Twenty years ago American companies discovered they can save money and boost earnings through downsizing. Ten years ago they discovered they can save even more money and boost earnings by outsourcing. Walmart and other retailers, as well as manufacturers, have realized substantial profits and made shareholders very happy over the past decade as a result. But what are the long-term consequences?

Within our new global village economy many would say that outsourcing is not only inevitable but necessary. From the point of view of raising the standard of living for third world countries, its impact is undeniable. Even though there are unpleasant news items regarding child and slave labor cropping up now and then, the net effect of outsourcing is nonetheless positive. As countries around the world are engaged to manufacture American goods, their national product increases. Whether it be Mexico, China, or India, their lower labor rates not only benefit consumers in America, but also help to enrich the countries involved in the manufacturing process. The eventual result is an increase in the standard of living for all countries outsourced by America.

Detractors point to the social injustice as Americans take advantage of poorer countries where laborers work long hours in substandard conditions to provide goods to be enjoyed by the better off. This may be true, but history records that the Western world experienced similar deplorable conditions during the Industrial Age in both Europe and America. Though it is never fair, subsequent generations have often benefited from the sweat and blood of their forefathers.

But what are the benefits for America? In the short-run, Americans can take advantage of cheaper goods from abroad. But what happens when Americans start to lose their jobs because they have been replaced by underpaid counterparts elsewhere in the world? At what point in time does the entire American economy start to suffer?

Presently America is still reeling from the sub-prime mortgage rate fiasco brought on by over-extension and an overly high debt burden incurred by a staggering number of Americans. American currency relative to other currencies has taken a hit and the worst may not be over.

As other nations' wealth increases relative to that of America, several things are bound to happen. One is that there will be an increase in foreign investment in America. Another is that America will increasingly become a destination

• 1
• 2
• next page >>

---

Add your voice

Know something about Outsourcing: A boom or bust for American business??
We want to hear your view. Write now!