Europe is Doing Better With the Outsourcing Problem

pat·ent n.

1.
1. A grant made by a government that confers upon the creator of an invention the sole right to make, use, and sell that invention for a set period of time.
2. Letters patent.
3. An invention protected by such a grant.
2.
1. A grant made by a government that confers on an individual fee-simple title to public lands.
2. The official document of such a grant.
3. The land so granted.
3. An exclusive right or title.



Maybe you meant "copyrighted" or "trademarked." Show me the copyright or trademark and I will be happy to cease using said phrase. Thanks in advance.

(BTW, it is a <b>parody</b> of a silly phrase used by a silly poster)

par·o·dy n. pl. par·o·dies

1.
1. A literary or artistic work that imitates the characteristic style of an author or a work for comic effect or ridicule.

(Specifically, I was ridiculing you.)

 

andy you've really turned this thread into a mess. You're pretty good at that.

 

I would argue that you and your brother accomplished that, you by making statements directly refuted by the article and he by editing my quote to "call" me on a typo.

Either way, neither of you have an answer for this article and that is evident.

 

so why make a big deal about andy using "thanks in advance"?

TIA!

 

Global comments before we get to dissecting your faulty analysis:
1) Extapolating the effects of global trade is much different than looking at an economy like Old & Eastern Europe and drawing sweeping conclusions. India, China and Mexico have different skill sets, wage rates, and labor pools.
2) Saying that an economy is doing well when they aren't outsourcing much says nothing to what would happen if they did outsource. This type of logic represents the foundation of your post, and it is obviously invalid.
3) You seem to be quite content with the performance of the German and French economies. That is sad, given how woefully inadequate they are structurally and how they have been *far* surpassed (decades ago) by our own economy. Your argument is tantamount to saying that the Rockets should adopt the Atlanta Hawks' offense.

moon, you are saying that an economy can benefit from trade (of course, I said this to start with), but can do it without outsourcing their labor. This says nothing about what they could do if they did outsource their labor. It would naturally follow that since you think trade is a positive, that trade should not be restricted to all things *but* labor. As such, exporting labor would further create gains from trade. Where does that leave you moon? In a better position than if you didn't outsource. Oops. Foiled by your own argument. Just an incredible lack of basic understanding of reasoning on your part right there. Thanks for the softball.

Again you display poor reasoning. You claim that they have fair to good GDP growth in the absence of outsourcing, yet that tells us nothing as to what would happen with outsourcing. Faulty logic, moon. Well of course the industrial base is shrinking, the ENTIRE ECONOMY here is moving towards a service orientation. We are outgrowing the manual labor jobs and low value-add jobs and moving *forward* to higher paying, more specialized jobs. Those that can't keep up with this evolution end up being the ones who are looking for a job. That's nothing new. If you lived in the middle ages and couldn't make candles cheaper than your neighbor, what gives you the right to keep your job? Same premise here. If Americans can't do a job better and cheaper than foreign competition, then nothing prevents an employer from improving his lot. A business owner would be derelict in his fiduciary duties if he hired more expensive labor if others could do it cheaper. A CEO would be fired. Would you rather see a business fail, or the IT department outsourced to India? Which results in greater job loss?

Their workers still have jobs? Would you be happy with their unemployment rate of 10%? Ours is 5.1%, just so you know. Roughly HALF. Yet you are advocating adopting their labor policies? Have you lost your mind? We are outsourcing and have half of their unemployment rate. Why aren't you comprehending that less unemployment is better than more?

moon, arguing against free trade is an argument that flies in the face of hundreds of years of *widely accepted* economic thought. In case you want to have more arguments, I'd be happy to debate with you the shape of the earth. If you were consistent with this thread, you'd insist it was flat.


CASE CLOSED

 

Had you actually started with "analysis" I wouldn't have called you out on your reading comprehension skills, but now that you have actually attempted such...

Outsourcing may very well be good in many cases for an economy, but in case nobody has ever told you this, money isn't everything.

One of the reasons I like to compare German and French companies to their American counterparts is the priorities they set when dealing with their workers. They tend to believe, as American companies once did, that the workers themselves are far more valuable than profit margins, labor pools in foreign markets, and executive compensation packages. Their economic performance may not measure up on paper, but somehow they are able to have reasonable nationalized healthcare, a workweek that is far superior to ours, and lifetime employment (something that went the way of the dinosaur around 1978 in America).

IOW, there is more to an economy than what you mention.

Actually, the article said it before you regurgitated it.

Again, you are basing your entire argument on nothing but numbers which do not account for things that they have in Europe like the ability to get a job with and retire from a company after 40-50 years. They also have a far shorter work week (meaning more leisure time), dramatically lower health care costs, and better results from their health care systems than we do.

They COULD export their jobs, but choose not to because they, unlike our corporate pirates, actually feel some measure of responsibility for their employees. You act like these companies are losing money hand over fist by not outsourcing, but you are ignoring the fact that their economic performance has equalled or beaten ours in recent years.

BTW in case you missed it, they DO outsource for labor in Europe, they just do it less because they are not ruled by the almighty dollar (or Euro for that matter).

Again, you are ignoring the fact that businesses in Europe are not failing because they don't outsource as much as we do. In fact, they thrive! They just aren't as concerned with corporate bonuses, stock options, and golden parachutes as they are with corporate responsibility, community involvement, and loyalty to the employees.

Personally, I try to buy only products made in the US. I avoid Wal-Mart because of their propensity to drive businesses to outsource. I pay higher prices as a result of those choices, but I believe it is well worth it to do business with companies that employ Americans and not Chinese, Malaysian, or African workers.

I am not advocating "adopting their labor policies" wholesale, but I do believe that we could pick and choose some of those policies that promote more stability than we have here in the states. Layoffs happen in America at the drop of a hat. Nobody is safe and we are (again as the article points out) FAR more likely to experience unemployment than people in Europe. Granted, said unemployment is more transitory, but it still means that people have to start over, have far more stress, and cannot count on anything their employer says. Pension funds get drained in bankruptcy proceedings, promises get broken, and workers are used.

In addition, you are totally disregarding all of the people in America today who have either left the employment market altogether or are severely underemployed (how many PhDs are working at Starbucks these days?). Talk to me again when these people are accounted for.

I am not arguing against free trade. I am just saying that there are some things that are more important than GDP numbers.

 

Europe is better - for labor lawyers (which is why it is not surprising that the author of the article likes the European model).

Labor protection laws in Europe are way too much to the detriment of corporations by overprotecting employees (the labor unions especially in France and Germany are still very influential). At the end, this does not help the economy, but protects those who slack off at their job, it is very difficult to lay off people. On the other hand, it makes finding a new job much harder, because companies are scared to hire too many people if their business does not grow as they expect. Also, beyond the actual salary, because of the higher level of social security people have in Germany, it is very costly for the employer on top of the salary to have an employee (the employer has to contribute to a state pension fund, to health insurance, etc. etc. - other cost of having an employee than salary is much higher in Germany than in the US in terms of percentage of the salary). Unemployment is a huge problem for the German economy.

Granted, though, Germany had to deal with an unbelievably high cost of a unification with an extremely weak former communist economy (the German Democratic Republic).

I also think Germany is not well-positioned for dealing with the availability of much cheaper labor in neighboring countries.

The labor unions in Germany keep making more and more demands, but they do not realize (or their officials ignore it in order to get re-elected) that an economy can only keep high standards of social security as long as there is growth. But there cannot be any growth when you have an extremely high cost of labor, and you are basically thereby causing many industries to not be competitive with the same industries in other countries.

As an employee, I like the protections and benefits I get under the German system. As someone who has had some academic training in business and economics, I think they greatly harm our economy.

While I find some of the practices in the US shocking when it comes to laying off people, I think the US system is much more flexible and much less conducive to causing high unemployment rates and therefore better - for employees as well.

Personally, I would probably think that some middle ground between it being relatively easy to fire someone at one week notice or to not being able to fire someone at all would be the best...

 

What kind of econo-romantic stuff is that? A company is not a welfare organization. A company that believes workers are more important than profit margins? How long will this company be able to pamper those workers if there is no healthy profit margin?

Healthcare cost is a huge problem in Germany. They keep doing reforms because cost has been spiraling out of control, but they are not really getting the issue solved.

I agree that it appears that work weeks in Germany are shorter, but again, how long can a corporation or an economy afford this when in a country like China or Poland, cost of labor is so low?

Personally, I don't see lifetime employment as a particular benefit. Rather than lifetime employment, I'd like to be able to get into jobs more easily where I could succeed.

Again, how is that a benefit in itself?

Again, health care cost is a huge problem here. It appears to me that the average standard of health care is better in Germany than in the US, though, especially for those who do not have money. But that comes at a high price for the economy as a whole. Someone somehow has to pay the bills.

No, our economic performance in recent years is far worse than that of the US. That has to do with the added cost of the unification with a former communist country, but it also has to do with high labor cost and unflexible labor laws.

So you are saying companies are charities in Europe, in contrast to the US? Any company is "ruled by the almighty dollar". If a company is not profitable, it cannot survive. A company is not a charity. Any company should be about maximizing shareholder value, because the shareholders get the residual interest. And that is the same in Europe or the USA.

Maybe a bit more than in the US, but actually, not really. It is not "loyal to employees" to run a company into the ground by keeping too many on board, because everyone ends up losing their job. When a ship starts to sink because it is too heavy, you have to let some people go, so that the others can survive, even if the andymoons of the world think it would be more loyal to keep everyone on board for 40-50 years.

So does that make you a protectionist? Do you resent Chinese, Malaysian, or African workers? Do they not deserve to make a living? And if they do their job in a more economical way than their counterparts in the US, you deprive them of their opportunity to thereby improve their standard of living? You meanie, you .

The key word here is transitory. We have a huge problem in Germany of long-term unemployment. There are some people who, because of the labor laws in Germany, will probably never be able to get back into a job. Believe me, they would prefer to start over, and it would be less stress to them.

Actually, you are arguing against free trade. And I think your view of labor laws in Germany and France is more romantic than the actual picture I see here.

I am not even saying everything is better in the US - I do think that the level of protection in the US is probably lower than what I would personally view as acceptable. In my old company's parent company in the US, scores of people got fired on the spot under what I would describe as degrading and almost inhumane circumstances. I don't see how that would be necessary or advantageous to an economy, and possibly, such things might better be curbed. But on the other hand, if you completely tie a company's hands to reduce labor cost in order to achieve profitability, you end up costing everyone in that company the job.

 

HO HO HO!

What a post Jackie. I salute the BBS' top attorney at law. moon, you clearly barked up the wrong tree on this one, annointing yourself as the expert on German economic affairs. I stripped you naked and SJC applied the firehose. It's official, you're ready to be booked at county jail for failure to advance a coherent argument in the D&D.

Du bist MOONED

 

Wasn't West Germany doing very well prior to the union with East Germany? Was it probable that because of the "premature" merger of the two Germanies it would take the former West Germany (much) longer than expected to recover and regain her previous economic might?

 

Eventually people will recognize that in the era of globalization there is only one market. It does not make sense to pay person A $20 per hour to make cars if person C will do it for $1.50. If you go to the store and there are two identical products being sold, then you are a fool if you don't choose the cheaper option. It is all about maximizing self interest. glynch and Geoghegan would be much happier in a theoretical communist system where everyone does their best to contribute to the success of the community, and everyone in turn has all of their needs taken care of. Unfortunately this is not Star Trek. We live in the real world and the only thing that you can count on is that the vast majority of people will be motivated primarily by selfishness. Even in the markets of Germany and France, selfishness pervades, only over there the people at the bottom have used their political power to regulate advantages for themselves over the people at the top. Over here, with our less regulated economy, the people who are actually providing the jobs have the power, and so they are the ones whose selfish interests are served. Not surprisingly, our companies are more profitable.

 

A few weeks back, WSJ did an article on BMW plants in Germany, I guess the new plants they are building or just finished building are not under the same Labor Laws/Union Control the other old plants have been. And the article states the new plant is more flexible and therefore more competitive. This is one way for German companys to keep jobs in the country, and look for more company to do the same thing.

 

It all comes down to why does people in the US or Europe make more than people in China and India if they are doing the same job? This will lead to job being outsourced sonner or later until such a time when the cost in labor is not so significant. In the mean time expect real living standard in US and Europe to decrease or increase at a much slower rate and real living standard in China and India to increase at a much faster pace. I just hope they do not outsource too many jobs in the universities.

 

So if America are not loyal to Americans, what will happen to any sort of unity? I think many people feel betrayed. They invested their time and money for an education that means nothing when MANY of the jobs go to another country. Is that worth fighting for etc.? Why should someone be loyal to a country that isn't loyal to them?

 

Agreed. I would not advocate for the level of protection you describe, but an effective middle ground would be nice.

 

I never said it was a "welfare organization." Nor did I claim that employees should be MORE important than profit margins. However, it would be nice if employers felt some measure of responsibility for their workers (who I believe are their lifeblood). How long will the company be able to be productive if the employees are disgruntled and fearful of losing their jobs every time the economy hiccups?

I would venture a guess that the "out of control" healthcare spending is still lower than we see here in the US. It seems that very few countries are getting a good grasp on healthcare. It is disheartening however, that executives get multimillion dollar base wages and even more in stock options as a result of cutting healthcare for their employees. It seems even more excreble to me when they get those golden parachutes for laying off tens of thousands of workers.

How long have the work weeks been shorter there than here? Apparently there are many corporations in Germany that can afford it and even thrive, given the fact that your economy continues to grow.

I would like to be able to work my way up through the ranks of a company on my path to success. Unfortunately, it seems these days that the only way to get more than a 2% raise that doesn't even keep up with inflation is to change jobs. I believe that a worker who is taken care of over the course of decades will be much more loyal to their employer and will end up being far more productive than the latest wet-behind-the-ears college grad who is willing to work cheaper.

You don't see how there is a benefit in being secure in the knowledge that as long as you want your job it will be there for you? I would count that among the biggest benefits available if I thought such a job existed.

Agreed. The bills have to be paid, but I would submit that your system is working better than ours when you measure performance statistics like infant mortality, average lifespan, and availability of healthcare to everyone. I personally don't believe in "socialized" medicine, but I do think that a central insurer system would probably be able to mitigate some of the problems we are seeing here, specifically the tens of millions of people with no health coverage whatsoever.

Again, I would not advocate for the US to adopt the same policies as Germany or France, but I do believe that a middle ground exists.

However, hasn't your economy been expanding lately? It may not be as much as the US, but you are experiencing growth, aren't you.

No, I am saying that, due to regulation or a sense of loyalty to their employees, they tend to keep more of their jobs in-country. Of course profits are the reason for a company to exist, but it seems that some companies, whether in the US or Germany, at least have loyalty to their employees on the radar screen.

Wouldn't employees who feel secure in their jobs be more productive than people who feel like they have to be looking for their next job all the time? Wouldn't that tend to have positive effects on shareholder value?

Again, I would be looking for a middle ground. Yes, it would be better to let some people go as opposed to letting the entire company go under. However, if every company went under due to the regulations in place in Germany and France, nobody would ever start a company. Obviously the companies are making money even though they are precluded from shipping entire divisions overseas. They might not be making the kind of profits that allow the CEOs to give themselves multimillion dollar bonuses, but I don't really see that as a bad thing.

No, of course I don't have anything against those workers until they start taking our jobs. Personally, I would be satisfied if companies were required to retrain workers they displace offshore. Unfortunately, when the layoff axe hits it tends to hit suddenly and without much warning, putting people into very bad situations. Most people in America are little more than 6 months from living on the streets without their jobs. Unemployment insurance helps some, but 6 months is hardly long enough to get retrained in a new job.

Heck, it might be enough to require 6 months warning of a layoff to get the workers started on retraining, saving for the layoff, or to find a new job. Like I have said, I am not looking to bankrupt a company, just to find some ways to help the displaced workers to move on.

That problem has cropped up here, too. Unfortunately, the Department of Labor just doesn't even count people who have dropped out of the employment market altogether. We also have problems with severe underemployment (PhDs schlepping cappuccino at Starbucks) and declining real wages.

I am not fooling myself into believeing that your labor laws are the be-all end-all. I do believe that some of the principles embodied in your labor laws could have a net positive effect in the US, and I would prefer it if corporations followed those principles of their own accord. However, the almighty dollar being what it is, I do not see that as even a remote possibility.

Like I said, middle ground. There has to be a place between firing 15,000 at the drop of a hat (like HP is doing after giving their CIO a $15 million dollar compensation package) and not being able to fire people at all.

 

[singing]Sandy Claws is coming to town![/singing]

Personally, I would give Max that nod, but whatever. And in a dramatic departure from my norm, I agree with you in one respect. It was a good post.

First of all, I never "annoint[ed]" myself an expert at anything. There are a few areas where I consider myself an expert, but German economic affairs is not one of them.

Whatever. You posted a reasonably coherent argument, I responded in kind, as did Jackie. In case you missed it, I responded again.

BTW, this is what "debate and discussion" is all about. I realize you are unfamiliar with the concept as you are much better at running away from reasoned debate or flaming those who have reasoned arguments, but you do seem to at least be making an effort.

Yeah, I'M the one in danger of that. Your general inability to advance a cogent argument would jail you for a dozen lifetimes were it against the law.

 

The last time I checked, European countries calculate the unemployment rate differently than their American counterpart. In US, you don't count those lost jobs a while ago, but not eligible for unemployment benefit any more, as "unemployeed". Of course, I could be wrong.

As for outsourcing, I do think that's a tricky problem. On the one hand, corporations are heading to those cheap labour markets, to seek for maximum profits; on the other hand, average citizens want to keep their living standard by keeping their jobs and pays. It's naturally conflicting. You can't just say that someone makes 10 times less as you do for the same duty. Do you really think that your job is so challenging that nobody in the world can perform it? Maybe there are a few spots meet such criterias. But 90%+ jobs can be done anywhere, are you going to ship all those jobs overseas? Or you are going to drop your salary to global average? It's government's duty to raise the living standard in own country, not lower your standard. In steel industry, average workers have the exact same qualification and experience as their peers in military contractors. Can you simply say, well, tough $hit that i am with military, so I get to keep the job, but you can't? It's too simplified, to say that those workers can be re-trained. Re-trained to what? CEO of fortune 500, lawyers, doctors? What about the rest 99%? To IT professionals? Telecommunication is commudity now. Technology edge? Barely, rather than market edge. Software and Hardware industry? Which part exactly others cannot do? How many so-called elites are truly elites? What they have are just the edge of a good system and language. Well, Indians speak English, should you just ship all those jobs to India? Let's take another dramatic assumption. If companies hire all Chinese speaking management, so English isn't important anymore, in other words those management can be replaced entirely with just 5% pay, as long as, the company hire all sales people speaking English? You want profit, that's more profit than squeeze out an average worker.

People have higher salaries claim they have higher education, skillsets and other leverage. But over whom? Just over average manufacture workers, not necessary over peers in other countries. Yes, US has advanced technology over other countries, and a few people are the keys for those advantages, but that can't be said for 90%+ Americans. Are they all going to loose jobs in the future? Even in the same country, not to mention illegal immigrants, there are always people with the same qualification willing to take your job for less pay, be it new immigrants, people out of jobs, or people with financial difficulties. Are you going to just give your job away?

I am amazed by the mentality of some people, that as long as it doesn't happen to me, I don't care. Well, if it can happen to others, it will happen to you as well, you are not as superior as you imagine. I feel I am doing a good job, get fairly treated, and my boss is pleased with my effort and result, but I will never dare to be arrogant enough to believe that I am irreplacable. Although my English is still broken, I have far much more to learn in the industry than I know about, I still wouldn't want to give up my position to others who are equally talented, if not more, but ask for less. Now, the question to those big out-sourcing advocators, would you?