Cringely has written eloquently about the effects of outsourcing to India.
Outsourcing hurts more than just IT.Every day, I drive past an old factory. I don’t know what’s in it now. From its appearances, not much, because I’ve never seen any traffic around the place. The sign and the smokestack says “International Shoe Company.” Curious, I did a little bit of digging. It seems that at one time this was the largest shoe manufacturer in North America. It’s pretty obvious that it isn’t anymore. It’s not for lack of people around to staff the factory–there are plenty of people in the neighborhood. From the looks of some of them, they could use a job. But the factory sits, abandoned, for one simple reason.
We don’t want to pay people $5.25 an hour to make our shoes. Those of us who are willing to pay people $5.25 an hour to make our shoes can’t, because not enough other people are willing.
So the once-proud factory sits.
I drive past a smaller operation every day too. It’s boarded up and fenced up, and overgrown with weeds. A faded sign says, “Missouri Candle and Wax Co.” It obviously never employed as many people as ISCO did. But there’s a neighborhood all around it. I’m sure at one time it supported a few households in the neighborhood around it.
Not anymore. The neighborhood’s in better shape than the candle place, due to some rehabbing that’s going on. But I guarantee the people moving into those houses don’t work anywhere in the neighborhood, because the jobs aren’t there anymore.
The jobs aren’t there because we don’t want to pay people $5.25 an hour to make our candles.
Now, I can kind of see paying lower prices for shoes, in some cases. You need shoes. I can’t so much as walk to my car without shoes, some days. If you don’t have a lot of money, you’ll buy the cheapest shoes you can find. It’s a matter of survival.
But candles? Candles are a luxury item.
Like Cringely says, the government isn’t going to do anything about it because the government doesn’t care. Big business wants to offshore, and modern Republicans don’t seem to believe big business is capable of doing anything wrong. If big business says it should outsource, well then, God Himself must have handed them a stone tablet that says, “Thou shalt outsource.” Democrats won’t solve the problem because Democrats need needy people in order to keep their jobs. So Democrats profit from offshoring just as much as Republicans, although for different reasons.
Richard Gephardt suggested solving the problem by instituting an international minimum wage. That would solve it neatly–if a Chinese worker makes $5.25 an hour, then suddenly it’s cheaper to pay the $5.25-an-hour worker who lives next door to make your candles and shoes and computers.
But Richard Gephardt isn’t going to be our next president, and Richard Gephardt knows just as well as you and I know that there won’t be an international minimum wage coming down the pike any time soon. It’s just election-year rhetoric.
That means you and I have to solve the problem.
Cringely said one thing that I disagree with. He said companies who offer good customer service grow. Maybe sometimes they do, but if that were true, virtually everybody would be bigger than Wal-Mart, because at Wal-Mart, “customer service” is synonymous with “customer returns.” If you need to know where you would find mineral oil, it’ll take you half an hour to find an answer to your question. If you’re lucky.
I guarantee if you walked into A. G. McAdow’s in Pharisburg, Ohio in 1883 looking for mineral oil, my great great grandfather could tell you if he had it and where it would be. He’d even know what the stuff was.
I’ll tell you what customer service is. It absolutely shocked me when I got it last week. I went to Marty’s Model Railroads, and I’ll admit, the reason I went there was because they have the best prices I’ve found locally on used train stuff, and I can get it without the hassle of bidding on eBay. I asked Marty if he had a Marx coupler. He went and looked. He came back and said he didn’t have a coupler but he had an entire truck, and asked what I wanted to do with it. I said I wanted to make a conversion car. He pointed me to the cheapie bin, told me exactly what I should look for, and then when I found an $8 car that was suitable, he took the car, along with the Marx truck, into the back room, drilled out the Lionel truck, and came back with the one-truck Lionel car and a nut and a bolt. We put the car back together on his counter, by the checkout. Then he charged me 10 bucks.
Ten bucks would have been a good deal if he’d just handed me all the pieces and said good luck. But with his tools in the back room, he was able to do in five minutes what would have taken me most of an hour.
Later that week, I took in two Lionel locomotives for repair and bought another conversion car–this time, not because I knew I’d get the lowest price, but purely because I knew he’d treat me well.
When I go to pick those locomotives back up, I need to tell him that’s exactly why.
Marty’s business is growing, but I don’t know if that’s because of outstanding customer service or if it’s simply because he’s the only shop left in eastern Missouri that fixes Lionel trains.
Activists talk about thinking globally and acting locally. Building a sustainable economy requires less global thinking and more local acting.
Don’t go to Lowe’s and Home Depot if there’s a corner hardware store you can go to. The last two times I’ve gone to a local mom-and-pop hardware store I got help without asking for it, got exactly what I needed, and got out of there faster than I’d be able to get out of the big-box store. And as far as the price, I probably made up for it on gas. Remember, Lowe’s and Home Depot are megacorporations. More of the money you spend at the mom-and-pop place will stay in the area.
Don’t go to Wal-Mart if you can get what you need someplace else. Target is a megacorporation too, but it puts more money into the communities it works in. But if there’s a locally owned business left, frequent that.
Don’t go to chain restaurants if there’s a locally owned place you can go to instead. It seems like St. Louis has a thousand delightful locally-owned restaurants. There is no reason whatsoever for a St. Louisan ever to eat at Olive Garden.
And wherever you go, check to see where the product you’re buying was made. I needed a putty knife the other week. The cheapest one was made in China. The one on the peg next to it was made in Canada and it cost 10 cents more. I bought the Canadian one. Neither one helps the U.S. worker, but when I buy the Canadian one, I know the guy who made it was paid a fair wage, and that’s worth the extra 10 cents to me.
Sometimes you have to get creative to avoid these things. If I want model train stuff, Lionel and its competitors all seem to be building everything in China. But I don’t have to buy new stuff.
The same goes for clothes. If all the clothes you like are made in countries that operate as the world’s sweatshop, buy used ones. At least then the operation that created the sweatshop doesn’t profit a second time. Besides, used clothes are cheap. And no one will ever know those year-old clothes weren’t originally your year-old clothes.
DVD players are all made in China today. So there, the decision is pretty easy. Buy the cheapest one. Then you’ve got more money left over for the times when you do have a choice.
Finding a list of countries whose workers earn a living wage has proven difficult for me. Does anyone else out there have such a list?
Of course, I would first prefer to buy locally made and then used, given the option.
David Farquhar is a computer security professional, entrepreneur, and author. He started his career as a part-time computer technician in 1994, worked his way up to system administrator by 1997, and has specialized in vulnerability management since 2013. He invests in real estate on the side and his hobbies include O gauge trains, baseball cards, and retro computers and video games. A University of Missouri graduate, he holds CISSP and Security+ certifications. He lives in St. Louis with his family.
…and if you outsource too much, the tail may end up wagging the dog:
http://www.computerworld.com/managementtopics/outsourcing/story/0,10801,63176,00.html
There’s also a lowest common denominator effect happening here…
I agree, but don’t forget the illegals that steal jobs in this country.
Would it help if we outsourced a few politicians and a handful of CEO’s?
GE had a light bulb factory in Providence, RI once. These workers earned excellent money with great benefits and this plant outproduced all plants in the US. However, GE in it’s infinite wisdom closed it. Why? Not because they were losing money but they could make more money by moving the plant to Mexico and Yugosalvia.
Then Cross pens recently closed a plant in Rhode Island to move it’s operations overseas, again not because it’s American plant was losing money but they could make more money overseas.
I buy American made products whenever I can. However, it is becoming extremely difficult to find them. I can tell you one thing, it will be a cold day in hell when I purchase a GE or Cross product.
And as mentioned, buying from Ma&Pa shops can be rewarding. Ma&PA shops survive if the prices are "reasonable" and provide great service. Where else can you go when the purchased item is $4.01 and they forget the penny and hand you the $1 bill back instead of .99 cents of change, thereby sparing you the agony of it jingling in your pocket. Do the Mega/Franchise stores do that?
Within reason, I try to buy locally and American made products. I recently was able to find a local furniture store and it’s product was made in the US. Wahooo!
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~Half-baked philosophizing from a recliner.
I just wonder who’s going to be left to buy these products if companies keep out-sourcing all these jobs.
The time will come when we will be a stictly service supported economy, and the rest will be making minimum wage at a gas station. Going to be kinda hard for most to afford a family, car, home, on that kind of wage.
<sigh> Don’t get me started… Too late; now is the time on Sprockets when we rant </vague Saturday Night Live reference> Coherence is not guaranteed.
There are two factors as play here, IMO. First, there’s greed. Now I don’t buy into the notion that all corporations are inherently evil, but there are plenty of corporations that are obsessed with dollar signs. There’s also another factor: it costs a lot to run a business these days. My employer, as a reminder at performance review time, gives us a laundry list of the added expense that they must pay in order to employ me. Stuff that doesn’t show up in your salary. Things like matching Social Security funds (which I’ll probably never see when I retire; your welcome, children of the 60’s), matching 401k, the better part (or all) of my health, disability, and group life insurance. Those are things they have to pay either because the goverment forces them to, or to stay competitive and attract skilled employees. It doesn’t include the other things above what I’d consider “necessary operating costs”, like corporate taxes. Granted, the overhead will be less for companies that don’t offer a full set of benefits (or anything close to it).
Now I’m not shedding tears for the WalMarts of the world at all, but it seems to me that non-behemoth companies may be nudged into considering outsourcing because the overhead imposed by the government – you know, our well-paid, highly-wasteful babysitters – tips the scales. Expenses too high? Get a lower-costing workforce. Sure, you’ll never convince a company truly engulfed in moneylust that paying a foreigner $10 a month with few, if any, benefits is better than an paying an American’s $1000 salary along with insurance and maybe a retirement plan. But reducing the added cost of business imposed by the feds and states sure sounds like a way to encourage job growth from small- and medium-sized businesses here, no? And as Dave says, buying from those businesses – if we all do it – can get the big businesses focused back on what made them big in the first place.
Here’s a revolutionary idea: if you took away the expense of the wastes of payroll money and bureaucracy known as “entitlements” (funny how we survived without those for 150+ years), businesses would have more money to grow and – gasp! – hire more people. And employees would have that money to save or invest in something that will actually be there when they retire. Ah, well, that’d never sell to America today, because we’d hate to have to think for and take care of ourselves. Better to let the government throw our money away.
The humorous-if-it-weren’t-true part of this “evil corporations are moving jobs overseas” talk is when it comes from people who want to “create jobs”, but then want to tax the hell out of the people who’d offer them – thus discouraging those companies from hiring or doing business here. Funny, maybe those folks aren’t really serious about creating jobs. Maybe they just want to be re-elected. Not that I’m cynical or anything…
SteveD,
Those 150 plus years, 80% of the population was on the farm, living on what they grew. The corporations took the farms and stuck the people in the cities where they are easier to control.
The rich build gated communities and hire armed guards. Could they be anticipating another Depression?
Ask the people that worked at Enron and the other companies, where money was stolen from the pension plans, if private retirement is the way to go.
Those 150 plus years, 80% of the population was on the farm, living on what they grew.
Yep, our ancestors, in general, were more self-sufficient, and that’s my point. They didn’t depend on a wasteful government bureaucracy to take care of them. Progress, I guess…
The corporations took the farms and stuck the people in the cities where they are easier to control.
While there’s a kernel of truth to this statement, there’s also some chaff. There have been, and always will be, vultures. Some of them are individuals, some are corporations, some are government bodies. Corporations didn’t force farmers to go to the cities at gunpoint to become pawns in some social conspiracy. That’d be the Bolshevik Revolution, not the Industrial Revolution. Companies, particularly banks, surely benefited when crops failed and such, but they didn’t cause those root issues. Of course, today, farmers get sizable subsidies to do less, so there’s been some turnabout, I guess.
The rich build gated communities and hire armed guards. Could they be anticipating another Depression?
I suppose since the rich obviously still collude today, they must know what’s going to happen. Or maybe consumers have a lot to do with driving the economy… BTW, don’t confuse “corporation” with “rich”. Not all corporations are awash in profits, and thus want to enslave you. I’d hate to hear tired class warfare arguments applied to my local mom and pop store just because they incorporated.
Ask the people that worked at Enron and the other companies, where money was stolen from the pension plans, if private retirement is the way to go.
First, I’m not defending Enron, or its idiotic policy of holding 401k matching funds in company stock, or how it handled the plan around the time the accounting scandal broke, or the various other brain-dead aspects of its retirement plan. The employees were hosed, without a doubt. And I’m as ticked as anybody that those involved aren’t being prosecuted and doing time.
On the other hand, a 401k is not the only vehicle you can use to save for retirement. You’ve got plenty of options, IRAs and mutual funds outside of your 401k being just a couple. Those matching funds sure look nice, of course, because it’s “free” money. But it’s risky to count on a 401k and Social Security for a comfortable retirement.
There’s no foolproof way to save for retirement, and that’s particularly true for Social Security. Of course, that’s compulsory, so I don’t know if you can really call it “saving”. Like a lot of people my age, I don’t plan on it being there for me when I retire; it’s only going to bleed more as the baby-boomers collect. So “public” retirement is a complete bust. The only retirement I can count on being there when I need it is what I build myself. Part of that is a 401k, but not all of it.
I suspect we all to some degree speak with crossed purposes. We
complain about the megacorps but the mutual funds in our 401k’s
are loaded with their stock. We bemoan the loss of jobs and
wonder from the seats of our Hondas when Americans are going to
relearn how to build a quality car. We hate the illegals sneaking
over our borders but hell the price of grapes is too high as it is. A
decent wage in this country means clean new clothes, a good car, a
warm house, and being 15+ lbs overweight. A decent wage in
Guatemala means the family gets fed, this week. How many people
now shop the internet for the best price, which isn’t going to be
from your local megastore, let alone some Mom & Pop (specialty
shops may be excluded). Eventually most merchandise will be
stocked and shipped from mega-wharehouses built on cheap desert
land located in the middle of nowhere next to an airstrip and a Fed-
Ex.
As much as we might object, we buy into the system we protest. I
sympathize with loss of jobs but can’t help but notice that every
country we lost jobs to, seems to have improved their health,
education, and quality of life. I think that’s a good thing. And
America is still the major market engine of the world. I too miss
the Mom & Pop stores but I still shop at the local megastores
because that’s where my neighbors work and I want their families
fed and clothed also. And really, there’s no inherent reason,
customer service is bad at any of these stores. That often only
shows a loss of values on the employee’s part. After all, isn’t
someone who agrees to do a given job for a given wage obliged to
do their best? – how many do? Greed, self-interest, and
indifference are not the exclusive property of Corporations which
after all are made up of people. Where exactly is line where the
degree of greed, self-interest, and indifference goes from OK to Not
OK (I know that begs a response but the point is to check ourselves
first.) Modern communication has shown the world what kind of a
"good life" is possible and everybody everywhere wants a piece of
it. Lots of people are willing to work hard for it and feel they
deserve the chance. The days when 20% of the world’s population
controls and consumes 80% of available resources may be nearing
an end. I suppose we could learn that sufficient is enough or adopt
the attitude that we deserve it first because we’re better and
because we’re us. I think there’s a word for that.
—
Some things you must love because they’re impossible to like
Well spoken, Dean.
SteveD,
Very good response.
My bolshevik background comes from London, Steinbeck, Guthrie, Rogers, Jesus and many others, filtered through fifty six years of life.
When you combine the stories of the depression from your parents and grandparents, with the great works of these men and others, you will be hesitant to believe everything the government and the politicians would have you believe.
My bolshevik background comes from London, Steinbeck, Guthrie, Rogers, Jesus and many others, filtered through fifty six years of life.
Thought I detected some Grapes of Wrath in there. 🙂
When you combine the stories of the depression from your parents and grandparents, with the great works of these men and others, you will be hesitant to believe everything the government and the politicians would have you believe.
Again, I’m not an apologist for corrupt companies, but I also won’t paint all companies as evil. As with many things, there’s a lot of gray to be found between black and white. Believe me, I certainly understand and share your skepticism. I don’t take what a politician or a corporate officer says at face value (for a recent example, see CBS’s “apology” for the “unplanned” activities during the SuperBowl’s halftime show). There are vested interests (their own) involved in either case. But I think the government – being orders of magnitude larger than any corporation, and the purported defender of our rights – deserves the lion’s share of our attention. Personally, I wish they’d stick to defending our liberties and quit worrying about how “progressively” the rich should be punished for being successful.
SteveD
Once again, well said.
Beyond Grapes of Wrath, there is Education of a Wandering Man by Louis L’Amour. It’s a personal tale of the ’20’s and ’30’s in America .
It can come again. Be prepared by being educated.
This thread reminds me of that great movie "NETWORK" (where "I’m mad as hell, and I’m not going to take it anymore" became popular) In it, Ned Beatty gives a prophetic speech about how how corporations are the new nations of the world, where the interests of the corporation are not only the same as the government, but supersede the interests of the government. In this age of globilization, corporations cross borders more easily than diplomats. I mean no disrespect to Vets, I am a Vet. But in hind-sight, the way to have won Viet-Nam would have been to send Nike into the North and South and get everybody to start making sneakers. In 5 years it wouldn’t have mattered who won politically- their interests would have been the same as ours. Free Enterprise shows it’s easier and better to control the population thru economic success and the perception of freedom than with an Army. Among the results of free-enterprise though, money takes on an artificial value far in excess of the simple goods and services it’s supposed to represent, A super-class which exercises the real control over most resources, A broadly successful and content middle-class with every aspect of it’s life oriented to some form of paid consumption (which generates the profits that enable the super-class), and finally the losers, whose miserable lives provide the real motivation for everyone else to succeed. In this thinking, a certain percentage of the population losing out is not only a fact of life, it’s a necessity. Also in this scenario, giving welfare and unemployment to those in hardtimes, is economically viable because it’s money that gets returned immediately to the overall economic engine. Besides, uncontrolled suffering only leads to health hazards. The long term vision of globilzation is to create not just a few countries, but a world full of consumers with money. Stable, satiated, and a few pounds overweight. Sorry, – I got into a cynical mode.
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Some things you must love because they’re impossible to like
Stable, satiated, and a few pounds overweight.
…and stuffed in pods in order to utilize their energy to keep the machines running.