Outsourcing

[andyfox]

Swank, Inc., is something of a competitor of my company, although they are much bigger and more famous. From today's trade paper:

[b]Swank's fourth-quarter results pushed the company to more losses for the year, mainly due to restructuring charges attributed to last year's closing of its Norwalk, Conn.-based belt manufacturing plant. The company now outsources belts, small leather goods and jewelry to third-party manufacturers in Asia and South America.

CEO John Tulin said the decision to outsource was "gut-wrenching" but necessary in order to remain competitive.

"I don't think it can be business as usual. We are doing what everyone else is doing. Up until Nov. 30 we were manufacturers. Unfortunately, we moved offshore but that is the way the world is now. We can't compete with $11-an-hour wages when everyone else is paying 50 cents."

[slavic]

We can't compete with $11-an-hour wages when everyone else is paying 50 cents.

I don't see how you can argue with that statement. An operating cost reduction of 30K/year/employee (est) is amazing and if you don't do it I fail to see how you could stay competitive in any given sizable market.

[Zeno]

11 bucks to 50 cents. Is this a one-to-one ratio. By that I mean an absolute direct cost savings.

Is there not additional cost if you outsource. Quality control/manager people, extra transportation/handling/tracking of raw and finished products and so on? So the savings may be great but not as great as it first appears. Just wondering.

And $11 per hour is not that great of a wage! but certainly better than no work at all.

I remember in the sixtes many people complaning of all the large influx of stuff that was 'Made in Japan' or 'Made in Tiawan'. And an outcry about all this. Now the same outcry is repeat with 'Made in China". America has still prospered and survived.


-Zeno

[andyfox]

Our direct labor cost is about 50% of our overall labor cost. That is, if somebody makes $11/hour, it's actually costing us $22/hour when you consider the "additional" costs (health insurance, workers comp, etc.).

Overseas, yes, there are indeed additional costs as well. We need to travel over there often. It costs an additional 5-25% to land the goods here in Los Angeles, depending on whether we receive the goods via sea or via air and what the duty rates are on particular products. While our biggers customers charge us to run their own quality and safety inspections at the overseas factories, they also do so at our domestic factories and our home office.

Overall, I would say the savings are larger than they appear, not smaller.

In New England, at one time, there were over 800 shoe manufacturers. The last I heard, there were 8. In Taiwan, the situation is exactly the same: almost all of the Taiwanese manufacturers relocated to China when cross-strait economic relations opened up.

[Six_of_One]

I can't decide if this is good or bad, but it certainly seems to be inevitable. Fighting it is very much like banging your head repeatedly against a wall to distract yourself from the pain in your foot, or some other such metaphor (that is a metaphor, isn't it? What do I know, I only majored in English).

[adios]

I can't imagine what it must be like to fire long time, productive employees. I read an incredibly depressing article in the WSJ about outsourcing of white collar work the other day. Ok I'll bite, how do people in other countries get by on $0.50 an hour wages (probably less if that's the cost to the employer)?

[Cyrus]

All manufacturing jobs in the West, that involve little or no skill, cannot compete with the wages offered in the Third World. It's all a matter of when and how. This has been brought about by the advance of free trade and freedom of capital movements, which guide all capital towards the absolute lower cost and the absolute higher return.

We have to learn to live with it because ostensibly this will bring about not just more efficient economies but also peace, in general. When trans-national investments, joint ventures and alliances flourish, there is less incentive to go to war. At least, that's the theory.

I don't know how the West should cope. Protectionism is no longer an option, except exceptionally. Complete freedom has proved to be destructive. The best one can do (as an employee anywhere) is improve his value to the corporation. And keep improving it. But low, repetitive jobs are is constant danger. Hell, some of those wages are cheaper than a machine's!

An anecdote: Some years ago, most of our major competitors outsourced heavily. Some of them even moved HQs because of the empty spaces! We were tempted to outsource all Accounting, more than half of Operations, almost all of Warehouse, and bits from other divisions.

We finally didn't and never regretted it. We made a point of 'selling' this to our clients too. (Notice that this happened inside one country, so it's not useful as an example for outsourcing to cheaper foreign labor.) All competitors have horror stories (and some legal horror stories too!) and are trying to weasel their shareholders into allowing a gradual return to in-house managing of affairs. They have lost on quality control, accountability and customer response. And they have lost market share - to us. Of course, their top people who instigated the "cost-saving" move to outsourcing are long gone elsewhere, carrying kudos and bonuses.

But I'm grateful for the others' outsourcing: It provided me with ammunition when my shareholders questioned the wisdom of sticking to our guns. And it was incentive to our employees to work even harder, knowing that blood was been shed all around them.

[andyfox]

Their wage usually includes room and board. Many of the workers in China, who have migrated from the hinterland to the industrialized cities, even save money, sending it back home.

[brick]

I still believe in free trade... I believe it is best for the world in the long run.

http://www.economist.com/opinion/displayStory.cfm?story_id=2442040

[SossMan]

[ QUOTE ]
Ok I'll bite, how do people in other countries get by on $0.50 an hour wages

[/ QUOTE ]

This is pretty interesting:

From www.pkarchive.org (http://www.pkarchive.org) (Economist Paul Krugman's unofficial website)


IN PRAISE OF CHEAP LABOR

Bad jobs at bad wages are better than no jobs at all.
SYNOPSIS: Detractors of globalization don't understand Economic reality and comparative wages.

For many years a huge Manila garbage dump known as Smokey Mountain was a favorite media symbol of Third World poverty. Several thousand men, women, and children lived on that dump--enduring the stench, the flies, and the toxic waste in order to make a living combing the garbage for scrap metal and other recyclables. And they lived there voluntarily, because the $10 or so a squatter family could clear in a day was better than the alternatives.
The squatters are gone now, forcibly removed by Philippine police last year as a cosmetic move in advance of a Pacific Rim summit. But I found myself thinking about Smokey Mountain recently, after reading my latest batch of hate mail.
The occasion was an op-ed piece I had written for the New York Times, in which I had pointed out that while wages and working conditions in the new export industries of the Third World are appalling, they are a big improvement over the "previous, less visible rural poverty." I guess I should have expected that this comment would generate letters along the lines of, "Well, if you lose your comfortable position as an American professor you can always find another job--as long as you are 12 years old and willing to work for 40 cents an hour."
Such moral outrage is common among the opponents of globalization--of the transfer of technology and capital from high-wage to low-wage countries and the resulting growth of labor-intensive Third World exports. These critics take it as a given that anyone with a good word for this process is naive or corrupt and, in either case, a de facto agent of global capital in its oppression of workers here and abroad.
But matters are not that simple, and the moral lines are not that clear. In fact, let me make a counter-accusation: The lofty moral tone of the opponents of globalization is possible only because they have chosen not to think their position through. While fat-cat capitalists might benefit from globalization, the biggest beneficiaries are, yes, Third World workers.

After all, global poverty is not something recently invented for the benefit of multinational corporations. Let's turn the clock back to the Third World as it was only two decades ago (and still is, in many countries). In those days, although the rapid economic growth of a handful of small Asian nations had started to attract attention, developing countries like Indonesia or Bangladesh were still mainly what they had always been: exporters of raw materials, importers of manufactures. Inefficient manufacturing sectors served their domestic markets, sheltered behind import quotas, but generated few jobs. Meanwhile, population pressure pushed desperate peasants into cultivating ever more marginal land or seeking a livelihood in any way possible--such as homesteading on a mountain of garbage.
Given this lack of other opportunities, you could hire workers in Jakarta or Manila for a pittance. But in the mid-'70s, cheap labor was not enough to allow a developing country to compete in world markets for manufactured goods. The entrenched advantages of advanced nations--their infrastructure and technical know-how, the vastly larger size of their markets and their proximity to suppliers of key components, their political stability and the subtle-but-crucial social adaptations that are necessary to operate an efficient economy--seemed to outweigh even a tenfold or twentyfold disparity in wage rates.

And then something changed. Some combination of factors that we still don't fully understand--lower tariff barriers, improved telecommunications, cheaper air transport--reduced the disadvantages of producing in developing countries. (Other things being the same, it is still better to produce in the First World--stories of companies that moved production to Mexico or East Asia, then moved back after experiencing the disadvantages of the Third World environment, are common.) In a substantial number of industries, low wages allowed developing countries to break into world markets. And so countries that had previously made a living selling jute or coffee started producing shirts and sneakers instead.
Workers in those shirt and sneaker factories are, inevitably, paid very little and expected to endure terrible working conditions. I say "inevitably" because their employers are not in business for their (or their workers') health; they pay as little as possible, and that minimum is determined by the other opportunities available to workers. And these are still extremely poor countries, where living on a garbage heap is attractive compared with the alternatives.

And yet, wherever the new export industries have grown, there has been measurable improvement in the lives of ordinary people. Partly this is because a growing industry must offer a somewhat higher wage than workers could get elsewhere in order to get them to move. More importantly, however, the growth of manufacturing--and of the penumbra of other jobs that the new export sector creates--has a ripple effect throughout the economy. The pressure on the land becomes less intense, so rural wages rise; the pool of unemployed urban dwellers always anxious for work shrinks, so factories start to compete with each other for workers, and urban wages also begin to rise. Where the process has gone on long enough--say, in South Korea or Taiwan--average wages start to approach what an American teen-ager can earn at McDonald's. And eventually people are no longer eager to live on garbage dumps. (Smokey Mountain persisted because the Philippines, until recently, did not share in the export-led growth of its neighbors. Jobs that pay better than scavenging are still few and far between.)
The benefits of export-led economic growth to the mass of people in the newly industrializing economies are not a matter of conjecture. A country like Indonesia is still so poor that progress can be measured in terms of how much the average person gets to eat; since 1970, per capita intake has risen from less than 2,100 to more than 2,800 calories a day. A shocking one-third of young children are still malnourished--but in 1975, the fraction was more than half. Similar improvements can be seen throughout the Pacific Rim, and even in places like Bangladesh. These improvements have not taken place because well-meaning people in the West have done anything to help--foreign aid, never large, has lately shrunk to virtually nothing. Nor is it the result of the benign policies of national governments, which are as callous and corrupt as ever. It is the indirect and unintended result of the actions of soulless multinationals and rapacious local entrepreneurs, whose only concern was to take advantage of the profit opportunities offered by cheap labor. It is not an edifying spectacle; but no matter how base the motives of those involved, the result has been to move hundreds of millions of people from abject poverty to something still awful but nonetheless significantly better.

Why, then, the outrage of my correspondents? Why does the image of an Indonesian sewing sneakers for 60 cents an hour evoke so much more feeling than the image of another Indonesian earning the equivalent of 30 cents an hour trying to feed his family on a tiny plot of land--or of a Filipino scavenging on a garbage heap?
The main answer, I think, is a sort of fastidiousness. Unlike the starving subsistence farmer, the women and children in the sneaker factory are working at slave wages for our benefit--and this makes us feel unclean. And so there are self-righteous demands for international labor standards: We should not, the opponents of globalization insist, be willing to buy those sneakers and shirts unless the people who make them receive decent wages and work under decent conditions.
This sounds only fair--but is it? Let's think through the consequences.

First of all, even if we could assure the workers in Third World export industries of higher wages and better working conditions, this would do nothing for the peasants, day laborers, scavengers, and so on who make up the bulk of these countries' populations. At best, forcing developing countries to adhere to our labor standards would create a privileged labor aristocracy, leaving the poor majority no better off.
And it might not even do that. The advantages of established First World industries are still formidable. The only reason developing countries have been able to compete with those industries is their ability to offer employers cheap labor. Deny them that ability, and you might well deny them the prospect of continuing industrial growth, even reverse the growth that has been achieved. And since export-oriented growth, for all its injustice, has been a huge boon for the workers in those nations, anything that curtails that growth is very much against their interests. A policy of good jobs in principle, but no jobs in practice, might assuage our consciences, but it is no favor to its alleged beneficiaries.

You may say that the wretched of the earth should not be forced to serve as hewers of wood, drawers of water, and sewers of sneakers for the affluent. But what is the alternative? Should they be helped with foreign aid? Maybe--although the historical record of regions like southern Italy suggests that such aid has a tendency to promote perpetual dependence. Anyway, there isn't the slightest prospect of significant aid materializing. Should their own governments provide more social justice? Of course--but they won't, or at least not because we tell them to. And as long as you have no realistic alternative to industrialization based on low wages, to oppose it means that you are willing to deny desperately poor people the best chance they have of progress for the sake of what amounts to an aesthetic standard--that is, the fact that you don't like the idea of workers being paid a pittance to supply rich Westerners with fashion items.
In short, my correspondents are not entitled to their self-righteousness. They have not thought the matter through. And when the hopes of hundreds of millions are at stake, thinking things through is not just good intellectual practice. It is a moral duty.

[sam h]

Technically there is an important difference here. Almost all major companies have outsourced some operations over the last thirty years or so, basically because it just doesn't make sense to do everyting in house once specialist subcontractors develop. The extreme example would be the Ford Motor Company who used to mine their own coal. Outsourcing is also part of the reason why statistics about the service economy often give a skewed perception of reality. If you washed windows for Ford, you were an employee in the manufacturing sector. Once your job was cut and you went to work for a subcontractor washing windows for Ford, you suddently were in the service sector.

[ThaSaltCracka]

[ QUOTE ]
This is pretty interesting:

[/ QUOTE ]
Indeed it is, thanks SossMan

[ThaSaltCracka]

It now seems that most manufacturing jobs in the U.S. will never come back. So if those jobs are gone, one would think service industry jobs will fill that void. What is wrong with that?

[SossMan]

Esentially, that's what it boils down to. Over the past 35 years, there has been a well chronicled shift from manufacturing jobs to service sector jobs. While it creates frictional unemployment in the manufacturing sector, it creates job surplus in the service sector.
I have never understood the protectionists arguments. In short, it's NOT a zero sum game. It is possible for jobs to shift from one country to another and have both countries be better off (aggregetely speaking). That's the basis of free trade.

It's pretty pius (or ignorant) of someone to condemn a business that provides dollar a day jobs to people who otherwise would have penny a day jobs simply because they cannot see living on a buck a day. It's not just about cost of living....it's about alternatives. Alternatives and choices is what economics is all about.

[superleeds]

The problem with his argument is why am I still paying the same and usually more for a pair of nikes or some teddy bear as I was when these kind-hearted multinationals were not using slave labour. Someones getting rich at my and some 12 yaer old phillipeno child's expense.


[ QUOTE ]
First of all, even if we could assure the workers in Third World export industries of higher wages and better working conditions, this would do nothing for the peasants, day laborers, scavengers, and so on who make up the bulk of these countries' populations. At best, forcing developing countries to adhere to our labor standards would create a privileged labor aristocracy, leaving the poor majority no better off.

[/ QUOTE ]

This intrigued me also - where is this 3rd world middle class that is going to do the jobs if fair wages and fair labour conditions are enforced depriving all these poor peasents of a fair wage. Where are they now?

[superleeds]

you mean service industary jobs such as customer call centres, you know the ones you call when you have a problem with a Party Cash out request. Or as its tax time the forms once processed by American Accountants and now farmed out to Indian Accountants.

[brick]

This article points out just that. We are shipping service jobs to other countires now. But, even shipping call centers to India is better in the long run.

http://www.economist.com/opinion/displayStory.cfm?story_id=2442040

[ACPlayer]

You have to be a bit careful in the cost analysis, specially over time.

I first encountered Indian software developers as part of a project I managed in the mid-80s they were very, very cheap back then, even when located in the US.

In 1997 with a big Insurance company, we were paying $23 per hour for resources in the US and $12 per hour for resources in India as part of the Y2K changeover.

Now in the US you would pay perhaps $35 (have not looked recently) and the overseas rates I dont know. The local rate is not much more even with overhead (FICA) for a local employee.

The Globalization of trade and specially jobs is driving the wage differential between the US and the rest of world towards zero (long way from there at the moment of course). This also implies that overtime, the standard of living for people overseas will rise and ours will stay constant or fall.

Young software developers in India now enjoy a higher standard of living then their counterparts in the US (specially when you factor in the ability to hire servants etc to take care of the families). Our tax structure, specially the highly regressive FICA taxes also share a lot of the burden for falling standard of livings.

[Gamblor]

I'm all for free trade and making use of comparative advantage, but I'd be interested to know where you came up with this assertion:

Complete freedom has proved to be destructive.

The best one can do (as an employee anywhere) is improve his value to the corporation.

I've said since day one that it don't matta whatcha do, as long as ya do it better than anyone else.

Too bad you're so clueless on the way the Middle East works, I'd almost have you pegged for a intelligent guy.

Hint: It's not all freedom of religion and individual rights.

[superleeds]

Nice nothing to worry about article.

From the article
As competition forces some jobs in services abroad, it will call forth the creation of new jobs in services in their place. And on average they will be better, higher-paying jobs than the ones that migrate. The evidence shows this is happening (see article). In practice as well as in principle, the fusty old idea of comparative advantage still works.

Unfortunately I couldn't access the link to show this is happening

Let me ask you a question.
Just how many jobs do you think someone with a basic training and a basic education could not do. And keep in mind, by world standards Americans are not particulaly well educated.

[brick]

[ QUOTE ]
I still paying the same and usually more for a pair of nikes or some teddy bear

[/ QUOTE ]


This is not a true statement.

In 2000 the average american spent half as much of his PCE (Personal Consumption Expenditures) on shoes as he did in 1959.

.7% in 2000
vs
1.4% in 1959

Please see document below.

http://www.bea.gov/bea/articles/national/nipa/2001/0301pce.pdf

[Ray Zee]

eventually all water ends up at sea level. same with wages. they will flow to the lowest places. we have had it good for many years. now our standard of living will erode slowly if we are lucky. the service jobs will save us for awhle but they too will go to the lowest bidders. do you really think our country will dominate the world forever.
those that adapt and make the changes will do well. the rest might think about the guy selling buggy whips that said there will always be a market for his goods.

[ThaSaltCracka]

[ QUOTE ]
Just how many jobs do you think someone with a basic training and a basic education could not do. And keep in mind, by world standards Americans are not particulaly well educated.

[/ QUOTE ]
very few.

[imported_Chuck Weinstock]

Circa 1971: My dad ran one of three major (ladies) coat and suit companies in the Chicago area. This was essentially a two season business (Winter, Spring). ILGWU shop. Good to employees. But the world changes. Women stopped wearing fancy spring coats and switched to wearing raincoats (wet look in those days.)

It turns out that raincoats were made by sportswear "shops", coats and suits were made by cloak "shops". (If there are any other ILGWU types out there correct me please if I got this wrong I'm going from memory.) Piece rates in sports shops were significantly lower than piece rates in cloak shops. The union wouldn't switch my Dad's company to sportswear rates so that he could make competitive raincoats. Guess where all the sales went?

Within a few years my father had shut down his company, and his two local competitors had gone bankrupt.

Fast forward to the present era. Now it's not cloak shop wages vs. sportswear shop wages, it's US wages vs. Chinese (or whereever) wages. Guess where all the sales go?

Other than restrictive tariffs (which always seem to backfire on us), isolation (in this case) or going non-union (in those days) there isn't much we can do about it. Notice how we managed to keep the foreign cars from taking over the US auto market with our "buy american" campaigns.

How depressing.

Chuck

[ThaSaltCracka]

there is an important lesson here.
What did your dad do after he shut down his business?

[MMMMMM]

Ray, I rather doubt that outsourcing will erode our standard of living as a whole. Here's why: outsourcing helps bring costs down for consumers and for businesses. Yes it is painful when you are the one getting laid off or whatever. But bringing down consumer and business costs does even more good for the economy as a whole, than the harm done to the niches it hurts.

Also the flip side of outsourcing is insourcing. We do contract work for foreign companies, but in other industries.

Your point about those who adapt is well taken.

[andyfox]

I don't know what the answer is, or even what the correct questions are.

One of the biggest selling items I ever had we sold to JC Penney. It retailed for $12.00. We charged JC Penney $4.56. I was paying $1.20, first cost, ex Taiwan. The guy who sold it to me was an agent, so he was buying it from somebody else and adding on his profit. And he bought a brand new 7-series BMW every year.

So the American consumer was paying $12.00 for an item that probably cost the orginal manufacturer about eighty cents to produce.

And yet: the original manufacturer employed probably 100 people. (That was the size of the typical belt manufacturer in Taiwan in those days.) The guy who sold me the item employed 60-80 people. I had 50 people in my warehouse. And JC Penney employs a helluva lot of people.

The moral of the story? As I say, I'm not sure.

[ACPlayer]

You are quite correct in saying that outsourcing reduces costs paid by the customer and has a net short term benefit to the economy.

You are only partially correct that it will not bring down cost of living. it depends on whether you see standard of living as a zero sum gain or not. It is clear that as these jobs go over seas that population is seeing a rise in standard of living and wages, how much are we recapturing through cost savings.

Two major points:

As long as we have an onerous tax structure for individuals, we will be working longer and harder for less money. The regressive taxes are the worst as they provide a strong disincentive to work at the low end of the wage scales. The less we work the more chances of our having a medium to long term downturn in the standard of living.

As long as our health care costs and the costs of meeting environmental regulation (whether that is overall good or bad is another debate) are very high (and they are the highest in the world) our employers have ever diminishing desire to hire local workers or build local plants. So, you now find knowledge workers (engineers, financial analysts, etc) all being hired on behalf of emplyers in remote countries. Some European countries are already outsourcing certain medical procedures to countries like India.

I believe that India stands to benefit the most from these trends (of the high value jobs) as it has one of the best education systems around.

For those interested there are mutual funds through which you can invest in Indian companies. I myself own IFN for quite some time. There are other vehicles now as well that may be more attractive including ADRs.

[GWB]

[ QUOTE ]
The union wouldn't switch my Dad's company to sportswear rates so that he could make competitive raincoats. Guess where all the sales went?

Within a few years my father had shut down his company, and his two local competitors had gone bankrupt.


[/ QUOTE ]
Chuck's story demonstrates one of the major problems with unions in America today. Discussed Here. (http://forumserver.twoplustwo.com/showthreaded.php?Cat=&Number=611615&page=&view=&sb =5&o=&vc=1)

[brick]

[ QUOTE ]
it depends on whether you see standard of living as a zero sum gain or not.

[/ QUOTE ]

The standard of living is not a zero sum game because of innovation. Innovation is the only true economic driver. Without it we would still be living in caves.

[adios]

I assume a bar of soap is basically the same price most places. For consummer non durable items I would think many prices paid are inline with what is paid in the US. They may not consume as much though. Upon further review I realized that if the whole family works lots of hours they could make ends meet with subsidized housing and food without too many problems.

[Zeno]

[ QUOTE ]
I don't know what the answer is, or even what the correct questions are.

[/ QUOTE ]

Here is something that will add to the confusion, enjoy(note which countries the new turbine orders are coming from).

GE to add jobs at Plant (http://news.morningstar.com/news/DJ/M04/D16/200404160943DOWJONESDJONLINE000499.html)

-Zeno

[SossMan]

I said:
[ QUOTE ]
I have never understood the protectionists arguments. In short, it's NOT a zero sum game. It is possible for jobs to shift from one country to another and have both countries be better off (aggregetely speaking). That's the basis of free trade.


[/ QUOTE ]

MMMMMMM said:
[ QUOTE ]
Ray, I rather doubt that outsourcing will erode our standard of living as a whole. Here's why: outsourcing helps bring costs down for consumers and for businesses. Yes it is painful when you are the one getting laid off or whatever. But bringing down consumer and business costs does even more good for the economy as a whole, than the harm done to the niches it hurts.


[/ QUOTE ]

Oh my God...I agree w/ MMMMMM.......quick, someone find a tree I can go hug. /images/graemlins/confused.gif

[SossMan]

[ QUOTE ]
The problem with his argument is why am I still paying the same and usually more for a pair of nikes or some teddy bear as I was when these kind-hearted multinationals were not using slave labour. Someones getting rich at my and some 12 yaer old phillipeno child's expense.

[/ QUOTE ]

Couple of things....it's not "slave labour". Trust me, the workers in those nations clamor for many of these jobs. Remember, it's about THEIR alternatives, not YOURS.
Secondly, let's do some math...

Let's say Nike and Reebok used to make shoes in Anytown, USA. It cost them $25 to make the shoes in Anytown. They sold them for $50. The $25 profit was necessary to stay in business.
Now, Nike realizes that there are workers in Bangladesh who currently work for two cents a day. Some big, bad corporate executive of Nike decides to crap on that workers head and opens a factory where he employs workers for $1 a day.

Doing so causes the costs to make the pair of shoes to go down to $10.

In the short term, he can still charge $50 for the shoes because, well, that is what the market has determined is the minimum that shoe producers can currently sell the shoes and still make enough profit to stay in business. If they charged more, the sales would suffer...if they charged less, they would not generate enough revenue to survive.

But Nike is producing at $10 a pair, and Reebok is still producing at $25 a pair. How long do you think this will last? Not very long, I would suspect. Soon Reebok opens a Bangladeshi factory and starts to produce at $10 a pair.

So, what happens to the price?? Without collusion, it cannot possibly stay at $50. Why? Because we have already determined that the companies only require $25 profit to stay in business. That means that Nike can cut the price of the shoes to $40, outsell Reebok by more than 20%, and increase revenue.
How long do you think that will last? Not very, I suspect.
Reebok soon cuts it's price to $40.
Etc, Etc...until the price goes to $35 ($25 accounting profit).

Lesson:
In the long term, without a Competitive Advantage, there are NO economic profits.

Business, however, is the process of finding and exploiting short term (remember, the short term can seem very long) market inequities and advantages. That is what separates successful long term companies and unsuccessful ones.

[ QUOTE ]
where is this 3rd world middle class that is going to do the jobs if fair wages and fair labour conditions are enforced depriving all these poor peasents of a fair wage. Where are they now?

[/ QUOTE ]

They are currently part of the bulk population. If third world countries are expected to adhere to first world labor standards, multinationals would be forced to hire less workers. These workers would make up the "priviliged labor class", leaving millions no better off.

[BadBoyBenny]

Bars of soap?!! First these Philipinos want to live on a garbage dump, and now they're taking showers? Crazy.

[Cyrus]

"I'd be interested to know where you came up with this assertion: Complete freedom has proved to be destructive."

This refers to freedom of capital movements, more than freedom of trade. For more, google the first Indian-named Nobel laureate that comes to mind. (The latter is meant as an off-hand compliment.)

"It don't matta whatcha do, as long as ya do it better than anyone else."

It is really not necessary (as a matter of fact, it just might be impossible) to be #1 in your job in a corporation. After all, there is only one number one, at least in the rational set. (The latter is meant as an off-hand compliment.)

As I wrote, "The best one can do (as an employee anywhere) is improve his value to the corporation." This means that corporations will be looking for Value Added as the prime criterion when it comes to moving people up -- or moving people out. And, leaving aside the workings of the Peter Principle for a moment, the latter is often more important than the former, for the vast majority of working people. Believe otherwise, it's your prerogative.

"Too bad you're so clueless on the way the Middle East works."

Yeah, you gotta teach me sometime about the elaborate and multivariant thought process that informs your intricate understanding of the Middle East.

ROTFLMAO.

[MMMMMM]

So, Cyrus: if complete freedom of capital movement has been "proven" to be destructive, as you cite, how destructive is the lack of freedom of capital movements? In other words, I don't doubt that certain negatives accrue to freely moving capital--but I'd bet that the alternatives to freely moving capital accrue even more negatives--somewhere, somehow.

[Cyrus]

What happens to those Anytown, USA, workers of Nike (who are also consumers) when Nike closes the plant, packs up and heads off to Pakistan?

[Cptkernow]

Reality 1= Finite recources/capital

Reality 2= Flow of recources/capital from one economy to another equals lower standard of living in former economy which is an objective consequence of there being less recources to distribute within said economy.

Subjective 1= Is this a bad/good thing? As USA presently consumes 2/3 of the worlds recources can it expect this to continue, remember the vast majority of the world lives in relative poverty.

The one thing that we should realy consider is not the distribution of capital along geographical lines but along social lines.

Those that gain most from this redistribution of capital are those that own capital. They can move capital freely to leverage maximum returns for there investment/s.
Therefore they form a transgeographical class of individuals whilst the rest of us are left to the whimsy of local markets for the selling of our labour.

[MMMMMM]

So what?

Do you realize that many resources are not limited, for all intents and purposes? That better utilizing the resources one has creates greater prosperity? Synergy, efficiency, invention, trading what you don't need for that which you do--all these combine so that the sum of wealth in the world is not static, but rather is capable of being grown. In other words, wealth is created, not merely transferred (although wealth can also be transferred). Wealth can also be destroyed (by communism for instance).

The USA consumes more resources, true--but the US also creates more wealth than any other country, by far, and a significant portion of that wealth created is in other countries. Think on these things.

[Cptkernow]

So what what?

I dont understand which part of my post you are taking issue with.

OBVIOUSLY wealth and recources can be created and the rate at which they can be created can be increased. Thats why Im not living in a mud hut. This does not change the fundemantal reality that recources are finite at any given time the relative value of your personal wealth can be determined at anyone time by your share of this finite sum of recources.

When you say the USA creates wealth in other countries what do you mean? The USA is not a economic entity, it is a political construct . You can say American business creates wealth in other countries. Those that own these business stand to benfit MOST from this scenario. Also it is these bussinesses that are transfering not only wealth but the means of creating wealth into other countries.

I havnt made any value judgments in my post yet you seem to assume I have.

I am only outlining the objective realities of the situation how you relate to those realites is up to you.

[MMMMMM]

The So What!? was meant to refer to the following:


"Those that gain most from this redistribution of capital are those that own capital. They can move capital freely to leverage maximum returns for there investment/s.
Therefore they form a transgeographical class of individuals whilst the rest of us are left to the whimsy of local markets for the selling of our labor"

Better to have more choices for the selling of our labor than less. Let the capital come (or go)!

[Cptkernow]

This is the whole point.

It is going, and it will be for a very very long time.

We have much less choice/opportunities for selling our "labour" now than we did in the post war periods upto 1980.

Intelectual capital is perhaps the market we can hope to remain constant, product development etc can only realy happen in advanced economies.

[MMMMMM]

"We have much less choice/opportunities for selling our "labour" now than we did in the post war periods upto 1980."

I don't think this is so. Are you forgetting about insourcing?

And if it's better for companies than workers, well, hell...start a company. It isn't that hard you know.

[Cptkernow]

Ever heard of FULL EMPLOYMENT ?

This was a feature of post war Britain and USA.

[MMMMMM]

"Ever heard of FULL EMPLOYMENT ?

This was a feature of post war Britain and USA."

Never heard of it, but if so, it's not surprising since there was so much reconstruction and work that needed doing in the war's aftermath.

I don't see what's so great about full employment, either--and I'll bet many busineses and bums share this view.

[imported_Chuck Weinstock]

Hey, my daughter and I saw you land in Marine One yesterday. Pretty disgusting how one person can disrupt things so much on a whim.

Also, while I blame the union (mostly) this was the 1970's and not 2004. In this case the union only hastened the inevitable. The purpose of the story was to illustrate how things move to the low-cost producer...but of course there was also a significant change in the marketplace (I hesitate to say "tipping point", but I guess if you were in the industry it was.)

Chuck

[imported_Chuck Weinstock]

Why?

[Gamblor]

Amartya

Sorry, the Hebrew word for "You said..." is "Amarta", not "Amartya". "Lo amarta" is "You didn't say."

Give me a little time on Sen's readings and I'll respond with some thoughts.

Preliminary opinions include:

<ul type="square"> lending and borrowing money abroad lessens the effect of domestic shocks on local economies.

less vulnerability to natural domestic business cycle shifts - if investments here are subject to a recession, somewhere, there HAS to be economic expansion!
[/list]
The main point is obviously, reduced risk in diversification.

I suspect Sen's argument will have something to do with free information (or lack thereof) problems.

It is really not necessary (as a matter of fact, it just might be impossible) to be #1 in your job in a corporation.

In practice no. But if you're not shooting for a specific goal, what's the point?

Value Added

Is that your management bonus criterion? Value added? Value-added management is the new new thing in business unit/management valuation and for once, I think it's a long term winner. I spent last summer working as an intern in Strategic Planning and Corporate Development at a large Canadian organization, and without a doubt the change to EVA as a key performance indicator was the hot topic and my main project. What I like (personally) about it is the inclusion of capital charges (opportunity cost of capital use) in the measure - much more useful than an outdated measure like EBITDA.

What my little rant implies, is that in times of severe recession, merely having positive EVA is no guarantee of job-security. One must strive to add the most value to a unit/project/firm to make himself so indispensible to his firm that the firm cannot afford to let him go, either voluntarily or otherwise.

Tournament theory and personnel management theory better describes this phenomenon.

Yeah, you gotta teach me sometime about the elaborate and multivariant thought process that informs your intricate understanding of the Middle East.

Yep. Reminding us of your wonderful ability to read and apply theory and oversimplify everything.

The world don't fit nicely into little theories, Ms. Smith.

In my world, we deal with real life. Situations as they happen. No use wasting energy arguing the past. I know how and why the general Arab public think and feel about Jews and Israeli Jews, and what they want. Why? Because I know 'em.

Take Ryan, a Christian Arab from Yaffa. Or Khaled, a Muslim Arab from Umm el Fam. I know these people, and I hung out with them, drinking, partying, enjoying huka at the coffee shop. They're good people. I like them. And I know what they think of me. But I also know what they hear from people who aren't me. And I know what those people want to do to all of us, simply because Ryan is a traitor, and I am a Jew. It's not being Jewish that makes me a target, it's being Jewish and free.

[sam h]

[ QUOTE ]
lending and borrowing money abroad lessens the effect of domestic shocks on local economies.


[/ QUOTE ]

Which local economies? Certainly from the perspective of the borrowers and lendees, recent history has shown fairly conclusively that increasing capital mobility by getting rid of capital controls makes the effect of various shocks much greater. One only need take a glance at which countries got reamed in the Asian financial crisis and which emerged with only bruises.

I don't think the diversification of risk argument holds well for lender countries other. I would say that great degrees of capital mobility works very much to the immediate advantage of big institutional investors. But since it seems to help in the triggering of massive regional shocks and recessions every five years or so - the Asian crisis, the Mexican Peso crisis before that - then on a macro-level it may be not be good for advanced industrial countries either, since our fortunes are still somewhat linked to the health of the developing world, or at least parts of it.

[sam h]

[ QUOTE ]
Reality 2= Flow of recources/capital from one economy to another equals lower standard of living in former economy which is an objective consequence of there being less recources to distribute within said economy.

Subjective 1= Is this a bad/good thing? As USA presently consumes 2/3 of the worlds recources can it expect this to continue, remember the vast majority of the world lives in relative poverty


[/ QUOTE ]

Reality Check 1 = I don't know what definition of "resources" you are using, but it must be a pretty wacky one to support the idea that the US consumes 2/3 of them.

Reality Check 2 = It's not like when capital is invested abroad somebody is just giving money away. They are purchasing assets in the form of debt or equities. And when "resources" like oil move from one country to another (at least nowadays), they generally do so in the form of trade rather than some kind of simple expropriation.

[sam h]

[ QUOTE ]
Ever heard of FULL EMPLOYMENT ?

This was a feature of post war Britain and USA.

[/ QUOTE ]

The main strength of the welfare state was redistributing resources and sheltering people from a certain amount of risk. High employment levels were mainly a product of 1) Technological frontiers being such that Fordist mass manufacturing was the most productive form of economic activity and 2) A small workforce made up mostly of men, with women generally staying home or working part time on a contingent basis.

While there have been plenty of despicable policy decisions made by the Reaganites/Thatcherites in the dismantling of the welfare state, there is no reason to think that the welfare state itself could survive the vast changes in the above two dynamics without serious retooling.

[adios]

It's called social progress /images/graemlins/smile.gif. As a nations economy advances IMO the demand for non durables strengthens and non durables become more easily affordable to all members of society.

[adios]

[ QUOTE ]
Business, however, is the process of finding and exploiting short term (remember, the short term can seem very long) market inequities and advantages. That is what separates successful long term companies and unsuccessful ones.

[/ QUOTE ]

Very true, excellent point.

[adios]

They find another employer.

[adios]

[ QUOTE ]
All manufacturing jobs in the West, that involve little or no skill, cannot compete with the wages offered in the Third World. It's all a matter of when and how. This has been brought about by the advance of free trade and freedom of capital movements, which guide all capital towards the absolute lower cost and the absolute higher return.

[/ QUOTE ]

This isn't entirely accurate. For instance manufacturing jobs in the US have been declinging for something like 40 years if memory serves me correctly. Technology has obsoleted many jobs and will continue to do so and not only in the USA. Even China has seen a decline in manufacturing jobs over the past year.

Your assumption seems to be that wages will always remain at their current level in Third World countries and if so this is certainly not the case.

[ QUOTE ]
We have to learn to live with it because ostensibly this will bring about not just more efficient economies but also peace, in general. When trans-national investments, joint ventures and alliances flourish, there is less incentive to go to war. At least, that's the theory.

[/ QUOTE ]

In theory, but actually there is quite bit of friction between trading nations in the world from my viewpoint. Free trade doesn't exist today either. The world has to learn to deal with technological advancement.

[ QUOTE ]
I don't know how the West should cope.

[/ QUOTE ]

Growing economies throughout the world should provide many economic opportunities for the West.

[ QUOTE ]
Protectionism is no longer an option, except exceptionally.

[/ QUOTE ]

Do you think Kerry will pass this along to his constiuency?

[ QUOTE ]
Complete freedom has proved to be destructive.

[/ QUOTE ]

Free trade doesn't exist. Capital movement is both constructive and destructive. So what?

[ QUOTE ]
The best one can do (as an employee anywhere) is improve his value to the corporation. And keep improving it.

[/ QUOTE ]

This is so ridiculous it's impossible to comment further. In short there are many more options available than this.


[ QUOTE ]
But low, repetitive jobs are is constant danger.

[/ QUOTE ]

Depends what the pay is and what industry you're referring to. Should McDonalds employees or Walmart employees be worried about losing their jobs to outsourcing.

[ QUOTE ]
Hell, some of those wages are cheaper than a machine's!

[/ QUOTE ]

Which ones?

[Cyrus]

"As a nation's economy advances IMO the demand for non durables strengthens and non durables become more easily affordable to all members of society."

If you look at the data of any western economy, you will see that the per capita demand for durables also increases "as the economy advances".

So where are we supposed to get 'em durables when we no longer manufacture 'em but rather we have shipped out their manufacturing? By importing them.

A noted politically conservative fiscal expert was quoted, some years ago, as saying, about derivatives, that "all that paper is well and good but someone's gotta manufacture the goddamn underlying thang"! He was deemed to be "old school".

[Cyrus]

"Great degrees of capital mobility works very much to the immediate advantage of big institutional investors. But since it seems to help in the triggering of massive regional shocks and recessions every five years or so - the Asian crisis, the Mexican Peso crisis before that - then on a macro-level it may be not be good for advanced industrial countries either, since our fortunes are still somewhat linked to the health of the developing world, or at least parts of it."

Whoa. Too much reality, there. I don't know if as a reader in this forum I can take so much. Gonna watch an "Apprentice" re-run instead.

(By the way, a Jew economist, who was in other areas, mostly philosophical ones, quite wrong, had the above outcome actually pretty well focused in his analysis of capitalism's future. That guy lived a long time ago but his name cannot be pronounced in this forum without the walls caving in.)

[Cyrus]

"Which wages are cheaper than a machine's?"

You do not believe that the manufacturing cost per unit is often cheaper when it is done by Third World workers when compared to manufacturing by a machine in the U.S.? This is what I meant.

"The best one can do (as an employee anywhere) is improve his value to the corporation. And keep improving it &lt;--- This is so ridiculous it's impossible to comment further. In short there are many more options available than this."

I can't help noting that right after saying you cannot comment further, you did! /images/graemlins/smile.gif

But seriously, when was the last time you sat at a cost saving committee, aka the firing people committee? I can assure you that, when you are faced with the necessity to cutting back X% of the workforce, the first if not the only item under review in such cases is this criterion: How much value is this guy adding (or likely to be adding in the future) to the corporation? The lower VAs get the immediate chop and one takes it from there.

So, once again, the advice for the vast majority of people working for a hierarchically-structured corporation is this : Make yourself as much useful as possible. In the process, you will be improving yourself too. (And, in tandem, learn about the business as a whole, on your own, as much as possible. Learn about everything as much as possible : nobody else's gonna warn your ass when "the paradigm's gonna shift"!)

I do not understand why you think that this is a "ridiculous" notion. Perhaps you have not understood what I meant.

[Jim Kuhn]

I work in Information Systems for a very large U.S. financial company. They are outsourcing much of their programming. Hundreds of Indian programmers have instant access to U.S. and Canadian customer information. They have social security numbers, credit card numbers, phone numbers addresses, mother's maiden name, yearly income, net worth, etc. This should be very private, protected information and not exported to another country.

Could there be a correlation between exporting personal information and the increase in identity theft? Outsourcing and identity theft have both increased several hundred percent in the last few years. If you have an Indian programmer that is making $50 per week and he is offered $5000 for a list of personal information to be utilized for identity theft what would be his/her response? Our Government needs to protect our private information.

Our workers can not compete with overseas workers. My property taxes are $3000 per year. That is around six years of an average Indian's income. There is no possible way I can compete under those terms. My home is also a very modest one. I am in the middle class and between taxes and insurance I pay more than $20,000 per year. Insurance is so expensive because of lobbying efforts by lawyers, insurance companies, drug companies, etc.

I think that our government does not care about the average person. Therefore, I think government should be greatly reduced (or outsourced?). I also think that a better America needs our soldiers to be here defending us instead of defending Japan, Germany, France, Iraq, etc. Our soldiers could also be watching our prisoners instead of letting them back on the streets!

I would urge everyone to check out the issues of the Libertarian Party. Less government would help most of us and make us more competitive with the rest of the world. Maybe it would not help the politicians and lobbyist that would need to look for other crooked ways to line their pockets! Please check out this link:

http://www.lp.org/issues/

Thanks for taking the time to read my opinions!

Thank you,

Jim Kuhn
Catfish4U
/images/graemlins/spade.gif /images/graemlins/diamond.gif /images/graemlins/club.gif /images/graemlins/heart.gif

[Gamblor]

But since it seems to help in the triggering of massive regional shocks and recessions every five years or so - the Asian crisis, the Mexican Peso crisis before that - then on a macro-level it may be not be good for advanced industrial countries either

Are you prepared to dig up some Capital Account information to back that up?

Are you saying the recession of the early 1990s was entirely due to the effects of the decreased returns of foreign investments, specifically the Asian "bubble" investments?

Furthermore, are you claiming that diversification in fact increases risk?

(By the way, a Jew economist, who was in other areas, mostly philosophical ones, quite wrong, had the above outcome actually pretty well focused in his analysis of capitalism's future.

What difference does it make if arl-Kay arx-May was a Jew?

I showed you once already his answer to The Jewish Question. (http://www.marxists.org/archive/marx/works/1844/jewish-question/)

The anti-Jew Jew. An 150 year sneak preview of Norman Finkelstein. Cyrus' DVD could only dream of that kind of hype - he had every Russian for miles pogromming is way into history.

Unrelated: Cyrus, Hef called. Stop calling the mansion, you're no longer welcome.

[Cyrus]

"What difference does it make if arl-Kay arx-May was a Jew?"

You tell me. I don't know.

If the old man was Paraguayan I would have called him a Paraguayan economist. It so happens he was a Jew economist. (Boy, are you in need of treatment for the paranoia.)

[MMMMMM]

Yes, Cyrus, but don't you think "a Jewish economist" sounds a litle bit better than "a Jew economist" (speaking from a purely aesthetic perspective, of course)?

[SossMan]

[ QUOTE ]
What happens to those Anytown, USA, workers of Nike (who are also consumers) when Nike closes the plant, packs up and heads off to Pakistan?

[/ QUOTE ]

They get to pay $15 less for their kid's pair of Nike's.

[MMMMMM]

^

[Cyrus]

Q: "What happens to those Anytown, USA, workers of Nike (who are also consumers) when Nike closes the plant, packs up and heads off to Pakistan?"

A : "They get to pay $15 less for their kid's pair of Nike's."

That must be it, then. I thought when you get fired you kinda tighten up for a spare $15.

[Cyrus]

"Don't you think "a Jewish economist" sounds a litle bit better than "a Jew economist" (speaking from a purely aesthetic perspective, of course)?"

If "Jew" has come to sound a little derogatory, I believe that Jews ought to claim the word back. A good way is to overcome those aesthetic objections (PC objections is more like it, but with the best of intentions) and call it as it is. Brit, Jew, Yank, etc. I would like to see things come to a point where even kike would come to be used as (at worst) an indifferent or even (at best) a cool word. Think "nigger" and think Tarantino - or all those black buddy/buddy movies.

But it's too early for that, I guess. And the world sure misses Lenny.

[MMMMMM]

I didn't mean it in the PC sense; rather in the artistic, or even grammatical sense.

Which would you say: "a Spaniard economist" or "a Spanish economist"?

[andyfox]

When someone uses the word "Jew" as an adjective, rather than as a noun, it smacks of the usage anti-Semites have traditionally used, i.e., "A Jew banker." When someone uses the word "Jew" as an adjective in a context where the person's religion is not at issue, it also smacks of the usage anti-Semites have traditionally used, as if the fact that the person is a Jew has something to do with the fact that he is, for example, a banker, or, in this case, an economist.

I read Cyrus's explanation, that he was merely using "Jew" as an adjective, but why? It's irrelevant to the discussion.

[adios]

[ QUOTE ]
You do not believe that the manufacturing cost per unit is often cheaper when it is done by Third World workers when compared to manufacturing by a machine in the U.S.? This is what I meant.

[/ QUOTE ]

Ok but which manufacturing jobs? A simple request for information.

[ QUOTE ]
But seriously, when was the last time you sat at a cost saving committee, aka the firing people committee? I can assure you that, when you are faced with the necessity to cutting back X% of the workforce, the first if not the only item under review in such cases is this criterion: How much value is this guy adding (or likely to be adding in the future) to the corporation? The lower VAs get the immediate chop and one takes it from there.

[/ QUOTE ]

This doen't prove your original assertion by any means.

[ QUOTE ]
So, once again, the advice for the vast majority of people working for a hierarchically-structured corporation is this : Make yourself as much useful as possible. In the process, you will be improving yourself too. (And, in tandem, learn about the business as a whole, on your own, as much as possible. Learn about everything as much as possible : nobody else's gonna warn your ass when "the paradigm's gonna shift"!)

[/ QUOTE ]

Again this doesn't prove your original assertion nor support it.

[ QUOTE ]
I do not understand why you think that this is a "ridiculous" notion. Perhaps you have not understood what I meant.

[/ QUOTE ]

I think making a blanket statement what is "best" for a diverse and dynamic work force is absurd and perhaps a tad arrogant.

[adios]

[ QUOTE ]
If you look at the data of any western economy, you will see that the per capita demand for durables also increases "as the economy advances".

[/ QUOTE ]

Ok, I think you're making an additional point to my point.

[ QUOTE ]
So where are we supposed to get 'em durables when we no longer manufacture 'em but rather we have shipped out their manufacturing? By importing them.

[/ QUOTE ]

Ok.

[ QUOTE ]
A noted politically conservative fiscal expert was quoted, some years ago, as saying, about derivatives, that "all that paper is well and good but someone's gotta manufacture the goddamn underlying thang"! He was deemed to be "old school".

[/ QUOTE ]

Ok.

[MMMMMM]

Isn't the term Jew correctly used as a noun rather than as an adjective? The noun is Jew, the adjective is Jewish--just as with Spaniard and Spanish, or Pole and Polish. One wouldn't say "a Pole economist", one would say "a Polish economist" (never mind that such a thing might not exist;-). Cyrus is using a noun to modify a moun, and as such it is at least cumbersome, if not outright wrong.

That it smacks of anti-Semitic overtones is true also; but if it's improper usage in the first place, Cyrus should be aware of that even if he doesn't care about overtones.

[andyfox]

I'm on your side here. Both on the grammar, about which I care little, and the reason for the use of either Jew or Jewish in the context.

[MMMMMM]

That the use of "Jew" as an adjective sounds grammatically improper, tends to draw greater attention to the negative undertones when it is so used.

[Gamblor]

Google "Jew" and check out the third unique website.

[SossMan]

[ QUOTE ]
Q: "What happens to those Anytown, USA, workers of Nike (who are also consumers) when Nike closes the plant, packs up and heads off to Pakistan?"

A : "They get to pay $15 less for their kid's pair of Nike's."

That must be it, then. I thought when you get fired you kinda tighten up for a spare $15.

[/ QUOTE ]

Oh, sorry...I guess I didn't make it clear. They were able to buy the shoes w/ the paycheck from the job they got from the cable company that was hiring because of a increased demand for cable TV because everyone who buys Nike's now had an extra $15 in discretionary income.

[SossMan]

[ QUOTE ]
Q: "What happens to those Anytown, USA, workers of Nike (who are also consumers) when Nike closes the plant, packs up and heads off to Pakistan?"

A : "They get to pay $15 less for their kid's pair of Nike's."

That must be it, then. I thought when you get fired you kinda tighten up for a spare $15.

[/ QUOTE ]

Oh, sorry....I guess I wasn't clear.

They had cash to purchase the shoes from the paycheck that they got from their new job at the Cable Company who was hiring after an increase in demand for cable services due to a bunch of people having to pay less for their kid's shoes and deciding to order Playboy Channel to liven up their marraige.

[SossMan]

[sam h]

[ QUOTE ]
Are you prepared to dig up some Capital Account information to back that up?

[/ QUOTE ]

No. I am way to lazy to prepare a fact sheet on this for you. But it is well-known that a major trigger of the Asian financial crisis, for one, was capital flight in the form of refusals to renew short-term bank loans. It is also fairly obvious that the countries that had capital controls - such as China and Taiwan - and those that took measures to stop capital flight during the crisis - such as Malaysia - took far less of a beating.

[ QUOTE ]
Are you saying the recession of the early 1990s was entirely due to the effects of the decreased returns of foreign investments, specifically the Asian "bubble" investments?

[/ QUOTE ]

The Asian crisis began in mid 1997, so obviously it had no effect on the American recession of the early 90s.

[ QUOTE ]
Furthermore, are you claiming that diversification in fact increases risk?

[/ QUOTE ]

You are attempting to apply some logic from Personal Investing 101 to the structure of the international economy, a comparative enterprise of truly dubious merit. Diversification has nothing to do with it. The question is about how stable the system is as a whole when liquidity sloshes from place to place, creating cyclical booms and busts.

Obviously, capital mobility is important. And "developing" countries need foreign investment. But there is no reason to believe that because some degree of mobility is important that extreme mobility is necessarily optimal. Such beliefs are just the product of typical free-market zealotry that privileges abstract economic models over empirical evidence.

[Cyrus]

I personally don't give a damn about the difference between the two. But I understand and want to respect the "sensitivities" involved in the context, for some people. (And I'm no lenny Bruce, that's for sure.)

So I will accept the error in my ways and henceforth call Karl Marx a Jewish economist and philosopher, rather than a Jew.

It just struck me: Are Jewish economists somewhat wannabe Jews? (Like when we say 'let's make an appointment for nine-ish'?)

[MMMMMM]

[ QUOTE ]
So I will accept the error in my ways and henceforth call Karl Marx a Jewish economist and philosopher, rather than a Jew.

[/ QUOTE ]

You would also be grammatically correct, as well as non-offensive, in simply calling Karl Marx a Jew. However you just aren't speaking well if you use "Jew" in the attributive sense, (e.g. a Jew lawyer), regardless of whether or not you intend "Jew" as a pejorative.

[ QUOTE ]
It just struck me: Are Jewish economists somewhat wannabe Jews? (Like when we say 'let's make an appointment for nine-ish'?)

[/ QUOTE ]

If Spanish economists are somewhat wannabe Spaniards, then you might have a point there;-)

[Jim Kuhn]

BUMP!!! I put much thought in this and had no responses. The only response I got was a headache! So I will bump and wait for responses!

[ QUOTE ]
I work in Information Systems for a very large U.S. financial company. They are outsourcing much of their programming. Hundreds of Indian programmers have instant access to U.S. and Canadian customer information. They have social security numbers, credit card numbers, phone numbers addresses, mother's maiden name, yearly income, net worth, etc. This should be very private, protected information and not exported to another country.
-
Could there be a correlation between exporting personal information and the increase in identity theft? Outsourcing and identity theft have both increased several hundred percent in the last few years. If you have an Indian programmer that is making $50 per week and he is offered $5000 for a list of personal information to be utilized for identity theft what would be his/her response? Our Government needs to protect our private information.
-

Our workers can not compete with overseas workers. My property taxes are $3000 per year. That is around six years of an average Indian's income. There is no possible way I can compete under those terms. My home is also a very modest one. I am in the middle class and between taxes and insurance I pay more than $20,000 per year. Insurance is so expensive because of lobbying efforts by lawyers, insurance companies, drug companies, etc.
-
I think that our government does not care about the average person. Therefore, I think government should be greatly reduced (or outsourced?). I also think that a better America needs our soldiers to be here defending us instead of defending Japan, Germany, France, Iraq, etc. Our soldiers could also be watching our prisoners instead of letting them back on the streets!
-
I would urge everyone to check out the issues of the Libertarian Party. Less government would help most of us and make us more competitive with the rest of the world. Maybe it would not help the politicians and lobbyist that would need to look for other crooked ways to line their pockets! Please check out this link:
-
http://www.lp.org/issues/
-
Thanks for taking the time to read my opinions!
-
Thank you,

Jim Kuhn
Catfish4U



[/ QUOTE ]