“Globalization is a process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology,” according to the website globalization101.org, a project of the Levin Institute of the State University of New York (SUNY). This definition wraps up a serious, widespread issue in a nutshell.
Seeing as how the issue is too broadly based to devote adequate depth to all of the problems at hand in one blog post, I have selected the subtopic of outsourcing on this occasion, and specifically its effects on world economics.
Outsourcing: to purchase goods or subcontract services from an outside supplier or service, or paying another company to provide services which a company might otherwise have employed its own staff to perform (dictionary.com).
In Michigan in particular, when we turn on the six o’clock news, or open up the local paper over a bowl of Cheerios on a Sunday morning, we view headlines that are riddled with stories of outsourcing, such as the notorious Electrolux exodus from Greenville in 2005, costing the small town 2,700 jobs. Similar stories often occur in the automotive industry; some, such as Lee Russ (link) claim that General Motors has even embarked on a question to “rid itself of all domestic workers,” sending the jobs to be performed at a lesser cost in countries such as Mexico or China, to name a few. Companies such as Boeing frequently say they have “no choice” when outsourcing, citing the desire to remain competitive and have the most productive workers possible, according to the Seattle Post-Intelligence. The same article quotes Gus Faucher, a senior economist at Economy.com, as backing Boeing’s claim with the proclamation, “We should not view this as something that is revolutionary. It is more evolutionary. To a large extent, it is inevitable.”
I beg to differ with Faucher. Outsourcing is not “evolutionary”; it is destructive to economies.
In the name of building up an economy–whether it is that of the US by companies purportedly saving funds, or helping that of a developing nation, such as poverty-riddled India–outsourcing occurs. Jobs are shifted from one place to another without creation of more positions, meaning that unemployment rates of the world do not decrease as a whole, but rather temporarily decrease in one location at the expense of another. For example, Forrest Research analyst John McCarthy says that three million positions in the US service sector will find their way to foreign countries in the years between 2000 and 2015, an astounding 200,000 jobs every year. Yes, this will decrease India’s unemployment rate of 7.8%, but will cause disastrous effects to our own unemployment rate. All the process really does is shift problems temporarily. The reason I say “temporarily” is that recent reports at the New Economist Blog, as of October 13, 2007, have pointed out that, due to recent Indian wage increases, the same jobs that were outsourced from America are now being outsourced from India to American states like Idaho or Georgia!
In addition, a study by PricewaterhouseCoopers in 2004 showed that outsourcing reaped few benefits for firms involved. Only 47% of the 77% of American companies who have outsourced in recent years and participated in the poll claimed to have seen even a moderate savings from their outsourcing. An astonishing 31% said they had seen little to no benefit, 9% might be breaking even with no gain or loss of funds, and another 4% who participated said that outsourcing had even caused them to lose money!
Outsourcing. In the name of globalization, of spreading the wealth and making up some of what American companies had lost, they have embarked on a risky experiment that is soon proving to be counterproductive. When they return to American soil in search of willing, cheap workers–as they did abroad in years past–they will find that gone are the desperate families who would have groveled for a minimum-wage job.
Left, instead, is a culture of distrust and bitterness.
