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I bet that I can walk into a social gathering right now and hear discussions like “outsourcing is good for the American consumer” or outsourcing takes jobs away from all of the hard working Americans.” In either case, outsourcing has raised great concerns over its effects on the American economy. In this paper, I will discuss the types of outsourcing, pros and cons associated with outsourcing, management views of outsourcing, employee views of outsourcing, and give my opinion of outsourcing. What does outsourcing do? It enables companies to focus on the mission at hand, to save money and be competitive. Depending on a Company’s needs determines the type of outsourcing that company may use (Embleton, 1998).
The U.S. Government has to give corporations financial incentives to keep the jobs here, such as tax incentives. It has to be a win for the economy. Otherwise, companies will continue to take the jobs overseas. In the late 1990’s the high tech jobs did wonders for the economy helping to reduce the jobless rate to its lowest level in decades. These days, most high tech jobs have been outsourced to foreign countries which leave many American job seekers looking for jobs or standing in the unemployment line.
Presidential responsibility requires much focus on both the United States’ economy and the labor force. In order to establish a thriving nation of successful commerce and secure employment opportunities for all Americans, it is important to create policies to ensure that these goals are achieved. Therefore, an essential platform in my presidential race would be the guarantee that although businesses have the right to manufacture their products overseas, a law should limit the ratio between American vs. foreign employees to at least 2:1 in order to improve employment rates in the United States. One of the major reasons the economy has been suffering in recent years is the fact that employment rates have plummeted. Workers are deemed unqualified for many jobs, and while lower classes struggle to find work, the upper class enjoys extravagant salaries.
There are many reasons that a company would elect to use outsourcing. Among them is the fact that it provides an almost immediate opportunity for savings as well as a noted improvement in quality. The main reason why American companies are doing this is to save money. It’s cheaper to have someone form a developing country do the job because a dollar goes a lot further than in the states. One management problem that is causing outsourcing is that companies are looking for ways to cut cost tremendously in labor and manufacturing.
The outsourcing phenomenon has shown that globalization can affect white-collar professions, heretofore immune to foreign competition, in the same way that it has affected manufacturing jobs for years. But Mankiw's statements on outsourcing are absolutely correct; the law of comparative advantage does not stop working just because 401(K) plans are involved. The creation of new jobs overseas will eventually lead to more jobs and higher incomes in the United States. Because the economy-and especially job growth-is sluggish at the moment, commentators are attempting to draw a connection between offshore outsourcing and high unemployment. But believing that offshore outsourcing causes unemployment is the economic equivalent of believing that the sun revolves around the earth: intuitively compelling but clearly wrong.
Buying American-made products would likely help with the immediate recession by creating more jobs. But, in the long term, it will damage our economy badly. The rest of the world needs us to once again provide a solid financial backbone, and we need them to produce the tools and merchandise that we enjoy so much. In short, ‘buying American’ is only mortgaging our future. Trade is the route to salvation.
However, an increase in the number of immigrants to the United States will actually increase the number of jobs provided for people who need them. This is explained through the idea that jobs are not divided up among people in the form of having a fixed number of jobs specifically balanced to fit the number of American workers. By analyzing the effect of immigrants on the economy over the past two-hundred years, we can see that as the number of immigrants increased, the bigger the economy got, which therefore created more jobs. Immigration reform will boost demand for goods and services, which in return, means more demand for labor and more jobs for American workers. Immigrants are ambitious because they have gone through many hardships and overcome many risks to reach life in the United States.
While Bernie Sanders disagrees with American outsourcing, I cannot. Sanders’ argument focuses generally on American jobs, claiming that “We have been losing millions of jobs as a direct result of our disastrous trade policies … We must do everything possible to stop companies from outsourcing jobs” (44). While perhaps low-skill manufacturing jobs are gone, macroeconomics proves that the increased economic efficiency outweighs the initial unemployment. The outsourcing of low-skill labor allows national economic focus on high skill labor outputs. This situation allows the for price of exports to go up and keeps the costs of imports low - a favorable condition for the growth of Gross Domestic Product (GDP).
Changes in technology really make a country better off as it increases aggregate supply on a long term basis. A change in the long term aggregate supply leads to a change in a country’s output and increases productivity .This leads to an increase in real income and which in turn leads to a change in consumption thus bringing a change in the aggregate demand. The country’s real per capita income rises and puts a country in a better position economically. It generates a wealthier nation. A good example is the US economy which faced a technological change in the 90’s.