Oakvillian

What an extraordinary thing to say. I don't "keep buying rubbish from China," thank you very much. I buy things that do what I want them to do at the best mix of price/function/brand/design that is appropriate in the circumstance. None of those things have fallen apart in a week.

Why should I buy nothing that's made in China? Apart from the difficulty of finding stuff that is not made in China (or India, or Brazil, or Korea, or Malaysia, or anywhere else that your ill-informed rant presumably includes), there are increasing numbers of Western companies with manufacturing operations in China simply because that's the economically sensible place to build stuff. Much of the time there simply isn't an alternative that is made in the US or Canada - or if there is, it's of inferior quality.

Are workers in China being exploited? By the standards of a unionised, low-productivity North American workforce, probably yes. But by the standards of the alternatives available in China - whether that's manual agriculture in rural areas or anything in the domestic Chinese economy, I'm not so sure.

Cheap imports are not costing jobs in Canada. There are many studies (I refer you to this well-known one in particular) that show the net benefit to the domestic economy of outsourcing both manufacturing and service jobs.

With the changing demographic of the Canadian and US populations, global manufacturing and service delivery is the only realistic way of ensuring that the country can continue to pay for its upkeep as the workforce ages.

If we started to adopt the approach you propose, Canada's economy would stagnate, exports would slump, companies would descend into bankruptcy, more jobs would be lost, and you'd be crying into your beer and trying to find somebody else to blame. I think it's time you addressed the reality of a global supply chain and embraced its inevitability, rather than standing, Cnut-like, at the shore ranting at the incoming tide.

JonboyE

Although I agree with your post, I thought this unnecessarily offensive to the OP.







Oh, that Cnut. As you were.

Oakvillian

<oleaginous Francis Urquhart voice> You may think my choice of that particular spelling variant was deliberate; I couldn't possibly comment.

iaink

From the abstract of that link

"The reality of the emerging global economy is that the workforce is experiencing higher turnover than ever before. The challenge is how to make that inevitable process less painful and share more of the wealth being created"

Isnt that a rather flawed premise to start from? If the jobs were not getting shipped offshore all the time then the "higher turnover" as they euphemistically chose to describe the layoffs would not be nearly as inevitable would it?

I suppose its churlish to sit at my desk in a country whose economy revolves around EXPORTING wood, oil, power etc and bemoan the way manufacturing is becoming more and more of an uphill struggle here due to the importation of goods from cheaper sources. One reason my job is here rather than in the US is because its cheaper to do it here in Canada for various reasons. On the other hand more and more of our assembly is offloaded to Mexico. Maybe I should be learning Spanish.

I guess Im an old fashioned liberal who thinks that there is much harm to be done in the long term by doing what makes the biggest short term profit over what is best for society in general. The problem is that the "economy" may indeed prosper, but that's cold comfort to the millions at the bottom of the food chain that are out of a job while the 5% that control 90% of the wealth are benefiting from outsourcing. The "economy" may be prospering, but the average persons standard of living is not. Are the rich even benefiting anyway, I mean, once you have ten million in the bank I doubt your standard of living or happyness is going to increase in a noticable way with a 5 million change either way, it just becomes monopoly money, a way to keep "score".

Alan2005

In the long term propping up uncompetitive businesses does more harm than good anyway. I would hope that in the long term the east/west wealth disparity would disappear; although I'm hypocritical enough to want the transfer to not be from my pockets.

iaink

There is a real world difference between uncompetitive and "Slightly less profitable", to be honest our current economic trajectory scares the pants off me as someone whos chosen a career in making actual physical things to sell. The silver lining for me is a lot of our work is defence industry oriented...there are still a few things that dont get made offshore for the sake of saving a few bucks.

In the long run what happens when all the manufacturing jobs have gone offshore to the cheapest bidder? Where will the "value added" component come from in an economy that is service industry driven without taking a raw material and turning it into something else. As far as I can tell if you are making money in a financial market its because someone else is losing it... no net gain I can figure out. Obviously I come at this as a naive engineer with no grasp of economics!

jimf

If its the likes of Philip Green benefiting then thats got to be a bad thing. If it means that companies like M&S survive so that the people in the middle can still collect a pension through investments in companies like M&S then thats something positive. For those at the bottom it looks bleak, and more and more people are going to get included in this group as time goes on.

The problem with China is that they don't buy anything in return, which is hardly suprising as the currency is held artificially low for political reasons.

Oakvillian

I come at it from the perspective of an employee of a global IT services company, headquartered in India, with most of our people in India but most of our business elsewhere in the world (around half of it from North America). We don't, in your terms, make "actual physical things to sell" - but the value we add for our Canadian customers is that we help them to do whatever it is they do more efficiently, so that they can compete better in a global marketplace. Our clients certainly include manufacturing companies, but also banks, insurers, mining companies, power and utility types, retailers... not all of them make actual physical things to sell, either. Many of the retailers source their inventory through a global supply chain. Many of the manufacturers source components and subassemblies globally; some of them buy mostly Canadian raw materials.

The upshot of a lot of the business services sector (and to the consternation of some on here I would lump IT consulting and contracting in with lawyering and so forth as "business services" - sorry dbd!) is that we enable other parts of the economy to function more successfully. I wrote "better" there, but that depends too much on your point of view.

Oakvillian

...except US dollars, which they buy by the bucketload by all accounts. But that has at least as much to do with the economic policies of successive US administrations as it does with Chinese fiscal policy, although I agree that the artificial Yuan exchange is not exactly a helpful thing.

Lord Vader

I should hope so. On the path to a world of economic parity wouldn't you rather have "them" rise up rather than for "us" to fall back?

iaink

The logical progression is to move all the business functions to more "efficient" locations, at which point your canadian customers are no longer really canadian customers, and then you have no purpose in being in canada to support their business, which is now all offshore and efficent.


As I said earlier, my suspicion is that in the long term, pursuit of higher profits in the short term is going to be extremely bad for those people actually working (or trying to) in Canada. Maybe 100 years from now the canadian economy, with its tapestry of immigrant cultures and tongues, will be solely driven by being the "go to" location for Call Centers for the Chinese economic juggernaut

Oakvillian

No, I don't think that's logical at all. But I think it's necessary to make a distinction between outourcing (which may still be local) and offshoring (which may be an offshore business of the same company).

Any company espousing the idea of outsourcing will tell you that it is sensible to outsource non-core functions but keep the actual purpose of the business in-house. Thus, a manufacturer will still keep on manufacturing their own widgets, but may employ a specialist company to look after their payroll, or their accounting systems, or janitorial services, or whatever. There's nothing new or radical about that - it's not really any different from a 19th-century London merchant using the services of the Royal Mail to deliver goods rather than employing their own liveried messengers.

Offshoring is newer, and has largely been enabled by improvements in communication technology. Big insurance companies have had claims-processing back offices in places like the Philippines for years, but keep their front office functions in the same country as their customers, otherwise they wouldn't be able to function.

I think the lie is given to your argument by looking at the public sector, where short term profit is removed as a motive. The Ontario public service, at least (which I know a little about; I don't have as much exposure to other provinces but I can't imagine it's a very different story) is outsourcing a number of functions, both within Canada and offshore, simply because there is a major demographic crunch happening. A large number of senior-ish people are due to retire in the next 6-8 years and outsourcing is the most effective way of filling the gap in the workforce.

You may be right - perhaps the now-dominant Western economies will be overtaken by the Asian Tigers. Did you see the news stories today about the latest Forbes rich-list? The world's wealthiest man is a Mexican; there were four Indians in the top dozen or so; more Chinese billionaires have been identified in the last couple of years than any other nationality - the shift of wealth (and the influence that wealth commands) away from Europe and North American towards South and East Asia started a while ago, and will only gain momentum.

ExKiwilass

It's going to be interesting to see how it plays out. For one thing, I'm waiting for unions to globalize too - that's also inevitable from where I sit. Cheap labour is not going to remain cheap forever. I'm looking forward to a globalized working class taking on globalized corporations over workers rights, decent pay, etc.

Alan2005

This is the ideal. It depends on capital flows and investment; ideally we work, create wealth, use that wealth to invest in new technologies that lift people out of poverty and improve the lives of everyone. This is how the system should operate and is the point of having an economy.

In practice this isn't happening; central banks have encouraged investment in things that are unproductive and add no value to the economy. Be it under performing businesses or overpriced assets - our wealth is being squandered on nothing. That is why it will be a transfer rather than an uplift.

ExKiwilass

That sounds like a nice idea but I find it hard to believe most rich people really do invest in new technologies, not houses, cars, yachts etc.