quote:

Originally posted by misterpink Me personally, I think it's(the financial crisis) a result of years of outsourcing well-paying american jobs overseas and replacing them with low paying jobs. Welcome to the late 1920's. Don't hit your face on the way down.

how does it have anything to do with outsourcing anything?

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quote:

Originally posted by timmyboy how does it have anything to do with outsourcing anything?

Maybe the point he's trying to make is that workers can't afford to buy the products that they make anymore since they're just working retail jobs (not higher paying production jobs) or that the margins are going into the pockets of the few at the top of these companies.

Henry Ford revolutionized things when he paid his workers enough to buy the products they made.

Now, with off-shoring, skilled workers are working at Wal-Mart for peanuts.

*** this is all very very generally speaking of course, but try and find too many affordable consumer goods still made in USA / made in Canada.

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Paul

quote:

Originally posted by pmoisse Maybe the point he's trying to make is that workers can't afford to buy the products that they make anymore since they're just working retail jobs (not higher paying production jobs) or that the margins are going into the pockets of the few at the top of these companies. Henry Ford revolutionized things when he paid his workers enough to buy the products they made. Now, with off-shoring, skilled workers are working at Wal-Mart for peanuts. *** this is all very very generally speaking of course, but try and find too many affordable consumer goods still made in USA / made in Canada.

the whole point of outsourcing and trade is that certain goods that can be produced cheaper somewhere else, which actually makes them more affordable for the consumer. as for outsourcing, sure some jobs are outsourced but usually it is tech support or other "follow a set of instructions to do something/solve a problem" job. people that are only trained to do that, can easily re-train into a more in-demand job. and should for that matter.

___________________
Jesus Quintana: Let me tell you something, bandejo. You pull any of your crazy shit with us, you flash a piece out on the lanes, I'll take it away from you, stick it up your ass and pull the fucking trigger 'til it goes "click."
The Dude: Jesus.
Jesus Quintana: You said it man. Nobody fucks with the Jesus.
Walter Sobchak: Eight year-olds, Dude.

quote:

Originally posted by timmyboy the whole point of outsourcing and trade is that certain goods that can be produced cheaper somewhere else, which actually makes them more affordable for the consumer. as for outsourcing, sure some jobs are outsourced but usually it is tech support or other "follow a set of instructions to do something/solve a problem" job. people that are only trained to do that, can easily re-train into a more in-demand job. and should for that matter.

But that's exactly my point - outsourcing works in theory but little of the savings is passed on to the consumer (or former employee).

If you worked for Sears making couches, and got paid well for your efforts, but then were canned because Sears wanted to make couches in China for less money but still sell them for a similar amount, you run the risk of working a lower paying job and now the inability to afford the same product you were just making.

If enough manufacturing jobs get off-shored, where do the people with manufacturing skillsets (or no skillsets but were just working manufacturing because it was available) get employment that pays them half decent? You create a surplus of formerly well-paid people now looking for any decent employment and those who go unemployed / under-employed can't afford what they once produced.

Outsourcing works great if you're a shareholder earning dividends or an exectutive earning bonuses based on reducing costs and increasing margins.

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Paul

quote:

Originally posted by misterpink Me personally, I think it's(the financial crisis) a result of years of outsourcing well-paying american jobs overseas and replacing them with low paying jobs. Welcome to the late 1920's. Don't hit your face on the way down.

Or a combination of over-extended cheap money, lax lending standards, securitization gone mad, flawed risk-assessment models, leverage being pushed pass it's sustainable limits, an unregulated $45 trillion credit default swap market, falling house prices....and so on and so forth.

Or it could be outsourcing....

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quote:

Originally posted by pmoisse But that's exactly my point - outsourcing works in theory but little of the savings is passed on to the consumer (or former employee).

not true at all, i love to use this example, when i was in high school, the most expensive brand name running shoes back in the days were like 100-150$, nowadays, it's still 100-150$... thats like 15 years later!

Same thing for so many electronics, anyone remember the cheapest PC was selling for 2k about 10-15 years ago? now 2k$ for a pc is considered mid-high end.

You get way more out of your buck since China entered the game.


In the late 19th century the exact same fears popped when the engine was invented, people lost their jobs in droves... still there's an even lower unemployment rate today than back then, while people enjoy a higher standard of living.

Didn't they say, companies with computers would need less workforce?

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^ good point, though you're also dealing in economies of scale too with regards to consumer electronics etc.

I don't think that this whole crisis can solely be blamed on outsourcing. it can't be blamed on any one particular failing of the US economy at all, rather a collection of circumstances mixed with long-standing greed that all came to a critical mass at once. Any one of these issues on their own could be dealt with accordingly, but because everything is so bloody mixed up, it just creates one giant toilet bowl sucking the whole thing down.

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Paul

quote:

Originally posted by pmoisse But that's exactly my point - outsourcing works in theory but little of the savings is passed on to the consumer (or former employee).

I disagree with this. I think the increase in margins is shared somewhat with the consumer....but not entirely, you're right.

I'll get flamed for this, but outsourcing is just comparative advantage at work. North America is not the best at making cars, so why on earth should we try?

meh. back to the topic.

many feel that this "financial crisis" is merely a symptom of a much larger problem...and that problem has become SO big, that no cash infusion into the financial markets is going to fix it.

just a few recent quotes from people whose opinions I respect on another forum, so take them with whatever grain of salt you wish...they're merely food for thought

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"Housing, banking problems, etc. are symptoms of a problem, but not the actual problem. The real 'disease' has been the loss of North America's industrial base, and a lack of investment in productivity. Fix the underlying disease, and the symptoms mostly will go away. If the energy and manufacturing infrastructure of the US is fixed, then house prices can be high, and even bankers might make some money. The $700B bailout should be passed, but instead of being directed to the financial sector, it should be directed towards a revitilization of the manufacturing, infrastructure, and energy sectors."

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The problem at this moment continues to be liquidity. A prof of mine highlighted a paper by Bernanke from the 80's a few months ago in a blog post and almost everything he brought up (or the Fed has attempted to curb) has locked in step with what occurred during the Great Depression & its effect on monetary policy. The US has to revitalize its industrial base, but this problem has gotten so big, so expansive & so complex I don't see how turning on all the engines will get things moving again. You have to have consumers to purchase anything and they're all tapped out because their in negative equity and struggling just to make it week to week.

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apparently every Depression after a great bubble goes the same way with heroic bailouts and the central bank doing everything it can just like today. During the boom the system of the day is said to be great and the central bank head or whoever, is said to be a genius. After it bursts everyone says it is thier fault and they caused it. John Law as the first really reckless central banker, was celebrated during the boom and reviled during the bust after the mania climaxed in 1720. A mighty effort was done by the senior central bank to prevent the subsequent general contraction that endured from the climax of the bubble in 1825 until the mid 1840's. At the height of the 1929 mania the Fed with its "elastic" currency was celebrated, as the old system of the greatest depression from 1873 to 1895 was condemned. ...

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...$700 billion would go a long ways towards ameliorating infrastructure, and putting the construction industry in the US back on track. And yes, I would suggest literally cutting the infrastructure construction firms blank cheques. Much better than doing such with the financial industry, which they were seemingly very well prepared to do. Looking back at the Great Depression, many projects that were government-funded back then have had enormous lasting economic effects. The Hoover Dam, the Tennessee Valley Authority, hydro dams in the northwest. The Alaska highway. Etc. Contrast this with the history of bank bailouts in the USA; the most recent bailout of the Savings and Loans, by way of the Resolution Trust Corporation cost the taxpayers billions. I think you'd be hard pressed to show any historical bank bailout in the history of the world as being beneficial to taxpayers.

Last edited by MarkT on Sep-30-2008 at 21:57

quote:

Originally posted by slingshot Or a combination of over-extended cheap money, lax lending standards, securitization gone mad, flawed risk-assessment models, leverage being pushed pass it's sustainable limits, an unregulated $45 trillion credit default swap market, falling house prices....and so on and so forth. Or it could be outsourcing....

haha.
Walmart is clearly behind all of this.

If you really wanna get into it, it starts with the second Bretton Woods agreement and a fiat money supply.