"The Problem Isn't Outsourcing" By Robert Reich

[applegrove]

The Problem Isn't Outsourcing: It's That The Prosperity Of Big Business Has Become Disconnected To The Wellbeing Of Most Americans.

By Robert Reich

http://robertreich.org/post/27527895909

"SNIP.....................................

As an Apple executive told the New York Times, “we don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.” He might have added “and showing profits big enough to continually increase our share price.”

Forget the debate over outsourcing. The real question is how to make Americans so competitive that all global companies — whether or not headquartered in the United States — will create good jobs in America.

Apple employs 43,000 people in the United States but contracts with over 700,000 workers overseas. It assembles iPhones in China both because wages are low there and because Apple’s Chinese contractors can quickly mobilize workers from company dorms at almost any hour of the day or night.

But low wages aren’t the major force driving Apple or any other American-based corporate network abroad. The components Apple’s Chinese contractors assemble come from many places around the world with wages as high if not higher than in the United States.

.....................................SNIP"

[AnotherMcIntosh]

1. Economic traitors.

[JDPriestly]

2. American universities are among the best in the world.

America tries to give every child the same chance at higher education and opportunity. That is not true in many countries in the world. In those countries, only the top performers in grade school go to an academic high school. Of course, if you limit access to an academic high school to your best students, you get better test scores -- at least from those students. That gives the world the impression that your schools are the best.

In the US the children who excel in academics are mixed in with everyone else in public schools. That is a wonderful thing in that we have a lot more social integration at least in smaller communities.

But it gives the world a false impression about the abilities of Americans.

In fact, our universities and the students who are educated in them are among the best and brightest in the world. That's why we attract so many talented students and teachers from around the world.

It isn't a matter of education. Germany protects its workers and its environment, and the workers respond by working productively. We need to protect our workers. In addition, the VAT tax in Germany and some other European countries more fairly imposes the costs for a social safety net on products whether produced in Germany or in some other country.

As for China, it was until recently an extremely poor country in which a portion of the population was starving. So, they are willing to do almost anything at this time to insure economic well-being. But, just wait until the working people decide they want better pay and some rights in the workplace. It will happen. It is human nature to want rights and a better life.

For Americans, outsourcing is very much the problem. We should introduce a VAT and lower proportionately the taxes we impose on employers and employees to support social welfare programs. That is what Germans do. We need to protect jobs and workers in this country as they do in Germany.

We are paying a horrible price and not being told the truth about what is going on in other countries.

[Dragonfli]

3. Excellent post, I agree the German model to protect workers should be an example we follow

Such is unlikely however as the "accepted notion" of economic success is measured only by bottom line profits and the fortunes of those that control them. This country no longer takes the well being and financial success of the population into consideration when deciding "how well we are doing".... it's as if the population below the class of wealthy does not even exist to our policy makers.

[JDPriestly]

12. True. Thanks.

[JHB]

13. Part of the German formula is employee representation on corporate boards

I think it's 1/3 of the seats for companiees with over 500 employees, going up to 1/2 of the seats for companies with over 2000 employees.

That changes the math on who managment has to please, and makes it a lot harder to conduct "sneak attacks" on the work force.

[Dragonfli]

14. I was aware of that and think it is perhaps the most important part we may be able to encourage

There are some companies here that already do that (i remember a report on one where all the employees ran the place, voted for the CEO from their own ranks and chose his salary), and it has proven to work extremely well even here, now if only we could regulate it to be the standard American business model we may finally see some fair distribution of the profits produced by the ever increasing productivity of our workforce.

In the American model, increased productivity produces more wealth but it is funneled upward and wages here fall for those responsible for the productivity, we appear to have it backwards.

[magical thyme]

20. oh, we exist all right

but only as resources to be exploited and then tossed aside when we hit our expiration date or get broken by the system.

It is not by chance that employees are referred to as "resources" and even "resource units."

[Yavin4]

9. I Agree With Your Point About The VAT

In addition, it would take us away from a consumption based economy and put us onto the road to a more balanced economy between consumption and production.

Germans are notorious savers which is why their economy is not in the dire straits that its neighbors are in.

[JDPriestly]

11. Ah! There too, government policies encourage saving.

Bausparkassen accounts.

It's an account specifically aimed to help people save to buy or repair a home or condo, and it is, as I recall, subsidized to some extent. So it is a great way to save. The German and Austrian governments encourage working people to save through this program. We have something similar in our retirement accounts. But the tax benefits are merely in being able to defer tax on our income -- not nearly as good.

http://www.infoportal-finanzen.de/bausparen.htm

[davidpdx]

16. That sounds similar to South Korea as well

Our income tax is 3.3%, the VAT is 10%, then we pay 5.8% for health insurance.

Off topic (but closely related): Taxes and fees for cars here in Korea are really expensive. I pay about 385,000 KRW ($335) a year in car tax. Plus many of the roads are toll roads.

[JDPriestly]

18. The VAT does not directly protect domestic industry -- but does so in effect.

It permits a country to lower taxes on domestic industry.

We should go that route and fund a lot of social welfare with that money.

Germany and Austria used to have VAT of 19-20%. It is really easy to collect VAT taxes although there can be some controversy about collecting it on sales of used items.

I do not think that the VAT should be charged on food or on children's clothing or medical expenditures.

[davidpdx]

19. I believe we are charged on food and clothing

I'm not 100% about medical expenses.

[DCBob]

4. "we don’t have an obligation to solve America’s problems."...

"Our only obligation is making the best product possible.”

That sounds like the fisherman who overfishes and says he doesnt have an obligation to protect the ocean since his only obligation is to feed his family.

Incredibly ignorant and short-sighted.

[Jeff In Milwaukee]

5. For those of you who don't click through to the article, read this:

"More than a third of what you pay for an iPhone ends up in Japan, because that’s where some of its most advanced components are made. Seventeen percent goes to Germany, whose precision manufacturers pay wages higher than those paid to American manufacturing workers, on average, because German workers are more highly skilled. Thirteen percent comes from South Korea, whose median wage isn’t far from our own."

SNIP

"American-based companies are also doing more of their research and development abroad. The share of R&D spending going to the foreign subsidiaries of American-based companies rose from 9 percent in 1989 to almost 16 percent in 2009, according to the National Science Foundation."

Reich's point is the the assembly of iPhones in China is almost the cheapest part of the manufacuring process. The good wages and jobs are in the R&D and high-tech manufacturing. Part of the problem? Our K-12 system of education is wilting under dumbass ideas like "No Child Left Behind" and our system of higher education is rapidly getting priced beyond the abiiity of an average family to afford tuition.

Invest In Education
Invest in Research.

That means raising taxes, Goddammit. So just fucking do it!

[davidpdx]

17. I would guess the memory chips probably come from Korea

Both Korea and Japan make components that the iPhone would use so that makes sense.

But you have a good point that not all of the money behind the making of the iPhone is going to China. It just is portrayed that way.

[Citizen Worker]

6. Outsourcing isn't the problem! Tell that to the millions of workers whose jobs have been outsourced

They will not agree.

[treestar]

7. Why do the executives want less public spending in America

When it's oK for other countries like Germany? Which they hire in due to a better educational system?

[Jeff In Milwaukee]

8. Because the costs are being borne by German taxpayers

But their profits are taxed here, where the rates are lower.

So they use the "suckers" in Europe to provide them with a high-quality labor force, and get taxed back in America, where everybody is working at McDonalds.

[treestar]

10. No surprise there

And yet they will pay into the German system. When they employ Germans, they may be liable for some types of taxes that keep their national health care going.

Yet they don't have to worry about whether WE have national healthcare.

[Nancy Waterman]

15. K&R

Great article!

[OmahaBlueDog]

21. I'll always K & R Robert Reich