Answering fan question about Globalization

You know, what I like about what you are doing is that you are positioning yourself as somebody with answers. I don't have answers. So maybe what we should do is structure things so that people can e-mail you to get answers or to take issue with what is in your book. I guess that is what you are doing right now.

So, for example, I want to know something. Who is responsible for the exportation of so many jobs to the Asian world.? How did that happen? I think they changed the laws that allowed companies to import to the United States. Was that NAFTA? Anyway, jobs left. Manufacturing left. And when is America going to see some payoff from that?

My Response:

The outsourcing of jobs has a little bit to do with trade alliances like NAFTA though that would more be the outsourcing to Mexico rather than Asia.  It comes in the form of comparative advantage.  Let’s just pretend that you are a lawyer and are better than anyone else in the office on the phones.  When a client calls, you can schedule the appointments better than say your secretary.  You also are much better at trying a case in court than your secretary is.  Since the gap in your knowledge is much greater with regards to trying the case, it would make more sense for you to focus all your efforts on trying the case and your secretary on phones.  

We are much better at skilled labor than Asia.  In fact, in China, they want to hire white people because they believe us to be more efficient and better workers than the Chinese.  It is interesting how this dynamic is pretty much the exact reverse here.  So, we outsource jobs like customer service and manufacturing of clothing to India, China etc. so that we can focus on the branding, marketing and universal selling of the product.  By doing it this way, the company is more efficient and more productive.  This is the way free trade works.  Companies being outsourced and the globalization movement is good for America and the third world.  Most people cannot accept this notion.  They believe everything to be a zero sum game, Asia and America can’t both benefit, ones victory needs to be another’s loss.  The real losers are unskilled workers in America IE Americans who want to deal with customer service.  The problem with this is that Indians are willing to work much cheaper than Americans to perform the same task with the same efficiency.  Like any other resource, labor is a commodity or good.  Employers will look for the best commodity for the money.  Sadly, this is almost always outsourcing to other countries.  is already seeing a payoff from this in that the American base companies are more efficient.  People only focus on jobs going out, never on jobs coming in.  Real Estate in Tokyo is much more expensive than Real Estate in America because they do not have the abundant land that we do.  This is why Toyota outsourced their factories to Kentucky and North Carolina.  Toyotas are made in the United States using American workers the same way GM moved out of Flint Michigan and are now being manufactured by Mexicans in Mexico.  Which leads to the question “What makes a car American?”  Does a Japanese design manufactured by Americans make a car American or Japanese?  Does an American Design manufactured by Mexicans make it an American car or Mexican?  The point is, this was the best business advantage of the two industries.  

America

China is another country that nobody looks at as what we export to them.  If you ask the average person on the street, they would probably say we export nothing to china.  This is not true.  China is very good at recycling products and manufacturing things out of them.  Their communist nature makes them exploit workers but their exploitation makes them able to manufacture things better at the cost of the entire country.  Despite what most people believe, China is nowhere near overtaking the US in economic dominance.  Given that they are a manufacture-minded country.  They buy millions and millions of pounds of our garbage so that they have materials to manufacture with.  We are in constant trade with China in that we export our trash to them and import their toys.  .

It is interesting when enough time passes we see a reverse in trade.  Japanamations (Japanese cartoons) in the 80s were written by Americans and sent to Japan for the illustrations.  Now, Japan writes the cartoons and they outsource the illustrations to the US to do.  

With that said, some things, like weapons and defense, logically need to stay in house but clothing, toys, etc. etc. there is no problem with outsourcing, because companies outsource to us too, and it allows us to focus on the things where the gap of our ability with the outsourced country is greatest.