Another Discussion about Outsourcing

"Answers on Outsourcing"
CNN Money
By Rory L. Terry

A finance professor argues against placing blind faith in outsourcing. His views follow.


(New York)-- A great deal of effort is being expended to convince us all that the outsourcing of jobs under the rubric of free trade is a good thing. I would like to discuss some of these arguments.

Our labor force is not better trained, harder working, or more innovative than our foreign competitors. The argument that we will create new jobs in highly paying fields simply is not true. We have no comparative advantage or superiority in innovation. To assume that we are inherently more creative than our foreign competitors is both arrogant and naive. We are currently empowering our competition with the resources to innovate equally as well as we. Consider the number of new non-native Ph.D.'s that leave our universities each year; consider our low rank in the education of mathematics and the sciences; and consider the large number of international students enrolled in our most difficult technical degree programs at our most prestigious universities.

Most of our best, high-paying jobs can be exported:

• doctors (even surgeons)
• mathematicians
• accountants
• financial analysts
• engineers
• computer programmers
• architects
• physicists
• chemists
• biologists
• researchers of all types

Our trading problem is an externality. An externality exists in economics any time there is a separation of costs and benefits, and the decision maker does not have to incur the full cost but receives the full benefits of the decision. The fact is, there is no economic force, no supply and demand equilibrium, no rational decision process of either business or consumer, that will make an externality go away. Classic examples of externalities are when a business dumps toxic waste into a nearby river and the downstream residents incur the costs of cancer. The business is able to lower its costs and pass those lower costs on to its customers, and never pay for the treatment of the cancer patients. We have laws in this country against dumping and pollution because they are externalities -- they require a legislative solution. Cost reductions and other benefits provide a strong incentive to outsource jobs. A company that decides to move its production overseas cuts its costs in many ways, including the following:

1. Extremely low wage rates
2. The circumvention or avoidance of organized labor
3. No Social Security or Medicare benefit payments
4. No federal or state unemployment tax
5. No health benefits for workers
6. No child labor laws
7. No OSHA or EPA costs or restrictions
8. No worker retirement benefits or pension costs
   

Besides cutting costs, there are other benefits to exporting jobs, including the following:

1. Tax incentives provided by our government
2. Incentives from foreign governments
3. The creation of new international markets for the company's products (which ultimately empowers the company to turn a deaf ear to this country's problems and influence)
4. The continued benefits of our legal system and the freedoms that we provide

The net effect of all of this is lower costs, higher revenue, higher profits, higher stock prices, bonuses for management, and the creation of wealth for a subclass that benefits from low taxes at the expense of the rest of us. The costs of the decision to outsource are not borne by the decision maker. As a society and as a country, we experience many costs from outsourcing, including the loss of jobs, social costs, higher costs of raw materials and loss of national sovereignty. Loss of jobs reduces the tax base, creates high unemployment benefit costs, and raises the cost of government retraining programs. Displaced, unemployed workers have higher rates of child and spousal abuse, alcoholism, bankruptcy, divorce, etc.

As China and India and other large populations grow, they demand huge quantities of oil, gas, steel and other basic raw materials. These costs are born by all of us -- every time we fill our gas tanks, for example. And as a nation, we lose our ability to make independent decisions that are in our best interest when we are dependent on foreign debt and foreign manufacturing. This is a classic externality.

Rory L. Terry is an associate professor of Finance at Fort Hays State University

Personally, I am vehemently opposed to outsourcing. I feel that as leaders of business, the CEO's of American companies have a lot of benefits as corporations -as has been given in a previous post of mine - and with all those benefits they enjoy, there is a requesite responsibility to American workers. If you are taking jobs away from Americans, to give to people in India, China, Mexico, or anyplace else, then you (as CEO) have not upheld your personal responsibility to your country.

Either act responsibly, or quit.

Watch out - Hilary thinks the boogie man is out to get her!

You know, Ms. Clinton, if I needed another reason NOT to vote for you in 2008, you just provided it. I just read a news story where you are crying out against the "Big, Conservative Conspiracy". This story makes you sound like the paranoid, socialist, conniving, gold digger you are.

You and your fellow partisan politicians are not interested in what is best for the US, you are interested in the next sound bite that will give you the next leg up on the "competition".

Do you want to know something important? Leading this country is not a popularity contest - you are not running for Prom Queen. The President of this country bears the responsibility and weight of making tough choices that are the best to promote THIS country as a whole - not his or her personal agenda.

I hope the rest of the country sees clearly through your manipulations. You, Ms. Clinton are no John Kennedy.

An Open Letter to General Pace CJCS

Dear Sir;

Please know that many American hearts and minds are standing behind you as you are besieged by a press rampant with the spread of immorality. We stand behind you as you are attacked by partisan politicians who seek personal gain. We stand behind you as activist groups seek to discredit you.

The United States was founded on a basis of morals and ethics that is under attack in today's society because of the environment of political correctness. Personally, I feel we as citizens of the United States have an obligation to do what is right and just to promote our country and protect the very core of American society.

I applaud you and your strong stand against impropriety in the ranks. I support you in your statements. I encourage you to stand firm and not to knuckle under to pressure to "apologize". The next thing you know - we will see a ridiculous demand for you to attend "rehab". Stand your ground. You spoke the truth and no one should have to apologize for that.

Does God exist?

I have heard - for all too long - attacks against the existence of God, attacks against Jesus Christ our Lord and Savior. I have to say, I am truly tired of this. Since the dawn of time man has been looking for an answer to the question "Where do I come from?" Yet, today, in our society, the ONLY acceptable answer is Darwin.

To my knowledge, there has been NO archaeological find of the "missing link". And, while I acknowledge that I share DNA with chimps and frogs, I have seen no proof that I descend directly from either. My assumption about the DNA similarities is this - I have written MANY documents in my career - meeting notes, memos etc, - and I have started with an existing document (modifying is easier than starting from scratch) So, I think God is pretty smart - and He probably used the materials at hand and modified until He got what He was after - mankind.

For those who do not believe, I do not go about making fun of you and telling you that Eternal Hell is waiting for the price of your disbelief. I respect your opinion. I believe it is not a correct opinion, but, I respect your right to it all the same.

Yet, you cannot do the same for me. So, I would like to engage you in a debate. To all those who profess there is no God, I have a couple of basic questions for you. Please take your time answering.

#1 - Do you believe there are planets out in space that are inhabitable?

#2 - If the answer to the above is yes, then do you believe there is life on
those planets?

#3 - Do you believe that life - as we know it - truly came out of the nothingness soup of the universe? That there was no "intelligent design"?

#4 - Have you ever seen the birth of a child? A puppy? A horse?

#5 - If the answer to the above is "yes", can you truly say there is not ANYTHING miraculous about that?

#6 - Do you believe that child abusers, rapists, murderers, serial killers, Hitler - are/were evil?

#7 - Do you believe that those who mutilate, maim and torture are evil?

#8 Do you believe in the existence of evil?

There is nothing that exists without it's true opposite. If evil exists - and it does - as we can clearly see from the likes of Hitler, Pol Pot, Jeffery Dahmer, Ted Bundy, Mohammed Atta, and Osama Bin Laden - then the power of good - from one true source (as everything comes from a source) exists.
Thus, God exists.

Stop Mexi-Ameri-Canada!! Secure our Borders NOW!

TO: Our Elected Officials:

There is a huge amount of propaganda and myths circulating about illegal aliens, particularly illegal Mexican, Salvadorian, Guatemalan and Honduran aliens - or illegal aliens from Sweden sneaking in through the rocky coastline of Maine. I don't care where they came from - they need to leave! Deport them. No it will not be overnight. Who cares? They didn't all get here in one night!

1. Illegal aliens generally do NOT want U.S. citizenship. Americans are very vain thinking that everybody in the world wants to be a U.S. citizen. Mexicans, and other nationalities want to remain citizens of their home countries while obtaining the benefits offered by the United States such as employment, medical care, in-state tuition, government subsidized housing and free education for their offspring. Their main attraction is employment and their loyalty usually remains at home. They want benefits earned and subsidized by middle class Americans. What illegal aliens want are benefits of American residence without paying the price.

2. There are no jobs that Americans won't do. Illegal aliens are doing jobs that Americans can't take and still support their families. Illegal aliens take low wage jobs, live dozens in a single residence home, share expenses and send money to their home country. There are no jobs that Americans won't do for a decent wage.

3. Every person who illegally entered this nation left a home. They are NOT homeless and they are NOT Americans. Some left jobs in their home countries. They come to send money to their real home as evidenced by the more than 20 billion dollars sent out of the country each year by illegal aliens. These illegal aliens knowingly and willfully entered this nation in violation of the law and therefore assumed the risk of detection and deportation. Those who brought their alien children assumed the responsibility and risk on behalf of their children.

4. Illegal aliens are NOT critical to the economy. Illegal aliens constitute less than 5% of the workforce. However, they reduce wages and benefits for lawful U.S. residents.

5. This is NOT an immigrant nation. There are 280 million native born Americans. While it is true that this nation was settled and founded by immigrants (legal immigrants), it is also true that there is not a nation on this planet that was not settled by immigrants at one time or another.

6. The United States is welcoming to legal immigrants. Illegal aliens are not immigrants by definition. The U.S. accepts more lawful immigrants every year than the rest of the world combined.

7. There is no such thing as the "Hispanic vote". Hispanics are white, brown, black and every shade in between. Hispanics are Republicans, Democrats, Anarchists, Communists, Marxists and Independents. The so-called "Hispanic vote" is a myth. Pandering to illegal aliens to get the Hispanic vote is a dead end.

8. Mexico is NOT a friend of the United States. Since 1848 Mexicans have resented the United States. During World War I Mexico allowed German Spies to operate freely in Mexico to spy on the U.S. During World War II Mexico allowed the Axis powers to spy on the U.S. from Mexico. During the Cold War Mexico allowed spies hostile to the U.S. to operate freely. The attack on the Twin Towers in 2001 was cheered and applauded all across Mexico. Today Mexican school children are taught that the U.S. stole California, Arizona, new Mexico and Texas. If you don't believe it, check out some Mexican textbooks written for their schoolchildren.

9. Although some illegal aliens enter this country for a better life, there are 6 billion people on this planet. At least 1 billion of those live on less than one dollar a day. If wanting a better life is a valid excuse to break the law and sneak into America, then let's allow those one billion to come to America and we'll turn the USA into a Third World nation overnight. Besides, there are 280 million native born Americans who want a better life. I'll bet Bill Gates and Donald Trump want a better life. When will the USA lifeboat be full? Since when is wanting a better life a good reason to trash another nation?

10. There is a labor shortage in this country. This is a lie. There are hundreds of thousands, if not millions, of American housewives, senior citizens, students, unemployed and underemployed who would gladly take jobs at a decent wage.

11. It is racist to want secure borders. What is racist about wanting secure borders and a secure America? What is racist about not wanting people to sneak into America and steal benefits we have set aside for legal aliens, senior citizens, children and other legal residents? What is it about race that entitles people to violate our laws, steal identities, and take the American Dream without paying the price?

For about four decades American politicians have refused to secure our borders and look after the welfare of middle class Americans. These politicians have been of both parties. A huge debt to American society has resulted. This debt will be satisfied and the interest will be high. There have already been riots in the streets by illegal aliens and their supporters. There will be more. You, as a politician, have a choice to offend the illegal aliens who have stolen into this country and demanded the rights afforded to U.S. citizens or to offend those of us who are stakeholders in this country. The interest will be steep either way. There will be civil unrest. There will be a reckoning. Do you have the courage to do what is right for America? Or, will you bow to the wants and needs of those who don't even have the right to remain here?

There will be a reckoning. It will come in November of 2008 and yet again in 2010. We, the people, will not tolerate representatives who do not listen and represent those who sent them to Washington.

We will not allow America to be stolen by third world agitators and thieves.

Corporations, Government and Corruption - Do WE need another Boston Tea Party?

I think it is necessary and appropriate to put the pressure on in our local communities and at our city council level. As we can see, our federal government is out of our control. Our federal representatives are too closely wed to corporate interests; indeed, a single corporate campaign donation obliterates 100,000 citizen opinions. Our federal representatives are too far removed from the average American citizen for us to have any influence over them. They don't have to look us in the eye at the grocery store or at the post office; our city officials do.

And speaking of government being in bed with corporations, many people forget a very important part of our American history. The American Revolution of 1776 was as much a revolt against abusive corporations as it was against a distant monarchy.

The Hudson's Bay Company, The British East India Company, and The Massachusetts Bay Company were all early corporations that existed during colonial times in America. Our founding fathers despised and feared those chartered companies, for they recognized the way British Kings and their cronies used them to control and deplete the resources of their labors in the colonies.

Remember, it was the British East India Company which imposed duties on the tea they were delivering to the colonies, and because they had a monopoly on the tea market, the colonists were forced to pay the duties or go without. The colonists revolted. Colonial merchants agreed to not sell the East India teas. Many East India Company ships were turned back, unable to deliver their cargoes of teas. And surely you must recall that the result was the Boston Tea Party, when colonists dumped 342 chests of tea into the harbor.

The Declaration of Independence in 1776 freed Americans not only of the British monarchy, but also the British corporations. For more than 100 years Americans remained suspicious and mistrusting of corporate powers. They were very careful about the way they granted corporate charters and the powers granted in them.

Early American corporate charters were of a completely different type than contemporary corporate charters. They were created literally by the people, as a convenience to the people, mere financial tools. Corporations were invisible, intangible, and artificial. They were chartered by the states, not the federal government, where they could be monitored locally, kept under close watch by the people. They were automatically dissolved if they violated their charter. Limits were placed on how big and how powerful companies could become.

The 200 corporations that were in operation by 1800 were kept on a short rein. They were not tolerated to participate in the political process, they could not buy stock in other corporations, and if they acted improperly, the consequences were severe. In 1832 President Andrew Jackson vetoed a motion to extend the charter of the corrupt and tyrannical Second Bank of the United States, and he was applauded for doing so. That same year Pennsylvania revoked the charters of ten banks for acting contrary to public interest. Even the industry trusts that formed to protect corporations from external competitors eventually faced the anti-trust legislation that was put into place in the mid 1800's.

In the early history of America the corporation played an important role, but their role was in service to the people. The people, not the corporations, were in control.

The shift began in the last portion of the nineteenth century. It was the start of a period of great struggle between corporations and society. The turning point was the Civil War. Corporations made huge profits from procurement contracts and took advantage of the disorder and corruption of the times to buy legislatures, judges, and even presidents. Corporations became the masters and keepers of business. Before his death, President Lincoln warned, "I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country...corporations have been enthroned and an era of corruption in high places will follow, and the money of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of war."

President Lincoln's warning went unheeded. Corporations continued to grow in power and influence. They had laws governing their creation amended. States could no longer revoke their charters. Corporate profits could no longer be limited. Corporate activity could only be restrained by the courts, and time after time judges granted them small victories, conceding them rights and privileges they did not have before and were never intended to have.
Then, in 1886, an event occurred that would change the course of American history. In Santa Clara County vs. Southern Pacific Railroad, a dispute over a rail road route, the US Supreme Court ruled that a corporation was a "natural person" under the Constitution and was entitled to all the rights and protections under the Bill of Rights. Suddenly, the corporation was made equal to the people, enjoying all the rights and sovereignty of individuals, including the right to free speech.

That court ruling gave to corporations the same powers and rights as private citizens. But, with their vast financial resources corporations thereafter actually have had more power than the individual citizens our Constitution and Bill of Rights was intended to protect against such tyrannical and empirical entities such as corporations. In a single stroke the whole intent of the American Constitution - that all citizens have one vote and equal voice in public debates - had been undermined. A single blunder by a corrupted judge changed the whole idea of democratic government.

In boardrooms in all the major global capitals, CEOs of the world's biggest corporations imagine a world where they are protected by what is effectively their own global charter of rights and freedoms -- the Multinational Agreement on Investment (MAI). They are supported in this vision by the World Trade Organization (WTO), the World Bank, the International Monetary Fund (IMF), the International Chamber of Commerce (ICC), the European Round Table of Industrialists (ERT), the Organization for Economic Co-operation and Development (OECD) and other organizations representing twenty-nine of the world's richest economies. The MAI would effectively create a single global economy allowing corporations the unrestricted right to buy, sell and move their businesses, resources and other assets wherever and whenever they want. It's a corporate bill of rights designed to override all "nonconforming" local, state and national laws and regulations and allow them to sue cities, states and national governments for alleged noncompliance. Sold to the world's citizens as inevitable and necessary in an age of free trade, these MAI negotiations met with considerable grassroots opposition and were temporarily suspended in April 1998. Nevertheless, no one believes this initiative will remain suspended for long.

We, the people, have lost control. Corporations, these legal fictions that we ourselves created two centuries ago, now have more rights, freedoms and powers than we do. And we accept this as the normal state of affairs. We go to corporations on our knees. Please do the right thing, we plead. Please don't cut down any more ancient forests. Please don't pollute any more lakes and rivers (but please don't move your factories and jobs offshore either). Please don't use pornographic images to sell fashion to my kids. Please don't play governments off against each other to get a better deal. Please don't fire me and hire a contractor whom you do not have to offer benefits. Please don't pay your CEO millions and millions every year while cutting away at my income. We've spent so much time bowed down in deference, we've forgotten how to stand up straight.

The unofficial history of America, which continues to be written, is not a story of rugged individualism and heroic personal sacrifice in the pursuit of a dream. It is a story of democracy derailed, of a revolutionary spirit suppressed, and of a once-proud people reduced to servitude. How long will we cowtow to the corrupt and power holding corporations and let America be sold out from underneath us?

Good Old-Fashioned Days!

Wow - what are we to do? Today while driving to work I heard on the radio that old time tv shows are making a return - "sort of like comfort food" the radio announcer said. He went on. "it is because these times were simpler". Huh? Simpler?

He is talking about a return to sitcoms like The Andy Griffith Show (circa 1950's), Leave it to Beaver (1950's also) and a number of other shows from the 60's and 70's. Now, while I do not have a problem with these old shows which prtrayed good old American values making a comeback, I do draw the line at the anouncers statement that "life was simpler then". What is he talking about?

Hmm....1950's - McCarthyism, The Red Threat, the Cold War, Segregation, Desegregation, busing, the Civil Rights Movement...Need I go on? The "old days" were not easier or simpler. What the old days DID have as an advantge was a solid grounding in morality that America is sorely lacking - and losing daily it seems. What do I mean? Well let's take a look at the situation.

Back in the "good old days", we did not routinely experience the following: school shootings, kids killing each other, families killing each other (not to say there was no abuse - there was, but not like drowning your five children), rampant drug use (again it was there - especially sneaking beer - but not like today's parties for teens mixing and sneaking of your mom's oxycontin), terrorism, rampant Christianity bashing (yes, there is), rampant disrespect for the President of the United States - whether or not you agree personally with his politics, he is still our elected President and deserves respect.

What America needs now is a return to good old-fashioned values. You hear all the time how "Retro" fashion is making a comeback and all that is old is "new" again. Well, in MY book, it is time for a good old-fashioned revival of morality.

What are YOU going to do to protect our country and our way of life?