Democrats & Liberals Archives

Outsourcing, Offshoring and Racketeering

In his India trip, President Bush praised outsourcing of jobs. Outsourcing is part of free trade, he said, and therefore good; Americans can educate themselves into better jobs than the ones they lose. He never praised offshoring - tax havens for business - but he did precious little to stop it because he is in favor of the “free flow of capital.” Both outsourcing of jobs and offshoring of capital are forms of racketeering.

Outsourcing

Outsourcing of jobs has started out slowly, is rapidly advancing and soon will become a powerful force for precipitously reducing wages in the U.S. Pretty tough statement, isn't it? Paul Craig Roberts, a Senior Research Fellow at the conservative Hoover Institution puts the matter more bluntly:

"The United States is the first country in history to destroy the prospects and living standards of its labor force. It is amazing to watch freedom-loving libertarians and free-market economists serve as full time apologists for the dismantling of the ladders of upward mobility that made the America of old an opportunity society. America has begun a polarization into rich and poor. The resulting political instability and social strife will be terrible."

In his eyes, outsourcing is the main culprit. Not of unskilled jobs, but of highly skilled jobs. Here's what he finds in the Information Technology field:

"Information technology workers and computer software engineers have been especially heavily hit by offshore jobs outsourcing. During the past five years (Jan 01 - Jan 06), the information sector of the US economy lost 645,000 jobs or 17.4% of its work force. Computer systems design and related lost 116,000 jobs or 8.7% of its work force. Clearly, jobs outsourcing is not creating jobs in computer engineering and information technology. Indeed, jobs outsourcing is not even creating jobs in related fields."

According to his studies,

"All of the occupations with the largest projected employment growth (in terms of the number of jobs) over the next decade are in nontradable domestic services."

Offshoring

According to William Brittain-Catlin, who wrote the book Offshore, virtually all big multinational companies have set up companies in tax havens such as the Cayman Islands, Bermuda and other places. In the Caymans, companies need not have even an office there. Once registered for a fee, they can collect income from anywhere tax free.

One way of using tax havens to cheat the IRS is called transfer pricing, or the playing around with prices to achieve minimum total taxes. He offers a fictional example with an outfit like Apple Computer:

Apple Computer in Singapore manufactures a Macintosh. Apple Computer in the Caymans pays $200 for the machine and then sells it to Apple Computer in U.S. for $900. Apple Computer in U.S. sells the Macintosh to dealers in the states for $1000. The Macintosh itself is sent directly from Singapore to the eventual buyer in the U.S.

Here are the results:
Apple Computer (U.S.) makes $100 profit, which is taxed by U.S.
Apple Computer (Cayman) makes $700 profit, which is untaxed.

Pretty neat. No?

Racketeering

Both outsourcing and offshoring are forms of racketeering. In the first case, a businessman tells his workers, If you ask for a raise I'll outsource your job. In the second case, a huge corporation goes to the U.S. and says, If you tax me too much I'll go offshore. In both cases they are using a "gun" to enrich themselves.

Bush's response to business: I'm from the government and I'm here to help you. And he means it.

The rest of us who work for a living are in trouble. We must get rid of job outsourcing and capital offshoring if we hope to prosper.

Posted by Paul Siegel at March 9, 2006 5:48 PM
Comments
Comment #132516

So, Paul, are you saying that companies shouldn’t be allowed to control their own hiring practices? That our government should have the right to tell those companies who they must hire, and where they must hire them from, and how long they must keep these employees hired in their positions and locations? Are you suggesting that the gov’t take control of certain aspects of our private industries… for the betterment of the U.S. worker, of course.

Hmmm… where have I heard that concept before? I think a guy named Karl Marx became rather well-known for introducing that idea.

I don’t like outsourcing anymore than you do, but the gov’t just doesn’t have the right to do anything about it. It’s not a political issue. It’s an economic one. If you want to effect change on this subject, don’t buy products and services from “American” companies that outsource their labor needs.

Posted by: Lee at March 9, 2006 6:33 PM
Comment #132533

We invest outside. Others invest in America. We are a net beneficiary of outsourcing. Of course, when we get it I suppose we should call it in sourcing jobs in America

Posted by: Jack at March 9, 2006 8:20 PM
Comment #132534

Outsourcing, Offshoring and Racketeering are all US government policy under Bushco. I can not believe you accidently chose to mention the Cayman Islands.

The American people will be back on the plantation doing the jobs that can not be outsourced by corporations whose executives make salaries in the millions.

Posted by: ohrealy at March 9, 2006 8:21 PM
Comment #132542

You’re reasoning is crap. The Japanese are OPENING Auto Plants in the US. Obviously, THEY don’t have a problem with profit.

I real reason US Companies are struggling is because of incompetence. They probably spent too much time with Republicans and got infected.

Posted by: Aldous at March 9, 2006 8:45 PM
Comment #132546

Wow Lee, did this hit a sore point jumping to visions of Marx right off the bat. Let’s get past the knee jerk. Yes, the goverment has infulence on off shoring, and yes our goverment encourages it.

As a software engineer I find it hard to compete on the international market with our current policies. Why? Well first it seems that between the legitimate and illegitimate tax breaks, there are big tax incentives to move my job offshore. And then we have health care. Here I am at a disadvantage compared to my offshore peers, because either I or my employer has to pay for health care that is poor quality and the most expensive in the world. Oh and don’t forget the that these countries keep there currencies artifically low. Right now that dollar sent to a Chinese software engineer goes for 40% more then where I live.

So, even if I went out on my own eliminating all my management overhead. I still couldn’t compete because this government when it comes to choosing between wealth and commonwealth always chooses wealth and has set is policies accordingly.

Oh, and Aldous. Toyota when they recently choose the location of their last North American manufacturing plant chose Canada, because the workforce was better educated and the health care costs where lower.

Posted by: Dan at March 9, 2006 9:20 PM
Comment #132549

Hate to agree with Aldous, but I agree with Aldous re U.S. management - sometimes.

Toyota has many plants in the U.S. and is expandning them. There is no particualar problem with the American worker when properly managed (and not too unionized).

Posted by: Jack at March 9, 2006 9:31 PM
Comment #132551

When we import cheap labor, we lower our tax base, and our standard of living. We give incentive to corporations to leave our country, taking with them high wage jobs.

This trend is bad for America. What we need are labor tariffs. If the labor cost for us to produce, let’s say a flashlight is $1.00. But in China, the labor cost is only $0.10 to produce the same flashlight, then we need a labor tariff of $0.90 on that imported flashlight. This action will give pause to companies planning on leaving the US for cheap labor.

These labor tariffs need to be placed on every good and service that we import.

Let’s ban the importation of cheap labor – let’s invoke labor tariffs to protect our standard of living.

Posted by: Patrick Howse at March 9, 2006 9:37 PM
Comment #132553

Dan-

I heard a report on the radio last week, I believe on NPR, that said several U.S. companies in the IT field are bringing quite a few of their outsourced jobs back home. Maybe you should check with some of the big boys if you are having job problems.

Also, your comment about our health care system is not completely accurate. Yes, it is overpriced, due to a variety of factors, one of which is the federal law that requires emergency rooms to treat any patient that comes in regardless of ability to pay. No, they don’t get a completely free ride, but the ER is required to at least stabilize them. There are many other reasons for the high cost of health care, including the cost of malpractice insurance, incompetent HMO’s, and and the increasing complexity of the practice of medicine.

As far as Toyota locating a plant in Canada because of lower healthcare costs, they may be lower, but they ain’t better. It hasn’t been that long ago that doctors went on strike in Canada. Over low pay and long hours. What good are lower costs if the hospital is closed?

As far as the quality of medical care in America, I will put it up against anyplace. I have experienced health care in several other countries and there is no comparison. Is our system perfect? No. Does there need to be some changes made? Yes. Would I trade it for any other system? No.

I also agree with Lee. The only way to stop outsourcing and off shoring is through government intervention. As long as it’s legal, we can complain about it and boycott companies that do such. I guess you would have to really search for such paragons.

Posted by: John Back at March 9, 2006 9:44 PM
Comment #132556

“I don’t like outsourcing anymore than you do, but the gov’t just doesn’t have the right to do anything about it.”

This simply is not true and never has been in any rational system, democracies especially.

The US Economy is a National Strategic Interest. If the overall health of the US economy drops, this will directly impact the US’s ability to spend on defense, on anti-terror programs, critical infrastructure, etc.

Ronald Reagan understood this when he put import quotas on autos which required increasing percentages of the parts to be made in the US. The net result has been that Toyota, Nissan and many others have a large US manufacturing presence.

Likewise, when Japan and Taiwan dumped computer DRAMs on the US market, the government’s response was to implement tarrifs which thereafter resulted in the return of DRAM manufacturing to the US and later resulted in a fairer marketplace in which foreign interests could no longer simply collude on DRAM prices charged to the US by having eliminted the US manufacturers.

These examples happened under Republican adminstrations (both of which I voted for, btw).

There can be _no_ more *STRATEGIC* area of policy than the US Economy. Harm to the American middle class could result in widespread social instability and disorder. Damage to the overall US economy through the elimination of high tech jobs, for instance, can and perhaps my well end up with the US loosing its ability to innovate as compared to the Chinese, for instance (China’s premier has already stated that being #1 in technical innovation is a *strategic* goal for China), will inevitably directly impact not only the American Dream, but the US’s ability to survive in a world filled with terrorists and growing numbers of unstable states having nuclear weapons.

To simply shrug off the US Economy as something that “will have to take care of itself” is not only naieve and ignorant of how we got to be #1 in the world in the first place (government programs for elictrification, highways, college loans, grants, incentives for becoming an engineer/scientist, massive university subsidies, and much more), but it also means that should our government stand by and simply let the very structure that allowed America to win the cold war, die, it would be the height of disloyalty to our nation.

Every other nation on the earth manages trade in the interests of its economy, nation and people - except perhaps ours now. The impact is that US markets and growth lag most of the industrialized and developing world.

Unfortunately, it appears the destruction of the American middle class, bankrupting of the US government and decades of economic calamity and distruption are exactly what may happen over time as we outsource our ability to produce, design, create and innovate and thus eliminate the ability to compete in the world that is all too ready to take us down economically. Military inferiority will come shortly thereafter and when we can no longer afford to defend ourselves, who will do so in our stead?

No one can defeat our military - but they don’t have to. Destroy our middle class and economy and everything else falls.

From Ike to Bush Sr, US trade policy was based upon US national interest. To have broken with this trend is one of the most strategic errors in our nation’s history, and both Clinton and GW Bush are to blame. Neither party can claim to be innocent.

Posted by: cbpusa at March 9, 2006 9:55 PM
Comment #132557

Interesting article from CNN. Here’s the key line in it:

“But experts say that the outlook for hiring in manufacturing isn’t nearly as bleak as the recent headlines would suggest.”

Whaaat? The media suggesting thing are bleaker than they really are??? Who’d a thunk it?

For those with intellectual curiosity, the rest of the story is linked below. For those without, continue with your pat responses.

http://money.cnn.com/2006/03/09/news/economy/jobs_bluecollar/index.htm?cnn=yes

Posted by: joebagodonuts at March 9, 2006 10:03 PM
Comment #132561

I found Jack’s link interesting:

http://www.ofii.org/insourcing/map/

Any disputes from the left on those numbers?

And at his time Reagan was the evil of the world … lots of protests, people calling him a bully world-wide … calling him crazy for thinking he could make a dent in the Soviet Union during his terms. I appreciated seeing a comliment thrown hs way.

Ahh, how USA history inevitably mutes the hysterical.

Posted by: Ken Cooper at March 9, 2006 10:21 PM
Comment #132576

The only ones who benifit from unions are the heads of unions who make big bucks off the sweat of others ,just like other big companies and the prices of goods keep rising and wages go up and so do taxes and they need more money to pay higher prices and taxes,the profits are taxed more and more and prices go up and more wages are needed and on and on.Organized Religion does not cost anything.Organized labor does.I was in a union,and was told to support Dems and vote Dem.Organized Labor does not support those in need but organized Religion and Big Business does.However,the Dems say we don’t care.Many of the people who speak out against Big Business own stock in the companies they complain about and they know they don’t intend to do anything to any Unionized business because that’s where the Dems get their money.The Dems say the Repubs are in the pocket of Big Business and deny they are in the pocket of Unions,but,they are.The Unions have been running (ruining) America through the Dems for decades and now Big Business is Winning the war started by the Unions.When I was in a Union I marveled at the SELFISH HATE the Unions had for the Businesses and am now seeing the same SELfISH HATE from the Dems for Bush and the Repubs.HATE IS NOT GOOD FOR AMERICA!!!!!!!!!The Dems say why don’t the Repubs reach across the aisle to work with them,but,stop anyone who reaches across the aisle to work with the Repubs.This Country is suffering for the HATE of both sides,but, the Dems HATE is the by far the worst.

Posted by: RDAVIDC at March 9, 2006 11:34 PM
Comment #132594

Its hard not to HATE the cronyism, incompetence, hypocrisy and sheer idiocy of the Republicans.

Posted by: Aldous at March 10, 2006 1:42 AM
Comment #132606

Hate is not free speech and it is damaging, not constructive!!!!

Posted by: RDAVIDC at March 10, 2006 7:57 AM
Comment #132613

Give the hate speach to Rush , Oreally , Hannity
and all the Repubs who call Dems Liberals ,
Baby killers , and Welfare crack wh***s, Terrorist
lovers, Islomafobes. Tell us how
the media is liberal when all you can find on a Sunday
program is conservatives. Tell us how
a station can say they are Fair and Balanced
yet spin every Republican story into possitive.
no matter how big of a tur* it is.
Then not cover or takeing liberties to spin
every Democrate story to the negative.

Everyone Knows what side of the island the
hate poors from. It is not from the Democrates.

Freetrade cost us. Outsorceing cost us. Our
votes allow it to continue. We should be rip
roaring mad at the head and word games used to
control us. Who produces more fertilizer a donkey
or a elephant. All we can smell is the product
of great talk. We are so over fertilized nothing
can grow.

Posted by: Honey P at March 10, 2006 8:45 AM
Comment #132619

Hot topic. Thanks for putting it up for discussion again.

If American corporations want access to American consumers, they should be prevented from hiding their profits and removing the good paying jobs. Every company wants to make the money but not contribute to the economy - profits above all else. But collectively they are sabotaging the overall economy. It’s about time to stop the proverbial buck.

As a result, if Apple prefers to sell all the computers they make in Singapore somewhere else, I think we should let them. Lets see if they can collect $1000 for that computer in Singapore.

Oops, I forgot, a little problem of lower per capita income EVERYWHERE ELSE getting in the way of their insane margins. Well, then they could sell their wares in Europe. Sorry, I forgot - the Europeans won’t put up with that crap. If you want the EU market, you have to bring jobs with you.

Well, at least they can do business in China without any restrictions…LOLOL! I forgot, most of our corporations doing business in China are not even MAJORITY SHAREHOLDERS in their Chinese ventures.

So, the only government leader ON THE PLANET who is not demanding something from American corporations in exchange for market access (jobs, control, ANYTHING) is George Bush.

But God forgive one of us should question his patriotism…

Posted by: CPAdams at March 10, 2006 10:06 AM
Comment #132626

CPAdams,

So you advocate the same business pratices as Europe and China? That’s a great idea…

Posted by: Cliff at March 10, 2006 10:29 AM
Comment #132631

Cliff,

so you are against any accountability for American corporations? Dell should move manufacturing anywhere they like and us poor Americans should be grateful they leave any jobs here? And they should definitely hide their profits too.

But they should keep their government contracts…

Please explain to me what is unAmerican about requiring American companies to keep jobs in America in exchange for preferred country access to our markets (remember that when American Company X makes something overseas, they avoid tariffs, while a foreign corporation does not)?

Posted by: CPAdams at March 10, 2006 10:52 AM
Comment #132632

My point, Cliff, is tht American companies adapt to the local business practices around the world, making concessions for market access, except in the US, where they do their best to do whatever they like.

Because, in the end, American corporations know that they will not be held accountable by governments here.

Posted by: CPAdams at March 10, 2006 10:56 AM
Comment #132635

Re the insourcing link:

1) It’s from 2003.
2) In Oregon, Freightliner is listed as one of the largest manufacturers responsible for insourcing. Just one problem. Freightliner used to be a part of Chrysler, which was bought out by Daimler. We’re in the somewhat absurd position of seeing a very large American corporation’s ownership sold abroad, then claiming they are ‘insourcing’ when they hire.

Posted by: phx8 at March 10, 2006 11:11 AM
Comment #132639

phx8,

that’s hilarious!! Is it any wonder cynicism runs high when corporations lie about hiring?

This month’s jobs report shows 243k new jobs, but we don’t know the salaries of these new hires and how they compare to the jobs that are sailing overseas. At least Wall St is happy…

Posted by: CPAdams at March 10, 2006 11:27 AM
Comment #132647

CPA,
243k non-farm payroll is unquestionably a good number, practically Clintonesque. The wage number and CPI/PPI numbers suggest inflation is running along at a 3 - 4 percent clip. What it means it the Fed will feel comfortable raising the Federal Funds rate again later this month, and probably at least one more time after that. Climbing rates and an inverted yield curve are harbingers of the inevitable economic downturn that follows a recovery. It’s normal.

What’s hard is the weakness of this recovery, to be followed so soon by a recession. Only twice in the past year have we seen non-farm payroll numbers like today. Since the beginning of the Bush administration we’ve seen a little over 2 million jobs created, which is disastrous.

(Btw, Bush apologists will counter with numbers of jobs created since the low point of the recession. That’s pretty funny. So, if a person goes gambling with a hundred dollars, loses fifty, and then makes 40 back, does that mean the person won $40?).

So we’re near the top of the roller coaster. Individual investors are re-entering the stock market, which is a warning sign. The little guy is always wrong. When you see Bush supporters loving the economic roller coaster ‘cause this car is going up and up and up, and they’re throwing their arms over their heads and squealing ‘wheeee,’ Katie bar the door.

We’re just about there… a nice little drop in oil prices could set off the excessive optimism, something soon, before the next hurricane season begins.

Posted by: phx8 at March 10, 2006 12:06 PM
Comment #132652

phx8-

I’m a proud holder of an insourced job (along with 5,000 other Americans and Ex-Pats). Part of our presence here was indeed a direct result of asset purchases, but as a company our main focus is on the fact that 50% of the world’s marketplace is in the U.S. And you’ve got to be here to sell here.

South Carolina has been a great benefactor of foreign investment (BMW, Michelin, Honda, and tons of smaller plants supporting them). This has helped maintain our low unemployment rate despite massive textile and apparel losses. Business cycles are painful, especially when it’s your job that is going away, but the net result is positive if you are educated enough to adapt.

And Aldous, I can also tell you that American companies do not have a monopoly on incompetent management!

Posted by: George in SC at March 10, 2006 12:23 PM
Comment #132660

CPAdams,

Interesting response to my comment…

My point, Cliff, is that American companies adapt to the local business practices around the world

Businesses do adapt…They have adapted here in the US as well…Do we really want the same type of restrictions and government mandates put in place by China and Europe.

I have done business in both places and work with numerous companies that have foreign subsidiaries and parent companies throughout Europe and the Pacific Rim. Europe/China are a pain to work with, they have to sift through all the red tape and have a lot of difficulty making decisions without consulting their local magistrate.

We have to play in a global economy.
Jobs go back and forth across the world all the time.
Governments can play numbers games,
but it becomes tit for tat and is ridiculous.
Remember…(I taught this to my kids)
What’s fair is when I have the advantage.
(The playing field is never level, see your comment above)

We (the US) have a better idea, and we have plenty of laws.

Remember, any time any government gets involved with anything, they usually screw it up.

Posted by: Cliff at March 10, 2006 12:58 PM
Comment #132662

Dan,

I know it galls you to have Marx and his ideas brought into the conversation because they are so relevant TO the conversation, and because the libs can’t stand being associated with the ideas he introduced… but it doesn’t make what I said any less truthful. When gov’t interferes in private industry, it’s not capitalism any more. It’s Marxism, socialism, communism… whatever tag you want to apply to it.

Check our constitution. Nowhere in it does it grant the Fed the right to tell private industry what it can and can’t do. I realize that times have changed, and the designers of the constitution recognized that would happen and they gave Congress the right to change the laws of the country accordingly. However, it seems to me that looking back through history, our economy has gotten progressively worse the more our federal government has tried to get involved in protecting it.

Especially now, with globalism affecting economies world-wide and businesses having the ability to migrate their investing and manufacturing and everything they do wherever they want whenever they want, a company is going to go where the money is. And by that, I mean they are going to plant roots wherever they are allowed to make the most profit, and they are going to manipulate the global system to take advantage of whatever rules gov’ts place on them.

Why do you think the foreign automakers began building here? Because it was cheaper to build plants and manufacture here than it was to pay the tariffs to import. Why American auto manufacturers can’t compete given that bloody advantage is beyond me, but it might have something to do with the fact that most “American” automakers don’t manufacture cars in the U.S. anymore… they build the cars overseas, where the labor is cheap, and then ship the cars here WITHOUT paying tariffs. And they’re still getting their asses handed to them by the Japanese. But I digress…

My original point remains… our economy is strongest when gov’t intervention is least. COMPETITION is what drives a free market, which is what we’re supposed to have. The more controls gov’t tries to place on private industry, the more the cost goes up for the goods and services provided by those companies. And if it costs more (read: less efficient and profitable) for a company to do business in America, then you’re damn right they’re going to take their jobs and the profits to other countries where they can MAKE money instead of having it siphoned off from them. And they have every right to do so! Because as I said before… we are a free market and a democracy, and the gov’t has no business telling business how to do business. Except for the notable necessity to prevent fraud upon the American public (i.e., Enron causing the rolling blackouts in California to ARTIFICIALLY boost the value of its stock).

Gov’t can and should protect the American public from the excesses and potential corruption of the private sector… however, it has abslolutely NO responsility or right to TELL businesses where and how to DO business. That, my friend, is Marxism, plain and simple — state control of business and industry. And I don’t care if you don’t like the label, or want to call it knee-jerk. It’s truth.

Posted by: Lee at March 10, 2006 1:02 PM
Comment #132667

One last comment:

My initial thread was actually in reference ONLY to outsourcing. I made no comment about offshoring, which is, in my opinion, a little unethical, but hardly illegal. It certainly isn’t racketeering!

And if you really want to get into that discussion, then again, you have to look at WHY companies outsource and offshore. And that’s because our gov’t ridiculously overtaxes them, and there is a limit to how much of that corporate taxation can be tranferred to the consumer in the form of increased cost for product. And the company IS going to make a profit… make no mistake. Else, why are they in business? So the company, seeing all it’s profit margin going into the toilet that is the Fed, must find other ways to keep costs down so the consumer can still afford to buy the damn product! So, in my humble and, I’m sure what the liberals will say is my biased viewpoint, by interfering in private industry, the gov’t has simply had the counterproductive effect of reducing the strength of the American economy, vis-a-vis forcing companies to search outside our borders for way to make themselves more profitable.

Posted by: Lee at March 10, 2006 1:21 PM
Comment #132671

Freightliner was originally part of CFCD, Consolidated Freightways Corporation of Delaware, whose headquarters were in Portland, Oregon. I worked for another division for years which was headquartered in San Mateo, California. Delaware is where corporations used to pretend they were located before they started going overseas.
Freightliner was previously bought by Volvo years ago, or maybe they bought Volvo, which is now owned by someone else. There is a lot of moving around of shares in companies for tax puroposes. When I worked for this company, they were mostly owned by the LDS church.

Posted by: ohrealy at March 10, 2006 1:42 PM
Comment #132694

Yes, dems call for higher taxes on the evil American corporations but then whine “Where you guys going (sniffle)??” when they out-source their jobs.

If you want to tax their pants off, fine … out of all of the positions to take, that’s certainly one of them … but don’t cry like a little baby when they take their business elsewhere.

Corporations are businesses of the people, the government is beholden to them, not the other way around. If the government wants them back they need to present the carrot, not the other way around.

Posted by: Ken Cooper at March 10, 2006 4:13 PM
Comment #132706

Cliff, Lee and Ken,

to no particular point but your overall responses,

the only free market on the planet is the US. That creates a decided disadvantage for the American workforce, as economies of scale allow corporations to outsource jobs while it is not nearly as easy for Americans to follow the jobs overseas.

That extra income generated from the reduced labor cost (along with the offshoring of the profits) flows through the corporation to its shareholders which, by definition, are the wealthiest people in this country.

That’s the complaint guys - outsourcing jobs along with offshoring is a wealth transfer from the middle class to the wealthiest. It’s all a trend that moves wealth distribution in this country back to the end of the 19th century - when being rich really meant something and human life was cheap.

In case all of you forgot, it was this concentration of wealth in other nations that lead to Marxism and much of the insanity of the 20th century. It was only FDR’s policies that prevented those movements from taking hold here.

Preventing the poor from getting too poor provides economic security and through it, political stability.

If enough people get hungry, they’ll vote for the people who will tell them to get even with the rich.

Posted by: CPAdams at March 10, 2006 5:21 PM
Comment #132709

Ken,
If a company wishes to do business in the US, they should contribute by paying taxes. If companies wish to offshore & evade taxes, or outsource to evade providing benefits, that’s fine. But if they do, they should not be able to do business here. That especially applies to the business owners. Too bad, so sad.

That’s the great thing about competition. When companies who don’t contribute taxes are forced out, other companies are willing to take their place, even if it means less profit.

Posted by: phx8 at March 10, 2006 5:27 PM
Comment #132715

phx8,

thanks for making the point again.

Ken,

they aren’t taking their business elsewhere, they are just trying to take their jobs and profits elsewhere. To follow up on your absurd statement,

Name one American corporation that no longer does business in the US (sells whatever it is that they sell) and only does business overseas.

Feel free to respond with an answer at anytime. I can wait.

The government exists, in part, to defend the interests of the people. While business overall is the people (in theory, at least), individual businesses do not exist for the benefit of everyone, rather they exist to benefit THEIR owners and no one else.

In this context, it is the government’s responsibility to insure that the people’s interests are defended, particularly when it is demonstrated that a corporation’s actions are against the public interest.

Posted by: CPAdams at March 10, 2006 6:04 PM
Comment #132718

companies wish to offshore & evade taxes

Like Enron, George W.Bush, and Oliver North’s money launderer James R. Bath

Posted by: ohrealy at March 10, 2006 6:09 PM
Comment #132719

CPAdams,

Can we afford to prop up everyone with entitlments? Does the US have the right to protect people from everything (even themselves)? Should people get what they deserve or be protected from everything? Should people look out for themselves or is it the governments responsibility? Should people be paid what they are worth and by what scale should we judge? Why should companies pay someone 60K a year, when they can pay someone else 30K? Should the government seize all companies and make them “state” run?

Somewhere in these questions lies your answer. How much “Big Brother” do you want?

Posted by: Cliff at March 10, 2006 6:09 PM
Comment #132722

Thank you, Cliff… How much Big Brother do you want? That is the perfect question to ask.

Posted by: Lee at March 10, 2006 6:33 PM
Comment #132723

Oh, and phx8,

How much do you think these evil corps are paying in taxes to the other countries in which they operate? I’m guessing that it’s a lot less than they are forced to pay to our gov’t… or else these corporations would be doing everything here and not trying to find a way to escape paying the excessive tax burden our gov’t tries to lay on them.

You want to grow the economy and the job market… you do it by cutting tax breaks to the corps, not by scaring them all off with excess taxes that siphon off their potential profits.

Posted by: Lee at March 10, 2006 6:40 PM
Comment #132725

IN a world wide free ecomony Workers as well as employers must compete with third world countries on the lower level and major powers on the higher level. Major tech companies can find better educated Employees for less money off shore so why shouldnt they? As time goes on the American student gets dumber due to the liberal ideas of “education” which needs no further comment. In the not to distant future a college grad will not qualify to sweep floors, not alone build computers. You socialists will have to get used to living in a world you created, so quit crying.

Posted by: jc at March 10, 2006 6:57 PM
Comment #132727

Lee,
I’m not stuck on any one particular solution. I am stuck on the idea that we need to address the situation. For example, I’d be willing to entertain the idea of disgarding taxes on corporations altogether. That would put the tax burden entirely on individuals. However, I would insist the burden consist of a progressive tax, and that the burden apply to all. Furthermore, no corporate taxation would also mean no corporate tax breaks.

Jc,
I’m flatly unwilling to see the incomes of the world’s workers averaged. I do not want American workers drop their incomes enough to make them competitive with Third World laborers. Others are most welcome to raise their wages and standards of living until they equal our own. However, I’m not willing to lower US wages and living standards to meet Third World standards, somewhere just off the statistical bottom.

Posted by: phx8 at March 10, 2006 7:06 PM
Comment #132728

grow the economy
Is it a fruit or a vegetable?

Avoiding taxes is part of the corporate culture. If you reduced their taxes, they would still try to avoid paying them, and the net result would be even less revenue. Here’s a proposal. How about an additional social security tax on each homeowner with a house of more than 5000 sq ft? You know someone is working there, keeping it clean, doing the yard work, etc. The people working there are eventually going to collect social security, but the employer homeowner is not contributing to it.

world wide free economy
Bulloney, we’re at a disadvantage because we have a free economy. Everyone else subsidizes what they need to subsidize, until they achieve the result that they want.
///

Posted by: ohrealy at March 10, 2006 7:10 PM
Comment #132735

Well said phx8. Its a shame that we cannot divorce ourselves from the third world but due to the one world mantra spewed out by the liberal minds we are forced to compete with people who are not capable of raising up to our standards of living. But isn’t that what its all about? If they cannot raise up we must lower ourselves to their level so there is a “level playing field.”

Posted by: jc at March 10, 2006 7:44 PM
Comment #132742

You are right. Put very simply, in a global economy, wages will (theoretically) rise for poor nations, but certainly fall for rich ones. Government policy ought to reward companies that invest in America labot by providing tax incentives. Conversely, companies tat outsource and hide their profits in these tax havens should be punished. We need to provide a fair playing field for corporations that have a conscience and invest in America.

Posted by: Angelo at March 10, 2006 8:27 PM
Comment #132744

Do you think the real problem might be that while all these mean people from the rest of the world are ‘taking’ your jobs, they aren’t able to afford the goods & services that you might sell to them? There are factories in foreign countries that make sneakers that go straight onto a ship to the US, because no-one who makes them can actually buy one.
This is going to change. Over the next few decades several hundred million, perhaps a billion or two people will become middle-class in places like India & China. Think the industrial revolution through to the late 20th century only 10 times larger & 5 times faster.
The US has 1/25 of the world’s population, but is 1/4 of the global economy. That’s just untenable. There will be a flow of wealth from the developed world to the rest for the foreseeable future, but some seem to think that’s a bad thing.
Now none of this is going to make you feel better, it just is the way it is. Your only real choice is, do you knuckle down and make do, or try and stop this speeding freight train & perhaps save your job, maybe you children’s job but ultimately destroy any chance your grandchildren have.
A piece of free advice: tell your kids to get jobs where you sell things to the people of East & South Asia. There’s a reason why those that have a clue call this the Asian Century.

ohrealy & jc,
“free economy”? maybe if you’re prepared to overlook the agricultural sector… truth is no country has a completely open & free economy. Everyone is looking out for their own self-interest and that’s no surprise. As for those unpleasant third worlders who can’t raise themselves to your level… a Mali cotton farmer isn’t going to design the next generation of computer chips, he’s going to have to do the only thing he can do. But if that doesn’t give him more than a dollar a day to live, it makes a hard task that much more difficult. So you will just have to lose jobs from another part of the economy.

Posted by: loki at March 10, 2006 8:44 PM
Comment #132748

The bulk of revenues collected as taxes that run this nation are obtained from personal taxes and consumer taxes, on purchased goods. Corperate taxes (and Taxes from other business entities) amount to a tiny proportion of the Nations revenue.

If you oursource our jobs, will the Foreign countries pay the taxes that US employees would have paid for the same jobs here? The only people to benifit from oursourcing are the greedy corporations. In the long run, we will all suffer the consequences of this selfish act, including the Greedy Corporations.

Posted by: Paul at March 10, 2006 9:42 PM
Comment #132771

news flash 3-10-2006 gm is recalling 900,000 pickup trucks, also gm is sending letters to 950,000 s 10 and sonoma pickup owners for a free inspection……

Posted by: RODNEY BROWN at March 11, 2006 1:29 AM
Comment #132797

Paul,

That’s the right idea…
Let’s abolish all Greedy Corporations…
That will show them…
We do not need the stuff they make…
We do not want the stuff they sell…
We do not want their stupid underpaying jobs…
Vote the liberal ticket…

Posted by: Cliff at March 11, 2006 11:40 AM
Comment #132798

Paul,

Besides…Corporations should not be in business to make money anyway…That’s just wrong…

Posted by: Cliff at March 11, 2006 11:42 AM
Comment #132799

I’m starting to sound like Aldous…

Posted by: Cliff at March 11, 2006 11:43 AM
Comment #132816

ohrealy i am sure glad you did not lower the size of the house to 4100sq ft i feel much better ! the california democrats are right behind you, they are fighting to repeal our prop 13 that was voted in 1978 by almost 70% favor. if that happens you can buy my house.

Posted by: RODNEY BROWN at March 11, 2006 1:56 PM
Comment #132846

“That’s the right idea…
Let’s abolish all Greedy Corporations…
That will show them…
We do not need the stuff they make…
We do not want the stuff they sell…
We do not want their stupid underpaying jobs…
Vote the liberal ticket…”

“Besides…Corporations should not be in business to make money anyway…That’s just wrong…”

Of course Businesses have to make make a profit for their share-holders. However, just like individuals who pay taxes, Every business entity also has a responsibility to its Country/Community. Its not just about making money. After all, its the infrastructure of this nation that has allowed the Corporations to set-up, function and make profits. Take GE to the mountains of Afganistan and see how long they will last! In the same way, in your own home, if you have working-age children, you would NOT let them to live like they want to without contributing to the ‘house-keeping’ funds.

Posted by: Paul at March 11, 2006 6:05 PM
Comment #132914

Offshoring is good. Outsourcing is good. Racketeering is bad. These are very simple sentences that ring very true; there is an expression called “creative destruction”, this is when products and services are made and done in a cheaper way so that we will all become wealthier. One example of creative destruction is the invention of the automobile, after its distribution, those who took care of horses or saddles lost their jobs due to the car. Another example is what the world is currently facing, outsourcing and offshoring is causing the lost of many jobs but is also making new jobs that offer more wealth to Americans.
In the end, if any nation or society wants to make products and offer services more effieciently, a loss in jobs is inevitable.

Posted by: greenstuff at March 12, 2006 12:44 AM
Comment #132935

I always felt that business with Honshu Island, early in Bush’s administration, was kind of fishy — you all remember: when our slow, lumbering, propeller-driven airplane collided with the nimble Chinese fighter jet. I always believed that we capitulated on that one because the Chinese told Bush, “Any guff out of you on this and we’ll nationalize every factory your boys have set up over here.” (The vernacular, of course, is my own.) This is what is so galling about offshoring: when these traitors expect us to humiliate ourselves and sacrifice true national security (we promised to stop the intelligence collection flights, as I recall) so as to protect their interests.

Posted by: JCollis at March 12, 2006 8:08 AM
Comment #234146

The Greedy Corporations and the Profit Hungry Shareholders

Honesty and integrity went out the window – anything goes

Corporate greed and the insatiable thirst to make a profit, to satiate shareholders share- holders’ profit expectations have changed American values, where anything is justified in order to derive enormous corporate profit and satisfy the expectations of the share-holders; maintain the image of profitable corporate America. It is a vicious cycle that feeds itself to ultimate disaster.

These attitudes have brought corporate executives to exercise the drive and mentality that anything goes, no holes barred.
Inflating earnings, hiding debts and liabilities, outright fraud and deception. Theft by executives, theft of corporate assets, graft, bribery, illegal contributions to politicians, trips, gifts and favors to politicians, crooked lobbying organizations.
Where and when does it all stop? When are Americans going to wake-up and realize they are on the path of disaster of magnitude proportions that will bring our downfall?

We still have honest ethical hard working people in America. Let us all rise and protest these money hungry actions and methods, before it is too late.

Work hard to better America, institute honesty and integrity.
It starts at the top – the politicians, the legal system, corporate America and progresses to the masses.

The media is not exempt. Honest reporting is a must, the public expects no less.
Exercising - Sincerity, honesty and integrity is a good beginning.

If you work hard, perform your duties sincerely and honestly, you will be able to earn a better profit/living. You will not have to worry about covering up for your wrongdoing and you will be able to sleep better at night, look at yourself in the mirror.

We should learn to respect each other.

Bring back family values.

Am I asking too much?

Jay Draiman, Northridge, CA – Sept. 24, 2007

PS
An essay concerning the origins, nature, extent and morality of this destructive force in free market economies. Definitions. Paradoxes and omissions in Adam Smith’s original theory permit - encourage - greed without restraint so that in a very large society [USA] over two centuries it has become an undemocratic force creating precipitous inequalities; divisions in this society now approach a kind of wealth apartheid, and our values are quite unlike Smith’s: this is an immensely wealthy society but it is not a humane society. Wealth and poverty are connected, in fact recent sociological theory shows our institutions routinely design inequality in, but this connection is largely avoided in texts and in the media, as is the notion that greed is a moral wrong. Problems created by greed cannot be solved by technology. We are also distracted by already-outdated environmental rhetoric, arguments that scarcities and human suffering follow from abuse of our ecology. Rather, these scarcities are the result of what people do to people. This focus opens practical solutions.

“The Social Responsibility of Business Is to Increase Its Profits.” The future Nobel laureate in economics had no patience for capitalists who claimed that “business is not concerned ‘merely’ with profit but also with promoting desirable ‘social’ ends; that business has a ‘social conscience’ and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of re formers.”
He wrote that such people are “preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting pup pets of the intellectual forces that have been undermining the basis of a free society these past decades.”
He argues that corporations add far more to society by maximizing “long-term shareholder value” than they do by donating time and money to charity.
He said “there is one and only one social responsibility of business-to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” That’s the orthodox view among free market economists: that the only social responsibility a law-abiding business has is to maximize profits for the shareholders.
I said. But we have not achieved our tremendous increase in shareholder value by making shareholder value the primary purpose of our business. In my marriage, my wife’s happiness is an end in itself, not merely a means to my own happiness; love leads me to put my wife’s happiness first, but in doing so I also make myself happier. Similarly, the most successful businesses put the customer first, ahead of the investors. In the profit-centered business, customer happiness is merely a means to an end: maximizing profits. In the customer-centered business, customer happiness is an end in itself, and will be pursued with greater interest, passion, and empathy than the profit-centered business is capable of.
Many thinking people will readily accept my arguments that caring about customers and employees is good business. But they might draw the line at believing a company has any responsibility to its community and environment.
This position sounds reasonable. A company’s assets do belong to the investors, and its management does have a duty to manage those assets responsibly. In my view, the argument is not wrong so much as it is too narrow.
First, there can be little doubt that a certain amount of corporate philanthropy is simply good business and works for the long-term benefit of the investors.
That said, I believe such programs would be completely justifiable even if they produced no profits and no P.R. This is because I believe the entrepreneurs, not the current investors in a company’s stock, have the right and responsibility to define the purpose of the company. It is the entrepreneurs who create a company, who bring all the factors of production together and coordinate it into viable business. It is the entrepreneurs who set the company strategy and who negotiate the terms of trade with all of the voluntarily cooperating stakeholders—including the investors.
The shareholders of a public company own their stock voluntarily. If they don’t agree with the philosophy of the business, they can always sell their investment, just as the customers and employees can exit their relationships with the company if they don’t like the terms of trade. If that is unacceptable to them, they always have the legal right to submit a resolution at our annual shareholders meeting to change the company’s philanthropic philosophy. A number of our company policies have been changed over the years through successful shareholder resolutions.
The Theory of Moral Sentiments. There he explains that human nature isn’t just about self-interest. It also includes sympathy, empathy, friendship, love, and the desire for social approval. As motives for human behavior, these are at least as important as self-interest. For many people, they are more important.
When we are small children we are egocentric, concerned only about our own needs and desires. As we mature, most people grow beyond this egocentrism and begin to care about others-their families, friends, communities, and countries. Our capacity to love can expand even further: to loving people from different races, religions, and countries—potentially to unlimited love for all people and even for other sentient creatures. This is our potential as human beings, to take joy in the flourishing of people everywhere. Whole Foods gives money to our communities because we care about them and feel a responsibility to help them flourish as well as possible.
The business model that should be embraced could represent a new form of capitalism, one that more consciously works for the common good instead of depending solely on the “invisible hand” to generate positive results for society. The “brand” of capitalism is in terrible shape throughout the world, and corporations are widely seen as selfish, greedy, and uncaring. This is both unfortunate and unnecessary, and could be changed if businesses and economists widely adopted the business model that I have outlined here.
To extend our love and care beyond our narrow self-interest is antithetical to neither our human nature nor our financial success. Rather, it leads to the further fulfillment of both. Why do we not encourage this in our theories of business and economics? Why do we restrict our theories to such a pessimistic and crabby view of human nature? What are we afraid of?
Businesses such have multiple stakeholders and therefore have multiple responsibilities. But the fact that we have responsibilities to stakeholders besides investors does not give those other stakeholders any “property rights” in the company, contrary to those’ fears. The investors still own the business, are entitled to the residual profits, and can fire the management if they wish. A doctor has an ethical responsibility to try to heal his/her patients, but that responsibility doesn’t mean his/her patients are entitled to receive a share of the profits from her practice.
Many probably will never agree with my business philosophy, but it doesn’t really matter. The ideas I’m articulating result in a more robust business model than the profit-maximization model that it competes against, because they encourage and tap into more powerful motivations than self-interest alone. These ideas will triumph over time, not by persuading intellectuals and economists through argument but by winning the competitive test of the marketplace. Someday businesses like these, which adhere to a stakeholder model of deeper business purpose, will dominate the economic landscape. Wait and see.

Posted by: YJ Draiman, Energy Consultant at September 24, 2007 12:08 PM
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