The economy is down and out, making it difficult for businesses to sell products to cash-strapped, angst-ridden Americans. In turn, those Americans lucky enough to be gainfully employed can’t buy new homes, despite historic low prices and rates.
It is only a matter of time before the focus re-returns to offshoring as part of the bigger picture as to why domestic employment levels disappoint.
But some public figures are seeing a silver lining to today’s situation. Financial and political gurus are starting to warn policymakers about the perverse effects of offshoring a significant number of American jobs without putting long-term economic principles behind those decisions. While no one can say they support a complete do-over on the subject, they are taking a long, hard look at what offshoring has done to the jobs situation.
After all, if you kill the world’s No. 1 economy while trying to build the No. 3 and No. 4 economies, someone will lose for another to gain.
China playing hardball with its currency and winning the trade wars is another factor stimulating discussions. The remaining question is how long will the open borders with no consequences philosophy maintain American businesses and American livelihoods? After all, a race to the bottom in price and quality is just that — a race to the bottom. When did grasping for the bottom of the barrel become a popular American past time? It’s not. Hence, all the anger among the populace.
For many, the benefits of getting cheap goods from foreign nations lost its luster in the absence of cheap credit. In the minds of some Americans, these policies are akin to a crumbled pair of cheaply made denim jeans bought at the discounter of your choice. They felt good for a moment at a cheap price, but they shrunk in the washer, and now they wish they’d bought a more robust, longer-lasting pair.
Meanwhile, the cost of creating so much economy abroad is gaining the attention of economists and political thinkers. After all, they can’t get people back to work, so buying a home is completely off the radar screen.
Whether its manufacturing jobs, service jobs or call center jobs, the average American is well aware that outsourcing is a common-stay business practice. But it’s mostly a nonpolitical issue on both sides of the aisle with the practice justified in the name of cutting overhead, finding more efficient workers and producing cheaper product. Some neo-libs may even see it as helping underdeveloped economies. The only problem is Americans are the ones without jobs, and with that inconvenience, there goes their buying power to energize corporate revenue with their sales.
The fact that a slew of new financial regulations are making their way through the American marketplace suggests even more firms could look outside the states to produce goods. Is anyone in Washington listening? They may be if recent coverage on the topic is heard.
Dennis Santiago, CEO of Institutional Risk Analytics, posted a report online, where he essentially says, “for decades, we have exported jobs by outsourcing first manufacturing and then services gaining cheap goods by ultimately paying for them with the most precious trade good of all: quality of life.”
Buying houses is part of that quality of life, but it’s an expensive proposition without a strong jobs base.
Donald Trump was recently quoted by Newsmax as saying, “Outsourcing has to stop. Outsourcing and free trade sound like a great thing. There’s only one problem: it’s not fair,” he said. “China in particular isn’t fair. China is manipulating our currency, making our products, taking our jobs. They kill us in every way.”
Writer Supratim Adhikari suggested in an article he wrote for Technology Spectator that firms are now wary of off-shoring, because it will cost them customer loyalty at home. He claims in the report that despite the cost advantages, some data companies are pulling in the reins to stay focused on the wants and needs of the end-user.
Santiago wrote that “this is a mess we made for ourselves, to be sure. It was fueled by academic theories that valued the unfettered circulation of money far more than the preservation of culture and lifestyle. And so sits one of the world’s most important economies suffering from having mined out the hole of the disposable society to the point that it doesn’t make a lot of sense to people anymore.”
Santiago’s suggestion is to repatriate 5% of the U.S. manufacturing and service jobs — a move he believes is necessary to get the U.S. back on track when it comes to jobs and growth.
While he doesn’t mention housing directly, it’s obvious that housing is the biological child of onshore job creation. Without employment in America, this child ceases to exist.
Write to Kerri Panchuk.
