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Shakespeare, in As You Like It, remarks, “O, how full of briers is this working-day world!”
Truly, economy is a complicated science with important and often annoying effects on the average
person. Thus it is with today's newly global economy, which has only recently entered a new
renaissance. After the dissolution of the Cold War, a short 'era of good feelings' reigned economically
as large blocks of previously Communist countries converted to Capitalism, and began to clamor to be
a part of the trade America shared with her allies. Even countries such as China, which continued under
the Communist system, began to look to the global capitalist market to try and understand or control
the newly emerging global forces. As the borders of the world freed, so too did the flow of money and
of goods. A Starbucks in the Forbidden City, a McDonalds at Auschwitz (“Welcome to Auschwitz, and
Welcome to McDonalds!” proclaims their sign), Levis in Red Square – it seemed that the international
marketplace had become one happy system (with a few quirks like Iraq, Libya, or Cuba). Soon,
however, tensions crept back into the economic system. In richer, more labor-protecting countries,
companies discovered that they were paying more for labor than their counterparts in poorer, less labor-
sensitive countries. And with increased ability to move goods and services became an increased ability
to contract labor and services outside of the country where the company was originally located. This
contracting or hiring of parts of the supply chain to foreign countries for either increased quality,
Consequently, public opinion varies by industry, by age, by political affiliation, by religious inclination,
and by national heritage. Deciding how to react to globalization, and its major effect outsourcing,
requires first an understanding and weighing of the benefits and detriments of outsourcing. Tragically,
however, it is precisely what we do not have at our fingertips. Because of the nebulous nature of
outsourcing, it is difficult to determine its pragmatic effects.
Laborers in the United States, especially in manufacturing, have opposed outsourcing (and
consequently, globalization), because of the perceived image that outsourcing means jobs lost for the
American Worker. In theory, this is self-evident – if factories close in the United States and move
overseas, then the displaced workers are out of work. The reality is less certain. If factories close in the
United States, do other segments of the market provide more jobs (as many of the proponents of
outsourcing agree)? If Americans lose jobs to American jobs leaving the country, do they gain jobs
created by foreign countries entering the United States? Export.gov, a federal website operated by the
California. The Organization For International Investment (OII), a special interest group supporting US
subsidiaries of foreign companies, states that 616,400 workers are employed by foreign companies –
5% of the workforce, having increased 32% over the last five years. Overall, OII estimates that 5.4
million workers are employed by foreign subsidiaries. However, note the discrepancy between the
government statistic and the OII statistic with reference to California: clearly, there are questions to be
raised at how to collect accurate statistics. In this debate, statistics are vitally important to
understanding the effects of globalization, but accurate statistics are exactly what we are denied.
Estimations of how many jobs are lost to outsourcing vary from 4,000 to 6,500,000. Clearly, 4,000 jobs
lost a year compared to 5,400,000 gained (as supporters of outsourcing declare) would indicate that the
free movement of jobs is not damaging our society. However, if 6,500,000 jobs are lost, and only
1,000,000 are gained (as opponents of outsourcing would indicate) then obviously Americans are
However, one accurate statistic which is currently compiled is the unemployment statistic
gathered by the Bureau of Labor Statistics. Assuming that outsourcing loses American jobs, then a slow
acceleration in unemployment would be visible sometime over the last fifteen years – most visibly
during the 1990s, when the surging tech-bubble led to many IT and other technologies companies
exporting their jobs to India. An analysis of these charts show that between 1945 and 2000, the rate of
unemployment has been growing at a mostly steady rate. After 2000, however, the unemployment picks
up slightly more rapidly. 2000, however, is auspicious because that is the year which the United States
entered its most recent recession—a more logical explanation than outsourcing as a source of job loss.
This is, of course, highly speculative, as is most of the debate surrounding outsourcing. Yet
in my mind, no clear argument has been put forward that the market as a whole is injured by allowing
companies to contract outside of the country. While some companies in textiles, manufacturing, and IT
have left for greener pastures, other companies such as Samsung, Vodafone, or Daimler-Chrysler (note:
the German buyout of an American company did not lead to the loss of American jobs in this example,
as was originally feared) have opened branches in the United States. The effect of allowing companies
to operate in foreign countries is as basic as gassing up at a Shell gas station rather than a Chevron.
Part of the problem with outsourcing is the sheer inability of the government to control it.
As yet, no effective trade barriers have been designed to end outsourcing without adversely affecting
trade otherwise. For instance, the highly protectionist Mexico was unable to sell its goods in the United
States until NAFTA opened up its borders. Mexico, a classic case of the problems of free trade, has had
a rocky time adjusting. The labor industry has boomed as American companies have moved their
factories to Mexico to create goods with lower labor costs. Conversely, the agriculture industry has
been destroyed due to competition with subsidized American goods. The overall effect for Mexico is
The United States, as the largest economic power in the world and a proponent of free
trade, cannot back away from globalization, and therefore ought not to oppose outsourcing. If workers
in foreign countries can compete with American workers and win, than it is not the fault of the foreign
countries but of our own country. The United States should compete with foreign workers in terms of
quality; Americans tend to have much higher levels of education, and therefore can handle many jobs
which cannot be exported to, say, Vietnam. This is not to say, however, that these economic effects
should simply be allowed to run their course. It is as equally flawed to say that the guiding hand of the
market will provide for all workers as it is to say that outsourcing will destroy the American labor
market. Most workers will adapt, change, and compete, as they do with people in other states and as
they do with people in other cities today. There will be some, and this may be a sizable some, who
cannot compete—just as many workers cannot compete for other reasons (without outsourcing, there
would still be unemployment). The role of government, while not to stifle the market, is still to protect
those for whom the market has failed to bring new opportunity and prosperity. The social safety net,
which has been poised beneath the worker in domestic trade, still exists as international trade shifts
jobs around. Some countries will have exceptionally rocky transitions into the world economy. These
countries should have a safety net provided by a higher economic ally – the IMF and the World Bank,
although currently causing more damage than benefit, might conceivably one day succeed in their roles
as protectors of the weak. Meanwhile, the human rights of workers within countries which often rock-
bottom cheap labor must still be defended—if not by the countries which supply them, then by a the
higher authority of the United Nations. Again, the current international body is woefully weak in
defending the rights of man, but one day it may rise with a more powerful mandate, and provide for all
the workers of the world the same defenses which the United States government provides to its workers
and farmers. As trade becomes increasingly more international, the social and political structures which
govern them must also become increasingly more international. The first organization to truly grasp
this was the European Union (né European Commission); which realized that the interests of Europe as
a whole were best decided by a larger super-national organization, instead of a disunion of the countries
As Thomas Friedman noted in his new book, the world is truly becoming flatter. Just as
city-states joined to become fiefdoms, and just as fiefdoms joined to become nations, so are now
nations joining to become trading blocs. And with this super-national trading, companies are losing
their nationalist flavor. Daimler, a German company, merged with Chrysler, an American company. Is
the company now a German or an American company? In reality, companies are decreasingly identified
by specific countries, as they trade in all of the countries of the world – and for their management, the
next logical step is that they should be able to operate in all the countries of the world. The side-effects
are as myriad as they are complicated, but in the end, rather than resisting this new wave of economic
action (as Marx tried to oppose the Market Revolution), countries ought to ensure that they protect the