Thursday, April 28, 2011

How Western Governments Destroy Jobs and Create Unemployment

What Is Outsourcing?

From the Economic Collapse Blog

Once upon a time in America, virtually anyone with a high school education and the willingness to work hard could get a good job.  Fifty years ago a "good job" would enable someone to own a home, buy a car, take a couple of vacations a year and retire with a decent pension.  Unfortunately, those days are long gone.  Every single year the number of "good jobs" in the United States actually shrinks even as our population continues to grow.  Where in the world did all of those good jobs go?

Economists toss around terms such as "outsourcing" and "offshoring" to describe what is happening, but most ordinary Americans don't really grasp what those terms mean.  So what is outsourcing?  Well, it essentially means sending work somewhere else.  In the context of this article I will be using those terms to describe the thousands of manufacturing facilities and the millions of jobs that have been sent overseas.  Over the past several decades, the U.S. economy has become increasingly merged into the emerging "one world economy".  Thanks to the WTO, NAFTA and a whole host of other "free trade" agreements, the internationalist dream of a truly "global marketplace" is closer than ever before.

But for American workers, a "global marketplace" is really bad news.  In the United States, businesses are subject to a vast array of very complex laws, rules and regulations that make it very difficult to operate in this country.  That makes it very tempting for corporations to simply move out of the U.S. in order to avoid all of the hassle.

In addition, the United States now has the highest corporate tax rate in the entire world.  This also provides great motivation for corporations to move operations outside of the country.

The biggest thing affecting American workers, however, is the fact that labor has now become a global commodity.  U.S. workers have now been merged into a global labor pool.  Americans must now directly compete for jobs with hundreds of millions of desperate people willing to work for slave labor wages on the other side of the globe.

So exactly how is an American worker supposed to compete with a highly motivated person on the other side of the planet that makes $1.50 an hour with essentially no benefits? ...

Read more


  1. You nailed it on the head. Great article and thanks for posting it!

  2. Louis, Thanks for your comment. Actually, this article is not mine, but from the Economic Collapse blog, as I have now made explicit.

    I did write about this here, where I proposed as a solution:

    The abolition of minimum wage laws and the introduction of a revenue-department-administered income supplement for those earning less than what used to be the minimum wage.

    Two things will result.

    First, every worker who cannot get a job at minimum wage can now find work at a lower wage, which will, nevertheless, net them an income equal to minimum wage.

    Second, employers in Canada will now be on a level playing field, as far as wages are concerned, with companies in Asia and Africa, where wages are on average less than 5% of those in Canada.

    What will it cost?

    Well if three million are currently unemployed or underemployed (in Canada) and if through the operation of an unrestricted labor market those people were able to find work at an average of, say, half the current minimum wage, the cost to the Treasury would be around $7000 per person per year, or $21 billion -- less than three percent of total government spending. But then you could deduct from that the social costs of unemployment, for example increased mental illness and crime, for a net cost of probably less than nothing.

    There are technical problems to work out. The scheme needs to include a mechanism that gives workers an incentive to get the best wage they can, even if below the former minimum wage. But this is not an insuperable difficulty.