Going Global

According to Swaminathan S. Anklesaria Aiyar.

On globalization and outsourcing he says

You might think that the Pope would hail this as a great development for humanity. Instead he has parroted the bogus claims of the white labour aristocracy.

His encyclical says, “the so-called outsourcing of production can weaken the company’s sense of responsibility towards the stakeholders---namely the workers, the suppliers, the consumers, the natural environment, and broader society---in favour of the shareholders, who are not tied to a specific geographical area and who therefore enjoy extraordinary mobility.”

The racial implications of this leave me dumbstruck. The Pope has posed the issue as one of stakeholders versus shareholders. But are white stakeholders the only ones that matter? When IBM shifts 80,000 jobs to India, 80,000 Indian stakeholders replace American ones. Are the rights of 80,000 Indian stakeholders any less than those of the American ones they replace? When Chinese suppliers outbid American ones in supplying hardware to IBM, are the Chinese lesser stakeholders than the Americans they replace?

The Pope’s moral blunders on outsourcing (August 02, 2009)

The outsoucing debate has spread far and wide and been repeated over and over. But it hasnt curbed the wave of globalization that triggered it into somewhat of an unstoppable force. Needless to say, the pope's comments sparked intense outrage in the intellectual class of India, the worlds leading supplier of outsourcing services in the most advanced sectors.

The comments made by the pope appear somewhat misguided as he may have been only looking at the whole affair from one point of view. Whereas in business and economics there is nearly always an opposing view point. A benefit to one may be a disbenefit to another. The only way you'd be against such a thing is if you were indeed biased in some way. But that way lies the road to politics. And the Pope being theoretically in support of one united world, has come under fire for apparently 'racist' remarks.

But it took an economist to figure it out. And hey, you don't need to be an economist to get to the top of the vatican they tell me, so perhaps the pope deserves the benefit of the doubt. Another thing you don't need to be an economist to become is president.

There’s a lot of American outsourcing going on. And not just to Mexico. In addition to Sri Lanka, there’s Vietnam, The Philippines, Malaysia, I’m not too sure about Pakistan but there’s definitely India. Gazillions of Indians work in call centers, and there are more queuing up. Lots of labor availability means lower wages (by US standards), meaning lower costs, translating into higher profits/lower prices. Mostly the latter due to high competition in developed markets.

Hell man, they’re even outsourcing war right now. And not just to American firms it seems.

And now Barrack Obama wants to stop all that. He wants to provide Americans with jobs he says, but is outsourcing really the demon of unemployment to developed nations like they seem to think?

I would say no. Outsourcing is great for the economy, its ‘spreads the wealth around’ (one of Obama’s axioms as a matter of fact, but I think he was talking in a more local sense as opposed to a global one). But then you’d argue that it may be okay for the global economy, but is it alright for countries taken individually? More importantly, is it good for America? Cos people in the US are losing their jobs to Pakis, curries and brownies faster than you can say ‘Joe the Plumber’.

I would say yes it is. Here’s why.

• Importing labor means outflow of foreign exchange translating into more demand for American exports. Cos the dollars that go out have to eventually end up back in the US right? So this will fuel American industry and actually increase employment there.

• Regular American consumers pay less for services due to reduced prices of goods and serviced whose functions have been outsourced to other countries, leaving them with more disposable income which they will in turn channel towards other industries making them more prosperous increasing employment there as well.

So Americans can only get more prosperous. Sure we’re looking at a group of immediately affected former white collar workers without jobs, but in the longer term, the US and everybody else, would be far better as a result of outsourcing, which after all is probably one of the most visible affects of globalization on the planet.

America, to prosper again will need to focus its energies on those industries I which it is strongest in. The credit collapse seems to have blinded everyone onto thinking there’s something wrong with everything in the damn economy. That’s not the case here. It’s funny; they forgot the one thing that the great guru of modern American free market economic policy, Milton Friedman, advocated when he preached a free market policy approach; ‘Regulate the Banks!’ and look where they are now. Friedman never really offered a concrete explanation as to why, of all industries, only banks needed to be regulated, but I’m pretty sure we can all see firsthand what can happen when the heavily intertwined and confused financial industry, like a Gulliver after a bit too many drinks, hurls on the Lilliputian economy of the world. (for a simple and informative look at at how the subprime crisis happened click here).

I sure hope Obama is just saying that to get the votes in man, cos if he wins and really does do away with outsourcing, all that’s gonna do is cripple the American, and the global, economy a little bit more.