Friday, August 10, 2012

Outsourcing, Global Competition, Education, and World Stucture

U.S. unemployment figures (Source: Bureau of Labor Statistics/Haver Analytics)
In the article below, Thomas L. Friedman touches on an important contemporary issue, namely the disconnect between corporate agendas and national and social interests. In a free market, corporations are driven by profits in a competitive environment, and therefore they seek the most efficient way to produce and/or serve. Hence, corporations outsource jobs in order to remain competitive. If an American corporation for example does not outsource, its competitor may get an advantage by its own outsourcing. Within this outsourcing context, corporations are looking for employees and production/service at the least cost. Profit is the end goal. If the cost of educating Americans for instance is high, what incentive do American corporations have, if they do not employee most of these persons or they can hire similarly educated foreigners for half the cost? This argument suggests that corporations run society. On the contrary, if corporations are taxed to pay for a first-class educational system, what is their incentive to remain in the country?

Friedman argues that average is over: for American workers to be competitive, they need to be better educated, so that they are more competitive than workers from other countries. Is that enough to overcome significant wage gap between American workers and Chinese workers for example? Who is going to pay for the better education? Do American corporations have enough incentive? Is capitalism and globalization undermining the country based structure of the world? If so, is this a bad thing?

Average Is Over, Part II

A big mismatch exists today between how U.S. C.E.O.’s look at the world and how many American politicians and parents look at the world — and it may be preventing us from taking our education challenge as seriously as we must.

For many politicians, “outsourcing” is a four-letter word because it involves jobs leaving “here” and going “there.” But for many C.E.O.’s, outsourcing is over. In today’s seamlessly connected world, there is no “out” and no “in” anymore. There is only the “good,” “better” and “best” places to get work done, and if they don’t tap into the best, most cost-efficient venue wherever that is, their competition will.

For politicians, it’s all about “made in America,” but, for C.E.O.’s, it is increasingly about “made in the world” — a world where more and more products are now imagined everywhere, designed everywhere, manufactured everywhere in global supply chains and sold everywhere. American politicians are still citizens of our states and cities, while C.E.O.’s are increasingly citizens of the world, with mixed loyalties. For politicians, all their customers are here; for C.E.O.’s, 90 percent of their new customers are abroad. The credo of the politician today is: “Why are you not hiring more people here?” The credo of the C.E.O. today is: “You only hire someone — anywhere — if you absolutely have to,” if a smarter machine, robot or computer program is not available.

Yes, this is a simplification, but the trend is accurate. The trend is that for more and more jobs, average is over.

Thanks to the merger of, and advances in, globalization and the information technology revolution, every boss now has cheaper, easier access to more above-average software, automation, robotics, cheap labor and cheap genius than ever before. So just doing a job in an average way will not return an average lifestyle any longer. Yes, I know, that’s what they said about the Japanese “threat” in the 1980s. But Japan, alas, challenged just two American industries — cars and consumer electronics — and just one American town, Detroit. Globalization and the Internet/telecom/computing revolution together challenge every town, worker and job. There is no good job today that does not require more and better education to get it, hold it or advance in it.

Which is why it is disturbing when more studies show that American K-12 schools continue to lag behind other major industrialized countries on the international education tests. Like politicians, too many parents think if their kid’s school is doing better than the one next door, they’re fine....

1 comment:

  1. Globalization is just a code word for "race to the bottom".

    Countless working class communities across Canada and the US have be decimated by offshoring and outsourcing. These cities and towns used to have robust middle classes that earned respectable wages and did not have to carry a lot of debt. The quality of life was high, as was the level of social cohesion.

    Today, all we have is an indebted class that masquerades as a middle class. They may have one or more degrees, but are stuck in low wage jobs. For the others not lucky enough to be employed, the only growth industries left in some communities are armed robbery and vice crimes. Social problems are consuming a larger amount of public dollars.

    If I can't count on big businesses to care enough to contribute to livable communities, why should I listen to ANYTHING they say?

    Here is a real life example of a community that is struggling with this issue:


Thank you for sharing your perspective.