Thread: Outsourcing is not about competition, it's about maximising dividends

Meanwhile:

http://www.telegraph.co.uk/finance/n...ectations.html

Apple profits rise 94pc to $11.6bn, smashing expectations

Apple's latest profits smashed Wall Street's expectations as demand for the iPhone and iPad surged.

Jobs used to brag that Apple sold products MADE IN THE USA.

It's odd that prior to Xmas, all the "patriotic" Americans (Righties), we creating threads on the old board about "buying US made products" as Xmas presents. Why have they changed their minds now?

Originally Posted by SiliconMagician

Now the motivation becomes clear.

You hate all businessmen because a few shady ones got away with what you see as a moral crime and you want to see all of the wealthy in America punished for it, and raising taxes is punishment. Plain and simple.

Its far far more insidious than that.


Companies steal from emplpyees every single day. And then expect those employees to pay for it.


Pension heists are just one example. Billions, if not trillions of dollars have been siphoned off of excess pension plans for rank and file workers, in order to fund executive liabilities. Its all legal of course. Lawyers and trickey accounting methods make it easy.

For example. My company runs two pension funds. One for the workers. One for the executives. My rank and file workers pension program is over funded. ( lets use GE for this one example ) by about 23 billion dollars. The law says I cannot touch that money.


My EXECUTIVE pension plan is UNDERFUNDED by lets say... 30 billion dollars. Because I have made usch huge outlays to my executives in the form of defferrd compensation in the forms of stocks, options, and bonds and so forth.


Well crap. We promised the executives more than we have. So whats the answer?

I will just transfer those under funded executive plan into the rank and file workers plan. Now my pension fund is underfunded by 7 billion dollars.

And my answer to fix this? freeze pension plans. Cut workers. Raise retirement age. Cut health benefits. And ask the workers to cough up even more.


And its all legal.

Originally Posted by Taxcutter

Two questions for the OP:

1) How much profit is "too much?" Nobody ever seems to answer that question.

2) Is it not the company management's fiduciary duty to the shareholders to maximize the shareholders' profits?

Here's the issue that the hard core capitalist apologists don't seem to understand or intentionally ignore. Right now, the success of the major outsourcing companies like Apple is driving enormous success for nations that AREN'T the United States. In a one year or even five year period, those successes don't affect the US economy a great deal. However, over the course of 10, 20, or 30 years or more, overwhelming global success for other countries will breed so much more greed for their citizenry that the US could potentially fade into oblivion economically because we simply cannot compete at all. Investors DO demand enormous, unrealistic gains at all times, and corporations have an inherent, unwritten responsibility to ensure some level of responsibility for the environment in which they produce, the consumers that buy their product, the countries that enabled their success, and yes, even the workers (including innovators and engineers, not just assembly workers) that ensured their success. When corporations sell out EVERY aspect of that responsibility, simply for unadulterated greed and appeasing the investors and executives exclusively, isn't that akin to a mouth biting the very hands and feet that feed it? At some point, if enough companies continue this practice, won't the entire consumer market for their own products dry up as less and less consumers exist and prosper? Sure, one company like Apple can simply get away with it right now, but how close are we collectively to seeing enough companies bring the entire house of cards collapse around their greed?

Remember this about Apple. The majority of consumers for Apple products come from the US. If the US worker can no longer afford their stuff, they will be out of business, no matter how much cash reserve the get on hand right now. If you think about it, they, like so many other companies, are one flawed product generation, one opposing technology, or one major recession away from becoming obsolete (ask blackberry how that feels right now). When that happens to companies like Apple, will the US consumer have an ounce of sympathy for them, given the way they've treated the US worker and government? I certainly hope not.

80 years ago, if you bought stock, it was likely in a local company in or around your town or city. You could walk down to a local broker, or even into the company itself, and walk out with a paper certificate giving you true value in that companies success and failures. What did that mindset give you as an investor? Well, for one, you truly had a personal stake in the success and failure of that company. It wasn't tied to some mutual fund. You would want to shop there, you'd encourage others to shop there. You would see the success of your investment pay off in the values of the workers in your town's wage and earnings, and how that ensured more success for your company.

Today, stock purchases are secondary to mutual funds and traded options, where actual value is manipulated and company earnings is a secondary marker to investors success. While it's true, the largest deficit of these companies is generally the collective salaries of the employees that do the work for the company. The largest profits on the back end go only to the investors (nowadays known as the market manipulators) and the executives. So which of those two things drives the purpose of the company, and which one should as the moral imperative of an organization? Conservatives believe that the profits, given to investors (who do no work for the company) should be the signal bearers while liberals tend to side with the workers (who ensure the success of the company and product). What I tend to see is that modern media and political talking points have actually forced a one side or the other balance between those two forces, when the reality is that BOTH sides SHOULD be working together to ensure that everyone benefits. Right now, Apple had essentially abandoned the support of workers and employees, and has fully moved to benefit only the profit side of things. They should be ashamed. The worst part about it is that when the pyramid comes crashing down, the conservatives that support this system and these actions are likely to blame some "liberal" tenet completely for tax rates or unionization without realizing the need for the balance that has been abandoned. Apple and others collectively are creating a workers income bubble (which is certain to reduce the number of consumers capable of supporting a "too big to fail" company like Apple), and while it's crash won't likely bring us to our knees, I sure as hell don't want to hear the right complain about liberal policies being to blame when it pops and we hit 12% unemployment and massive inflation. It's this exact profit and greed, and the abandonment of the unwritten responsibilities of successful businesses to balance both the workers deficit with investor returns that will cause this collapse. I don't know whether it will mean a 10% drop in the dow or a 50% drop, but it will NOT be because of corporate tax rates (which have NOT risen under Obama) or Unions (which are WEAKER than any time in over 70 years).

Remember this post when it happens.

You know companies offshore for a reason. The US makes it so difficult to make a buck here.

Apple is a good example. Have you ever seen an operation that assembles small electronic items like iPhones. Such work is highly automated. Workers very rarely touch the product and then only momentarily. Direct labor cost in the product is infinitesimal. Yopu could pay workers $1/hr or $30/hr and it wouldn't change the direct labor cost by a nickel a unit. So let's just forget the difference in labor cost because IT DOESN'T MATTER. (Shout intended)

Offsetting that is the cost of shipping the item. again the iPhone is small and you can put a lot in a container so the difference is again maybe a nickel per unit.

So if there is no difference in cost of labor/shipping why do companies go offshore? The answer is simple. Its the combination of excessive taxation, excessive litigation and excessive regulation. At the current rate of regulatory growth a business person will need a government permit to go to the rest room before long. This is not true in the high growth countries.

If jobs are REALLY important, the US has to butt out of the production process.

Originally Posted by Taxcutter

You know companies offshore for a reason. The US makes it so difficult to make a buck here.

Apple is a good example. Have you ever seen an operation that assembles small electronic items like iPhones. Such work is highly automated. Workers very rarely touch the product and then only momentarily. Direct labor cost in the product is infinitesimal. Yopu could pay workers $1/hr or $30/hr and it wouldn't change the direct labor cost by a nickel a unit. So let's just forget the difference in labor cost because IT DOESN'T MATTER. (Shout intended)

Offsetting that is the cost of shipping the item. again the iPhone is small and you can put a lot in a container so the difference is again maybe a nickel per unit.

So if there is no difference in cost of labor/shipping why do companies go offshore? The answer is simple. Its the combination of excessive taxation, excessive litigation and excessive regulation. At the current rate of regulatory growth a business person will need a government permit to go to the rest room before long. This is not true in the high growth countries.

If jobs are REALLY important, the US has to butt out of the production process.

What are you talking about? Why don't you look at the numbers of people that buy Apple products, and see what percentage of those people are in the states? Let's see here, the cost of shipping something from a plant in California to consumers in California, versus the cost of shipping an item, on a boat or plane, from China, to California, to consumers in California? Hmmmmmmmmmm? That's a LOT more significant than you think. How about this one.

The cost of refitting existing plants, like Apple had in the states 30 years ago, versus picking up and moving an entire population of workers while building an entirely new plant from the ground up in China? Hmmmmmmmmm? That's a LOT more significant than you think.

Labor costs are STILL the most significant part of Apples costs, whether you believe it or not. I guarantee you that it costs a great deal more in the short term to pick up and move overseas than to stick it out a few years and support American employees and American communities. The only people that believe Apple is "justified" in abandoning the very consumers that built it into a powerhouse are those that put capitalist ideologies above patriotism. IE, NON-patriots. Every time I look at foolish Tea party members, GOP idiots and even Libertarians standing around waving a little flag in a parade, it makes me want to vomit at the hypocrisy.

Originally Posted by Taxcutter

You know companies offshore for a reason. The US makes it so difficult to make a buck here.

Apple is a good example. Have you ever seen an operation that assembles small electronic items like iPhones. Such work is highly automated. Workers very rarely touch the product and then only momentarily. Direct labor cost in the product is infinitesimal. Yopu could pay workers $1/hr or $30/hr and it wouldn't change the direct labor cost by a nickel a unit. So let's just forget the difference in labor cost because IT DOESN'T MATTER. (Shout intended)

Offsetting that is the cost of shipping the item. again the iPhone is small and you can put a lot in a container so the difference is again maybe a nickel per unit.

So if there is no difference in cost of labor/shipping why do companies go offshore? The answer is simple. Its the combination of excessive taxation, excessive litigation and excessive regulation. At the current rate of regulatory growth a business person will need a government permit to go to the rest room before long. This is not true in the high growth countries.

If jobs are REALLY important, the US has to butt out of the production process.

So, let me see if I understand your premise correctly.

My summation would be:
That if government would "just get out of the way" (to use a familiar term), then companies would pay their employees well, they would self regulate to the point of never needing litigation to resolve anything, companies wouldn't outsource jobs for MORE profit, and the big boys would fix everything. Is that correct? That's how right wingers sound to me. Is this you too?

Basically, we wouldn't need oversight, standards, or defense of the worker if we would just leave it all up to the profiteers. All would be well. Right?

Companies outsource FOR PROFIT. They skirt regulations FOR PROFIT. They do everything FOR PROFIT. Given your logic...why SHOULDN'T companies maximize profit in every conceivable fashion to enhance their bottom line? Answer? Of course they will....and if that means maximizing profit by "overlooking" a few safety standards (and then a few more and a few more) here and there, hey, who cares? Afterall...it's the PROFIT that's the important, isn't it? If it means trimming a few (or many or more) workers from the needed staff in order to do the job with any regard for the worker whatsoever, so be it. PROFIT baby. If government just "BUTTS OUT", then these fine companies will all produce a quality product, with quality working conditions, with quality pay, and NEVER weigh the profit margin against the well being of people...correct?

Of course this is nonsense, but that is the ultimate conclusion of what you seem to endorse. I think we have had ample time and enough examples of "how business works" to determine whether profit or people would be the first and foremost objective of "business" regardless and above anything else. Government is far from perfect, but if we left "businesses" to determine all these things, I'd venture to say that we'd all be working for 15 cents an hour, 100 hours a week, and be getting cancer or ill (and of course...WITHOUT health care) at exponentially more frequency than we do now. To think that somehow, if we let companies just "work it out" that society will be the benefactor, rather than the CEO (or Wall street or whomever) is naive and a dangerous thought process. We've seen that "greed is good" over and over and over. Giving companies more "free reign" over society than they already possess is the ultimate death of all of us. GREED, PROFIT are all that matters. PEOPLE DO NOT. That should be obvious to everyone with a brain at this point, and "loosening up" the rules will serve only one purpose. Corruption and profiteering (okay...2 things).

Originally Posted by BTeamBomber

What are you talking about? Why don't you look at the numbers of people that buy Apple products, and see what percentage of those people are in the states? Let's see here, the cost of shipping something from a plant in California to consumers in California, versus the cost of shipping an item, on a boat or plane, from China, to California, to consumers in California? Hmmmmmmmmmm? That's a LOT more significant than you think. How about this one.

The cost of refitting existing plants, like Apple had in the states 30 years ago, versus picking up and moving an entire population of workers while building an entirely new plant from the ground up in China? Hmmmmmmmmm? That's a LOT more significant than you think.

Labor costs are STILL the most significant part of Apples costs, whether you believe it or not. I guarantee you that it costs a great deal more in the short term to pick up and move overseas than to stick it out a few years and support American employees and American communities. The only people that believe Apple is "justified" in abandoning the very consumers that built it into a powerhouse are those that put capitalist ideologies above patriotism. IE, NON-patriots. Every time I look at foolish Tea party members, GOP idiots and even Libertarians standing around waving a little flag in a parade, it makes me want to vomit at the hypocrisy.

That is stupid thing for someone with no financial sense to say. A whole bunch of analysts actually ran the math and determined it was cheaper to move operations overseas. In fact, a lot of analysts at a lot of companies have determined this.

Originally Posted by PatrickT

Outsourcing is about a lot of things. Union extortion, excessive regulations, anti-business ideology, excessive taxation and cost of government.

Well, there are plenty of states where most of these things are either nonexistent or barely existent.

The cost of production in China is still much cheaper than in any state, but it's not exactly expensive to produce something in South Carolina, for example.

Originally Posted by SiliconMagician

Well if I was a shareholder of Apple I would equally demand that they maximize profits. That is the meaning of a business. Stop trying to force your god (*)(*)(*)(*) economic morality off on everyone else. Businesses do not have some moral obligation to provide the maximum amount of people with jobs!

Geez. This is common sense.

I agree with you to a point, but it also demonstrates how the complaints about outsourcing are somewhat stupid.

Politicians of both parties try to blame the opposing side for outsourcing, but it's really just a matter of comparative advantage.

Getting rid of regulations wouldn't save most of the jobs people assume it would, because, even if we had no regulations at all, the cost of production here would still be more than it is in China.

Just what states do not have federal regulations, federal taxation and interstate litigation?