Wednesday, October 15, 2008

We the People: Lou Dobbs and Insourcing Jobs.

Insourcing is the opposite of outsourcing; that is insourcing (or contracting in) is often defined as the delegation of operations or jobs from production within a business to an internal (but 'stand-alone') entity that specializes in that operation. Insourcing is a business decision that is often made to maintain control of critical production or competencies.
According to PR Web, insourcing was becoming more common by 2006 as businesses had less than satisfactory experiences with outsourcing (including customer support).
To those who are concerned that nations may be losing a net amount of jobs due to outsourcing, some point out that insourcing also occurs as a major surplus. According to a study by Mary Amiti and Shang-Jin Wei, in the United States, the United Kingdom, and many other industrialized countries more jobs are insourced than outsourced. They found that out of all the countries in the world they studied, the U.S. and the U.K. actually have the largest net trade surpluses in business services.
So the measure of fear created by Lou Dobbs of Outsourcing jobs from America is Justified?
when Dobbs testified before Congress, it was not just a case of preaching to the choir, or even the blind leading the stupid. It was vivid proof of Goethe’s famous dictum, “Nothing is more terrible than ignorance in action.”
Let’s take a look close at Dobbs’s testimony. It was long on impressive-sounding claims based on apparently authoritative statistics. But virtually every seeming fact that Dobbs cited is flat wrong.
Dobbs said that free trade is costing America jobs. With the unemployment rate now at only 4.4 percent, it’s hard to see what he is complaining about. Nevertheless he stated that
Since the beginning of this new century, the United States has lost more than three million manufacturing jobs. Three million more jobs have been lost to cheap overseas labor markets …
That’s a total of six million jobs.
According to the Department of Labor’s Bureau of Labor Statistics, there today are only 6.7 million unemployed people in the U.S. to begin with. So just what is Dobbs promising? That if we had pursued protectionist trade policies, we’d have six million more jobs -- leaving only 700 thousand people unemployed? That would put the unemployment rate at less than one half of one percent -- a tiny fraction of the lowest unemployment rate ever achieved in history.
Surely this sets a new high water mark for sheer absurdity in the long history of political promises to provide more jobs.

Dobbs also declared that Salaries and wages now represent the lowest share of our national income than any time since 1929. Corporate profits have the largest share of our national income than at any time since 1950.
The claim about salaries and wages is so deceptive as to very nearly be a lie. Dobbs ignored the fact that for many of the years following 1929, companies paid only salaries and wages, and no fringe benefits such as pensions or health care. In the modern economy, fringe benefits are a significant portion of total compensation. Today, the income share of total worker compensation -- wages and salaries plus benefits -- is higher than in any year prior to 1967, and lands in about the middle of the narrow range in which it has since fluctuated.
Know with Insourcing more than five million Americans now receive a pay check from a foreign firm. We the People travels to a former US manufacturing town to see how 'insourcing' is changing the face of one small community.

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