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Old 12-26-2009, 02:39 PM
 
Location: Lafayette, IN
838 posts, read 869,572 times
Reputation: 391

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Quote:
Originally Posted by malamute View Post
Outsourcing is actually as stupid a policy as they come. It is an outcome of runaway capitalism that cannot be satisfied except by communist labor.

What happens when the $0.25 an hour Chinese can't buy the $2000 televisions and neither can the unemployed American?

That's why the USA is headed to collapse and soon.
Uhh... outsourcing isn't a 'policy' - it is an inevitable outcome of capitalism. When a country loses comparative advantage in a particular industry then it has to undergo structural adjustment. In other words, it has to shed those inefficient industries and focusing on developing new industries to replace them. The process of structural adjustment is a painful, but necessary, one as it necessarily leads to people losing jobs. However, if you want to innovate and 'evolve' the economy you have to do this; you can't cling to dying industries unless you want to see rapid price increases and rising poverty. We've had to do this innumerable times in the past; we've 'outgrown' plenty of industries that have become obsolete over the last 200 years and we had to develop new industries to take their place.

There are two options:

1. Protectionism: we could try to stop companies from outsourcing by implementing a variety of protectionist policies. This will lead to dramatic increases in the price of the goods being protected, hurting all American consumers. This, in turn, contributes to rising poverty. It will result in deadweight losses to the economy as it necessarily prevents us from maximizing economic growth ('Harberger Triangles' for those of you familiar with trade theory). It will, over time, lead to those companies abandoning America entirely, moving their headquarters abroad. It will result in trade wars which will be disastrous for the economy as a whole. It will also lead to foreign investment in our economy drying up (so say goodbye to all the Honda, Samsung, Sony, etc jobs in the US!). In the end, we'd be sacraficing economic growth, low prices, jobs provided by foreign companies, our leadership role as technological innovators and many middle-class incomes in order to protect jobs that will be lost eventually no matter what.

OR

2. Free Trade/Free Market Policies: We lose some industrial sector jobs (which are less than 20% of the US economy) to outsourcing. The people losing jobs do suffer. However, as a result we maximize economic growth by eliminating what are known as 'Harberger's Triangle' deadweight losses. We maintain an innovative edge and find ways to spur and develop new, high value-added, high-tech industries for which we do have a comparative advantage thus spurring economic growth further. Prices for goods stay low, thus benefitting all American consumers. With the right policies, we can develop entirely new industries which the US can become worldwide leaders in. With policies that provide worker training, education and unemployment benefits we can minimize damage accruing to the workers who are in industries facing outsourcing. We do not lose jobs as a result of trade wars, since they won't happen. We continue benefitting from foreign investment into the economy.
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Old 12-26-2009, 02:43 PM
 
Location: Lafayette, IN
838 posts, read 869,572 times
Reputation: 391
Quote:
Originally Posted by rd2007 View Post
This is like arguing with one of those people that protest at the G20 summits and the like. They know nothing except for some guy told them corporations are bad because they have all the money and control the Earth. They don't need to bother with the truth or anything crazy like that. All they need is the intraweb and that guy to tell them everything they need to know about the world economy. Mostly college students too and you know they know everything because they're college students...
I know, it's truly frustrating. I've been complaining about it on these forums for some time now; I'm just amazed at how strong a person's opinion can be regarding an issue which they know very little about. People who have no formal education in economics will go ahead and make crazy arguments about economic policy and they will believe they are right! It's crazy. The American and global economies are unbelievably complex things, yet people think that their opinions regarding economic policy are completely accurate, 100% right even when they have no understanding of how the economy actually functions.

I'll never understand how people can be so stubborn in their opinions regarding issues they know nothing about.
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Old 12-26-2009, 02:43 PM
 
Location: Great State of Texas
86,093 posts, read 72,469,891 times
Reputation: 27565
Quote:
Originally Posted by Ever Adrift View Post
2. Free Trade/Free Market Policies: We lose some industrial sector jobs (which are less than 20% of the US economy) to outsourcing. The people losing jobs do suffer. However, as a result we maximize economic growth by eliminating what are known as 'Harberger's Triangle' deadweight losses. We maintain an innovative edge and find ways to spur and develop new, high value-added, high-tech industries for which we do have a comparative advantage thus spurring economic growth further. Prices for goods stay low, thus benefitting all American consumers. With the right policies, we can develop entirely new industries which the US can become worldwide leaders in. With policies that provide worker training, education and unemployment benefits we can minimize damage accruing to the workers who are in industries facing outsourcing. We do not lose jobs as a result of trade wars, since they won't happen. We continue benefitting from foreign investment into the economy.
Sorry to tell you but the high tech has left the US as well; that started in the mid to late 90's. Now even high tech R&D is done in either China or India. China is also well on their way to becoming #1 in green/solar technology while the US languishes and still favors oil.
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Old 12-26-2009, 02:46 PM
 
Location: Lafayette, IN
838 posts, read 869,572 times
Reputation: 391
Quote:
Originally Posted by CAVA1990 View Post
My great grandfather supported a family by working in the railroad stockyards. Would I recommend that as a career option to my kids? I don't think so. I'm glad we're moving beyond doing repetitive physical labor in this country.
Good example of an industry that we eventually let fade away (though not as a result of outsourcing, in this particular case). Railroads used to employ a lot more people than they do today, but they slowly lost their economic importance as highways were built, airlines were built and railroads were completed. It was painful as jobs were shed from the railroad industry; people become unemployed. Yet, should we have implemented protectionist policies to prevent unemployment as a result of the declining importance of railroads? Absolutely not! Economies changes and people's lose their jobs as a result. It's painful but it's absolutely necessary if we are going to continue to innovate and experience economic growth.
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Old 12-26-2009, 02:47 PM
 
Location: Great State of Texas
86,093 posts, read 72,469,891 times
Reputation: 27565
Quote:
Originally Posted by Ever Adrift View Post
Good example of an industry that we eventually let fade away (though not as a result of outsourcing, in this particular case). Railroads used to employ a lot more people than they do today, but they slowly lost their economic importance as highways were built, airlines were built and railroads were completed. It was painful as jobs were shed from the railroad industry; people become unemployed. Yet, should we have implemented protectionist policies to prevent unemployment as a result of the declining importance of railroads? Absolutely not! Economies changes and people's lose their jobs as a result. It's painful but it's absolutely necessary if we are going to continue to innovate and experience economic growth.
But with the increasing cost of oil, railroads get more bang for the buck.
Then you can have trucks just locally deliver from RR yards/hubs.
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Old 12-26-2009, 02:50 PM
 
Location: Everywhere and Nowhere
14,131 posts, read 27,077,317 times
Reputation: 6825
Quote:
Originally Posted by HappyTexan View Post
Sorry to tell you but the high tech has left the US as well; that started in the mid to late 90's. Now even high tech R&D is done in either China or India. China is also well on their way to becoming #1 in green/solar technology while the US languishes and still favors oil.
Plenty of tech jobs here in the DC area. I don't know what you're talking about.
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Old 12-26-2009, 02:54 PM
 
Location: Everywhere and Nowhere
14,131 posts, read 27,077,317 times
Reputation: 6825
Quote:
Originally Posted by HappyTexan View Post
But with the increasing cost of oil, railroads get more bang for the buck.
Then you can have trucks just locally deliver from RR yards/hubs.
The railroads didn't go away. They haul as much or freight as they ever did with fewer people, making it cheaper to put your corn flakes on your table. Some was because of technology but much because of renegotiation of previously very inefficient labor agreements with the unions.
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Old 12-26-2009, 02:56 PM
 
Location: Great State of Texas
86,093 posts, read 72,469,891 times
Reputation: 27565
Quote:
Originally Posted by CAVA1990 View Post
Plenty of tech jobs here in the DC area. I don't know what you're talking about.
I'm not talking web jobs here..but system R&D, chip R&D..that's gone offshore where PhD's get paid $35K.
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Old 12-26-2009, 02:59 PM
 
Location: Lafayette, IN
838 posts, read 869,572 times
Reputation: 391
Quote:
Originally Posted by HappyTexan View Post
Sorry to tell you but the high tech has left the US as well; that started in the mid to late 90's. Now even high tech R&D is done in either China or India. China is also well on their way to becoming #1 in green/solar technology while the US languishes and still favors oil.
Wow...

'High-tech' is simply shorthand for industries at the forefront of modern technology. Microprocessing, nanotechnology, biotechnology, 'green technology,' etc. are all examples of these industries. New industries are constantly being 'invented' as a result of innovation, the key is to implement policies to spur the development of and become a leader in such industries. Most of the 'green industries' are in their infancy; the market is young and only beginning to be tapped so there is an extraordinary amount of room for growth.

Much of our problem in the US has been a lack of proper policies to spur such developments; we focus too much on protecting antiquated industries because they have powerful political lobbies and focus too little on finding the right sets of policies to spur innovation and high-tech industrial growth. However, given our high levels of human capital, market integration, etc. we are in a great position to become a world leader in a lot of these industries.

It's not too late to spur development in photovoltaics, which you mention. China has recently surpassed the US in the production of photovoltaic technology, but the industry as a whole is growing incredibly rapidly meaning we have a lot of room to 'catch up' and develop a serious solar industry in this country--after all, we're still one of the 5 largest photovoltaic technology producers in the world. Many of these industries are a long-way off from becoming zero-sum games; there is too much room for growth right now not to pursue them. However, we aren't going to become a world leader if we don't implement the right policies to promote growth and investment.

And photovoltaics is only one of innumerable industries for which there is tremendous growth potential. Even in just the area of 'green energy' technologies there is an enormous amount of potential for development of better wind, solar, hydro (including ocean current), and bio energy technologies. Aside from this, as I mentioned, there is great potential in many other high-tech industries (micro-processing, nanotechnology, etc). We should be pursing these. There are always new industries being created as a result of innovation; this is why economic growth isn't a zero-sum game!

More investment in R&D is needed. We need to improve our education system dramatically to keep up, make it easier for people to go to college, make it easier for middle aged people to go back to school or get training they need to enter new industries, etc. A number of developed countries (and in a few industries, some developing countries like China and Brazil) are getting ahead of the US in terms of innovation and development. We need to institute policies to catch up; protectionism will just make us fall further and further behind. The best way to ensure that the US falls further behind, to ensure that the US loses its leadership role as an economic innovator, to ensure that the US economy stagnates is to pursue protectionist policies and focus on existing industries for which we have lost our comparative advantage.
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Old 12-26-2009, 03:02 PM
 
Location: Lafayette, IN
838 posts, read 869,572 times
Reputation: 391
Quote:
Originally Posted by CAVA1990 View Post
The railroads didn't go away. They haul as much or freight as they ever did with fewer people, making it cheaper to put your corn flakes on your table. Some was because of technology but much because of renegotiation of previously very inefficient labor agreements with the unions.
You're only supporting my point, here. I didn't say that railroads as a whole went away, rather that employment in railroad industry declined substantially. I think most everyone would readily admit that had policies been implemented to stop this trend, it would have been highly inefficient and economically disastrous. We shouldn't have prevented railroads from reducing employment when they became less labor-intensive, yet that is exactly what these protectionist policies to eliminate outsourcing do!
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