willing to take a small paycut in order to offer the lowest price."

    It is my understanding that Walmart starts you above the minimum wage (pretty significantly above, 7-9 bucks) already for unskilled positions. They deserve criticsm for 1. Not paying overtime in one case, and 2. hiring a bunch of illegal immigrant contractors, but bye and large they treat workers pretty well. And this upcoming class-action is just a witch hunt.


    "It's not the same as a "vote" when there's a financial motive attached."

    Heh. Funny. No seriously, are you not arguing a change in policy based on a financial motive. That workers should be paid more? I am as well. If you fell strongly about it, their are plenty of alternatives, many of whom advertise as being union friendly or carrying clothing made in the US. I just believe in leaving it up to individuals to decide for themselves.

    "The reason they're outsourced is so they can pay less, so they're not as high paying anymore."

    They are always high paying relative to the region that they are in. It sounds horrible to hear some people gettin a dollar a day, but in some places, that will feed your extended family with savings left over.

    "Companies founded in America take advantage of our publicly financed police"
    Which they pay for.
    "military,"
    Which they pay for.
    "infrastructure,"
    Which they pay for.
    "and schools."
    Which they pay for.

    "When they take advantage of that system and then move operations overseas once they can afford to, are we supposed to feel happy in some way because they raised the standard of living in a country that has substandard conditions a minimal amount?"

    Trade is generally a two way street, and it also improves the quality of life here by exchanging bad jobs for good paying professional jobs. This is especially important as the workforce gets more educated. Money saved by outsorcing isn't horded by corps. That money loses value quickly if not active. They generally increase productivity (requiring more staff) increase sales force (more staff again) or pay out a dividend (more retirement money, good for 401k's more taxes, of course, almost no one does this these days unless they have to due to the double taxation of dividends).

    "Once they grow, do they lose what you call their greatest asset: poverty?"

    Yes, but generally if the venture has been successful the company will stay in the region to take advantage of the customers it has created. They may leave, it's possible, but that economy will have grown, labor conditions will likely have improved, and some other businesses will likely have grown up to take advantage of the company. And even an abandoned company will usually not cease funtioning in a develping nation.

    "I'm not saying we should. I don't believe that the only way that businesses can make money is through worker exploitation. I think that's selling ourselves short."

    Then let some member of the competiton come up with a better way. It's MORE likely to happen if outsourcing is going on. After all, it's expensive to m,ove operations overseas, and a slight increase in productivity might be enough to overcome it. And that situation will create said gain in productivity.

    It is also worth noting that outsourcing itself is responsible for all of about 2% of job losses. From the Bureau of Labor Statisitcs:

    Of the 239,361 private sector nonfarm workers who were separated from their jobs for at least 31 days in the first quarter of 2004, the separations of 4,633 workers were associated with the movement of work outside of the country, according to preliminary data. Domestic relocation of work--both within the company and to other companies--affected 9,985 workers....

    In establishments that had layoffs related to the movement of work, the average size of a layoff was 135 workers. This compares with an average of 199 for all establishments that had extended mass layoffs in the first quarter of 2004....

    Sixty-eight percent of the layoff events involving the movement of work and 65 percent of the laid-off workers were from manufacturing industries during the first quarter of 2004.

    And this doesn't even account for the insourcing that occurs. It is worth noting that almost all insourcing consists of high paying good jobs from Europe and Japan. Dailmer-Benz, BMW, Toyota, Honda, all have plants here because its cheaper.

    By Blogger PaulNoonan, at 12:49 PM  

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