The following story is not just about outsourcing, China or the US situation. As author Steve Denning writes, it’s been happening in Germany and elsewhere in Europe too, and it’s pretty clear Australia is in the same boat.
This article does a very good job of painting the more complete picture that’s necessary to understand that’s actually going on, and why. The individual decisions appeared to make sense, at the time – however they created serious problems later: the US now can’t innovate on certain things (such as solar panels) because they no longer have either the research skills or the manufacturing capability for the components – they’ve long moved overseas, or just been outsourced. Gone.
That’s something Upstarta cares a lot about: actions have consequences, and we don’t want to “create monsters”.
http://www.forbes.com/sites/stevedenning/2011/08/17/why-amazon-cant-make-a-kindle-in-the-usa/
“An economist is someone who knows the price of everything and the value of nothing.” Old joke based on Oscar Wilde’s quip about a cynic.
I recently noted how conventional cost accounting inexorably focuses executives’ attention on increasing short-term profits by cutting costs. The same thing happens in economics. […]
I worked at AT&T in Asia / Pacific between 1999 and 2004. During those 5 years I saw the plans of many of the very largest manufacturers in North America and Europe to move – collectively – millions of jobs to China (and other Asian countries with cheap labour). Around 2003 it dawned on me there were millions of people going to work every day whose jobs wouldn’t exist at some point in the next 5 years. The cope of what I saw started me wondering what the macro-economic impact would be in the West of losing so many jobs. I suspect this is the real cause of the global financial crisis. For a time, people floated their increasingly unsustainable lifestyles on easy credit. But by 2008 the aggregate loss of income was no longer sustainable for large numbers of people – especially those at the bottom dependent on those higher up who were now worse off.
By mid-2007 I considered a crash to be possible at any time….and moved to minimise exposure. My plans were complete 12 weeks before the crash in 2008. Almost perfect timing.
What made me wonder was so many “experts” didn’t see it coming. I never really understood how that could be true. If you knew what I knew, it was obvious from 2001 onward something bad was going to happen…and it had nothing to do with 9/11.
Steve you make an interesting point with the statement “…macro-economic impact would be in the West of losing so many jobs”.
I however do not think that the GFC is a result of this. I think the GFC was caused by greed that had accumulated over a considerable period of time before 2008 (and I mean something like 20 years).
No, your point of macro-economic impact on JOBS is yet to come!