Is outsourcing/offshoring the biggest threat to the US general economy?

April 21, 2011 By: admin Category: Commentary

Commentary by Don  April 22, 2011.  Anyone paying attention to the debate: “Is offshoring US manufacturing jobs and technological advances hurting the US economy” knows the prolific number of opinions offered over the ‘net, in print and on cable. Thousands of articles and blogs are offering expert (and some shallow) discourse on both sides of the proverbial fence.  In order to shed light on the debate I must share an intelligent discussion I found on  Physics Forums.

To summarize, (from the forum and ten resources last week) offshoring is seen as bad for the US worker because:

  • Unemployment rises due to Job-loss
  • Wages are lowered due to increased competition for jobs
  • Job loss and lower wages contribute  toward bankruptcies and defaults on loans
  • The middle class shrinks
  • Impact on government unemployment programs increases
  • US and local governments lose tax revenue from shrinking worker and corporate taxes
  • Retraining is costly and unsettling to the worker so families are disrupted
  • Infrastructure of towns deteriorate when plants relocate like Benton Harbor with the Whirlpool move to Mexico
  • Towns and supporting small businesses lose revenue
  • And of equal importance, Americans lose faith in the system
  • Assurance that you are not supporting sweatshops or child labor
  • As world-wide demand for convenience goods increases, natural resources become depleted
  • Under the NAFTA trade agreement exports and imports should balance however Foreign Nations buy up US assets and natural resources rather than American manufactured goods

Others expound on the positive effects:

  • Corporations can increase profits through lower labor costs
  • Manufacturing costs are reduced because of  lax environmental regulations
  • Plant relocation costs are subsidized by foreign governments
  • Expenses incurred by moving a plant offshore are currently tax-deductible in the current IRS system
  • Wages increase for workers in developing countries
  • With more disposable income,emerging nations import more  goods from the US
  • Wealth is redistributed to developing countries
  • Wars between nations decrease because of increased interdependence
  • Quality of life increases in developing nations
  • During stable economic periods, the American economy can absorb job losses

The former argument that weighs heavily in this discussion is “With loss of jobs comes lack of purchasing power and diminished tax base.”  The latter argument that carries weight is “It’s a moot point…the job of corporations is to maximize profit”.

What do you think?  It’s your turn to add to the list.   Posted by Don