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Would love to know how our American VIP Members feel about US companies continuing to move a huge number of their jobs ‘offshore’ to places like India, the Philipines, China and of course Costa Rica.
It’s not just the lowest-rung-on-the-ladder jobs any more, we have Wall Street analysts and medical experts in India… The ‘Wall Street’ international brokerage firm I deal with is located in the Philippines!
In years gone by the patents were held by the West and the manufacturing was done in the East but with so many years of manufacturing state-of-the-art products behind them, now more and more patents are being filed from the East so they seem to be taking control.
Are you concerned about the future of the US job market? Are you concerned about the kinds of jobs that will be available for your children and grandchildren?
Scott Oliver – Founder
WeLoveCosta Rica.comThe outsourcing phenomenon you describe, Scott, is one of the prime factors that motivated us to move to Costa Rica. While we have no children of our own, we have a niece and nephews and our friends have their children. Frankly, I see a pretty dim future for their generation.
Our niece and nephews have done everything right. They’ve all finished college (and many have advanced degrees), they’ve stayed off drugs and alcohol. They’ve married good people. They work hard. They live frugally. And they’re raising good children. In spite of all of that, every one of them is a severance check away from ruin as more and more of America’s opportunities migrate overseas. And once laid off, their futures will be as bright as those of all the other pizza drivers. While our immediate family may make it to retirement, many won’t.
The problem is that, from the point of view of American corporate boards of directors, you can’t blame them for moving those jobs to places where they can hire equally talented people for a quarter the cost. With the abundance of highly skilled workers in what used to be third world countries who will work for a pittance, how can corporations not capitalize on them? Given a choice, would you pay a block mason U.S. wages or Costa Rican wages? Why would a corporate director do otherwise?
What’s more, many of those countries have actual industrial policies which are aimed at successfully accomplishing just what’s going on. India has established a technical university that is second to none in the world and draws the very best students, the ones who used to come to the U.S. to study. China has an avowed policy of moving from an economy based upon making cheap consumer goods and snapping together components of higher-tech items designed and made elsewhere to an economy in which they do the research and development and they hold the patents. Where is the United States’ industrial policy? Where is the U.S., as a nation, headed? Where can I read the plan?
And what’s going on in the U.S.? We have an educational system that’s based upon passing tests, not teaching and learning. Fewer and fewer Amercian students pursue high tech (read: “difficult”) courses of study. Meanwhile, having abandoned the legitimate interests of the lower class twenty or more years ago, national policies, both governmental and corporate, increasingly disfavor the middle class. More and more wealth has migrated into the coffers of the already obscenely advantaged to the disadvantage of everyone else. Working peoples’ real incomes have been essentially stagnant since the mid-70s while the incomes of the already richest have spiraled up at a dizzying rate.
I think that the bottom line is that those with true power in the United States are hellbent upon a course of wealth concentration into their own hands that will eventually render the U.S. a third world country. The only question in my mind is just how quickly it may happen.
I agree with David. He is spot on about everything. The last prediction I saw indicated that withing the next ten years, Hispanics will have taken over our country and outnumbered the rest of us, as has already happened in certain states. It does NOT bode well for anyone here, and it’s one of the reasons we wanted to move out of the country. Having said that, we also realize that it is a viable idea to move the mosaic fabrication company to Costa Rica and we are investigating how to do that. We could hire 4 people for what we pay one person here in the States, but we may get blasted on import fees and shipping, so maybe it’s not as good an idea as we thought. As for education, we have been dumbed down so far that the US ranks behind countries such as Albania in math and science, and that’s just for starters!
Would appear so…
Maybe I’m old fashioned but I like to think that companies could be ‘good citizens’ too which in my mind means that they could show more ‘loyalty’ to the people who are working for them, helping their bosses build a business and some loyalty to the local community that supports them.
As a Wall Street trained investment advisor, I am most definitely a ‘capitalist’ and appreciate that companies need to make money but this capitalism-on-steroids system we presently have (especially in the US) is clearly unsustainable.
At the end of the day when we’ve all finished the “race to the bottom’ for the cheapest wages in manufacturing, customer service, telephone call centers and people are now processing US tax returns abroad for goodness sake – what jobs will remain in the US?
Will there be a middle-class left?
Short-term, offshore outsourcing may appear attractive but long-term, like you, I think it will decimate the American way of life.
Scott Oliver – Founder
WeLoveCostaRica.comI work with, not for, one of the biggest corporations “Motorola”.
They have recently outsourced their repair depot to Mexico. Those that worked in Elgin, IL, were either offered the job move or they lost their job altogether. All in the name of saving $$$s.
How sad is that? Where is the loyalty that a Company has to their employees? It’s very sad.Edited on Dec 20, 2006 08:36
If the US would make basic EDUCATION their top priority rather than military, social programs and prisons (3% of our population is in jail, on parole or on probation), the need for outsourcing would be drastically reduced. The bottom line is that we are turnig out a generation of degenerates that can’t think for themselves, are lazy and have an entitlement attitude. As a business owner it has been exceedingly difficult to find average employees less than age 30.
Education today is about test scores so the schools can keep their funding. They could give a rat’s behind if the students are prepared for life in the real world, or if they know where Canada is on a map. Forget them knowing where Iraq or Iran are. We had some of those under-30 employees — what a waste! We were lucky if they ever showed up and some showed up for work coming straight from a night of partying; they had no pride in their work and did only the minimum (sometimes less) expected of them; and a couple were on so many legal drugs they could barely function. If they are a glimpse of our society as a whole, you can start to understand why outsourcing is a good idea for the companies.
And the ultimate outsourcing story comes from a friend of mine who designed a line of cars for Ferrari. He’s been approached by some Chinese businessmen who want to manufacture his new line of Ferrari cars in China. He told them they’d never be able to keep one of those cars on the road for more than a year with the way they tool parts and the substandard materials that they use. But Ferraris are selling like hotcakes in China now so they want to find a way to make them cheaper — but surely not better!
First cheaper, then better, Maravilla. That was the sequence in post-WWII Japan, in post-conflict South Korea, in India, etc.
Sadly, the disloyalty between employer and employee runs both ways. True, many Americans do have that “entitlement” attitude, but most corporations see their employees as unbranded commodities which are interchangeable on the world labor market. There, equally good or better and much cheaper is the road to success.
And wise American corporations have not only undertaken to produce their goods and services worldwide, they’re marketing them worldwide, too. The American market, with it’s declining working classes, may soon become immaterial to global corporations.
This May Be the Best Kept Secret To Building A Stronger Domestic Economy
You may agree with the dozens of politicians who say that outsourcing is a problem and is dramatically eliminating domestic jobs.
I disagree and here’s why.
In 1999 I started outsourcing work to a firm in Venezuela, and did so with great success until late 2005. In the early years, my outsourcing was small; it eventually grew to such a large volume that I was forced to outsource work to Romania, Russia and India.
Presently, I send 99% of my work to India.
For every aspect of my new or ongoing business ventures, my focus is on outsourcing to India.
Now I won’t say that outsourcing hasn’t ever cost an American his or her job, but I disagree with the politicians that claim outsourcing is DESTROYING jobs. I’m not sure that these politicians actually believe that outsourcing destroys jobs. It’s more likely that they, (the politicians) think that voters believe this. They might even be right. If that is the case, it means that bad economics is really good politics.
Domestic job opportunities are not reduced by outsourcing jobs to foreign countries. Actually, quite the opposite is true. Higher paying domestic jobs are created by outsourcing. A promise to stop outsourcing by politicians is a promise to make our Country poorer.
Scarcity is what makes outsourcing work.
Our desire for more is unlimited, yet our ability to produce more IS limited. Outsourcing allows us to lower scarcity by letting foreign workers provide us with things that they can produce better and more cheaply than domestic workers can.
What about jobs that are being lost domestically?
Scarcity can ensure that there will be far more jobs we want done, than people to do them. It isn’t just the entrepreneurs that are better off getting more, with less effort, by outsourcing jobs. Outsourcing enables American workers to be freed up to produce new things. More people are able to work as nurses, teachers, medical researchers, musicians, writers and yes, even becoming an entrepreneur, developing new products and technologies that will release more people to produce even more goods and services.
There is a fundamental truth that must be considered.
“Some things have always been produced more cost effectively in other countries.”
This is true no matter how productive a country is. The concept of comparative advantage is the principle that applies here. A great example is Tiger Woods. Currently he is the world’s best golfer. You would probably never think it would make sense for Tiger to work as a caddy. Right?
But, he would make the best caddy ever. Who could give you better advice on which club to use and to how to line up a putt? But his opportunity cost as a caddy would be millions of dollars, money he would sacrifice buy changing from golfer to caddy. Being a golfer is the job in which he has a comparative advantage.
Just as Tiger is most productive as a golfer and earns a much higher income as a golfer, workers are the same. They earn higher incomes by specializing in the jobs where they are the most Productive. This is why free trade and job outsourcing increase wages and salaries. They create competition that directs workers into the jobs where they produce the greatest value.
Yes. Outsourcing and international trade will inevitably harm some by eliminating their jobs. We’ve seen this in the IT field in recent years. But this is usually temporary. There is always the class of older workers, (or people who refuse to learn new skills) that don’t find new jobs that pay as well as their old ones.
As hard as it is to accept, job loss is essential to economic progress. Changing technologies and preferences constantly increase the value produced in new jobs relative to old jobs. The best way to impoverish a country is by preventing the destruction of existing jobs. Workers threatened with foreign competition may want politicians to protect their jobs against that competition, but they would be worse off if all workers received that protection.
As long as politicians think the typical voter is economically illiterate, they will threaten our prosperity with proposals to restrict job outsourcing. Clearly, the best protection against such destructive economic policies is increased public understanding of basic economic principles.
The truth is; restricting job outsourcing is without a doubt – bad economics. And with visibly more economic literacy, it will also be bad politics.
Sorry but outsourcing is not a new idea. In an open market economy he who sells for less has the advantage. Markets are defined by quality and quantity. You sell quality to few and quantity to many, Walmart is quantity, Hummers in quality. The bottom line is who owns the patents that produces the products. My oldest son workes for HP in Heredia, but he learned his English in Tampa, FL. Maravilla has a point. Schools produce the new generation of thinker’s, and we are way behind in the US. Microsoft has an advanced computer University in India (I mean highly advanced), while it is midnight in Redmont, Washinton, State in the US it is daylight in India. They comunicated between India and the US and you have 24 hours of non-stop work being generated. Why in India? because their study habits are one of the most dedicated in the world, they take school serious, while in the US it is a GED or High School diploma and that is it, with a 2.0 grade point average. Again to the global village, advances in technology makes it easy to have a presence in any part of the world, (any part). Companies are making a profit, but at what expense? I shudder at the thought of what my grandchildren will see in the workforce in the next 25 years. An education is not enough. Do you realize a plumber, electrician, drywall, mechanic, etc. makes more money than a white collar worker with an university degree, think about this. A trade worker makes more money than a college degree.
Tomas, what I find lacking in your assertions is any mention of new opportunities. It is true that the introduction of machine weaving, for instance, did not permanently decimate the economy of Scotland but that was because there were existing new opportunities for hand weavers in the western hemisphere. Displaced weaves migrated. Where are the new opportunities for the 13,000 Ford workers who have recently taken a “buy-out” from their jobs primarily to avoid permanent layoffs? Where, exactly, do you expect those 13,000 or so middle-aged, marginally educated workers and their families to go? And what will they do when they get there?
The problem faced by the Ford workers (and many, many other Americans) is that, as individuals, they face the national plans for economic development put into place by new major players on the world scene. How does Joe Fenderhanger compete with the combined power of the Indian or Chinese economic plan? What provision are those plans making for Joe? And what plan is the United States making?
The U.S. is opting, by its inattention to the issue, to sacrifice the needs of working Americans in order that some entrepreneurs (but mostly large corporations) can succeed. The question that remains is what will become of the masses?
I agree that the U.S. is not concerned for the masses. The problem is, our country, the U.S., is too focused on the bottom line and making money. That includes the government and especially the big companies. Their people are secondary. This is the inherent flaw, not outsourcing.
Yes, Ford might be outsourcing jobs but if they were more concerned with their people, who built the company for them, they would do more for them even after the payoff. Does the CEO and the top executives of the company really need the billions of dollars of income they receive on a yearly basis? How much money does a person need, really? I have lost everything a couple times. What I learned from it is that I didn’t REALLY need all the money I had. I was a non-typical business owner who was truly concerned for my employee. I took better care of them than 99% of the businesses out there. But, if I had given each of them even 20% of the cash reserves that I had before losing it, I would have changed their lives. Maybe some would have started businesses and didn’t need a job anymore. Maybe some would have had the confidence to get a position that paid double what I was paying them because they had just enough added motivation from the money I gave them.
Ford gave each employee the best deal for the company. The deal that affected the bottom line the least. That’s the wrong way to look at people. They hide behind financials that say the company is losing money. It’s losing money after the executives take their big fat pay checks.
The government is in the same boat. It’s the biggest corporation on the planet. They have set the tone for this atmosphere. They are more concerned with money than their own people. In 1994, the government seized on several million dollars from it’s citizens. But, the law changed the next year and they seized several hundred million dollars that year. Now, it’s in the billions per year. And, they brag about it. It’s disgusting.
Besides that, we have more people in prison that any other country in the world, 2 million. We have another 5 million on parole or probation. That’s more than the two notorious authoritarian states, China and North Korea.
Everyone in the U.S. has become a suspect or a non convicted criminal. It’s the same thing that caused the fall of the Roman Empire.
The point is, the people are not the concern of our country anymore. Outsourcing is not the problem. It’s the general attitude of our government.
This combined with the U.S. coming down on businesses non-stop by trying to extract more money from them or find things that they are “allegedly” doing wrong, is forcing them to move an environment that is more codusive to business. I think many companies say that it is because the labor is cheaper. But, I think in reality they are outsourcing because of the regulatory environment. It just wouldn’t be great PR.
I know that is why I am outsourcing now.
This isn’t something that is in the direct control of the average person in the U.S. But, it can be changed by them. If the people would join together to take a stand against the corrupt legal system in the U.S., changed could be made.
But, the machine is smart. They throw millions of distractions at the masses to keep them from gathering together to do something. It has been very well executed.
Even the discussion of blaming it on outsourcing is a brilliant deflection technique. They get everyone upset over jobs going overseas so that the countries getting the jobs get the grief from the American people while the U.S. Government gets to look like the hero because they are concerned about this outsourcing business. It’s beautifully executed. It’s a joke. The government created the environment that is causing the outsourcing.
I have just glossed over the subject. I could go on. But, I would love to hear comments.
davidcmurray-
You and Scott are right on with your views. I am one of the masses from Michigan, where we have lost a quarter million manufacturing jobs in the last three years let alone what we have lost in the last decade. You wouldn’t believe the home forclosures in this state. It’s all a race to the bottom. Where most of these jobs have gone is China where they can pay 20 cents an hour. And there are a billion people out in the rice fields still waiting to come to the cities to work in the manufacturing plants. According to Tomas these displaced can retrain for other work….the only jobs available are truck drivers and nurses. I personally work for a small manufacturer and have never made more than 28,000 dollars a year, with meager health benefits. Now my employer says we must take pay and benefit cuts.Jeeeeezus!
I have been encouraging my children to focus on the demographics… It worked fairly well for me with client investment strategies over the past 20 years and should continue to work in the next 20 years as those ‘Baby-Boomers’ start having more knee, hip problems and all the rest of it the ‘challenges’ that go along with aging.
As long as they have health insurance (and over 45 million Americans do NOT) then people focusing on that market should be able to make a living.
David Cay Johnston in the New York Times (27th November 2006) wrote that “’04 Income in U.S. Was Below 2000 Level.”
The Times article notes that the bottom fifth of all taxpayers earned below $11,166 and their average reported income was only $5,743 each. Because the IRS includes a single individual or a married couple in its definition of a “taxpayer” the poorest 26 million taxpayers account for the equivalent nearly 48 million adults and about 12 million dependent children. According to the Times analysis, this means the poorest 60 million Americans have reported incomes of less than $7 a day!
This when the official poverty line in 2004 was $27 a day for a single adult below retirement age and $42 a day for a household with one child, even though we know that the real cost of the basic necessities is higher.
Scott Oliver – Founder
WeLOveCostaRica.comThese headlines only from today’s Wall Street Journal:
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“Indian Scientists Return Home As Economy Moves a Step Up Original Research Replaces Rote Work, Allowing Firms To Lure Talent From U.S.
Dr. Barbhaiya Looks for Cures
By PETER WONACOTT
December 14, 2006; Page A1
PUNE, India — For more than 20 years, Rashmi Barbhaiya lived a comfortable life in New Jersey as a researcher for drug maker Bristol-Myers Squibb Co., commuting from his five-acre suburban estate in a blue Mercedes.Now, in a move that hints at a big shift in the global pharmaceutical business, Dr. Barbhaiya is back home in India. He’s still trying to discover new drugs, but he’s doing so with an all-Indian-born research team at a company he founded in this center of Indian high technology.
As big drug companies shut down some research facilities in the U.S. and other rich countries, labs in India and China are increasingly picking up the slack.”@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@
The key sentence of course “in a move that hints at a big shift in the global pharmaceutical business…”
It’s not going to be pretty but at least the USA still has more nuclear, biological and chemical weapons than everybody else and the USA is #1 for manufacturing and selling weapons of mass destruction.
I love Charlie’s article at https://www.welovecostarica.com/members/533.cfm where he speaks of the USA being #1.
#1 for military expenditures – More than five times as much as #2 – China
#1 for nuclear, biological and chemical weapons of mass destruction per capita
#1 for the number of rapes
#1 for teenage pregnancies
#1 for total number of divorces
#1 for CO2 emissions
#1 for CO2 emissions from fossil fuels 2000 (per capita)
#1 for electricity consumption
#1 for nuclear energy consumption
#1 for oil imports
#1 for total energy usage per person
#1 for municipal waste per capita
#1 for nuclear waste pollution
#1 for the number of threatened species
#1 the largest debtor in the world
#1 for firearm discharge
#1 the highest divorce rate
#1 for total crimes committed
#1 when it comes to adults prosecuted for crimes
#1 when it comes to the numbers of their population in prison – Over two million! 34% more than China which has 241% more people
#1 when it comes to the number of criminal record holders
#1 for plastic surgery procedures and
#1 for the amount of money spent on healthcare yetà
#46 for life expectancy and there are estimated to be about 45 million Americans that do not have any health insurance
#2 for the number of abortions
#2 for heart attacks and
#2 for asthma sufferers
America is not even in the top 30 for public spending on public education so it’s not surprising that it’s …
#14 for duration of education and…
#47 for total education spending and
#14 for school life expectancy and
#68 for the percentage ‘literacy’ level of the population
#11 for unemployment
#6 in the world for the total number of murders
#3 for the total number executions along with our democratic ‘friends’ in China, Congo and Iran
#13 for social security expenditure as % of GDP
#98 for GDP real growth rate
#1 for soft drink consumption
#1 for the number of television hours watched
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