Outsourcing. Sorry I had my tonsils out and was not able to respond to our previous debate in time.
Debate Rounds (3)
to your first point you are absolutely missing the point of what it is to be american. 1st the price of the goods produced does not have to go up, instead the salaries and benefits of the ceo and other upper management would go down. I am not advocating socialism just a decrease in this upper elite's profits. in every other country in the world a ceo makes seven times that of the average worker. In america the average ceo makes anywhere from 248-436 times what the average worker does this is not necessary and is caused by outsourcing. Hence the discount is not passed on to the consumer but is added to corporate profits. second, not going to war is not an incentive to "screw" the american worker out of jobs that were once his. Third i am not saying america should produce everything, but right now, due to outsourcing, India is producing the pizza's, china the stapelers, and america nothing because india and china can pay their workers a dollar an hour.fourth the american worker was entitled to those jobs because they were once his and were wrongfully and unjustly taken away from him. It would be different if the whole world had a minimum wage and workers benefits, but it does not and this makes it an unfair playing field.Also you do not stop people in poor countries from being poor, by giving them our jobs. That is absolutely assinine. Thank you
The reason prices have to go up is that a tariff is essentially a tax on imports. So if you wanted to make sure that CEO's were not going to ship an automobile factory overseas, then you would tax the importing of automobiles. So the price of cars goes up, and these costs get passed on through the economy, thus putting people out of jobs and then raising the cost of goods. That's the tricky thing about economics, you have to look at indirect effects.
I'm not sure where you got those numbers from, but I can tell you the difference is because America produces a lot more than every other country, hence we make more money. America's GDP (dollar amount of how much we produce) is usually around 13 trillion dollars. I don't have the figures in front of me, but I believe Japan comes in second with 4 trillion GDP. There are several reasons for why that is, but mainly it is because relative to other countries, America has a very free market economy.
So when you say these corporate profits are not "necessary," what exactly are you basing that claim on? If European CEO's make only 7 times the average worker, then why is that not obscene? Why doesn't the CEO make 1.5 times?
When you say the discount of outsourcing is not passed on to the customer, there are a few things wrong with that statement: 1. Obviously the discount is passed on in some goods, because the reason we buy so many imports is because they are cheaper. Wal-Mart now provides material goods that were once unavailable to lower-income people. 2. Even if the price is not reduced, that profit goes somewhere. Businesses don't just bury money in the ground after they make it. Dividends are paid out to stockholders, some is invested in expanding the company or making it better. Even if the CEO kept all the extra profit for himself, everyone still benefits because the money will be spent, thus providing employment elsewhere.
This part of your argument makes the assumption that rich people can "hoard" money. You can do three things with money: Spend it, invest it, save it. When you spend it you are giving it to someone else for something. When you invest it you are essentially making a loan to someone and you then either own part of their company (stocks) or the pay you back with interest (bonds), and when you save money, it doesn't just sit in the bank, the bank is loaning it out to people. The only time money is kept from circulation is when you are carrying cash, which no one has a billion dollars stashed in a vault, except for Scrooge McDuck. Since he is a cartoon character, I think we can rest easy.
The idea that America is not producing anything is one I have never been able to figure out why people think this is so. I remember having this exact same conversation in one of my film studies classes, and the irony of it was that almost every film we watched was made in America. When I was in Europe I remember hearing American music everywhere, posters advertising American films, eating at a Burger King, and using a computer in a coffee shop that used Microsoft internet explorer. The most shocking thing were the American cars (Ford Focus is a popular car in parts of Europe). America has a very strong service economy. There is a lot more that goes into a product then just putting it together. I'll probably go into more detail about this in later rounds.
We import more from Canada than China. Is anyone really concerned about trade with Canada? I think it has to do more with xenophobia than trade policy. But China and India also have over a billion people each. If every country traded with everyone else equally, then that would mean over a third of our trade would be with China and India. But China only accounts for about 15% of our imports, and India even less.
You also haven't given a reason why it is unjust that these jobs are sent elsewhere, or why the jobs are the property of the employee. If I hire you to trim my hedges, but then one day decide that I want to hire someone else, or that I don't want the hedges anymore, is this unjustly taking away your job?
It's not asinine that trade makes people wealthier, it is basic economics.
Your assumption is that jobs are a constant--that you can not create jobs or wealth, they are merely transfered. But as technology advances, there are new opportunities for different jobs. When humans first went from being hunter-gatherers to living in agricultural communities, not as much time was need to find food. This technological advancement lead to the rise of arts, music and the like. Then with the industrial revolution, not as many people were needed to farm, so more people were free to pursue other things, which made us wealthier. Now you can be a banker, a scientist, a teacher, a merchant, an entertainer, etc etc. So there isn't a fixed pie; wealth is the product of man's capacity to think.
Reply: Now we have two different subjects on hand: Outsourcing and income distribution. I'm not sure which one you are really upset about, (i.e. If outsourcing were allowed in exchange for more generous welfare benefits, would that be okay?) But a tariff is not a level playing field. Politically connected businesses can have their industries protected at the cost of everyone else.
oleboy: This is not an indirect effect it would be a direct effect if instead the profits were reduced in order to maintain that level playing field.
Reply: Your solution is to just tax corporate profit. But this has an indirect consequences too. In reality that would just encourage more outsourcing, since a tax is an added cost. And businesses outsource because it is more efficient than manufacturing here. It is easy to think taxing corporations is a limitless and harmless way to pay for any government program you want, because we don't view corporations as a person. But a corporation is a group of people, and those profits are used to provide services and to pay people.
oleboy: It would be ideal for a CEO to make one and a half times what the average worker does. Seven is still too high,but seven is obviously better than 248 or 436.
Reply: ...because? What this is touching on though is something in economics called the paradox of value. Why is water, which is vital to human survival, practically free, but diamonds, which serve no practical ends other than personal aesthetics, are worth millions of dollars? It is because prices are determined not just by demand but also by supply. In the case of the CEO, both the demand is high, since they are essential for running a business, and the supply is low, since not everyone is capable of being a CEO, especially the ones you refer too (most CEOs make about $100,000 a year). But you don't even need a high school degree to learn how to go through the motions of a manufacturing plant. Prices serve as a signaling mechanism for the efficient allocation of resources. People in poorer countries need these manufacturing jobs so that they can accumulate wealth and since we already have wealth, we should be the ones pursuing management, scientific, and highly skilled jobs. And the higher salaries of those jobs is what drives people to those jobs. Over time poorer countries can accumulate wealth and make improvements so that they can compete for those jobs, which brings down the price and makes the most goods out of limited resources. It is a much more complicated concept to grasp than, well the government can wave its wand and give us everything we want.
oleboy: but he should not do so if it jeopardizes the greater good of society. Hence, sending jobs overseas to accumulate profits is not for the greater good.
Reply: No, it is the government that jeoparidzes the greater good by society by interfering with price signaling. By artificially keeping jobs in America, you are protecting politically connected businesses at the expense of everyone else.
Oleboy: The discount may be seen in cheaper products, but with every job that goes overseas, so goes america's standard of living.
Reply: No, because as I explained in the first version of this debate, you are ignoring comparative advantage. Sheeding weaker sectors of the economy leads to greater production of goods for us and the rest of the world, and the more we trade, the less likely we are to fight (No two countries that both have a McDonalds have ever declared war on each other.) Just think how cellphones used to be a luxury for the wealthy, now they are ubiquitous and of better quality. More people own houses now than 50 years ago.
Oleboy:. if a factory worker making forty thousand dollars a year gets his job outsourced and has to work at subway it effects all of american society.
Reply: And by keeping his job here artificially, you are raising costs elsewhere. it's the indirect effects you have to think about. It's not the paycheck with the most zeros behind it, but the one that has the most purchasing power that matters.
Oleboy: If a ceo invests his money recieved from cutting american jobs and sending them overseas for cheap labor in a bank or the stock market he does so in fact to make more money for himself, enhancing further his need to make money.
Reply: And what is wrong with making money through business? Who has done more for the world, Mother Teresa or Bill Gates? Mother Teresa just planted poorly made hospitals for people to be converted to Catholicism and die in. Bill Gates made a company that has made an operating system that has made everyone better off by saving time and making life easier. Not only that, he has accumulated enough wealth that he can venture into philanthropy. In business, you have to give someone something they want in order to get something you want, which is why it is win win. I scratch your back, you scratch mine. This is something a British economist Adam Smith realized a long time ago when he coined the term, the "invisible hand" of the market. By pursuing our own self-interest, we end up providing for the common good, because in order to get what we want, we have to give someone something the want.
Oleboy: When you talk of American music and movies being produced for the rest of the wold you are speaking of a small percentage of people who benefit. I am speaking of the outsourcing of MILLIONS, yes MILLIONS, of manufacturing "blue collar" jobs, as well as "White collar" jobs as well.
Reply: Yes, out of the hundreds of millions of jobs. As I said before, 90% of all jobs can't be outsourced due to proximity (e.g. if you work on an oil rig in east texas, that oil can't be outsourced to India for drilling.) If you are interested more in this subject, just get a back copy of the June 2004 edition of Foreign Affairs magazine and read the article titled "The outsourcing Bogey Man."
Oleboy:. American have special talents that these blue and white collar workers do not possess they are a small minority and all thought appreciated are not a useful argument in this debate.
Reply: This sentence needs some work, because I can't understand it. So I won't respond.
Oleboy: These manufacturing and technological jobs are "unjustly" exported because they ARE Americas to begin with and any American should fight to have them stay here for the good of the country. If you hire me to trim your hedges and find someone else to do i, IN AMERICA, then that is fine you are not hurting our society or another society by having Chinese people do it for a dollar.
Reply: Then take your logic even further. Is it unjust if a business is moved from Oklahoma to Illinois? What about from Oklahoma City to Tulsa? What about from one neighborhood to another? In fact, why should I ever trade with anybody? It's because everyone is wealthier when we all specialize in something and trade. So global free trade makes the world and America better off.
Oleboy: This practice, decreases America's standard of living and does not increase China's, which is a lose lose.
Reply: China last annual rate of growth was an astounding 11.1% This is clearly the result of moving from a centrally planned economy closed to international trade to a more open free market system.
Oleboy: You might argue thast this is basic economics, but we are humans first, Americans second, and economists third.
Reply: Yes, I would, but I would also add that first and foremost we live in a reality that operates by certain laws. Just as you can't make a plane fly by ignoring gravity, you can't make any coherent policy decisions by ignoring the laws of supply and demand. I am out of space, but have said all I have needed to say.
oleboy64 forfeited this round.
1 votes has been placed for this debate.
Vote Placed by Daxitarian 9 years ago
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