Is outsourcing really that bad? (mandatory, employer, increase, considered)

[user_id]

Originally Posted by Bette

I found a great shop - American Apparel - that makes the clothes here in the US - they wash well, etc. We are now paying for all this outsourcing overseas and it will get us nowhere.

Firstly, American Apparel is rather over priced on the retail level. The shirts are not higher in quality than foreign made shirts. But they do have an interesting business model and actually wholesale their apparel for prices that are maybe 10~20% over brands like Hanes, Gildan, etc.

But don't kid yourself when you buy American Apparel. Come visit their factory in Los Angeles. The first thing you'll notice is that well, none of the workers are speaking English. After awhile you'll realize that all American Apparel did was hire many of the same people they would have if they located their factory in Mexico.

[floridasandy]

Originally Posted by user_id

No, they won't. We don't even need to debate about this stuff, the effects of tariffs have been observed before and they do not end well.

Also, the US does not import "far more" than we export. The trade deficit has declined and the deficit is now pretty much oil and China. The US cannot afford to screw over oil producing nations and it can't afford to screw over China. If the US tries to destroy the Chinese economy, the Chinese can destroy the US economy. The US and China both have the ability to majorly screw the other over, the only thing that stops one from doing it is because the other has the same power! Its an economic cold war.

This is what tariffs would really result in:

1.) A slow down in the global economy, including the US.
2.) Increases in product costs for anything for consumers
3.) Increased geopolitical tension that could lead to another war.

And a war between the US and China would result in the destruction of both nations.

I'm glad the majority in the government are not so short sighted as to increase tariffs, etc right now. Spending money and focusing on renewable energies will do far more for the US economy than short sighted tariffs.

we already have the slowdown in the world economy. if you think we are not in an economic war with china right now you are mistaken. our government, under president obama, chose to ignore the chinese warning about increasing our spending and went full throttle into a ridiculous spending plan, knowing what the repercussions were. chinese banking leaders have actually come out and said, "we hate the united states, but what can you do"? when the chinese tell you to slow the spending down, when their own economy received benefit from the spending, that tells you something. they are looking ahead! this spending will not help a country that is already mired in debt. obviously, this is already a subtle war which is not being played out in the open as both countries have a lot to lose but clearly the chinese are slowly extricating themselves from the united states and its debt.

More and more people are noticing that China has surpassed the US as ‘engine of world growth’. The US role for the last 30 years has been as consumer. China is a producer. The US can’t figure out the difference between ‘production’ and ‘consumption’ anymore than we understand the difference between ‘creditor’ and ‘debtor’. This fatal inability leads us to mistake our losses, imagining losses are increasing our wealth.

[Randomdude]

Originally Posted by user_id

No, they won't. We don't even need to debate about this stuff, the effects of tariffs have been observed before and they do not end well.

Yeah, lets just ignore the fact that the US exported way more then it imported when the last major set of tariffs were set up........

Originally Posted by user_id

Also, the US does not import "far more" than we export. The trade deficit has declined and the deficit is now pretty much oil and China.

US trade deficit for 2008 was 736 billion and so far this year is about 240 billion, Trade Ticker - The Web's only up-to-the-second counter for the U.S. Trade Deficit. Last year the US had a trade deficit higher then all but 15 countries of the worlds GDP's.

266 billion of that was China. US-China Trade Statistics and China's World Trade Statistics


The US imported 9.7 million barrels a day in 2008, about 3.5 billion barrels US Imports Less Oil In 2008, Yet More From Mideast.

Lets say that the average was about $100 a barrel, that is 350 billion. Now, NOT counting the amount of garbage we send back out to oil producing countries (considering Canada is our top trade partner for oil, and also one of our main destinations of exports). That would STILL be a gap of 120 billion dollars. Likely, this is closer to 300-350 billion dollars, or about HALF of the total trade deficit is not explained by oil or China.

The fact is, the US is running a trade deficit with almost every country on the globe.

Originally Posted by user_id

The US cannot afford to screw over oil producing nations and it can't afford to screw over China. If the US tries to destroy the Chinese economy, the Chinese can destroy the US economy. The US and China both have the ability to majorly screw the other over, the only thing that stops one from doing it is because the other has the same power! Its an economic cold war.

Chinas only trump card is its control of US debt.

Originally Posted by user_id

1.) A slow down in the global economy, including the US.
2.) Increases in product costs for anything for consumers
3.) Increased geopolitical tension that could lead to another war.

1. The US would only slow down temporarily as China dumps billions of dollars on the market and the US slowly collects it back.
2. Product costs would increase, but so would wages. The US would not be able to find enough people in the labor force to fill the current industrial capacity farmed out to foreign nations. People with any skill at all will be making a fortune.
3. Yeah, Id like to see China, completely destitude without the US dollars proping up their economy, mount an invasive war of the US.

Originally Posted by user_id

And a war between the US and China would result in the destruction of both nations.

Highly unlikely. The US has shown it has the proper technology to shoot down long range rockets. China does not have the support or military power to mount an invasive war. The US Navy and Air force would completely destroy them before they even got to the shore. So it would be forced to depend on a preemptive nuclear attack.

Originally Posted by user_id

I'm glad the majority in the government are not so short sighted as to increase tariffs, etc right now. Spending money and focusing on renewable energies will do far more for the US economy than short sighted tariffs.

Yeah, because eliminating less then a quarter of our trade deficit, the part related to oil, most of which is going to Canada, a country which is not stealing US jobs, is going to help with anything at all.

[Randomdude]

Originally Posted by user_id

This is obviously a selection bias, you see the unsuccessful ones working at Home Depot and begging for work on craigslist.

As with any profession there are people that are successful and there are people that are not.

Or maybe, there is just a surplus of them.......

[chuck22b]

Originally Posted by user_id

Firstly, American Apparel is rather over priced on the retail level. The shirts are not higher in quality than foreign made shirts. But they do have an interesting business model and actually wholesale their apparel for prices that are maybe 10~20% over brands like Hanes, Gildan, etc.

But don't kid yourself when you buy American Apparel. Come visit their factory in Los Angeles. The first thing you'll notice is that well, none of the workers are speaking English. After awhile you'll realize that all American Apparel did was hire many of the same people they would have if they located their factory in Mexico.

And your point? Who cares if they hire immigrants to work in their factories if they are documented and are allowed to work here. If your willing to work a "factory" job, then they can't discriminate based on creed anyways. Perhaps immigrants are the majority demographics in downtown LA? Perhaps they feel more comfortable working with like people with like language. The thing to point out and note is how they treat their workers, and how they are able to make a profit in spite of manufacturing in the States (California of all places) and all the laws thereof.

How they operate is significantly different than companies who offshore to leverage labor laws/costs. Basically your comment is baseless without considering how they actually operate, wages, and working conditions. Not even remotely close to taking operations into Mexico.

But he adds that doesn't mean workers should be exploited, and American Apparel is something of a maverick in the industry when it comes to employee health and benefits. And the work environment is radically different, too. Every afternoon, workers take a 10-minute break for synchronized stretching exercises, and a team of massage therapists roams the factory floor to offer free neck rubs all day.


Earning twice the California minimum wage, employees get subsidized lunches, subsidized health insurance, free on-site English classes and free bus tokens -- even company bicycles to get to and from work. Charney likes to boast that American Apparel is "sweatshop free."

American Apparel, an Immigrant Success Story : NPR

Also part of their "policy" is fair wages around the world. They won't pay less than US minimum wage to anybody even if the store is located in China, India, or some other developing nation.

The company's fair-wage policy—it pays its factory workers $12 per hour, more than twice the current federal minimum wage—will extend to Chinese retail employees as well. "[Wages] will not be the same as the L.A. workers, but we will make sure that every worker in China receives at least a U.S. federal minimum wage per hour worked," Charney said.

American Apparel Expands To China
http://americanapparel.net/presscent...080317dnr.html

-chuck22b

[user_id]

Originally Posted by Randomdude

Yeah, lets just ignore the fact that the US exported way more then it imported when the last major set of tariffs were set up.

Yes, things were different than from the US point of view. But look at the effects globally. The tariffs were bad for everyone, not just the exporting nations. The US still exports a good deal.

You are looking at old trade data, the trade deficit has changed over the last 1-2 years. I'm talking about the trade deficit today, not a year ago. See for example:

Brad Setser: Follow the Money » Blog Archive » Forget global imbalances, it is now a Sino-American imbalance –

Originally Posted by Randomdude

The fact is, the US is running a trade deficit with almost every country on the globe.

Again, things have changed.

Originally Posted by Randomdude

1. The US would only slow down temporarily as China dumps billions of dollars on the market and the US slowly collects it back.

China owns trillions in US debt. If they dumped it, it would destroy the dollar.

Originally Posted by Randomdude

2. Product costs would increase, but so would wages. The US would not be able to find enough people in the labor force to fill the current industrial capacity farmed out to foreign nations. People with any skill at all will be making a fortune.

This is where you guys are really short sighted. The jobs are gone no matter what you do. If you force the work back to the US it won't be done by people it will be done by robots. The wages as a result will not go up for these sorts of jobs.

Originally Posted by Randomdude

3. Yeah, Id like to see China, completely destitude without the US dollars proping up their economy, mount an invasive war of the US.

The Chinese would not try to invade the US, that is not the Chinese way. They may destroy every US city though.

Originally Posted by Randomdude

Highly unlikely. The US has shown it has the proper technology to shoot down long range rockets.

The US will be able to shoot down some rockets, but not all. Its not hard to beat the crappy US anti-missile technology. You simply send nuclear warheads with a bunch of decoys. China can also destroy US satellite and is more sophisticated in terms of cyber warfare.

Originally Posted by Randomdude

Yeah, because eliminating less then a quarter of our trade deficit, the part related to oil, most of which is going to Canada, a country which is not stealing US jobs, is going to help with anything at all.

Yes it will help with something, namely reducing the trade deficits. As of now (again, look at the recent trade data, not least years) crude oil imports represent around half of the deficit. Also, most of the money is not going to Canada. Canada is the top oil importer, but there are many others. More oil is imported from the middle-east than Canada. We import around 1/5 of our oil from Canada. Furthermore, it does not matter where your money is going.

Reducing oil imports will help far more than tariffs. It has a number of other desirable outcomes too.

[user_id]

Originally Posted by chuck22b

And your point? Who cares if they hire immigrants to work in their factories if they are documented and are allowed to work here.

Ugh, yes we all know all the workers in Los Angeles are documented and legal. The point is they are not really creating jobs in the US, they are importing people to the US instead of products!

Originally Posted by chuck22b

The thing to point out and note is how they treat their workers, and how they are able to make a profit in spite of manufacturing in the States (California of all places) and all the laws thereof.

Its important to note how they profit. They charge a lot for their products in their retail divisions. The products are the same quality as others, but they are marketed as a more "high end" brand. They would not do well if they did not control their retail operations like say hanes. Hanes has to sell products that are competitive on a wholesale basis.

Originally Posted by chuck22b

Basically your comment is baseless without considering how they actually operate, wages, and working conditions. Not even remotely close to taking operations into Mexico.

Are you under the impression that every factory out of the US has poor working conditions? They don't.

Originally Posted by chuck22b

Also part of their "policy" is fair wages around the world. They won't pay less than US minimum wage to anybody even if the store is located in China, India, or some other developing nation.

Firstly, you have to note the stupidity of that. Secondly, this is just their marketing. American apparel is good at marketing, thats why they are succesful. They would get eaten alive if they had to compete on price with the likes of Hanes, Gildan, Fruit of the Loom, etc.

Anyhow, you need to think a bit more deeply about their business model and why they succeed. They are virtually integrated and as a result control their manufacturing and retail, but most of the money is made on the retail end of things. Its more realistic to think of them as a retailer than a manufacture. If you are virtually integraded you can manufacture in the US and still make money, of course you may make more by out-sourcing. But having locally controlled manufacturing has its benefits and if used can out strip the cost benefit to out-sourcing. But, pretending as if this could be model for US manufacturing in general is inane. Most retail is done on a retail/wholesale sort of model and as a result cost becomes the primary issue. American apparel could not compete with the likes of Hanes, Gildan, Fruit of the Loom, etc on the wholesale front and they don't.

It should also be mentioned that apparel, especially what they are making, is light labor wise. In fact America apparel's apparel is usually made more simplistically than others. For example, their ladies cut t-shirts are not side-seamed (they are tubes, like men's shirts) where as most ladies fitted shirts are side-seamed. Personally, I find American Apparel to be less quality than the cheaper imports.

[Randomdude]

Originally Posted by user_id

Yes, things were different than from the US point of view. But look at the effects globally. The tariffs were bad for everyone, not just the exporting nations. The US still exports a good deal.

You are looking at old trade data, the trade deficit has changed over the last 1-2 years. I'm talking about the trade deficit today, not a year ago. See for example:

Brad Setser: Follow the Money » Blog Archive » Forget global imbalances, it is now a Sino-American imbalance –

Old trade data? This is 2008 trade data. It has not changed THAT much in the past 5 months.

Originally Posted by user_id

China owns trillions in US debt. If they dumped it, it would destroy the dollar.

An unfortunate temporary side effect

Originally Posted by user_id

This is where you guys are really short sighted. The jobs are gone no matter what you do. If you force the work back to the US it won't be done by people it will be done by robots. The wages as a result will not go up for these sorts of jobs.

1. Many of the jobs done outside the borders cannot be done by robots.
2. Even assuming they are, it would still create jobs building, servicing, and operating the robots.

Originally Posted by user_id

Yes it will help with something, namely reducing the trade deficits. As of now (again, look at the recent trade data, not least years) crude oil imports represent around half of the deficit. Also, most of the money is not going to Canada. Canada is the top oil importer, but there are many others. More oil is imported from the middle-east than Canada. We import around 1/5 of our oil from Canada. Furthermore, it does not matter where your money is going.

It does matter where and what the money is going out for. If it is going out for things we legitimatley cannot produce, that is far different then for items that we are simply trying to cut production costs for. One costs American jobs the other doesnt.

Originally Posted by user_id

Reducing oil imports will help far more than tariffs. It has a number of other desirable outcomes too.

I have to diagree with you there.

[nomore07]

Originally Posted by killer2021

I run a small online business that sells education and information products. I outsource nearly all of my labor needs which consists mostly of doing research and writing. We plan out what we need to be done then allocate that workload to various people in India.

Wait... so what do you actually DO? And what is to stop them from deciding they don't need your "management" and go on without you?

[user_id]

Originally Posted by Randomdude

Old trade data? This is 2008 trade data. It has not changed THAT much in the past 5 months.

You need to actually look it up before you rumble off about it. The data has changed a lot in the past 5 months, it was changing before that too. But you are looking at aggregate numbers for 2008. Things started to change in the middle of 2008. Look at the graphs here:

Calculated Risk: U.S. March Trade Deficit: $27.6 billion

Originally Posted by Randomdude

An unfortunate temporary side effect

No, not temporary. The panic it would induce could bring down the entire system. The collapse of Lehman brother's almost brought down the system!

Originally Posted by Randomdude

1. Many of the jobs done outside the borders cannot be done by robots.
2. Even assuming they are, it would still create jobs building, servicing, and operating the robots.

You seem to think the US exports nothing. Its odd. Even if you create tariffs the work would not come running to the US. It could not. If the US stopped importing it would have to stop exporting. Brilliant idea, bring no skilled jobs back to the US while destroy high tech export industry in the US.

Honestly, its not even worth talking about. Tariffs are a bad idea on so many levels.

Originally Posted by Randomdude

It does matter where and what the money is going out for. If it is going out for things we legitimatley cannot produce, that is far different then for items that we are simply trying to cut production costs for.

Again, if the goal is to correct trade imbalances than reducing oil imports is a rather powerful way of doing that.


Anyhow, this conversation does not matter. The majority in congress are not silly enough to push for increased tariffs.