Posts tagged with: outsourcing

Sic semper tyrannis, eh?

Sic semper tyrannis, eh?

The Burger King acquisition of Tim Hortons and the resulting plans to move the corporate headquarters under the taxing authority of the Canadian government is being derided by some as unpatriotic.

This is the latest in a long string of similar phenomena over the last decade or so, as we see patriotic loyalty (or the lack thereof) becoming a political issue in the context of offshoring, globalization, outsourcing, and so on.

A response to the charge of being unpatriotic would seem to me to require at least two points.

First, the responsibilities of a business owner, CEO, or corporate board are different than those of a government politician. They have different loyalties, so to speak. So to judge the one by the standards of the other is an exercise in missing the point.

Second, I would respond with a query along these lines: Which is more unpatriotic, a greater disservice to a nation, for someone to be involved in: moving a business from one country to another or making the tax environment in a country inhospitable to businesses?

Blog author: jsunde
Tuesday, December 18, 2012
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Work: The Meaning of Your LifeI recently pondered what might come of the global economy if we were to to put God at the forefront of our motives and decision-making. The question came as a reaction to Tim Keller, whose recent book calls on Christians to challenge their views about work. By re-orienting our work to be a “servant” instead of a “lord,” Keller argues, we will actually find more fulfillment in the work that we do.

Keller’s main point in the video I discussed was to caution against our human preferences for idol carving. Although this is a valuable word of warning, it’s also worth noting that in a more basic sense, our work is already service.

The extent to which this is practically true will depend on a variety of factors — the type of work we’re doing, the type of economic system we’re engaged in, the levels of cronyism, artificiality, and misinformation in the economic environment that surrounds us — but by and large, our work is concentrated on actually fulfilling the particular needs of particular persons. As Lester DeKoster writes in Work: The Meaning of Your Life: “Work is the form in which we make ourselves useful to others.”

Through this understanding, perhaps a clearer way of expressing things is that work is less about whether we’re serving and more about who we’re serving. At the core, this simply rehashes Keller’s original point, prodding us to ask ourselves whether we’re serving God or something else (i.e. anything else). But beyond this, in those rougher, hazier areas of human discernment, it also empowers us to ask some other productive questions.

For example, in examining the ways in which trade and exchange impact human relationships across broader society, DeKoster contrasts life in the African bush with life in Western civilization, noting that the primary difference lies in work: “The bush people have to do everything for themselves. Civilization is sharing in the work of others.”

As DeKoster goes on to explain:

Our working puts us in the service of others; the civilization that work creates puts others in the service of ourselves. Thus, work restores the broken family of humankind… Through work that serves others, we also serve God, and he in exchange weaves the work of others into a culture that makes our work easier and more rewarding…As seed multiplies into a harvest under the wings of the Holy Spirit, so work multiplies into a civilization under the intricate hand of the same Spirit. (more…)

Two weeks ago, President Obama ventured courageously into the debt crisis debate with soak-the-rich proposals aimed at the usual suspects—“oil companies,” “hedge fund managers,” “millionaires and billionaires,”—and a new enemy, “corporate jet owners.” That phrase may have tested well with focus groups, but economists and pundits weren’t duped. The imprudence of a new punitive tax on a segment of the country’s manufacturing industry was immediately mocked up and down the Twitterverse, and longer arguments have since been made.

There’s also the “small” problem of the size of the tax break for corporate jet owners: over a decade, the government could collect three-quarters of one-tenth of one percent of the portion of our debt that the President aims to eliminate. The proposal begins to smell like demagogic nonsense.

Then we have this towering irony: the President wishes to harm a segment of the economy (manufacturing) which he claims at the same time to support. His union base insists that he sign no new free trade agreements until Congress passes protections for workers whose jobs are outsourced. There is no talk, however, of protections for Gulfstream employees who will be laid off when the higher price of jets brings down demand. Focus groups can’t provide much in the way of economic analysis. Perhaps the President’s team should have talked to Steve Rooney, president of the International Association of Machinists and Aerospace Workers in Wichita, Kan., who told the AP:

I think it’s just insulting. He acts like it is just a luxury for somebody to own a business jet when they’re used as tools. And I don’t think he realizes how many people that this industry employs and how much revenue is brought in here from those types of aircraft.

Senate Majority Leader Harry Reid, who claims that lawmakers are fighting the President’s tax agenda “to protect the owners of yachts and corporate jets. To protect corporations that ship jobs overseas” misses this inherent contradiction.

The Heritage Foundation’s Mike Franc calls it an “off with their heads” mentality, and he’s right. That successful businessmen should be bled dry out of a “sense of shared sacrifice” is not the instinct of a free society. It is a Marxist sentiment, one based in a view of historical progress as class conflict.

The creation of wealth, from which the U.S. can pay down its national debt, is not a zero-sum enterprise.  It requires the cooperative striving of the whole business ladder. As Pope John Paul II pointed out in his 1981 encyclical Laborem Exercens, management and labor ought not to be separated at all. “Isolating … ‘capital’ in opposition to ‘labor,’” he says, “is contrary to the very nature” of wealth and its creation.

In concocting a solution to this country’s fiscal problems, our leaders would do well to remember that.

Blog author: jballor
Thursday, February 7, 2008
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In any period of economic transition there are upheavals at various levels, and winners and losers (at least in the short term). We live in just such an age today in North America, as we move from an industrial to a post-industrial information and service economy, from isolationism to increased globalization. There’s no doubt that there have been some industries and regions that have been more directly affected than others (both positively and negatively).

Michigan, for example, has been one of the most manufacturing-rich states in the nation for the last century, and has been running record unemployment numbers for the last decade or so, as manufacturers move to more friendly economic environments, both within the US and without. Not least of these factors contributing to Michigan’s competitive disadvantage is the high labor costs associated with a labor union-laden state.

The perception that manufacturing workers are simply being left behind in the new economy is pervasive, such that popular opinion is shifting away from free trade. As Fortune magazine reports, “A large majority – 68% – of those surveyed in a new Fortune poll says America’s trading partners are benefiting the most from free trade, not the U.S. That sense of victimhood is changing America’s attitude about doing business with the world.”

As an aside, this is a perception that doesn’t quite match up with the typical caricature of globalization. After all, how can both America (as the “imperial” dominator) and the developing world (as the exploited poor) both be made worse off by international trade?

If it were truly the case that global trade weren’t mutually beneficial, that would be one thing. What’s visible on news reports everyday are the layoffs, buyouts, and unemployment levels in the US. What isn’t always so visible is the extent to which Americans depend on the low prices associated with many imported goods. One group you might think should know better than the average American about such complexities are professional economists. (more…)

Blog author: kschmiesing
Thursday, March 1, 2007
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The John A. Ryan Institute at the University of St. Thomas has been organizing a series of international conferences on Catholic Social Thought and Management Education. The latest was on the topic “The Good Company: Catholic Social Thought and Corporate Social Responsibility in Dialogue.” You can access a number of the papers through this site.

These conferences are usually a mixed bag, so investigate at your own risk. But there are always a few outstanding presentations and this edition is no exception. Albino Barrera offers a fine, concise treatment of the application of Catholic social teaching to the issue of outsourcing. My only question is whether the phrase “race to the bottom” is an accurate description of what happens in some cases. But I can agree with Barrera’s conclusion, which includes a caveat: “A race to the bottom, if true, is not permissible in CST’s vision of a properly functioning economy” (emphasis added).”

Blog author: jballor
Tuesday, January 2, 2007
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James Dyson, inventor of the world’s most exciting bagless vacuum cleaner, will receive a knighthood. Speaking of his company, the BBC reports:

Today, the company has about 1,400 staff in the UK, with about 4,000 others working in production plants in Malaysia and China.

Despite his successes, Mr Dyson has been criticised for his decision to ship so many production jobs abroad.

Paul Kenny, general secretary of the GMB said: “Do people now get a knighthood for services to exporting jobs?”

By contrast, Dyson says, “I have spent 35 years making things in a country that often has little regard for its manufacturers.”

“It has left me more convinced than ever that engineering is this country’s future.”

HT: Gear Factor

Blog author: kschmiesing
Tuesday, May 23, 2006
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A couple years ago I wrote a commentary that didn’t exactly defend outsourcing, but did recognize its benefits and argued that it could be done morally if done correctly. I won’t pretend that my writing is read widely enough to generate voluminous responses of any sort, but that piece did elicit a significant number of responses, many of them negative. Several correspondents, who had no personal connection to me, ostensibly knew a great deal about me, including my salary and the type of vehicle I owned. The salary estimate was high by about 250 percent. The car model guess was closer: I’ve never owned a Lexus but I did drive a Lincoln at the time (ten years old, it cost me $3500).

All this by way of introducing an interesting piece by Martin Davis on NRO today. The source of the rancor from some of my outsourcing critics was the assumption that my job as an academic was “safe” and that I, therefore, had the luxury of looking at the issue from a position insulated from the competition that beleaguered manufacturing and tech workers confronted. As I thought at the time, it’s shortsighted to think of any kind of job as “safe.” After all, who would have thought 20 years ago that American computer programmers would be threatened by the advances of Indian tech workers?

As Davis’s article suggests, it turns out that education jobs are vulnerable to foreign competition as well (when not artificially protected, of course). And yet, my view of outsourcing remains unchanged. Good thing I don’t have payments to make on a Lexus.

Blog author: jballor
Wednesday, April 5, 2006
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Large numbers of migrant populations going out of a particular area or nation should be viewed in large part as a signal of something. There are reasons for people to pick up and move, and policy and governing bodies would do well to examine these reasons.

When business close facilities and open elsewhere, it is usually because the destination location has a better economic and business-friendly environment. So the natural course of action when examining this phenomena is to ask what is it about the place that these businesses are leaving that makes it inhospitable? Michigan’s single-business tax is a great example of a contributing factor on a statewide scale.

Similar analytical methods should be applied to the question of individual or personal immigration. There is a reason that so many residents of the country of Mexico want to leave: there is better opportunity for flourishing in the United States. In particular, the primary motivation for many immigrants is economic opportunity, but the yearning for other sorts of freedoms (religious, political) can be the motivation for immigration as well.

In an article on NRO today, “The Economics of Immigration,” Larry Kudlow makes this same point regarding economic opportunity. He writes, “As long as the American boom beckons, Mexicans in search of prosperity will continue to stream to this country.” The movement of people from Mexico to the United States says a lot about immigrants’ opinions regarding the comparative advantage of living in the US.

A long term answer to immigration reform must include the economic reform of Mexico. Mass immigration out of a country is a symptom of poor economic conditions in the originating nation (other freedoms being equal).

Kudlow writes, “Instead of an Asian or Irish Tiger, Mexico has become a poodle-like Chihuahua, with economic growth of less than 2 percent a year and per-capita growth at less than 1 percent. That’s pathetic. In an age when free-market reforms are sweeping emerging economies worldwide, Mexico should be growing at 8 to 10 percent each year.”

If immigration is a symptom of economic disease, the cure is development, prosperity, and stability in Mexico. And on that score, investment in the manufacturing sector in Mexico, as in the case of outsourcing, is a good thing.