Tuesday, March 16, 2004
Crumbling Under The Weight of Our Own Capitalism?
One of the newest, and most alarming, buzzwords I’ve been hearing in corporate life is “off-shoring,” as in the export of jobs. You may have heard a number of stories in the news lately of many corporations whose base customers are in this locale sending their jobs to countries in the other hemisphere. One of the more popular positions is that of telephone customer service personnel. It is very likely that you may have recently called some form of help line through a local or toll free number and been connected with a customer service person located halfway around the world.
Why all this “off shoring?” Simple-to save money. Wages in places such as India are much less than having to pay someone in the United States. It’s the first rule of capitalism: maximize profits, which in this case is done by decreasing expenditures. (Personal aside-I actually thought the first rule of capitalism was to create competition, causing all of the players to constantly improve themselves and their products. I better go check my economics textbooks.) At face value, there’s nothing wrong with that. Everybody wants to try to save as much money as they can.
However, when you see the big picture, you have to wonder who this is really benefiting. In the current climate, the US economy is supposedly starting to improve, most obviously shown by the recent gradual rise of the Dow Jones. And yet, paradoxically, the employment growth rate in this country still seems to be slow.
So, faced with these pieces of data, am I drawing too simplistic of a conclusion that this rush to maximize “offshoring” might have something to do with this? Could it be that while the wage savings brought about by this latest corporate fad pad the balances of corporate ledgers, the dearth of domestic opportunities caused by this job export creates the atmosphere for slow employment growth?
Of course, the short term outlook practiced by the beancounters shows that this reduction in expenditures allows company profits to grow, thereby increasing stock prices (theoretically making stockholders richer should you be fortunate enough to have the funds to afford such shares) and providing more money to raise the wages of those currently employed by the company (well, at least those making enough money to be considered for such a bonus). But in the long term outlook, a view generally frowned upon by business school graduates, you have to wonder one thing.
If nobody domestically has a job in order to make a decent living, who’s going to buy the company’s products?
