Knight Of The Mind

I'll do my best to present a philosophical and generally conservative look at current events and life, the universe and everything. Readers are invited to take all that's posted herein with a grain of salt. or if they prefer, a grain of salt, a slice of lime and a shot of tequila.

Location: Alexandria, Virginia, United States

Greetings and welcome. My name is Steve, I'm 35 years old and I work for the US Army as an Operations Research Analyst. Hence my blog title Knight Of The Mind.

Saturday, May 29, 2004

Benedict Arnold Had A Point

The job loss associated with outsourcing will be a major issue in the coming Presidential Election. Like all major issues discussed in Presidential Elections, it will also be badly demogouged to the potential detriment of the commonweal. Political candidates across The Fruited Plain will miscast outsourcing as a cause of illness rather than the symptom of a greater chronic malady.

The enemies of the current Presidential Administration will claim that corporate greed and a lack of concern for the average worker are the source of all of our economic problems. The champions of stronger corporate regulation by the iron hand of the Federal Government will argue that America’s corporations are traitors. They will call these corporations Benedict Arnold with no accurate logical concept of who Benedict Arnold was or why anyone behaves patriotically in the first place.

Benedict Arnold started out behaving patriotically. He enlisted in the Continental Army as an officer and performed with absolute brilliance at The Battle of Saratoga. He turned coat and joined The Redcoats only after his superior, General Horatio Gates, did everything in his power to wreck his career and discredit his heroism.

Arnold receives vituperation for following a logical set of instincts. He walked away from a totally raw deal that he in no way deserved. Arnold took a walk on The Continental Army when that organization did everything but toss him out on the street.

Corporations exist for one purpose. They exist to better their lot. They are naturally greedy and predatory. A lot like that person you and I both see in the mirror every morning. They will walk away from a bad deal just as fast as you or I will walk away from one. As fast as we can possibly manage.

That brings us to why the angst over job loss as an effect of corporate outsourcing is heartfelt, sincere, but utterly directed at the wrong set of culprits. Corporations locate their operations and employ workers where doing so provides them the greatest advantage. They maximize their well being.

They don't do it on anyone's behalf or athwart anyone's aspirations. The impact on the individual is entirely a non-sequitor. A corporation cares about as much about you as you probably care about the typical corporation. When it works out well for me to buy a corporation's stuff I pull out my wallet. When I offer a service the corporation needs badly enough to pay for they offer a salary. That's where both the love affair and the obligation for either party ends.

The people who attempt to make hay out of American job loss from outsourcing are the very politicians and regulators who vociferously call for the policies that create conditions conducive to the flight of corporate capital. Outsourcing would not constitute a rational behavior pattern for any domestic corporation not under duress at home. A combination of high wage rates, high taxation and constraint from litigation and regulation apply this duress to American corporate enterprises.

Corporations who can afford to, escape this duress whenever possible. This relief doesn't come at a cheap price. The expenses of outsourcing run quite high and long term. The risks inherent in sending jobs abroad or even outside a corporate shop add substantially to the cost of doing business.

Under favorable domestic business conditions, outsourcing would be an act of utter management stupidity. Outsourcers pay for extended training and construction of infrastructure. They acknowledge extensive currency risk. They face a political gauntlet at home, and always have the chance of having their millions confiscated on a whim of some foreign politician who gets an itch to nationalize their assets.
It takes a colossally bad set of domestic conditions to make outsourcing seem like intelligent corporate policy. This adverse set of conditions has made corporate paymasters decide that the American economy has become an increasingly hostile place to hire a work force. These paymasters don't argue against the hostility, they just pack up and leave. When the employers leave, the jobs go with them.

You, me and the rest of the work force are not guaranteed a job. We are very privileged and fortunate to live in a country where the vast majority of people who want jobs have them. Basra, Iraq had over 50% unemployment the day The British Army took it over. This is often the rule, rather than the exception in countries who are hostile towards privately owned business.

We can listen to those who bemoan outsourcing and punish corporations who do it, but that would be about as bright as chopping off our own noses because they run too much. Corporations leave because our laws, our wage structures, our legal system and our regulatory agencies make America a harder place for business to take care of business.

A government entity can only practice limited job creation. The true public policy graveman for effecting the rate of employment lies in a government's policies towards employers. When America is a decent place to hire people and corporations are valued entities rather than political pariahs, regulatory targets and lawsuit magnets, they have a rather pleasant habit of hiring and paying people. When corporations are told to peddle their papers elsewhere, the corporate headquarters move to Jamaica with the swiftness and certainty with which Benedict Arnold joined The Royal Dragoons.


As you may or may not already be aware, members of the Watcher's Council hold a vote every week on what they consider to be the most link-worthy pieces of writing around... per the Watcher's instructions, I am submitting one of my own posts for consideration in the upcoming nominations process.
Here is the most recent winning council post, here is the most recent winning non-council post, here is the list of results for the latest vote, and here is the initial posting of all the nominees that were voted on.

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