Why must candidates/politicians lie to voters about outsourcing?

[Jayjay]

So, if people as voters want to keep the jobs for factory workers, what are you complaining about?

But I'm asking WHY they want to keep those uncompetitive jobs instead of enjoying the benefits of the lower prices we gain from increased trade and competition and outsourcing. Are you saying we can never question anyone about why they voted a certain way?

"what they want" means what consumers want, not what voters vote for.

Voters can vote wrong in some cases, but consumers are never wrong in what they choose, as long as there's no fraud.

For your argument to be correct, that the voters are always right, if they vote to have Creationism taught in the schools and Evolution banned, that proves that Creationism is the truth and that Evolution is false.

And for your argument to be correct, you'd have to agree that a consumer who choose to put his or her child in a creationist private school is "never wrong". That's bollocks. Creationism doesn't become any more true if people are stupid enough to spend money on it, than it does from people voting on it. Consumers can be just as wrong as voters and just because they are using their own money doesn't mean that their choices are not impacting others and can be suboptimal for the whole economy.

Another example: Is a drug addict who spends all his money on crack cocaine "always right", and the voter who votes to criminalize drug sales is wrong to hamper his consumption?

Creationism is not made true and Evolution false just because the majority voted that way. And neither is outsourcing bad just because some voters may have mistakenly voted against it.

By the same vein, ust because a bunch of consumers might have marginal benefit from outsourcing (which is far from proven), doesn't mean that it is the right thing to do. In fact positing as you are that, say, a thousand people should lose their jobs so that a million people can save a few bucks on their iPhones is a perfect example of the tyranny of the majority.

 

[Loren Pechtel]

It's not a win when the consumer doesn't have the money to buy the cheaper goods.

The amount of savings on the goods is greater than the lost wages.

 

[laughing dog]

It's not a win when the consumer doesn't have the money to buy the cheaper goods.

The amount of savings on the goods is greater than the lost wages.

Not to those who lost the wages. After all, they are not getting compensated for their loss.

 

[ksen]

Yes, and the winners are Chinese workers and corporate profits. This must be what you meant the other day when you said that we should redistribute our national income and wealth to the whole world and not just to the corporations. And not to the poor in our country.

The American consumer wins when the products they buy are cheaper. The only losers are the workers whose jobs got displaced.

what cheaper goods?

do you have any examples of goods whose price went down after the manufacturing was outsourced to a country with cheaper labor?

 

[ksen]

It's not a win when the consumer doesn't have the money to buy the cheaper goods.

The amount of savings on the goods is greater than the lost wages.

proof?

 

[Valjean]

It's not a win when the consumer doesn't have the money to buy the cheaper goods.

The amount of savings on the goods is greater than the lost wages.

I understand that some goods, like food, may be cheaper today than they once were. But I suspect these savings have been largely obviated by stagnant or falling wages.
Eg: 2012 figures show one in five adults on food stamps.*

When I was a boy, back in 'socialist', big government times, a man could buy a house, raise a family, take a yearly vacation and send his kids to college -- with a high school education and (one) workingman's salary.

*http://www.huffingtonpost.com/2012/09/05/food-stamps-record-high-june-2012_n_1857224.html

 

[Loren Pechtel]

The amount of savings on the goods is greater than the lost wages.

I understand that some goods, like food, may be cheaper today than they once were. But I suspect these savings have been largely obviated by stagnant or falling wages.
Eg: 2012 figures show one in five adults on food stamps.*

When I was a boy, back in 'socialist', big government times, a man could buy a house, raise a family, take a yearly vacation and send his kids to college -- with a high school education and (one) workingman's salary.

*http://www.huffingtonpost.com/2012/09/05/food-stamps-record-high-june-2012_n_1857224.html

Yeah, everyone thinks back to when the people at the bottom of the pile weren't paid attention to--either black or out of the country.

 

[Lumpenproletariat]

Replace workers with robots / replace them with cheap labor = cost savings. What's the difference?

The OP has made claims that it hasn't backed up.

The OP claims that outsourcing has resulted in lower prices. But we haven't seen any data that shows this.

There is data, but not any that proves what prices are lower (than they would have been) as a result of outsourcing.

My first HP printer cost $1500. My second one, which was better than the first one, cost only about $300. And my most recent HP cost only $30. Each one was better than the earlier one(s).

Among all the cost-reducing measures taken by HP, it's clear that outsourcing was one of them, and there is every reason to believe that this resulted in lower prices.

Cost savings HAVE to result in lower prices to consumers. But you can't prove it with so-called "data".

It is a delusion that somehow all truth can be proved with "data".

When there is a drought and crops are lost, we know this results in higher prices on those products. And yet there is no "data" to prove that any particular price increase was due to the crop damage.

Yet all forecasters and economists know that crop damage or other events that result in shortages must result in price increases, regardless whether there is "data" to link the shortage to the higher prices.

So it is a phony argument to say "There is no DATA to prove it." We don't need "data" to tell us that the law of supply-and-demand works. Higher cost leads to higher prices, lower cost, including lower labor cost, leads to lower prices.

In fact, prices have climbed every year.

No, I gave you the example of HP printers, and there are millions of other examples of lower prices due to cost savings.

Inflation has been constant. Nowhere do we see prices dropping to the degree that the OP claims.

In many product lines there have been price declines due to cost-savings. And where there are price increases, those increases are less than they would have been if there had not been cost-saving measures which restrained those increases. There are many factors that cause prices to go up and down. Cost savings ALWAYS cause prices to go downward, but other factors can cause those prices to go up, and the upward-pushing factors may outweigh the downward-pushing factors to cause a net price increase. Still, the price would go up even higher without the cost-saving measures that put downward pressure on the prices.

One has to be brain-dead to claim that cost-saving does not result in lower prices than there would have been otherwise. Can't you figure out that there are MANY FACTORS that push prices up and down?

Don't you understand that automation also causes price decreases? It's the same thing as outsourcing. How is it any different? In both cases the lower cost of production leads to lower prices, to the benefit of consumers.

Do you want to put yourself into the mentality of the Luddites who think it's bad for the economy when jobs are eliminated because of machines?

All this rests on the simple question: Do robots/computers make consumers better off, even if they replaced workers and eliminated jobs?

What has happened is that corporate profits have increased dramatically and wages in the US have dropped in real terms for the majority of workers.

You could just as easily blame this on robots/computers that replaced so many jobs. Still it doesn't change the fact that consumers are better off because of it.

The main beneficiaries of outsourcing are the Chinese workers and the corporation profits. At a cost of a 800 billion dollar trade deficit.

That's no "cost" at all. There is no trade "debt" that is owed to anyone.

And you could just as easily argue that the only beneficiaries of the robots/computers which replaced the workers is the corporate profit.

By your reasoning there should never be any replacement of workers by machines or any other cost-savings measures by companies that result in a job being eliminated.

No matter how many times you repeat that you believe that outsourcing is a great benefit to all consumers it is not the case . . .

It is the case, unless you also assume that replacing the workers by machines is not a benefit to consumers. The benefit is the cost-savings, which is passed on to consumers in the form of lower prices. Like my example of the lower-price HP printers, and a million other examples. If you deny this, then you are arguing for replacement of machines by workers, i.e., for eliminating all the machines and robots and computers and putting workers back into those jobs that were replaced -- and prohibiting companies from ever replacing workers with machines in the future, because it only hurts the workers without producing any benefit to consumers, because there is no "data" to prove that consumers benefited from it, according to your twisted logic (and that of the Luddites 200 years ago).

. . . you have no data to support it, because it simply isn't true.

Just as it is not true that robots and consumers benefit consumers, and that therefore companies should not ever replace workers with robots or computers. Because there is no "data" to prove that there is any benefit to replacing workers with robots or computers, by your Luddite logic.

Your logic MUST lead to the conclusion that companies are doing damage to the economy by replacing workers with robots and computers. Do you admit that you are agreeing here with the Luddites that companies should not replace workers with machines?

 

[Lumpenproletariat]

Why shouldn't the interest of consumers ALWAYS over-ride the interest of the workers?

There are always winners and losers but the winners greatly outnumber the losers.

That is an empirical question because it is not necessarily the case. And it ignores the relative sizes of the "winnings" and "losings" as well as the actual distribution of the "winnings" and the "losings".

Do consumers "win" or don't they when companies replace workers with robots/computers? This is the same question as that of replacing workers with cheap labor.

The principle is the savings in production cost. If this is not good when it's cheap labor replaces the workers, then it is also not good when it's robots/computers that replace the workers.

So if you say the consumers do not win and that it's a net loss to the economy to replace workers by cheap (foreign) labor, then you're also arguing that it's a net loss when they are replaced by machines.

And so you're arguing that it's bad to replace workers with computers/robots.

Everyone tacitly accepts automation -- replacing workers with improved technology, even if the only reason is the cost savings, which is frequently the case.

But no one explains why the same benefit of the cost saving does not also apply to outsourcing where the workers are replaced by cheap labor instead of by machines. The principle is the same -- cost-savings, which benefits the consumers by putting downward pressure on prices.

And it ignores the relative sizes of the "winnings" and "losings" as well as the actual distribution of the "winnings" and the "losings".

When is this point ever raised in regard to the practice of replacing workers with computers/robots?

When does someone argue that companies should not replace the workers unless the size of the "winnings" to consumers can be proved and shown to be large enough?

Is this an argument that in some cases a company should be forced to pay HIGHER production costs in order to preserve some jobs that otherwise would disappear because of the replacement by something that saves on cost?

You would FORCE companies to pay HIGHER COST of production -- not for safety or environmental reasons, but just to preserve some "jobs"?

Because those workers would be "winners" and the consumers would lose only a small amount, then you would force that company to preserve those unneeded jobs for the benefit of workers if that benefit is high enough?

When have you or anyone ever argued this way against companies replacing workers with computers/robots? The answer is --- NEVER! It is an asinine argument. No one ever expects a company to absorb higher costs than necessary just in order to keep some workers in jobs that could be replaced by better technology that reduces the cost.

No one is so whacked-out as to think that it's good for society to impose unnecessarily-high costs onto companies only for the purpose of preserving some workers in outmoded jobs that machines could do at lower cost.

When has this ever been done?

And so why not also replace those workers with cheap labor, in order to gain similar cost-savings?

Why isn't the cost-savings best for society? How can it ever be wrong to replace those workers, as long as there is a net gain for consumers?

What is the social function of the company if not to serve consumers?

Why should the workers' jobs EVER take priority over the interest of the consumers?

When you put anything above the interest of consumers, what then is the point of having the company at all? What is the point of business or the economy if the consumers take second place to anything?

Unless your premise is that the company is essentially a babysitting service to provide slots for job-seekers we need to put somewhere to keep them out of mischief.

 

[Lumpenproletariat]

It's not a win when the consumer doesn't have the money to buy the cheaper goods.

Here again is an argument against robots/computers, which also eliminate jobs and thus reduce the spending power of the replaced workers.

It's clear: All the arguments against outsourcing are based on the same Luddite logic that says workers should not be replaced by computers/robots, because the jobs are more important than the benefit to consumers.

 

[laughing dog]

That is an empirical question because it is not necessarily the case. And it ignores the relative sizes of the "winnings" and "losings" as well as the actual distribution of the "winnings" and the "losings".

Do consumers "win" or don't they when companies replace workers with robots/computers?.......

Nothing, I repeat, nothing in the bloviation addressed in anything in the post to which it was an alleged response to.

 

[Lumpenproletariat]

Consumer buying choices = no harm to anyone. Voter choices = sometimes harmful to people.

But I'm asking WHY they want to keep those uncompetitive jobs instead of enjoying the benefits of the lower prices we gain from increased trade and competition and outsourcing. Are you saying we can never question anyone about why they voted a certain way?

"what they want" means what consumers want, not what voters vote for.

Voters can vote wrong in some cases, but consumers are never wrong in what they choose, as long as there's no fraud.

For your argument to be correct, that the voters are always right, if they vote to have Creationism taught in the schools and Evolution banned, that proves that Creationism is the truth and that Evolution is false.

And for your argument to be correct, you'd have to agree that a consumer who choose to put his or her child in a creationist private school is "never wrong".

Of course they're not wrong to do this. They're not imposing anything on others by doing this. But when voters vote against outsourcing by electing someone who enacts laws to punish companies for this, they are imposing their will onto consumers who want the benefits of cheap foreign imports. It's not just a personal choice by the voter, but a dogma that they are imposing onto consumers which curtails the choices of consumers and forces them to pay higher prices.

That's bollocks. Creationism doesn't become any more true if people are stupid enough to spend money on it, than it does from people voting on it.

But spending your money on something does not impose your dogmas onto others. Those Creationist parents are not interfering with anyone else's freedom to believe in Evolution or disbelieve Creation. But to elect a trade-bashing politician who tries to impose tax penalties onto companies to punish them for outsourcing is to impose one's economics ideology onto consumers and restrict their choices.

Spending your money on something does not interfere with the freedom of others. But electing a politician who imposes his economic theories onto companies is an assault on those consumers who want the products of those companies and will have their choices reduced by that politician and higher prices imposed onto them.

Consumers can be just as wrong as voters . . .

Not in the sense that they are imposing any harm onto others, as voters can do if they elect politicians who enact bad policies that hurt people. What harm are consumers inflicting onto anyone by their choices in the marketplace?

As long as they're not committing a crime, like hiring a murder-for-hire service or something. That's not what we're talking about. We're talking about a desire to buy a cheaper pair of shoes or cheaper TV etc. How is the consumer doing harm to anyone by choices like these?

. . . and just because they are using their own money doesn't mean that their choices are not impacting others and can be suboptimal for the whole economy.

How are they impacting others in any way that deprives others of anything?

Another example: Is a drug addict who spends all his money on crack cocaine "always right" . . .

If it's criminal, maybe not. But that's not what we're talking about. Obviously criminal behavior is wrong, whether committed by a consumer or by a wage-earner or by an investor or by a welfare recipient or whoever. We're not talking about that.

. . . and the voter who votes to criminalize drug sales is wrong to hamper his consumption?

We're not talking about criminal behavior, or buying something for a criminal purpose. Buying a cheap TV or a cheap computer or cheap stereo etc. is not criminal. This kind of choice poses no threat to anyone. Some activities border on being criminal, but let's not get bogged down in whether certain behaviors should be made crimes. As long as it's just buying personal products that are legal, there is no harm posed by a consumer seeking to buy a cheap foreign-made product.

Creationism is not made true and Evolution false just because the majority voted that way. And neither is outsourcing bad just because some voters may have mistakenly voted against it.

By the same vein, just because a bunch of consumers might have marginal benefit from outsourcing (which is far from proven), doesn't mean that it is the right thing to do.

Yes it does. If consumers benefit and want those products at lower prices, how is that ever wrong? If they're buying something for a legal purpose, who is harmed? They aren't imposing anything onto others. Others are still free to make their own free choices. What's wrong with people/consumers making free choices?

In fact positing as you are that, say, a thousand people should lose their jobs so that a million people can save a few bucks on their iPhones is a perfect example of the tyranny of the majority.

It has nothing to do with being the majority. Even if it's only ONE consumer saving a few bucks and a MILLION workers lose their jobs, how is that one consumer inflicting any harm onto those workers? What business is it of a company to waste so many workers providing a benefit that could be produced at so much lower cost? It's those workers who are inflicting the damage and tyrannizing that company and that consumer who is being ripped off by them.

The consumers ALWAYS have priority over the workers. Those workers must provide a good deal for the consumers and not force them to pay a price higher than the real value of what is produced. What good are those workers if they are not providing a good service to the consumers? at a competitive price?

Why should ANY consumers, or even ONLY ONE consumer, ever be forced to pay a higher price than necessary, if there is a less costly way to produce that product or service?

 

[ksen]

if outsourcing is so great why don't ceo positions get outsourced?

 

[Jayjay]

It's not a win when the consumer doesn't have the money to buy the cheaper goods.

Here again is an argument against robots/computers, which also eliminate jobs and thus reduce the spending power of the replaced workers.

It's clear: All the arguments against outsourcing are based on the same Luddite logic that says workers should not be replaced by computers/robots, because the jobs are more important than the benefit to consumers.

Bollocks. Nobody here is advocating that inane analogy except you. And I addressed the fallacy in this post already: Outsourcing is not equivalent to replacing workers with machines. It's equivalant to just paying workers less.

Let's say worker A is paid $5 by business owner B who sells the product to consumer C for $6. B takes $1 profit for himself.

If B replaces A with a machine that costs $4 to rent and operate, he can lower his price to $5 and still make the same profit. A is fired and has to get a job elsewhere that pays less than $5 (because if he could get such a job before, he wouldn't have been working for B the first place). Or maybe he doesn't get a job and just enjoys some extra free time. In either case, the benefit to the economy is twofold: the consumer gets its product cheaper, and the total productivity is increased.

However if B simply reduces A's salary to $4 without using a machine, the consumer gets the product $1 cheaper but this isn't inherently better for the economy. Total productivity stays the same, A does not get any more free time, and he is just pissed off for losing 20% of his salary. This is nothing more than transfer of money from the worker to the consumer.

 

[Jayjay]

There is data, but not any that proves what prices are lower (than they would have been) as a result of outsourcing.

My first HP printer cost $1500. My second one, which was better than the first one, cost only about $300. And my most recent HP cost only $30. Each one was better than the earlier one(s).

Among all the cost-reducing measures taken by HP, it's clear that outsourcing was one of them, and there is every reason to believe that this resulted in lower prices.

Cost savings HAVE to result in lower prices to consumers. But you can't prove it with so-called "data".

How do you know that HP was able to reduce the price of its product via outsourcing, rather than other means? You'd have to show that HP increased its outsourcing during between the time when you bought the printers, and that the cheaper price is not fully explained by increased automation in HP plants, better processes, or more advanced technology becoming available.

Oh that's right, you don't do "data", so you can make any claim without having to back it up.

In many product lines there have been price declines due to cost-savings. And where there are price increases, those increases are less than they would have been if there had not been cost-saving measures which restrained those increases. There are many factors that cause prices to go up and down. Cost savings ALWAYS cause prices to go downward, but other factors can cause those prices to go up, and the upward-pushing factors may outweigh the downward-pushing factors to cause a net price increase. Still, the price would go up even higher without the cost-saving measures that put downward pressure on the prices.

You have not shown that outsourcing is a mere cost-saving measure and doesnt impact other factors. That's where having actual data to back up your claims comes in handy.

Example one: you brought up Samoa in another thread as an example where minimum wage caused measurable unemployment. Yet in other studies minimum wage increase does not cuase measurable unemployment. So you'd have to admit that there are other factors at play that sometimes make minimum wage impact unemployment, sometimes not.

Example two: Outsourcing as brain drain. When you move a factory to China for cheap labor, it means that eventually the Chinese will pick up how to make your products at least as well as you do, while you lose the know-how because it's no longer cultivated in-house. Then you have to keep outsourcing, but the foregn salaries will go up eventually and the cost is raised back to where it was. The end result is that the cost saving from outsourcing can be temporary and eventually you'll end up in a situation where you'd just handed over your key expertise to outsiders and thus you are less competitive than you would have been otherwise.

 

[Jayjay]

And for your argument to be correct, you'd have to agree that a consumer who choose to put his or her child in a creationist private school is "never wrong".

Of course they're not wrong to do this. They're not imposing anything on others by doing this. But when voters vote against outsourcing by electing someone who enacts laws to punish companies for this, they are imposing their will onto consumers who want the benefits of cheap foreign imports. It's not just a personal choice by the voter, but a dogma that they are imposing onto consumers which curtails the choices of consumers and forces them to pay higher prices.

 Opportunity_cost

Your blind worship of the consumer is getting ridiculous. Consumption doesn't exist in a vacuum, and people impact other people's choices by their choices more than you think.

Another example: Is a drug addict who spends all his money on crack cocaine "always right" . . .

If it's criminal, maybe not. But that's not what we're talking about. Obviously criminal behavior is wrong, whether committed by a consumer or by a wage-earner or by an investor or by a welfare recipient or whoever. We're not talking about that.

Criminal activity is just something that government says is not allowed. In democracy that ultimately means the voters, at least in principle. So why should the wishes of voters trump the consumer in this case, but not in some other case? You are just arbitrarily picking and choosing where you think the consumer is right, and when the voter is right.

Why should ANY consumers, or even ONLY ONE consumer, ever be forced to pay a higher price than necessary, if there is a less costly way to produce that product or service?

The fallacy here is that just paying someone less doesn't make the production any more efficient, all other things being equal. The cost stays the same, it's just paid by someone else.

 

[lpetrich]

It's not a win when the consumer doesn't have the money to buy the cheaper goods.

Except, of course, if consumers all get their money from picking money trees, which is what certain people seem to believe.

 

[Lumpenproletariat]

Anything or anyone which/who can be replaced by something that does it cheaper should be replaced.

if outsourcing is so great why don't ceo positions get outsourced?

Maybe some are outsourced.

Assuming virtually none of them is outsourced, there are plenty of possible reasons.

In the case of U.S. companies, the job of a CEO probably requires an extreme familiarity with American culture and communication practices, including language use and ability to manipulate people with one's personality and with facial expressions and gestures and voice fluctuations.

It might be very difficult to find Asians or others not raised in the U.S. culture who have these talents to communicate to Americans and manipulate them to get things done. CEOs from any country probably have to be mostly native-born and raised in the native culture to know how to deal with the people of that culture.

But for lower-level positions, especially working in a factory, operating a machine, a foreigner may have all the same talents necessary.

It doesn't matter what the reason is.

There should be nothing artificial preventing a company from replacing an American CEO with a foreigner if that foreigner could do the same job just as well and at lower cost.

If there are obstacles preventing companies from hiring lower-cost CEOs who could do the job just as well, those obstacles should be removed, to reduce the company's costs and increase the profit margin and helping to keep down the prices to consumers.

The attention should go toward replacing any CEOs who could be replaced and not toward seeking excuses to prevent companies from replacing uncompetitive workers.

 

[Lumpenproletariat]

The wage should be increased or decreased to the market level, based on supply-and-demand.

Here again is an argument against robots/computers, which also eliminate jobs and thus reduce the spending power of the replaced workers.

It's clear: All the arguments against outsourcing are based on the same Luddite logic that says workers should not be replaced by computers/robots, because the jobs are more important than the benefit to consumers.

Bollocks. Nobody here is advocating that inane analogy except you. And I addressed the fallacy in this post already: Outsourcing is not equivalent to replacing workers with machines. It's equivalant to just paying workers less.

In terms of the impact on the economy the two are equivalent. There is no change in the economy from outsourcing that is not also the case with replacing the workers with machines. Workers lose their jobs, the company's costs are reduced, and consumers benefit from lower prices than there would have been without the cost savings.

All cost savings are good, as long as the same quality and quantity of production is maintained. Or if the quality or quantity is increased without any increase in cost, or the cost per unit is reduced.

Let's say worker A is paid $5 by business owner B who sells the product to consumer C for $6. B takes $1 profit for himself.

If B replaces A with a machine that costs $4 to rent and operate, he can lower his price to $5 and still make the same profit. A is fired and has to get a job elsewhere that pays less than $5 (because if he could get such a job before, he wouldn't have been working for B the first place). Or maybe he doesn't get a job and just enjoys some extra free time. In either case, the benefit to the economy is twofold: the consumer gets its product cheaper, and the total productivity is increased.

But A is pissed off because he now has to go on welfare or whatever, the same as if he had been replaced by a worker who is paid less.

However if B simply reduces A's salary to $4 without using a machine, the consumer gets the product $1 cheaper but this isn't inherently better for the economy.

Of course it's better for the economy. The function of the business is to serve the consumers, and a lower price for consumers is always better for the economy. As long as the worker continues to do the job at the lower wage it's better for the economy. The only downside would be if the worker quits and cannot be replaced so that needed work fails to get done.

Total productivity stays the same, A does not get any more free time, and he is just pissed off for losing 20% of his salary. This is nothing more than transfer of money from the worker to the consumer.

An uncompetitive worker SHOULD get a reduction.

Your example here changes the scenario from outsourcing to wage-reduction. You're not comparing outsourcing to the replacing of the worker by a machine. So there's no argument here to show that outsourcing does any more harm than replacing the worker with a machine. In both cases the worker is replaced by something that does the work cheaper and is pissed off. But in both cases the consumers are better off.

But secondly, what about your scenario here of a worker getting his wage reduced. If the worker is being paid more than the job is worth in the marketplace, then he should either get a reduction or he should be replaced by a worker who is paid at the lower wage level.

However, if the worker is worth the higher wage, because of supply-and-demand, then it is against the company's interest to reduce his wage, because the company needs to have the workers necessary to get the job done, and for that it must pay the market wage level, as set by supply-and-demand.

So whether the wage reduction is good or not depends upon whether that wage level is the correct amount based on supply-and-demand. Any wage that is too high should be reduced, and any wage that is too low should be increased. It's always in the company's interest to pay whatever wage level is necessary in order to attract the needed qualified workers. But no higher than this wage level.

 

[Lumpenproletariat]

As long as the companies benefit from outsourcing, the CONSUMERS benefit.

How do you know that HP was able to reduce the price of its product via outsourcing, rather than other means?

There's no way to identify exactly how much of the price reduction was due to outsourcing and how much to other cost-saving factors. Obviously the improved technology makes much of the cost-savings possible.

But it is a virtual certainty that some of the price reduction is due to outsourcing. All cost savings contribute to the lower prices. It's not due to any one factor alone.

You'd have to show that HP increased its outsourcing during between the time when you bought the printers . . .

I.e., that it continued its outsourcing, which of course it did. Outsourcing is not something that happens only once. The time period was from about 1990 to 2010. Obviously HP did lots of continued outsourcing during this period. And the company obviously saved on costs by doing this, and it is virtually impossible for this savings not to have contributed to lower prices or keeping down prices.

. . . and that the cheaper price is not fully explained by increased automation in HP plants, better processes, or more advanced technology becoming available.

EVERY cost savings contributes to lower prices. It's silly to say that price savings has to be due to only one factor. There's no reason to believe that lower prices is "fully explained" by any one factor alone.

Oh that's right, you don't do "data", so you can make any claim without having to back it up.

There's never been any "data" that ever showed that lower prices for a product or service were due to one factor alone, to the exclusion of other cost-saving factors that were also present. How could any "data" show such a thing?

You could disprove my theory about HP printers if you could show that HP reduced its outsourcing during the time period of 1990-2010. I.e., that they reduced the number of foreign workers doing the same work as American workers, or reduced the foreign jobs while increasing the American jobs. I.e., if you could prove Sen. Barbara Boxer was lying when she accused Fiorina of outsourcing jobs during her term as CEO of HP.

In many product lines there have been price declines due to cost-savings. And where there are price increases, those increases are less than they would have been if there had not been cost-saving measures which restrained those increases. There are many factors that cause prices to go up and down. Cost savings ALWAYS cause prices to go downward, but other factors can cause those prices to go up, and the upward-pushing factors may outweigh the downward-pushing factors to cause a net price increase. Still, the price would go up even higher without the cost-saving measures that put downward pressure on the prices.

You have not shown that outsourcing is a mere cost-saving measure and doesn't impact other factors. That's where having actual data to back up your claims comes in handy.

"Outsourcing" means replacing higher-paid domestic workers with lower-paid foreign workers. This in itself is a cost savings, by definition. You don't need "data" to prove that a higher price costs more money than a lower price.

However, if you claim that this cost-saving is offset by some other cost increase that it brings with it, then you are free to produce your data to prove that point. Until then, however, it must be assumed that a higher-paid American worker costs the company more than a lower-paid Chinese or Indian or Vietnamese or Malaysian worker.

In your data you would have to explain why the company would choose to pay this higher cost, because it's not credible that a company would make such a choice.

Example one: you brought up Samoa in another thread as an example where minimum wage caused measurable unemployment. Yet in other studies minimum wage increase does not cuase measurable unemployment.

But those "other studies" do not prove that there is no increase in unemployment. Only that the increased unemployment cannot be measured.

In Samoa the evidence is clear that there were higher unemployment levels as a result, because the impact was so great. Whereas in all the cases you're referring to the impact on the workforce is too small to be able to measure the impact on the unemployment level. Which doesn't mean there was no impact, but only that the impact was probably small. But, as in Samoa, the net impact overall is probably negative or an overall net harm to the economy.

So you'd have to admit that there are other factors at play that sometimes make minimum wage impact unemployment, sometimes not.

Forcing employers to pay higher than the market wage level always has a negative impact on employment opporunities. However, this negative impact usually cannot be measured. Also the inevitable increase in prices cannot be measured, because there are so many other factors that impact prices.

Example two: Outsourcing as brain drain. When you move a factory to China for cheap labor, it means that eventually the Chinese will pick up how to make your products at least as well as you do . . .

Even so, consumers are made better off. Whatever benefits consumers is what matters. The whole function of business is to serve consumers.

. . . while you lose the know-how because it's no longer cultivated in-house.

The know-how doesn't get lost. Consumers will always benefit from the know-how.

Then you have to keep outsourcing, but the foregn salaries will go up eventually and the cost is raised back to where it was.

All cost-savings are good no matter how long they last. We're better off today from the cost-savings that took place 50 years ago. Japanese products were once cheaper, but now maybe not. But those lower prices are always good whether they last a long or short period. There is no damage today from the lower costs of 10 or 20 or 30 or 50 or 100 years ago. It doesn't come back to us later in some negative form that offsets the earlier benefit from the lower prices.

The end result is that the cost saving from outsourcing can be temporary . . .

But it's always a net benefit even if it's temporary. The only harm could be if the company makes a mistake which results in lower rather than higher profit. But the profit-motive makes this very unlikely. We can trust companies to do what is in their profit interest.

. . . and eventually you'll end up in a situation where you'd just handed over your key expertise to outsiders . . .

Whatever this means, it sounds like something that would benefit consumers. And if it's something that's bad for companies, and thus causing profit loss, we can trust the companies to take the necessary precautions to prevent it.

. . . and thus you are less competitive than you would have been otherwise.

We can trust companies to do whatever makes them more competitive and not less competitive. They know how much outsourcing is good for the company and how much is too much. The profit motive is all that is necessary to drive them to make the right decisions about this.

Most of the complaining about outsourcing does not come from a concern about the long-term health of the companies or their competitiveness, but rather from an obsession on the workers who get laid off and a fear that these will rise up in anger and go on a rampage.