I blogged about whether America still makes "stuff" anymore a few weeks ago. Today I will speak about something along the same lines. If you read that blog before this one you will understand that most factories and other manufacturing jobs that are lost in America are not lost due to companies shipping those jobs overseas for cheaper labor. Most are lost due to the progress in the realm of technology and thus productivity is much higher and we need fewer workers in manufacturing because of this. Kind of like the decline of farming that began years ago despite not having a drop in production due to the better technology.
Although this is true, companies still often DO ship jobs overseas due to cheaper labor. Should that happen? Should we allow it? Is it a good thing?
First the morality of the issue. We in America like to talk about hating some people's speech but honoring their right to say what they want because the Constitution says: Congress shall make no law... restricting free speech. Yet we often say that companies should not ship jobs overseas. Given the fact that a company is a free enterprise and independent company that is not owned by congress or any other government entity, is it moral to restrict their freedom to move anywhere? Would you force a person who wanted to move out of America to stay in America? North Korea does that, so does Cuba. I find it immoral to restrict a company from doing as they want to do in order to please their stockholders who own the company.
On a more economic note is it hurtful for our economy? The answer is no if that company is freely making this decision without government pressure or regulation forcing it to make a decision outside of the Free Market. Meaning unless crazy high taxation, or regulation, entitlements for workers, or some other unconstitutional force is forcing companies to make these decisions. If a company freely chooses to leave without these being the reasons, then this company sending jobs overseas is a good thing for the economy although hurtful for some workers.
If a business sends some jobs overseas it is in essence saying that those jobs are low skilled jobs that can be done by low paid low skilled workers in other countries that can thus more efficiently perform those tasks. When this happens, the companies keep their costs down and are more competitive in our economy. This allows them to keep prices lower than they would be if those jobs were kept here in America.
Now some would argue: But if those jobs are kept in America then that is more money and more jobs and thus that helps the economy. That is incorrect and believed by many people because they do not understand trade-offs. If inefficient jobs are kept in the country, this means more resources (IE: money) is used on this production which means fewer resources to be used on more efficient areas. In other words, the jobs saved by continuing to do something inefficient is dwarfed by the jobs that are lost, when those resources (IE: money) are not used in efficient ways. Let me close by giving you a local example:
Would you argue that Tennessee should save jobs by refusing to buy oranges from Florida or California in an effort to keep "Orange farms" around here in Tennessee? No one would argue for this because they would say: Those oranges can be made in Florida and California more cheaply thus saving Tennessee Consumers more money to spend in other areas that can put Tennesseans to work in more efficient areas. It works the same way when countries trade with each other. We just don't understand that and thus most Americans are not happy when companies send some work to be done overseas.
