Saturday, July 21, 2012

The human costs of outsourcing and global economic rationalization

One of Romney's defenses has been that those outsourcing companies in which Bain invested happened after he relinquished control of Bain in 1999. We've seen the stories questioning whether he indeed was not in control after that time, but what is now proven is that some of Bain's investments outsourced while he was still in charge up to 1999. This Mother Jones story details Romney's investment in three companies that were infamous for, and proud of, outsourcing high-tech jobs: Flextronics International, Jabil Circuit Inc. and Global Tech Appliances.

These companies rationalize that outsourcing is good for America because it cuts costs on products due to reduced labor expenses. This is good for the American consumer because it gets low, competitive prices on high-quality products. And it allows American companies to compete on global markets, which can sell the same products for lower prices. All true. The authors of the MJ  article even admit that this "might be partly inevitable in a globalized economy."

But what are the costs to global society for this business model? And it this really inevitable? The article also points out that the Chinese workers are earning 70 cents per hour. What it doesn't discuss are the unsafe working conditions, or how Chinese families must cram numerous relatives into one hovel to survive on such wages. All of those humane living conditions that Americans have come to accept, long fought for by Unions through gradual improvement, are virtually non-existent in the countries to which we outsource. And due to such outsourcing these living standards are now being badly eroded in America and are moving toward the Chinese way of life, with parents having several jobs to make ends meet and families once again having to all live together in crowded conditions. Do we really want to lower living standards on 98% of the world population to have cheaper products that few can afford. How about raising the living standard for everyone so that we all can afford the true and higher real cost of the products?

Romney's lame defense is that Bain had no management responsibilities for these companies; they were just investments that brought financial gain to the company. And it was just standard business practices. But per above this does not have to be the accepted way business has to be done, and we don't have to accept the enslavement of the cheap labor force abroad, and rampant unemployment and depression of the middle class in America, just to make cheaper products that only the dwindling affluent class can afford to buy. We can do better than that on a global scale and raise the boat for everyone, instead of sinking the boat of most for those few in cruise liners and yachts. Granted those who can afford yachts might have to cut back to only 1 or 2 yachts to accommodate a more equitable redistribution of wealth, but can they manage on such meager profits?

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