Outsourcing Jobs To Foreign Countries
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Outsourcing Jobs to Foreign Countries
Outsourcing jobs to foreign countries is beneficial to the United States economy and should not be outlawed. On the downside of being in a weakened economy, Americans tend to be more hostile toward trade relations and no other aspect of this was more apparent this past year than the much-debated topic of outsourcing American jobs to foreign countries. Americans should not be concerned that outsourcing will affect their job security or earning potential. Many speculate that outsourcing will actually lead to the creation of more jobs for people in the United States as well as other countries due to globalization (growth to a global or worldwide scale).
Election years are usually full of politicians and candidates trying to find an issue of major concern, many times economic, they can exploit in order to either strengthen their candidacy or weaken their opponents. This past election year was certainly no exception with the main topic of debate being the outsourcing of jobs to foreign countries. The critics would say outsourcing has done great damage to U.S. workers and the economy and if not stopped would cause a rise in unemployment (Issues and Controversies, 2004). Supporters of outsourcing argue “that the phenomenon is simply the latest manifestation of globalization, which seeks to make the global economy more efficient and competitive” (Issues and Controversies). The media covered this topic extensively since it had become a largely debated issue between the presidential candidates during their campaigns. To strengthen their own positions during their campaigns, the candidates would even use this issue to their advantage; preying on the peoples fears of having their livelihood threatened.
It is only natural to be concerned about the economy and what potential effects outsourcing could have on it. What position does the United States government take on outsourcing? N. Gregory Mankiw — head of President George W. Bushs Council of Economic Advisers — said, “outsourcing is just a new way of doing international trade,” which makes it “a good thing” (Drezner, 2004). Jobs are not just being taken away from U.S. workers and given to low wage workers in other countries arbitrarily. Companies need to stay profitable in order to survive. Outsourcing is a new way for companies to be able to lower their costs in order to be more profitable; enabling them to grow and generate even more jobs. To blame outsourcing as the cause for high unemployment and a weak economy would not be just.
We now live in a global economy where trade can take place virtually anywhere. Many barriers to trade relations with foreign countries have been lowered in recent years. Companies can now reach out to customers and put workers in places never before possible. Recently, more companies have been looking to outsource some of their services to countries such as India, Russia and the Philippines (Drezner). Reasoning for outsourcing to countries such as those can be attributed to the economies there are still developing; making for a lower standard of living than in the United States. For this reason, companies do not have to pay workers as much as they do in the U.S. for the same job; thus, lowering the companies costs. In testimony before Congress, Hewlett-Packard chief Carly Fiorina stated, “there is no job that is Americas God-given right anymore” (Drezner).
American workers have always felt generally secure within certain job markets. One sector they felt particularly secure in was the manufacturing and semiconductor industry. From the 1980s through the 1990s, millions of jobs in the United States had been lost in the manufacturing and semiconductor industry to other competing countries (Drezner). This caused a period of time where U.S. workers felt insecure and hostile about their economic rivals. U.S. workers had never had competition in these industries. The United States had always been the strongest in these fields; providing manufacturing and semiconductor services to other countries in addition to the U.S. In the 1980s, Japan grew to become a strong economic rival to the U.S. in the automobile and semiconductor industries. Because of this, there was a backlash against Japan by U.S. workers (Drezner). Some people felt the loss of jobs for workers in the automobile and semiconductor industry would cause severe damage to the U.S. economy. Eventually the economy and labor market grew strong again by the creation of better and higher-paying jobs. The high-tech industry grew and needed workers. In the wake of jobs being lost, many skilled workers were now able to fill those high-tech jobs (Drezner).
Today, India is one of the largest markets where companies are looking to outsource some of their services. India has a total population of just over 1.2 billion and has the largest English-speaking population outside of the United States. India offers very well educated English-speaking people who will work for much lower wages. This can only lead to strengthen Indias local economy and make them a stronger player in the global economy. Outsourcing to countries, such as India, enables them to be stronger and more self-sufficient; making them rely less on aid from other countries. This in turn provides for better trade relations. Good trade relations equate to products and services being bought and sold; putting money into the economy and creating jobs. Without good trade relations, these things cannot happen. If nothing is being traded, consumers are not buying and jobs are not being created.
Rewarding countries for removing barriers to trade helps the United States in many ways other than gaining economic benefits. U.S. companies have outsourcing operations in countries including India, Poland, and the Philippines. These countries are vital allies in the war on terrorism. The North American Free Trade Agreement (NAFTA) is another example of how lowering barriers benefits other countries as well. For years, Mexico has been going through a democratic transition.