What are the best ways for businesses to maximize profits? Businesses in the U.S. have answered this question with a very simple answer: make products overseas. This business tactic of using labor services from a third party is known as international outsourcing (Brecher 996). Within U.S. borders, there are certain regulations and restrictions on many aspects of the manufacturing process (Stephanie para 2). However, production is cheaper if they are made countries where regulations are less strict (Wood 25; Stephanie para 1). Despite the profits made from this technique, it can have some repercussions on the U.S. economy and the environment of nations occupying those factories (Marquis 39; Ahmed 192; Zhang 776). This springs a debate to whether more concern should be held for the outcry of Americans to bring jobs back to the U.S. (Ahmed 192; Stephanie para1) or to the freedoms of the businesses and their right to seek a profit (Salanţă 270).
“It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy” (Taylor). This quote by Adam Smith, cited by Timothy Taylor, defines outsourcing as a task that can be done within a group, but is instead done by a third-party group for less money. While outsourcing service benefits American firms, studies show it takes jobs from middle-class Americans and adversely affects the American economy; however, other research proposes that outsourcing might actually benefit the American economy.
Outsourcing American Jobs
Outsourcing, no word in today's workforce is so loved or hated. Depending on who you are it is the greatest thing ever or an evil act by money hungry businesses at the expense of American workers. But what is the truth? Is it good? Is it bad?
Outsourcing – Don't Get Bangalored?
As the world has gotten “smaller” in terms of trade, outsourcing has become a hot topic in much political and economic debate in the United States.
An Associated Press-Ipsos poll in May 2004, found that 69 per cent of Americans thought that outsourcing hurts the US economy while only 17 per cent thought it helped . President Bush’s chief economic advisor Greg Mankiw has stated “outsourcing…is something that we should realize is probably a plus for the economy in the long run” . While John Kerry has emphasized, that he is going to stop the outsourcing of American job .
Outsourcing emerged on the financial arena during the 1980s and has since then been spreading. Outsourcing production was furthered with the process of globalization which provided a new component leading to the strengthening of resources, skill and labor specializations across the world. The process of outsourcing is using the skill and abilities of a third-party to accommodate society on the foundation of labor. As stated earlier, it was during the 1980s that the process kicked off mainly due to the efforts of corporations when they began to hire labor forces across the world. Even though outsourcing has come out from its developing stages, there are still following effects on the US economy.
Case Summary
The American Outsourcing Case is a compilation of factual information for the purpose of provoking debates. The authors present both the pros and cons of outsourcing, and avoid inserting their personal bias. The case clearly defines outsourcing and then focuses on outlining its existence in China, Mexico, and India. The evolution and U.S. involvement in the Maquiladoras of Mexico is described first.
Globalization, or outsourcing, has been a hindrance on the American economy for the better part of twenty years. Outsourcing has cost millions of jobs in the United States over the past twenty years, and continues to create problems for the families in the United States. Outsourcing is a hindrance on the American economy, and will create a lasting effect on the college graduates and younger children of today. While outsourcing is bad for the American economy, it has been a growth factor for the economies of the countries such as India. However, India has a social caste system. The caste system determines what social class one is born into, and that person has to stay in that social class for their entire life. Therefore, the economy of that country would be better, but it would only help the rich get richer and politicians have a stronger effect on the poorer classes.
Mankiw and Swagel (2006) argue outsourcing is not as large a phenomenon as the media describes. Their research indicates outsourcing accounts for very little of job loss in the United States, nor has it made a distinct contribution to the slow rebound of the labor market. They go on to propose that increased overseas employment has actually contributed to higher employment in parent United States companies. They reported that while 30,000 jobs were lost per month in 2004, two million job changes per month were happening as well. They reference the Bureau of Labor Statistics when they report that in 2015 there are expected to be 3.4 million jobs outsourced, but 160 million jobs gained here in the United States. They also claim that there is a rise in net US income by 12-14 cents per dollar of outso...
Ethics of Outsourcing
In this paper, I will discuss the ethics of outsourcing manufacturing from my local community to a developing country. I will view this debate through three different frameworks: Utilitarianism, Pragmatism, and White’s biblical principles. I will also conclude my final view on outsourcing and the benefits of using a framework for making ethical decisions.
Utilitarianism
are a major cause for jobs becoming outsourced. The outsourcing of jobs can greatly impact a nation, just like it did in America. The size of the U.S.work force has been reduced due to Chinese factory workers because they were the cheapest labor force and could work longer hours for a smaller pay. No wonder as I grew up I observed the items I was using, very few said, “Made in America”, because most said “Made in China”. It is now seems clear that there is an economic incentive for companies and corporations to produce toys for children, clothing, sneakers, technology in China and other foreign Asian