OUTSOURCING

Topics: European Union, United States, Government debt Pages: 6 (4019 words) Published: October 27, 2014

Outsourcing and the U.S. Economy
Outsourcing jobs has been a topic of great debate for the past several years here in the United States. Those who are against outsourcing stated that it would have a negative effect on the U.S. economy because we would lose our competitive advantage to other countries and hundreds of Americans would lose their jobs, which include not only low-skilled workers but also semi-skilled and skilled workers, and in the end this does not leave enough jobs for the American people. American economists and policymakers that have favored outsourcing seem to have been misled because they believed the United States would be successful if we specialized in research and innovation, and let developing countries do the manufacturing. However, these views have been sadly mistaken because the manufacture of high-tech products in an age of ever changing technology is very valuable and if the U.S. is not producing these products we are importing them from some other country and that in turn has caused our 30 billion trade surplus that we enjoyed ten years ago to our 56 billion trade deficit that we face today. The loss of manufacturing jobs those that require low skills are jobs that are lost and they will be lost forever. These low-skilled workers have had a very difficult time finding a new job which in turn created a negative effect on the U.S. economy because of the expense and time it takes to re-train this workforce. A study held by the University of California-Santa Cruz discovered that in a period of 20 years about one-third displaced workers in the manufacturing industry could not find reemployment within a three-year period, and those people who did find a new job, suffered a considerable cut in their pay by at least 15 percent. In addition, the United States also faces a reduction in consumer spending and tax revenues, a loss of industrial infrastructure because factories have been forced to close down and capital once invested in the U.S. is now exported to foreign countries, which in turn leaves us with less money for economic expansion. The offshore relocation of the manufacturing industry has greatly debilitated the United States capability to create new jobs, the capability to get out of this Great Recession, and it has also destroyed the prosperity of middle-class Americans. According to Harvard Professors Willy Shih and Gary Pisano, “for the first time in our history, the U.S. economy has been unable to provide a rising standard of living for the majority of its people". Furthermore, outsourcing manufacturing has devastated the United States’ ability to invent the products and medical advances of the future. Nonetheless, the biggest threat to our future that we face now is the fact that the social wealth created by innovation will go to the outsourced country. In 1980, the United States produced 42 percent of the world’s supply of semiconductors as of today we only produce 14 percent. Moreover, the 8 percent that the U.S. semiconductor firms spent on research and development moved to the outsourced countries. The United States once held the first place as a research and development intensive economy and now we have moved down the ranks to number eight. The National Science Foundation reported that in 2008, $58 billion, one-fifth, of total research and development spending by U.S. firms took place overseas. The United States if the only country in the world that does not provide tax cuts and other incentives to venture capitalist who wish to invest in a manufacturing company within the United States’ territory. Other countries around the world such as China and Germany do so because the manufacturing industry is the best job generator in the world. According to Conrad Burke, President and Chief Executive Officer of Innovalight, "Every nation is lowering tax rates to attract business, every nation except the United States. In Germany, they have very attractive incentives where, in...

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