Why is outsourcing so bad to US Economy? ...If it is.

Hello,

I am just too curious to know that, ...why is it so bad?

People claim about the destruction of jobs in the US, but....are there no upsides, advantages?

Thanks in advance!

 

The main argument is focused on organisational knowledge. Thus, the search for short term profits by the firm can lead to the loss of core capabilities that harm long term opportunities

 

Because a trade defecit drains a nation of its ownership in capital. One example: When it is someone else in another country is getting the money, they buy up all the land in your country, and then all the rents on the land do not go to your country anymore.

Free trade agreements can also drive down wages, as workers in more expensive countries are not able to compete with low wage workers outside.

 

Upside = Cheap goods

Downside = downward pressure on wages, destroying demand, giving us economic stagnation, and eventually contraction.

 

Utter garbage! More finely attuned specialisation can actually increase wages.

 

And yet you can't tell me why increased supply of labor doesn't create downward pressure on wages.

 

You haven't understood the impact of specialisation according to comparative advantage. Wage reductions are reliant on homogeneous labour. In reality, we don't have that. Whilst we'd expect wage reductions to be focused on the low skilled, high skilled labour (given the increase in labour demand) will see wage increases.

And that's the problem with the unholy alliance between the left and right over outsourcing. They deliberately ignore the real problem: the long tail of low skilled labour created by a structural flaw of the economy, quite independent of trade

 

You mean those tech jobs we were promised a decade ago, and that China now has more of then we do?

What you don't understand is that the science of outsourcing has allowed them to bypass higher education and training needs for specialized labor.

We build the model here, develop the training programs to build a skilled work force, and then they take that model, and train cheap labor to do the same work!

 

I mean economic reality. The empirical evidence confirms wage increases. Your understanding of trade (and outsourcing) is simply inconsistent with economic analysis. Do you even understand comparative advantage?

 

I mean that you just completely ducked my question, and might as well have posted the word "Forfeit" in place of your last post!

 

You can ramble on how ever you desire; it won't change the fact that your "outsourcing reduces wages" was simple ignorance of the economic analysis involved. I of course already knew you didn't understand comparative advantage!

 

What is comparative advantage, when training for a job can be outsourced, and China rigs it's currency.

We have no competitive advantage!!

 

Go ahead with fiction, it suits you

 

Go ahead with your propaganda you can't back up, it suits you!

 

I merely twin economic theory with empirical evidence, ensuring a rational conclusion. I don't care for your non-economic foot stamping, but I expect it

 

I mean this post you ran from like it was the Boogeyman!

 

I only reply to things that make sense in terms of the debate. You referred to a reduction in wage (using a cretinous reference to labour supply), when in fact we have wage gains (as you'd expect from more finely attuned comparative advantage with heterogeneous labour in terms of quality)

 

Even someone that pays no attention to economics knows our wages have been flat for over a decade, so WTF are you talking about?

 

You think that reflects outsourcing? Golly! You must have a 'simplistic' understanding of wage determination

 

Yes, I think the supply of labor determines wages?

What do you think determines market value for something, if not supply and demand?

 

Then you don't know what you are talking about. In terms of orthodox economics, its the labour demand schedule that determines wages. And in terms of supply (and how it impacts on which marginal revenue productivity of labour we achieve), its only domestic supply that matters. You're making statement without knowing the basics, ensuring silly error!

 

Translation = Labor is the only thing in existence that doesn't have it's value determined through supply and demand!

 

An ignorant reply. Its labour demand, according to the orthodox, that determines wages as that informs us of the worker's productivity level. You've shown zero understanding of wage determination, bogusly thinking international labour supply determines domestic wages. In reality, we know that trade actually increases wages (by increasing labour demand for skilled labour)

 

The empirical evidence does not show an increase in wages...at all. Why the need to make (*)(*)(*)(*) up? And you are the one that needs remedial work on Ricardo's comparative advantage. Because you sir are oblivious to the many factors today that didnt exist during Ricardo's era.

The number one cause of the US demise is the outsourcing of labor to countries that do not abide by any embedded labor laws enacted in the US for over 90 years now. In less than 3 decades, the US commerce has gone from the largest net exporter...to the largest net importer. Only an idiot could not understand the deleterious effects to the macro economy under such overt tyrrany.

I dare you to debate me on this subject.

 

Oh so now supply and demand do determine wages, but just not in a international market huh?