Posts Tagged ‘Outsourcing’

I suppose we should have seen it coming when China launched its own version of the Apollo spacecraft – three Chinese astronauts circling the Earth – a few years ago.  It was at a time when the U.S. space program was, at best, going sideways, partnering with Russia, making short trips to the Space Station with the Shuttle. Not a whole lot of new things have been done by NASA recently, and now NASA’s most recent brainstrom, a return to the Moon, has been canceled. But this Chinese high speed rail deal is different. We’re not talking about the Moon anymore.

It has just been announced that China is in negotiations to build a high speed rail network connecting Europe and Asia. The trains that China will build, the fastest in the world, will travel almost as fast as a jet plane. People will be able to take high speed rail, using Chinese technology, from London to Beijing. China is now in talks with seventeen countries, among them England, Russia, France, and India to build the system.

So, how did the U.S. do in the competition for the job? Let’s be serious. Nobody even asked us. And why should they? We don’t make high speed trains. Our so-called high speed train, the Amtrak Acela, doesn’t come close to the performance of Chinese trains. We don’t build real high speed trains because we can’t. We don’t have the knowledge or the manufacturing capability. We are simply not a player in high speed rail technology. China is the clear leader with Japan a fairly close second.

It’s interesting that the U.S. press, to my knowledge, hasn’t even covered this story. I found it in the Irish Independent. So, does that mean that this isn’t part of the news that is worthy of print in America? Or does it mean something else? Could it be that our news media is unaware of this development? Or, could it be that, for whatever reason, they would just rather not tell us about it? I know; it sounds kind of paranoid, but I just went through eight years of Bush/Cheney, so don’t we all have a right to be paranoid? In fact, it seems that at least half the country is paranoid now, debating things like whether health care for all of us is good or bad (does that question even make sense?).

Meanwhile, China quietly pushes ahead on all fronts.  China’s economy is booming. China is already the primary manufacturer of most of the consumer goods that are sold in America. Oh, but that’s OK we said. It’s just low tech stuff. We don’t need those jobs anymore.  We’re a high tech country now. OK. So what high tech stuff do we make? Airplanes? Sure, if you count military planes (we’re really good at making things that kill people). How about commercial planes? Well, we’re down to Boeing now. Everyone else – names like Lockheed, McDonnell Douglas, Convair – not to mention Wright – they’re not in the business anymore. Most of the planes you see in the sky in America these days are built by the European company Airbus, or by the Canadian company Bombardier, or by the Brazilian company Embraer. Boeing is fading too. My guess is that the 787 will be its swan song for commercial aviation. The last of the American commercial airplane companies.

We need to understand the significance of this new announcement about a Chinese trans – Europe and Asia high speed rail system. The handwriting is on the wall. We have been eclipsed.  China is about to become the technological King of the World.  Under Bush we were obsessed with military attacks and military expenses and nothing else.  Not even Katrina could capture his attention for a microsecond. We have built the most efficient killing machines in the world, but we have an economy that is struggling to recover from banking disaster and a seriously decayed civilian technological manufacturing infrastructure that can’t begin to compete with China. Our only hope is that there will be a need for financing for this magnificent rail system. Our banks could make the loans and then package them as collateralized debt obligations (CDOs) and then, just in case the borrowers don’t pay back the loans our banks could buy credit default swaps from our insurance companies and, of course, then sell the swaps on the derivatives market. Or at least create an options market for the CDOs and swaps. We’re pretty good at that.  We just need to figure out how the average citizen makes money this way.

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In 1776, a group of revolutionary minded people, many of whom were Freemasons, created the United States of America.  This new country was to be a break from the past. The leaders of the movement: George Washington, Thomas Jefferson, Benjamin Franklin, John Hancock, and many more were Freemasons.  They were informed and inspired by some of the tenets of the Freemasons, tenets that were at odds with the established manner of world governments at that time.  Many of the governments of various European countries had a long established and close relationship with one branch or another of the Christian church.  Most of the governments had kings or queens, whose right to rule was based upon their ancestry.  The American revolutionaries had a different concept in mind – a democratic, elected  government that had no association with any religion.  It was a daring concept, and a complete break from the European view of government.  These Freemasons even documented this break from traditional government when they made the Great Seal of the United States and when they printed the one dollar bills that we have today. One each of these bills are printed the words: Novus Ordo Seclorum, i.e. A New Order of (0r for) the Ages.

The New order that was founded by these Freemasons created a Republic where the principal ideas and visions were centered on individual liberty.  A key concept was that the government was not made up of the elite or the wealthy or the influential or the religious leaders. The government was changed regularly, based upon a schedule of elections, and anyone could become a member of the government – as long as they could convince their friends and neighbors to vote for them.  This concept of a republic also implied something else, there would be a distance, a division, between the will of the wealthy and the will of the government, i.e. the will of the people.

Today, as our economy lurches towards a dubious recovery from a worldwide economic meltdown, we can observe that there has been a key change in the Novus Ordo that was created by the Freemasons.  There is no longer a distance between the government and the wealthy. Indeed, it was the closeness of the wealthy to the government that directly led to the meltdown.  It was the money in the pockets of the our governmental representatives that led to the relaxation or the complete annulment of laws that had protected us from nefarious economic practices by the banking industry.  It was the government’s Securities and Exchange Commission that looked the other way when Bernie Madoff ran his gigantic Ponzi scheme.  Over the years, the wealthy had established a cozy relationship with the representatives of our Republic – all for the purpose of gaining more money for themselves and less for the average citizen.

Today, the wealthy have almost a stranglehold on our government.  Some would say it is more than that.  They say we have an oligarchy – a situation where hidden, wealthy people rule through a puppet government and all laws are made to benefit the small, wealthy elite.  All you need to do is look.  Our American companies have become multinational. Our once good paying jobs have been moved to other countries where the cost of labor is much less.  Our government has “reformed” our tax laws allowing millionaires and billionaires to pass on their fortunes from one generation to the next while not a cent of tax is imposed on this transfer of wealth.  The wealthy have used the government to create income tax cuts for themselves and income tax increases for the middle and lower class.

The New Order created by the Freemasons is fast dying.  Today, our multinational companies, owned by the wealthy, fabricate our goods in China- creating no jobs for American workers – except those who work for Wal-Mart.  Our multinational companies pay little or no tax to our country, because they are officially located in the Bahamas or some other idiotic legal location.  And our government just winks and says, “OK”.  Our country has been transformed without our even realizing it.  We have a new world order that we never saw coming.  In this new world order, it is the wealthy who rule and it is the poor who pay taxes.  In this new world order everyone can vote, but it hardly matters who you vote for. Money flows like water from the mighty Mississippi into the pockets of our Congressional representatives who pretend to ask for our opinions but then vote the way they are told.

The Novus Ordo Seclorum of the Freemasons has gone, and we didn’t even see it go.  We can only sit and watch, dazed, as the government tires to stimulate a dying economy, knowing in our hearts that we are only surviving on financial life support.   How can our economy ever rise again when the wealthy have sent all our jobs to China?  How can our children ever compete again when our schools can’t compete with those in Malaysia or Norway?  How can we lead and inspire the world when so much of our television and radio news is now filled with the lies of the wealthy media owners, propaganda, and gross distortions of truth?

The new order of the world is here.  It is the multinational companies of the world who now make the economic rules. It is China that will be the world’s supplier of almost everything anyone needs.  We are to be the consumers, borrowing money from banks in order to live – while living forever in debt.  Meanwhile the people of the wealthy class return to their rightful place: Rulers of the World.  And the elected leaders of our Republic grovel before them and do their bidding – all for a pocketful of change.

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The barons of American industry discovered long ago that they could get people in other, less well off, countries to do factory work for less money than what Americans wanted for pay. It all started with the outsourcing of American jobs within the country itself. Good paying jobs in the textile and other industries migrated from the industrialized north to the south.  These factory owners made a fortune by paying the Americans in the south much less than they had been paying those in the north.  It didn’t take too long before the owners of the businesses noticed that they could get even cheaper labor a little further south – and a lot of jobs went to Mexico. Now, it’s hard to find any items of clothing that carry the label Made in USA.  It turns out that even the Mexicans are now feeling the bite of low cost competition and today, when you buy any item of clothing, you could just as easily see a tag that says Made in India, or China, or Egypt or almost anywhere – although I have yet to see a tag that says Made by Eskimos in the Frozen North.

But, as they say, it is an ill wind that blows no one any good.  Or, to perhaps paraphrase – sort of – what’s sauce for the goose is sauce for the gander.  It turns out that outsourcing can help not only the fat cats who own our big businesses, it can also help the little guy who has to buy their stuff.  One prime example is that we are able to outsource our selection of automobiles.  We can buy foreign made cars instead of American made cars – and we do.  The American consumer has pretty much decided that they get a better value by buying Japanese or European made cars instead of American made cars.  Of course the American car manufacturers could give us better value than they do, but they don’t.  They choose not to. So we have the ability to choose something else. Most of us happily outsource our automobile choices to other countries.

Well then.  If we can outsource the purchase of cars, and lots of other stuff to China, India, Japan, Germany and so forth, why can’t we buy our health insurance from foreign countries too?  After all, a health insurance policy is nothing more than a sort of reverse lottery.  You get money, but you would probably rather not have won this sort of lottery, because it means you are sick.  The more money you win, the sicker you are.  But my point is that this is just a really big gambling game, and the boys who run the health lottery in the U.S. make big bucks in this game.  Essentially you pay a lot more into the pot, via your bets (i.e. your policy premiums), than you ever collect (on the average).  The insurance companies score!  They take in a lot more money that they pay out. (Ask yourself this:  how many health insurance companies have failed or needed a government bailout during the Great Recession?) The question we need to ask is this: how much do our U.S. insurance companies really compete with each other? Could their idea of competition be sort of the same as how the American car companies compete against each other?

What would happen if we let Chinese companies provide our health insurance? If there is one thing I have noted about the Chinese I have met throughout the world, it is this: they love to gamble.  My guess is that they would love to be in the insurance/health-gambling business.  They would undercut the absolute Hell out of the U.S. insurance industry, but they would also pay off on their claims because they are also excellent businessmen.  They know they need to keep satisfied customers.  My guess is that India could be a good source of health insurance too.  Another great source might be Ireland, a place where bookmaking is entirely legal and companies like Paddy Power will take a bet on anything.  It could even rejuvenate the fading Celtic Tiger.  If there is one thing Paddy Power knows how to do, it’s calculate the odds.  And they always pay off too.  There’s no denial of claims from Paddy Power.  You score, you win.  They pay.  No questions asked.  That’s the way insurance should be.

So, while we are thrashing about and wringing our hands about a Public Option, and how it will generate competition for the fat cat health insurance industry, maybe we should generate some real competition.  Let’s allow the outsourcing of health insurance to foreign companies and open up the health insurance business to the world. How about some real competition?  Then maybe we’ll see who the real Capitalists of the world are. Is it the Americans, the Irish, the Indians, the Chinese or someone else?

Guess who my money’s on.

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As Barack Obama’s plan to save the U.S. economy takes shape economists and politicans have begun offering their opinions about its potential effectiveness.  Many economists, like Nobel Prize winner Paul Krugman have said that the plan is not grand enough to be effective.  There are also some Republican Hooverites who feel it goes too far.  His plan seems to have two basic components for creating jobs: rebuilding roads and bridges, and creating an alternative energy source.  He also plans to inject a financial stimulus into the economy by reducing income tax withholding.  At first glance the rebuilding roads and bridges concept sounds good. These are mostly construction jobs and they would hopefully provide employment for many people who lost their construction jobs when the housing market imploded.

The alternative energy idea is a good one too because it potentially frees us from the blackmail of the Arab oil producing states and it helps staunch the outflow of U.S. dollars to foreign countries.  It remains to be seen how many jobs this will create in the short term.  It’s hard to believe this would create millions of new jobs.  I would guess that these jobs would be mostly high tech engineering jobs – at least until someone actually figures out a cost effective alternative to oil.  It’s not a JFK space-program-to-the-moon sort of vision – but its OK.  However, I wonder if  just “OK” is good enough.

The tax reduction stimulus thing sounds unexciting.  It’s just a few bucks here, a few bucks there.  Personally, I would rather receive a $10,000 debit card in the mail that expires in three months and can only be used to buy stuff, i.e. it can’t be used in ATM machines to get cash because people would just do that and then bank the cash. If we all received these $10,000 debit cards I can guarantee you it would be like a lightning bolt jolt to the economy. Don’t get your hopes up though – it’s not going to happen.

Here’s something no one is talking about: the danger that outsourcing will severely erode the impact of Obama’s plan.  First, let’s look at the road construction idea.  Giving jobs to American construction workers is a great idea – it goes directly to a group of people who have already been severely affected by the economic downturn. However, it is no secret that a lot of the construction workers who built America’s houses during the Great Bubble were immigrants – and not all of them were legal. If we don’t find a way to ensure that these new jobs go only to U.S. citizens then all we will have done is outsource the work to foreigners – and the money they receive will migrate from the U.S.  to their families back home – wherever that may be.  That won’t help the U.S. economy so much.

How about the high tech jobs?  Outsourcing will be a problem there too. Today the Irish government announced that Dell Computer Company (a U.S. company big on outsourcing)  is eliminating 1900 jobs in Limerick, Ireland and outsourcing these, already outsourced, jobs to Poland because the Poles will work for less than the Irish who work for less than the Americans.  We shouldn’t think for a heartbeat that America’s high tech companies will hesitate to outsource any of Barack’s energy related research jobs to any of a couple of dozen countries with highly educated workforces who work for less money that Americans. These highly capable countries include not only Ireland, but also Singapore, India, China, Malaysia, Korea, and on, and on.  Unless Obama does something to ensure that these jobs can only go to U.S. citizens who actually physically reside in the United States then the U.S. economic rescue plan will simply become an Economic Rescue Plan for the Entire World – and we can’t rescue the world all by ourselves.

Outsourcing of jobs is one of the underlying causes that led to the housing bubble.  That grand Ponzi scheme became just about the only way a lot of Americans could make a lot of money because too many good jobs had already been outsourced. Our economy is sort of like a big bucket that can hold a lot of water; however, when outsourcing is allowed it is like punching holes in the bucket – all the water (i.e. money) flows out. So, if Obama’s plan is to simply put more water in our economic bucket, but he doesn’t plan to take strong action to patch the holes, well, all that money (your tax dollars to be exact) will just flow away to foreign countries.  And make no mistake, our U.S. companies have no sense of patriotism when it comes to making money – they have already shown they will cut your economic throat and send your job overseas without blinking an eye.  It’s all about money with these businesses – it’s not personal. This is a lesson the Irish are now learning as they face an economic crisis at least as bad as ours, and it’s one the Poles will undoubtedly learn in a few years when Dell outsources their jobs to Rwanda and Zimbabwe.

So, my question to Barack is this: does your plan include seriously plugging the outsourcing holes in our bucket or not?  Because if it doesn’t then why don’t we just save ourselves a whole lot of heartache and tax dollars and forget about it?   You can’t fill an economic bucket that leaks like a sieve.

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We have heard a lot about outsourcing, i.e. hiring people in other countries to do work that used to be done here, in the past few years. It would be understandable if some people thought that this was a recent phenomenon; however, outsourcing in America has roots that go deep into our past. I don’t think we called it outsourcing then; we just said that jobs were being lost as businesses were closing down. Here is an example:

Beginning in the 1800’s New England experienced a financial boom based upon the industrial revolution. Factories were built by the hundreds. The town of Lowell, Massachusetts was built as a model of the new industrial society, with dormitories provided for factory workers, many of whom were imported from other countries because these factories could not find enough labor in the United States. Factories throughout New England eventually manufactured almost everything you could imagine, from shoes, wool, textiles, and linen to structural steel, copper wire, and high tech abrasives. However, by the 1950’s and into the 1960’s the factories began to close and the model factory town of Lowell became a synonym for a slum town. The major manufacturing city of Worcester, Massachusetts saw factory after factory close, with perhaps the greatest blow coming when its massive United States Steel plant closed. But where did all the jobs go?

They went south. They went to states like North Carolina and others where new factories were built and a flagging economy, that had yet to recover from the Civil War, saw a boom that led to nearly full employment and the beginning of an economy based upon something other than agriculture. The industrial jobs of the prosperous north had been outsourced to the indigent south. Why? Because the factory owners had determined that as the cost of employing people in the north increased they were making less and less profit. The south was a source of cheap labor and therefore an opportunity to return to the glory days of maximum profit. The outsourcing of jobs from the north to the south was a bad thing for the north, but a good thing for the south, wasn’t it? It was also a good thing for the factory owners – at least for a while. What about the overall American economy? Was it a good or bad thing overall? You might say that the north’s loss was the south’s gain and I think you would be mostly correct. I think that, for a closed economic system like the eastern U.S., outsourcing was, overall, a neutral economic activity, although it certainly inflicted a lot of pain – and happiness- in specific places.

Moving on to the 21st Century, a new type of outsourcing has occurred. The new outsourcing sends U.S. jobs to foreign countries, where the workers are paid much less than American workers, but the owners of the companies can return, once again, to the glory days of maximum profits. In this round of outsourcing we see the textile mills in North Carolina closing and new ones opening in China, India, and lots of other places. In the north, which transitioned to a high tech based economy after the loss of the mills, we see high tech jobs being outsourced to China, India, and lots of other places. In the new outsourcing, American jobs have been lost in both the north and the south. There is good news, however. You can now go to Wal-Mart and buy a pair of $60 Levis for only $20.

Eventually this sort of thing has to have consequences. One of these is that the owners of the companies are now making truly massive profits. It is better even than the old glory days. Money is pouring into the U.S. Is this a good thing? I don’t think so because the money isn’t really going into the overall economy; it’s going into the bank accounts of the owners of the companies. Fortunately, there are service jobs at places like Starbucks that seem to be immune to outsourcing. Lots of skilled American workers eventually have to settle for something like these and now make just enough money to pay for a $20 pair of Levis at Wal-Mart.

The new outsourcing doesn’t have an overall neutral effect on the average American like the old outsourcing; it makes their quality of life worse. The reason the new outsourcing is a bad thing is that, unlike the U.S. economy, the global economy is not a closed system. It is an open system. Money that flows out of the U.S. economy doesn’t flow back into it – instead it just winds up in the bank accounts of the ultra-rich.

I suppose then that it is not correct to say that no one benefits from outsourcing, because they do… It just isn’t you.

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