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According to a 2005 report by the Government Accountability Office, global technological advancement, increased openness of countries such as China and India, the higher education level of foreign workers in technological fields, and the reduced cost per foreign worker are all contributing factors to off-shoring.
"If a U.S. firm shifts employment abroad," said the Washington Post in an editorial on Jan. 26, "the savings flow back to the United States in the form of lower prices for consumers and higher dividends for shareholders; the consumers and shareholders will direct their new spending power at things that create employment. Meanwhile, the fall in prices will allow the Federal Reserve to keep interest rates lower, boosting the job-creation engine."
Indeed, a study by the McKinsey Global Institute, found that two-thirds of the benefits of outsourcing flow to the United States.
Gregory Mankiw, chairman of president George W. Bush Council of Economic Advisors, recently told the Joint Economic Committee of the U.S. Congress that the outsourcing of American jobs “is something we should realize is probably a plus for the economy in the long run.”
After all, he said, “Outsourcing is just a new way of doing international trade.”
Mankiw, who testified recently in support of the Economic Report of the president for 2004, apparently didn’t share other interesting tidbits about how America’s families have fared in the face of outsourcing and Bush economics.
•The economy has lost more than 2.8 million manufacturing jobs since Bush took office, according to the AFL-CIO. The number of long-term jobless workers has been roughly two million for months, and for much of that time, long-term unemployment has been at its highest rate since 1983.
•The International Monetary Fund, a group that is not known for criticizing the White House, recently released a report saying that the twin deficits, America’s growing budget deficit and the ballooning trade deficit, threaten the financial stability of the global economy.
Bush’s economic report, which Mankiw supports, predicts the economy will generate 3.4 million new jobs this year which would mean an average 325,000 new jobs each month. Of course, last spring, the council said the president’s “Jobs and Growth” tax cut plan for millionaires would create 306,000 jobs monthly starting in July. Yet by February 2004, actual job growth was 1.8 million jobs short of the Bush administration prediction.
One Republican, representative, Donald Manzullo, of Illinois, thought Mankiw’s comments were so out of sync with the devastation of outsourcing American jobs overseas that he suggested the Bush advisor resign. “He ought to walk away and return to his ivy-covered office at Harvard,” Manzullo told the Washington Post.
these companies had small hubs set up in these countries until there profit margins increased from tax insentives, and then started moving entire operation to Asia for cheaper labor. [ /quote]
It isn't because of tax incentives, cuts, or breaks the US gives them. It is because other countries give them a better tax break. Kinda like when a factory is going to build a new plant but can't decide where to build. They shop around 4 or 5 cities or states to see which one will give them the best tax breaks. Ireland corporate tax rate is about 12.5% compared to the US which is about 30 something percent.
They do outsource to Asia and other countries because of lower wages. I agree with this.
The deferral clause has been in the tax code for more than half a century and has outlasted numerous reform efforts. In April 1961, even as U.S.-backed rebels were dying at Cuba's Bay of Pigs, President Kennedy asked Congress to rewrite tax provisions that "consistently favor United States private investment abroad compared with investment in our own economy."
This is the tax break Obama is talking about but it is a tax law. Perfectly legal. Pay attention how long this law has been in effect. The article is also interesting. I kinda question whether it is the real reason why jobs are going overseas especially since we have been losing jobs overseas for many years.
In addition if Obama really thought that this was a major reason why we were losing jobs overseas why didn't he try to pass legislation to overturn this law?
I think the real reason is that other countries offer a lower tax rate in addition to cheaper labor. A corporation number one priority is to make money for its shareholders.
jsobecky check out this article. I think you will like the information. Knowledge is power.
[edit on 17-9-2008 by jam321]
Originally posted by Bunch
You dont get it. The article that I cite is from 2004, when none of these policies had shown their full effect on the economy. I can also found you another quote about the benefits of outsourcing:
Originally posted by buddhasystem
reply to post by jsobecky
I don't think that manufacturing of soda and car rental examples are relevant.
What's more relevant are the likes of suppor centers run by Dell and other in Inda etc. Most people who had to debug their wireless router using some tech help had one of the two experiences:
a) internet chat which makes the support personnel language skills les relevant
b) endure thick accents
And in either case, good tech jobs had fled this country.
Originally posted by jam321
Not because of tax cuts. I will say this, you are correct in this area. History has shown that tax cuts do not always create the jobs politicians think they will. Part of the problem is that everything is based on an assumption that the economy would remain good. Under this assumption the numbers of jobs created would be high. However, reality is that the economy is always up and down.
Originally posted by jsobecky
[Behind the support centers, someone had to create and design the hardware and software that needs call support. That's where we excel
Failure to do that will result in a $400 eMachine to cost $700 to cover the additional labor costs.
John McCain continues to support NAFTA. This agreement that has cost an estimated 3 million jobs since 2000 and stagnated American middle class wage rates. It has also hastened a race to the bottom where off shoring of industries to low paying, poor labor standard nations is the only way domestic companies can compete. This is wrong
NAFTA is not serving the interests of the U.S. economy or the American people. It is dismantling our chance as a country to compete rather than enabling it. McCain's ideas on this issue are dead wrong. A new vision on America's trade polices is needed.
"If I am elected president, this country will honor its international agreements, including NAFTA, and we will expect the same of others," McCain said. "And in a time of uncertainty for American workers, we will not undo the gains of years in trade agreements now awaiting final approval."
Amend the North American Free Trade Agreement: Obama and Biden believe that NAFTA and its potential were oversold to the American people. They will work with the leaders of Canada and Mexico to fix NAFTA so that it works for American workers