The Political Economy of Redistribution - Outsourcing Jobs, Offshoring Markets

Discussion in 'Economy' started by hvactec, Dec 4, 2011.

  1. hvactec
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    hvactec VIP Member

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    by ALAN NASSER

    Conventional economic wisdom teaches that it is not in the interests of employers to drive wages down to desperation levels, since most consumers are wage earners and consumption demand generates from 66 to 72 percent of the Gross Domestic Product. Were employers to drive wages too low they would at the same destroy their customer base, which is good for neither capital nor labor. This line of reasoning assumes that capitalism is organized such that each nation’s labor market is both entirely domestic and the sole source of the demand for its economy’s output. But capitalism is a global system and its sovereign components are not closed economies. The typical large corporations’ labor pool and customer base are now globally dispersed. In fact, the last few decades has seen the creation, for the first time in history, of a global labor market.

    The outsourcing of jobs has become common knowledge, and is perceived by most working people as a significant source of the nation’s unemployment woes. The loss of jobs to cheaper labor markets is nothing new; it has been building since the 1960s. In 1959, manufacturing represented 28 percent of domestic output. In 2008, it represented 11.5 percent. This tendency has accelerated with the deregulation of cross-border capital flows. Since 2000 the United States has lost thousands of factories and a total of about 5.5 million manufacturing jobs, representing a 32 percent decline. By the end of 2009, less than 12 million Americans worked in manufacturing. The last time we saw those numbers was in 1941.

    Widget production is not the only sector thast has seen job outsourcing. We are perhaps most familiar with offshore phone centers, but all sorts of uptown jobs have also been shipped out. Highly trained engineers and draftsmen, architects, computer programmers and other kinds of high-tech workers are increasingly employeed by US companies in China, Russia, India, and the Philipines.

    In these neoliberal times we are no longer scandalized to learn that this pattern is heartily championed by none other than the chairman of president Obama’s Council on Jobs and Competitiveness, Jeffrey Immelt, who happens to be CEO of General Electric. 2010 was a banner year for GE, when $9.1 billion of its total profits of $14.2 billion came from its overseas operations. Immelt pulls no punches in his indifference to US workers. At a December 6, 2002 investors meeting he enthused “When I an talking to GE managers, I talk China, China, China, China, China. You need to be there. You need to change the way people talk about it and how they get there. I am a nut on China. Outsourcing from China is going to grow to 5 billion. We are building a tech center in China. Every discussion today has to center on China. The cost basis is extremely attractive. You can take an 18 cubic foot refrigerator, make it in China, land it in the United States, and land it for less than we can make an 18 cubic foot refrigerator ourselves.”

    This is the man Obama put in charge of a committee assembled to address the nation’s unemployment crisis. But don’t think that Immelt’s obsession with overseas economic activity is only about cheap labor and lower costs. He goes on: “Today we go to Brazil, we go to China, we go to India, because that’s where the customers are.” My goodness, this looks like the Leninist thing about the insufficiency of domestic markets to absorb the economy’s output. The US worker is not only becoming decreasingly important as an input to production, (s)he is no longer seen by big capital as the most promising customer, the most robust source of sales revenue.

    On both the supply side and the demand side, the US worker/consumer is perceived as incrementally inessential. The former Labor Secretary under Clinton and current liberal blogger Robert Reich thinks that this strategy is irrational, even on capitalist terms: “Corporate profits are up right now largely because pay is down and companies aren’t hiring. But this is a losing game even for corporations over the long term. Without enough American consumers, their profitable days are numbered. After all, there’s a limit to how much profit they can get out of cutting American payrolls or even selling abroad. European consumers are in no mood to buy. And most Asian economies, including China, are slowing.” Reich doesn’t get it.

    read more Outsourcing Jobs, Offshoring Markets » Counterpunch: Tells the Facts, Names the Names
     
  2. likeabird03
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    likeabird03 Active Member

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    I've been following this subject for a while. It frustrates me to see people just blame corporations, and the average politician for this (though it's certainly not helped by them). What's happened has been intentional, it's part of a ongoing and sinister plan and it transcends big business and our government by far. How else can you explain that the most resource rich, technologically advanced, hardworking country has found itself in this economic predicament?

    There's plenty of evidence that suggests that incompetence on the part of leaders is responsible but I believe incompetence in this case is a cover story for what's actually a very well coordinated plan.

    This video I'm posting may seem somewhat long, but there's not one dull moment in it, and it connects the dots on a lot of things. The Speech is actually from 1994, and it aligns a lot with what's happening today.

    [ame=http://www.youtube.com/watch?v=WSoq2whtbJY]American Cannibalism prequel - YouTube[/ame]
     
    Last edited: Dec 4, 2011

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