Why is outsourcing so bad to US Economy? ...If it is.

It actually shows the effects I've mentioned (with low skilled labour losing, but high skilled labour winning).

Comparative advantage is merely a reference to opportunity costs. Its not time dependent in the sense that it somehow disappears all of a sudden in relevance! We do of course see innovation in understanding, from Heckscher-Ohlin to dynamic analysis into market failure, but that's irrelevant to the thread.

This amused me. Can you refer to one credible economic paper that supports this premise? (Good luck!)

Anytime, you're clearly clueless on the subject

 

Notice this disclaimer he adds.

Anything he disagrees with, isn't credible!

 

It means refer to primary research, not cretinous cultist source. Bit obvious really!

 

You mean like the primary research conducted by the economics professors at Harvard and Princeton who have been sourced as being corrupted entities for sale?

 

Being published in refereed journal is a jolly good quality control. Do we still need to check for robustness in conclusion? Certainly! However, you won't be doing any of that. Over here you're sub-Daily Sport in terms of quality of comment

 

This is utterly incorrect.

It is market structure, supply/demand of labour of said market, and whether if the industry has been unionized, barriers of entry that determine wage in mainstream economics...

 

Clearly you don't know your Econ 101. It is labour demand that determines wages in orthodox analysis as that gives us the marginal revenue productivity of labour. Why make these comments when you don't know the economics?

Market structure only informs us the extent of underpayment from monopsony. Unionisation, in terms of the monopoly union model, informs us how the orthodox predicts a result further up the labour demand curve. Your reference to barriers to entry makes no sense (as monopsony, in terms of "one buyer", is pretty much irrelevant)

 

1. outsourcing drag wages down which can hurt the poor who have to compete for those bottom level wages.
2. If we outsourced everything and end up having one-way trade where we keep sending a virtual unlimited money supply to China for their goods eventually our money will become worthless.

 

Nope. Outsourcing has an ambiguous effect on wages. You could refer to trade in general and how a capital abundant country will see reduction in wages. However, the real question is 'why does a developed nation has such an abundance of low skilled labour?'

This is just silliness

 

Quit blowing your own horn. You have jackall knowledge of microeconomics.

And for the record... straight out of my transcripts since I am an economics major...

PROG: (1001 ) AA GENERAL TRANSFER
ECO2023 ECO2023 MICRO ECONOMICS B 03.0 03.0 03.0

Could have been better... But one exam killed my A.


Barriers of entry can determine wages/salaries. You cannot just enter the medical field and be a doctor. Some industries do have barriers of entry for labour.

And no market structure does not only inform us...

Monopsies determine wages. There are no competitors, they can set the wage to whatever they feel like it. Different market places have their own wage mechanism. And that's micro 101.

The only thing your analysis was correct on is it being what determines a purely competitive market place. Which there is none of that.

 

Not a serious reply to my post. Just because you think it's silly doesn't make it so. Fact of the matter is if you have nothing but outgo of your money supply and no income because you can't get a job you go broke, unless you can print your own money, which we do. Sooner or later the debtors will come calling and this outsourcing will stop. I just hope it stops before we become a third world country.

 

You've got a F dear boy. Best read that textbook more closely!

I laughed at this. Cheers!

Traditional monopsony is a textbook curiosity. I'm not blaming your for your ignorance though. Its standard for textbooks to refer to unrealistic result to help the little'uns practice their diagram drawing. Monopsony power, in terms of practical relevance, refers to the likes of job search analysis (with the reservation wage strategy generating an upward sloping labour supply curve despite competitive industries)

And you won't be able to use that within a standard supply and demand context. Those barriers are linked to human capital delivery, plus avoiding the negative effects of asymmetric information.

No, that is ignorance. The textbook monopsony does not exist. Its condemned to the 'old' world of company towns. Sounds like you're a victim of the textbook!

 

I've provided the obvious: outsourcing has an ambiguous effect on wages. That reflects the heterogeneity in worker skills, given outsourcing can enable even finer specialisation according to comparative advantage and therefore increase wages on labour benefiting from that specialisation process.

 

Reiver, you have no clue what you are talking about.

And, yes, textbook Monopsonies do exist. St. Joe Company in Florida was one.

You have provided no credentials. You have been refuted by someone in the academic world. And, by the way, Greg Mankiw, Milton Friedman, Paul Krugman, Dean Baker, and a host of others would all laugh at your nonsense.

Your idea of the wage mechanism is absolutely wrong. Give it up.

 

I'm no genius. Fortunately I don't have to be to spot very basic error. You've read a textbook and just haven't understood it in sufficient depth.

They exist? And you say "was". Textbook monopsony died with transportation, mobility and the destruction of the company town. Its obvious that, to find source of wage-making power (i.e. an upward sloping labour supply curve), its through job search and/or worker heterogeneity. Of course those sources have naff all to do with barriers to entry.

Who's that?

Friedman wouldn't have a very good view of the labour market. He wouldn't have been so naive with regards the vertical phillips curve (based on a false debate with bastardised Keynesianism). Then again, Krugman can also be suspect. That new trade theory stuff, for example, by focusing on economies of scale and differentiated product underestimated the consequences for the labour market and the delivery of dynamic comparative advantage. That Econ 101 bible of yours probably forgot to mention that mind you!

That the orthodox world focuses on productivity (and therefore labour demand) is just a matter of fact.

 

I'll give you a little credit for specificity...although your statement is still patently false.

It most certainly is time sensitive. In the late 1800's, when ricardo laid out his case, international capitalism was as close to unfettered laissez faire as there ever was. Free market ruled, government intervention didn't apply. A whole different standard is the norm today. each sovereign nation picks and chooses what governmebt interventions are put into play. Thus comparative advantage, and the macro-economic benefits are overruled by the international "players". Do you think that America buys Chinese goods because of supply and demand labor only? As in hourly wages? Or are you so blind as to not understand that the Chinese government allows American "players" to circumvent all the worker protection laws as so legislated in the US? UC benefits exist in China? Nope. how about workman's comp? Nope. Minimum wages? Are you kidding me? Or how about overtime mandates on time and a half...or better? gee, you never thought of those have you? Moreover, what about OSHA standards on clean air and water? Were these factors even considered back in Ricardo's day? Of course not. But your simpleton view of the conundrum proves that you lack any true critical thinking in this area.

The publications of books, numerous editorials and common sense dictate this. You are easily amused...because you are so illiterate on the subject.

What country do you live in?

 

He has absolutely no ability to abstract real world economics. By his constant misspelling of words using esses instead of zees, one can surmize that he's some bloke from England. Not that there's anything wrong with that as Seinfeld would say.

 

And, then there is insourcing - more correctly, right sourcing.

http://www.businessweek.com/article...t-s-dot-manufacturing-gains-momentum#r=lr-fst

But, don't expect any significant decrease in unemployment for the unskilled.

 

For an example of the available analysis see Anwar (2013, Outsourcing the skilled-unskilled wage gap, Economics Letters, Vol 118, pp. 347–350). This makes a very simple conclusion: "the overall impact on the equilibrium skilled wage is positive".

You haven't understood the concept. Comparative advantage doesn't need laissez faire; its a simple reference to opportunity costs (though market problems can hinder the specialisation process).

Dynamic comparative advantage will often refer to the impact of economies of time (in simple terms, the learning curve). Here, we get first mover advantages which ensure multiple equilibria such that we do not necessarily achieve the first best outcome. In that circumstance government interventionism becomes key. Indeed, its difficult to find developed economies which have not used government intervention to aid that development.

A capital abundant country will import labour intensive (or product reliant on less skilled labour) product. Basic Heckscher-Ohlin!

The evidence shows that trade has increased Chinese wages. Of course we'd expect that with simple trade theory (given the increased demand for labour leads to increases in wage)

You're again misinterpreting how trade is generated. We'd expect differences in opportunity costs created through pollution: i.e. high income countries will have preferences skewed in favour of protecting the environment, with people prepared to give up income in order to avoid pollution damage (and health consequences). Low income countries will have a greater preference for income growth.

You've provided nothing to dispute the relevance of dynamic comparative advantage, going instead for cliche and non-economic prance.

A feeble dodge. You were asked to refer to just one credible economic paper that supported your premise. Clearly you neither understand the basics of trade analysis or the available empirical analysis on the issue. Rant won't be sufficient!