Jun

18

Outsourcing America

Posted by cameron

June 18, 2007 |

I was interested to read an article in Business Week about the false accounting that our government performs on the subject of worker productivity and Gross Domestic Product (GDP). According to Business Week foreign outsourced operations and workers are not accounted for and yet profitability is accounted for in the USA. They claim this makes the state of our economy and workforce look better off than it really is. We have been hearing that real wages are stagnant and possibly falling and yet companies are reporting healthy profits. This has prompted me to write my thoughts on this subject.

If you think about it in simple terms it seems to me that for every single worker that gets “outsourced” there becomes a loss of buying power in the local economy. Large companies are outsourcing their customers so to speak. Cities and towns across this country are defined by the success of their larger companies. This in turn has meant good jobs, professional level jobs that create customers for local small business to flourish and to pay taxes to local governments. Outsourcing is tearing at the very fabric of our towns and cities. The trickle down effect will be profound, less money for small business and less tax dollars for local governments. Governments in turn are raising real estate taxes at an unbearable rate across the country. Something is going to break.

The service sector of our economy has been growing and is a major component of the economy, this at a time when our manufacturing base is being dismantled and sent abroad. The service sector includes business such as hotels, restaurants etc. So we are trading high paying jobs for low paying jobs. Its no wonder families need two or three paychecks to make it any more. I look around where I live and indeed there are many restaurants and hotels and warehouses. Our local government claims hiring growth but the jobs are mostly low paying. What are we doing?

While traveling through Japan twenty years ago I heard the term “hollowing out of Japan”. It referred to citizens of that country struggling to make it while their companies were hugely successful. Japan was doing the same thing as we are now seeing here. It is the hollowing out of America. With this accelerating trend with large companies we will see a real drop in American standard of living, small businesses will go out of business and local governments must curb their spending habits. We are heading back 50 years. The upper echelons will be ok as will company shareholders. The American middle class will get creamed and will shrink.

Another worrisome symptom of this is the recent trend toward problems in our supermarkets due to poisoned imported pet food. Our government has given up control over anything imported. It makes me wonder where drugs are coming from.

I worked for a company that first outsourced components to offshore companies and then complete product lines. Over time they lost know-how and that company ended up losing control of product development and eventually lost their customers. They are now out of business. All jobs were lost.

I worry for my grandchildren.


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