Standard Stratocaster
Why Outsourcing Will Affect Your Lifestyle and What to Do About It
The United States has lost manufacturing jobs for a number of reasons. But, the implications of this job loss is resulting in a catastrophic effect on the US economy. You are likely to eventually see reduced standards of living during your lifetime.
Why Manufacturing Job Loss?
The causes have to start with corporate earnings. Manufactured products with a comparatively high labor cost can reap a higher profit if the labor costs are cut . Stockholders like to have higher profits and management has no option but to act in response. Increasing automation or using low cost labor are the main ways to scale back manufacturing costs. For many products, using foreign labor will be the best method to reduce manufacturing expenses.
The next step involved was to pass tax and import/export laws designed to allow outsourcing of manufacturing. With the expectation of higher profits, manufactures could offer incentives to politicians to vote for laws like NAFTA (North American Free Trade Agreement) that allowed easy outsourcing of manufacturing jobs. This law removed tariff taxes for imports and exports and removed barriers to trade between Canada, the US and Mexico.
US companies saw this as a "foot in the door" that gave them permission to outsource a myriad of jobs to low wage countries. Manufacturing and service positions have fled this country. Whether it's your clothing, electronics, or help desk support personnel, a great many laborers making products for the US market are foreign.
What Are the Effects of Massive Outsourcing?
The government's Education Resources Information Center published a report about the effects of NAFTA on American workers. Their research stated that the "North American Free Trade Agreement (NAFTA) will result in lower wages, fewer jobs, and generally reduced living standards for the majority of U.S. workers."
The AFL-CIO indicates that ever since 2000 the US has lost 5 million manufacturing positions and 850,000 information sector positions which have been shipped overseas.
Once a person loses their manufacturing job, they stop spending and a lot of other jobs are lost. All sectors from grocery stores, beauty salons, car repair shops, restaurants and so on suffer. Job loses also affect property values, city services, and local schools. Just when the former workers and their children need education the most, schools with a falling tax base must reduce their curriculum.
To help those displaced workers, the government established the Trade Adjustment Assistance program to assist in retraining. This allows them to get an associates or bachelors degree to improve skills.
The fact is, today workers in labor jobs have to increasingly compete with low wage workers in Mexico, China and other countries. Such competition must lower the standard of living of all workers involved in unskilled and skilled labor occupations.
Effects on the US Economy
Inhabitants of the United States buy more foreign goods than they manufacture for shipment abroad. This means that our trade balance is alway a trade deficit. We sent $46.3 billion more abroad for goods in January of 2011 alone. This floods other countries with US dollars. This suppresses the value of the dollar on currency exchanges.
In addition, our financial system is so bad and our political system so broken that the Government must borrow 42 cents for every dollar they spend. Because of this, the United States is the foremost debtor nation of all time.
The upshot of all this is that the monetary stability of the United States is starting to become increasingly questionable. The steady growth in the value of gold, a hallmark of value, has illustrated that the long term future of our financial system in question. With faith that the government will change course dimming, the future for the dollar and the investments of millions of Americans looks darker and darker.
Anyone with money in an IRA, mutual fund or savings plan ought to think about purchasing gold. Learn more about how to buy gold bullion which can help you safeguard and increase your wealth.
Fender Mexican Standard Stratocaster - Colour Options @ Nevada Music UK
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