Outsourcing in the U.S. has obviously enriched the heads of massive corporations. But for workers and consumers, outsourcing creates a multitude of problems. It poses a whole host of problems for shipping, communication and culture – but the biggest setback might be the loss in quality.
The capitalist market in the United States makes it nearly impossible for any successful company to avoid the lure of cutting American industrial jobs and shipping the work abroad. “Free trade” agreements such as NAFTA and U.S. membership in the WTO have caused the U.S. to be forced to compete with third world countries such as China and Mexico, where wages are often less than $4 an hour. It is a matter of market competition, and when the means are so available, they are essentially unavoidable. By leaving businesses with no protection and giving out full access to U.S. markets, it makes no sense to produce in the United States.
Meanwhile, America’s most ruthless competitors are doing just the opposite. In China, for example, if a company wants access to those one billion-plus consumers, there is a minimum percentage of their parts and labor that must be produced in China. Unable to resist the potential gains in such a massive market, many companies move to China just to enjoy this benefit, while continuing to ship their products back to the U.S.
Since entering the WTO in 2001, trade with China has resulted in the loss of 2.8 million jobs through 2013, according to the most recent study by the Economic Policy Institute. Those fortunate enough to retain their jobs witnessed their annual earnings decrease by roughly $1,400. American workers are put in direct competition with one another as more and more employers look to offshore production to nations with lower wage rates.
Also, in place of tariffs, more than 140 nations use a consumption tax called a value-added tax, or a VAT, to penalize imports and subsidize exports in order to meet their WTO obligations. The only developed economy on Earth that does not employ a VAT is the United States, and because of it, the U.S. is at a massive trade disadvantage. The U.S. should consider implementing a border consumption tax as part of a competitive tax plan.
As part of the fix to these issues, the U.S. must make it profitable for companies to employ workers in this country and produce goods and should not have to worry about quality jobs leaving the U.S. and rely on foreign companies to provide employment. Foreign trade needs to be controlled, as other nations are doing.
By looking at both sides of the equation, it’s obvious that while the U.S. is gaining short-term profit and a few jobs, it is forfeiting its manufacturing and industrial base. Eventually, the U.S. will be left with few to no American-owned factories, leaving the nation completely dependent on other countries for work, resources and a fair standard of living.
These are the economic characteristics of a third-world country. These are the chains that forefathers fought to shake off more than 200 years ago. That is a vision of the U.S. that no American is comfortable imagining.