Economic Litmus Test
I want to know what everyone thinks of the increasing outsourcing of american jobs overseas. Does America need to do something to resist the flood of imports and trade imbalances so high that we need to use scientific notation ($2 x 10^11) to quantify? Do we need to pull out of the WTO and imposed steep tariffs on imports? Is there merit to the belief that increased economic ties between countries reduces the risk of war and increases the spread of democracy e.g. USA and China? Take a side. This is an important decision for the country. Should we revert to a containment policy like we used on the USSR or are we going to continue with one of engagement?
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April 17th, 2006 at 10:35 pm
The United States should continue to economically engage other countries all around the world. If Dell and AT&T can successfully outsource jobs, let them. However, we in the United States have to adapt and strengthen our economic advantage. We must continue to focus on education and entrepreneurship. As a country, we have better ideas and better means for transforming those ideas into viable business opportunities than virtually any other country in the world. If we can maintain that, the U. S. will be fine. We can’t, however, take for granted that emerging economies in Asia (particularly China) are trying to undermine our economic strengths. But that’s a more fundamental problem than outsourcing alone.
April 18th, 2006 at 12:14 am
Economically, it makes absolutely no sense to close ourselves off to the rest of the world. And yes, increasing economic ties between countries decreases the threat of war, and increases the spread of democracy because the involved countries have a vested interest in each others’ success.
When you speak of the “increasing outsourcing of american jobs overseas” you start to sound like Lou Dobbs from CNN (no offense, Samuel). It makes it sound like there are a finite number of jobs here, and we’re shipping off good jobs overseas leaving Americans jobless. Of course on a micro scale, when your job has been outsourced, you feel this way, but the empirical evidence shows a strong benefit on a the macro scale. We outsource labor jobs overseas and replace them with better, higher-paying, more productive jobs here. Like Ryan said, it increases the need for specializiation (i.e. an education), but it also increases our productivity, which raises the standard of living for everyone (if you are more productive with the natural resources you have control over, standard of living increases). The WallStreet Journal ran an ad today for an organization that addresses this very issue: solutionsforourfuture.org.
In terms of trade imbalances, I’m not sure it’s as big a problem as it seems. It seems like we can take advantage of the relatively cheap labor of developing countries as their economies mature, but eventually they will need to stop relying on exports as much as we need to stop relying on imports. Also, as their GDPs increase, countries may lose the economic advantage of labor, and won’t be able to maintain such a trade imbalance. China is our biggest trade partner, accounting for almost 1/4th of the trade deficit today (see the article Deciphering Chinese Economics)
April 18th, 2006 at 11:57 pm
we should continue to trade, and who cares if foreigners get little pieces of green paper for goods. The trade deficit doesn’t bother me.
April 19th, 2006 at 9:14 pm
I’m no economist (finance/tax guy). However, I see that the companies in the US are engaged in business, but the US government seems to be out to lunch.
The Chinese government is engaging in a multi level strategic and tactical economic exercise against the US and US companies and we are not defending ourselves.
I recently was forced to leave a Chinese owned company (bought from an American company 2 years ago) after the company made a number of steps that would not be allowed in most areas of the world. However, Chinese companies do not have to play by the same rules.
Bottom line, when I started to receive death threats from people at the board level of the company, I did not mind leaving.
That said it pains me to see US companies and as a whole the US economy getting robbed blind, while the government doesn’t act.
I’m not for closed borders, but definitely for fair trade. Fair trade cannot exist where honest trade is openly ridiculed.
April 20th, 2006 at 12:03 pm
Brett, interesting viewpoint. Could you explain further what the “multi level strategic and tactical economic exercise against the US and US companies” is, and what we should be doing to defend ourselves against it.
April 21st, 2006 at 7:13 pm
Exactly!
Global faith in (and use of) the dollar is the only thing that allows us to continue to enjoy absurd fiscal deficits, astronomical trade deficits, and solid economic growth, all at once.
The United States does exactly the opposite of what we counsel every third world contry on earth to do. Why? Because we can.