What Would Companies Do To Stay Competitive If Cheap Overseas Labor Didn't Exist?

I personally believe most companies would invest in robots in order to keep their prices competitive. From what I understand, a robot can make one person like 50. The only reason why they're not is because they have the "easy" way out. Why spend hundreds of millions of dollars on robots when you can simply send all your jobs overseas? What do you think they would do?

 

Companies in the USA can't compete with massive capital overhead. If you run a buisness, you will see what I am talking about, and if you have union influence you will see just how much they have you bent over the fence. The reason the USA can't and will never compete is because of super high cost for health insurance, taxes, insurance, and other storage, shipping, and advertising. When you compair a similar company abroad, you will see that they put out the same quality product with less capital overhead, and will sell their product/service for way less than what the company in the USA sells it for.

Second, the countries abroad are keen to the capitalistic practices of the USA, and they have shut the USA out of some of their major buisnesses so as not to be taken advantage of by the capitalists who profit for doing nothing, but butt themselves in the exchange of money.

Third, the USA's capitalist industries have tapped out all the profits off the manufacturers and service providers, and the outlook is negative. Because they have no more room to capitalize on the USA, and the other countries have blocked them out, these capitalistic industries (banks, investment corporations/groups, venture capitalist, insurance industry, and financial industry), are now capitalizing on the State and Federal governments. Forcing the governments to rack up huge unpayable debt (just like they did to home owners), and are sustaining their profits from the USA taxpayer directly.

So, best thing is to evaluate how the macro economics plays into taxpayers, the global markets, USA politics, and the profitability of USA corporations, and what are their overhead costs to operate and still profit. Combine all these factors, and you will see what I am talking about. And you will be able to profit from the investment market.

 

Your question is a little naive on two counts. First, given the abundance of low wage labour at home, there's often no need to 'send jobs overseas'. Second, an advanced economy should not be focused on production that relies on low skilled (or repetitive) employment. There should be a focus on skilled labour. The more pertinent question is 'why is there a low skilled equilibrium?'

 

I think your answer is a bit naive. Do you know the TOTAL COST of hiring an employee in the United States?

 

I know that, compared to other developed countries, the US has a low wage abundance. That's a matter of fact and easily described, for example, with comparisons of working poverty rates.

Now there are some valid comments to be made over the negative effects of multinationals. You're just not making any

 

"low wage" in the U.S. is still significantly higher than many developed countries. Also remember that health care isn't subsidized.

 

Compared to European countries (and adopting an absolute poverty measure that fixes the poverty line and eliminates income inequality effects), the US gas higher working poverty. The idea that its low wages are high compared to Western Europe is a myth

 

Poverty isn't a standarized metric. It's different in every country. Also, Europe's socialist leanings mean that companies don't spend as much on insurance, retirment etc. Raw wages are a pretty poor comparison for labor costs between Europe and the U.S. I'd say that U.K/Germany/France are close to the U.S., but Eastern Europe and most other "developed" countries are not. Also consider that labor costs differ greatly by state in the U.S. Try setting up a company in New England, California, or New York and you'll be paying some of the highest labor costs in the world. Do the same in Wyoming or Kansas and things look a lot better.

 

I've deliberately referred to absolute poverty in order to ensure a standard measure capable of assessing wage comparisons. As remarked, the 'our low wages are high compared to other developed nations' is simply untrue.

Europe is liberal democratic and social democratic, making the reference to socialism just a little awkward! The differences in labour contracts isn't that different. The provision of occupational provisions, for example, is the norm. Also social democracy can increase costs, such as protecting 'insiders' by protecting long term labour contracts

Unit labour costs is certainly a different issue. But consideration of such issues (and the consequences of productivity differentials) would merely make the opening post more dodgy!

The same importance of geography of course exists in other countries.

 

What's "absolute poverty". You have to substantiate that.

I didn't say Europe was socialist....I said it had more socialist leanings, which is true. In many European countries retirement, health care, public transportation, and various other things are subsidized more heavily by the government than in the United States. European PEOPLE tend to pay more taxes for these services. However, European companies do not; The U.S. has the second highest corporate tax rate in the world, behind only Japan. So in summation, European companies tend to have similar wages, cheaper employment costs, and less corporate taxation. Your assertion that the U.S. has a plethora of cheap labor is wrong.

I want to be clear that I'm making A LOT of generalizations about Europe. With dozens of countries you can find an exception to every rule. I'm meerily using averages here. As I said earlier, the wealthiest countries in Europe probably have very similar employment costs.

As far as productivity, U.S. workers are the most productive in the world in terms of large nations. Only the miniscule countries of Luxumberg, the Netherlands, and Norway are better, which are rather unrealistic comparisons. My point being here that U.S. employment costs clearly outweigh extremely efficient workers.

 

What are you talking about? The impact it has on gross domestic product and the value of the dollar?

 

Nope. The impact on labour relations and the increase in underpayment through finding means to by-pass the efficiency gains from unionisation

 

My understanding of the English language is rather limited. Do you mean that overseas employees aren't being treated properly which is setting a bad example?

 

A poverty index that fixes needs. In terms of the original application it would refer to the basket of goods required to achieve a minimum level of calories. Here, however, we only need to ensure a constant poverty threshold that is independent of cross-country income inequality differences.

No, you've merely assume truth by abusing political economy. Liberal democracy dominates Europe and that has nothing to do with socialism

And none of that has anything to do with socialism.

Are you using effective corporate tax rates? Doesn't count if you're not. When we actually look at revenues from corporate profits as a percentage of total tax revenues and as a percentage of GDP, it was 9.7 and 3.6 respectively in 2000 in the OECD. The US figures were 8.7 and 2.6 (Source: Simmons, 2006, Journal of International Accounting, Auditing and Taxation)

I've already proved it. The low wage abundance is unquestionable.

Which would make US workers cheaper, in terms of unit labour costs, directly attacking the whole premise of the thread

 

Are you even an American? It seems like everything you have to say is a "cold" and "unpatriotic".

 

I'm not American and I have contempt for Americans that use non-economic comment to peddle loss for Americans. Try to do better

 

Well that explains your anti-American views! Thanks for sharing!

 

I don't have any anti-American views. You haven't been correct much so far. Try again! Here's something to respond to:

When we actually look at revenues from corporate profits as a percentage of total tax revenues and as a percentage of GDP, it was 9.7 and 3.6 respectively in 2000 in the OECD. The US figures were 8.7 and 2.6 (Source: Simmons, 2006, Journal of International Accounting, Auditing and Taxation)

 

American firms use Chinese manufacturing due to the input cost advantage it provides (which are a product of low standard of living and lax regulation).

Simply stated, there is no point in trying to compete for low skilled manufacturing (even if it is automated) against a nation that is suited for this type of production.

This is the type of manufacturing endeavor that the citizens of a highly developed economy should implore.

You cannot "copy" innovation.

 

Why is the cost of labor in Europe salient?

US companies don't outsource much unskilled work to Europe.

 

It describes the low wage abundance in the US. Together with the productivity differences (and therefore greater US wage underpayment), that makes the original post an exercise in guff

 

Why don't you TRY AGAIN. Explain exactly WHY our enormous trade deficit isn't a problem and stop dodging it with "code talk". Most colleges and universities in the United States would give you an "F" for the way you write.

http://americaneconomicalert.org/ticker_home.asp

 

I'll take that to mean that you can't respond.

Trade imbalances are a problem; trade deficits aren't. That is basic trade analysis! Now you could argue that the US has a trade imbalance (particularly with China). However, that reflects savings rates. That is basic macroeconomics!

You seem to have a low opinion of US colleges and universities. In reality, they do indeed teach trade analysis and basic macroeconomics. They just haven't taught you. Shall we blame them for that?

 

Now we're getting somewhere! How do you suggest the United States fixes this "trade imbalance"?

 

Bit obvious if you know the macroeconomics: its needs a higher savings rate. You've made a splurge without knowing any economics. You need to sort that out