Re: Does Outsourcing Piss you off?

Hi Jim,

Jim Blair wrote:

However, at macroeconomic level the situation is different.
If too many businesses are actually doing it, the consumer income
decrease.

Hi,

You are not being "macro" enough. Because of his better paying job, that
guy in India or China now has also become a consumer.

Mythology Jim. An US unionized worker making 45k/yr can afford to buy an 35k
SUV. If his job was offshored to China and the Chinese make 2k/yr the GM is
not going to sell that SUV anymore.

Unless companies offshoring jobs start to pay the same scale wages as the
jobs lost in US, we are not going to gain any serious business there.
Yes, the worker there is going to afford a 4k Chinese Ping-Ping-Pong car
instead of his old bike, however no a US made SUV.

Therefore, it is plain mythology (or rather propaganda lie) that moving our
jobs offshore we gain there customers for our products. This is not going
to happen until US wages are at the same scale with Chinese wages. One way
or another. Since the whole reason to move jobs offshore is not to pay
salaries as in US, the only option left will be for US economy to collapse
in order to match here the wages there.

Overall "consumer income" has increased because of the higher combined
productivity of both the American who gets more done with his time, and
the Indian who is contributing to the Global economy rather than
subsistance farming or whatever he was doing before being hired by
schlepprock.

The total created wealth, yes did increased. However, average consumer
income (for US I am talking about) decreased.
The fact that a IT CEO doubled his salary by offshoring the job of 100
programmers to India is not going to help GM sell more cars.

The CEO was already able to afford the car he wanted. Doubling his income is
not going to increase GM business. He is going to buy his new SUV at every
2 years as he already did.
The 100 Indians getting those jobs won't be anyhow able to afford an GM SUV
having Indian wages.
However, GM is going to lose 100 customers, which used to buy a car at every
5 years.

So, despite the fact that "Overall "consumer income" has increased", our
economy is getting hurt.

Keep in mind a theorem:
======================
Polarization betwen poor and rich is not good for business. It hurt local
economy instead of helping it.

Once this point is reached, the economy would be in big big trouble and
everybody is going to get hurt. Including the businesses which take the
advantage of outsourcing to increase their profits today.

If that were the case it would have happened decades (eons?) ago when
people first started "outsourcing" their work to others.


Maybe this explain why each empire in history did not last for more than a
couple hundred of years. Accumulation of power increase polarization, and
there is a limit into how much polarization can grow before everything
collapse.

Those who don't know history are condemned to repeat it.

.

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