Corporations leave the west at an amazing pace. Atleast there hiring does...

[Urban Ranger]

Originally posted by Lawrence of Arabia
1. American companies see cheap labor in India. They fire american workers, go to India, and hire new ones for 1/4 the price and get roughly the same quality and output.

2. These goods are then shipped back to america (the market for software in India is tiny) where they are resold.

3. The company who went to India realises that it can sell its good s for less and still make a healthy profit because its costs are less

4. It cuts its prices, resulting in cheaper stuff for us americans, and also increase competition between the other suppliers which may cut the price anymore

5. Who loses? The person who asks for too much money to work because of 1. greed, or b. union rules, or c. cost of living.

6. Who wins? Everyone else.

Why is the cost lower in India? One factor is the cost of living is lower, but a major factor is the lax environmental and labour laws allow TNC's (transnational corporations) to cut costs by cutting safeguards, dump toxins into rivers, and treat workers like slaves. Corruption could let them even totally ignore these laws.

The losers here are the workers. The only winners are the TNC's.

[Urban Ranger]

Originally posted by Lawrence of Arabia
Corporations are going to increase their supply until they have reached the profit maximization point. If their costs have decreased, they will increase the supply and decrease the price, and sell more and in the end make more profits then if they had simply pocketed it.

That wouldn't happen unless the market is perfectly competitive, with the demand being elastic to boot. For example, the rice market here is perfectly competitive, because rice is pretty much the same regardless of source. But the market is inelastic, people won't eat more rice just because the price is lower. So when the market was deregulated, the priced dipped initially, but came back up after a while.

[Ned]

Originally posted by Lawrence of Arabia
When companies move into Third World countries, the price of labor goes up, not down. If they werent there, wages would be much lower

And Ned, don't generalize. I'm on the left, but I'm pro globalisation.

el Lawrence, there indeed many on the left who are pro-globalization. Most responsible democrats are, including Clinton.

The anti-globalization types are either the extreme left or the extreme right. It they seem to live in a very bizzare fantisy world of conspiracy theories and extremism. It is amazing that they have any credibity whatsoever since the failure of the USSR and the New Way in China.

But they do cause enough problems that make investment in certain countries risky. These countries tend to have significant communists parties even if they don't always elect communists. It would be risky at best to put a factory in such a country.

And any country that has a brutal dictatorship running it is completely off limits. Only a fool would invest in such a country.

[Urban Ranger]

Originally posted by DanS
Had to have started in the 80s

Here you are, in real $...

A good 10% increase.

Dan, that's the average again. It gets skewed easily when a few people get very rich quickly. What about the median and mode earnings?

[Urban Ranger]

Originally posted by Imran Siddiqui
You'd do much better if your movement wasn't hijacked by a bunch of people that want to destroy Starbucks and McDonalds.

These corporations are viewed as symbols of Capitalism's excesses and flaws. They are held to sell packaged crud to the unwary.

There is a famous case in the UK where McD sued a small activist organisation for libel, whose members passed out flyers on the harmful effects of McD food. It dragged on for years and McD won in the end. This added more fuel to the cotrovery, now these corporations are also held to use the laws unjustly to silence their small distractors.

[Ned]

Originally posted by chegitz guevara

Originally posted by Ned
Che, the example given in the article and most examples that I know of suggest that the wages Western companies pay in the Third World are "princely." No one is suggesting that Western companies are hiring below the poverty line. Quite the opposite.

You are off in your own world, Neddie. $5.15 an hour is indeed a princely sum in India, where many of our call center jobs are going. It's not as if people working at call centers make some tall cash or even enough money to have much of a life on, but now even this is denied them?

Che, don't set up straw men. It makes no difference if the replaced worker was making $50 an hours. If the same work can be done offshore for a lot less, it will be.

This is nothing more than the invisible hand that Adam Smith described two hundred years ago. The difference today is that the internet and planes have shrunk the globe so that a India is effectively closer today to New York than New York to Boston were when this country was founded. We live in a world economy. Jobs will go to areas of the world where costs overall are lower. Nothing can change this except, perhaps, a world war.

In this enviroment, countries cannot legislate work conditions and rules, and certainly cannot impose business costs with impunity. The businesses will leave as they can in a free society.

[Urban Ranger]

Originally posted by Ned
Consider the disk drive. The move to offshore manufacturing began in the '80s and by the mid '90s was substantially complete. Has the price of a disk drive remained constant? No, it has dropped like a rocket. Why? - because costs are dramatically lower.

The dominating factor in this is competition. HDDs manufacturing is a high volume low profit margin business. HDDs manufacturing is not a labour intensive process, but you need huge initial investment in equipment and factory and you need skilled labours, not unskilled ones. The intense competition droved innovations in manufacturing methods to cut costs, thus the slew of mergers in the 80s and 90s.

Also note that the move was mostly to Singapore, not exactly a Third World country.

[faded glory]

I see I have started something. I thank Che, Ramo and everyone else who showed up to discuss there thoughts on the true effects of free trade and corporations using foriegn labor, yet selling there services at the same prices (or higher). They pretty much summed up my arguement.

I dont feel there is any positive impact on the first world economy whatsoever if a corporation sells its products to the west, yet uses the profits to further expand servicing and mfg. overseas to continue to feed the demand in the first world. The only benefit I see is the rich getting richer and re-investing the profits to get even richer.

Besides. I have to agree with Che here. These corporations gain unimaginable influence oversea's, hold down labor movements, and pollute alot. Saw a special not to long ago that had mountains of computer parts in China. Dangerous, extremely dangerous. Kids playing near Capacitors from motherboards, Sharp gold plate cards, Moniters. It was pretty disgusting, IMO. It was a generic producer of components for PC's that supplied US vendors. The workers lived in a shanty town nearby.


FYI, When I built my home computer I was actually very suprised to see most of the components made in America. With the exception of the AMD proccesser made in malayasia and the Asus motherboard and CD ROM(Taiwan) Case (Thailand). Everything else was made in the US or Europe. (Moniter, Modem, RAM, and G4Ti4200..which suprised me)

[faded glory]

Im more likely to buy stuff thats made in western countries lately. Its usually about the same price as the other stuff anyway.

[Ned]

Originally posted by Urban Ranger


The dominating factor in this is competition. HDDs manufacturing is a high volume low profit margin business. HDDs manufacturing is not a labour intensive process, but you need huge initial investment in equipment and factory and you need skilled labours, not unskilled ones. The intense competition droved innovations in manufacturing methods to cut costs, thus the slew of mergers in the 80s and 90s.

Also note that the move was mostly to Singapore, not exactly a Third World country.

Competition!

Precisely. Each company outdid the other not only to increase capacity, but to reduce costs. In 1990, there were over 30 disk drive companies: many of these made disk drives in the US. Today there are but a handful left. Four are US companies. (One an IBM/Hitachi JV.) Three are Japanese (including Hitachi) and one Korean. Seven in total. None make disk drives in the US.

Singapore indeed is a prime location for disk drive manufacturing. However, so is Korea, Thailand, Malaysia and China.

[Lawrence of Arabia]

And everything was made in america because we have a comparitive advantage in the capital necessary to produce these goods. 3rd world countries have a comparitive advantage in labour, so labor intensive industries move there.

[Urban Ranger]

Originally posted by Ned
C/E is a very broad topic. Let's just pick something that hasn't changed very much in 20 years. Let's pick 19" color TV sets and disk drives for desktop computers.

Both have changed a lot, but I will stick with HDD's since I know about that more.

Originally posted by Ned
Twenty years ago, a two-platter desktop disc drives cost $500 + and delivered a whopping 5-10 megabytes of storage. Today's two platter a desktop disk drive delivers 40-80 gigabytes of storage and costs $100-$200 dollars.

Correction: modern day HDDs use far more than two platters. Six, eight, or even ten.

Originally posted by Ned
Certainly, the essential components of the TV sets and the disk drives then are the same as they are now. They simply cost less and are much better, for that matter.

Well, if you put it that way. Say, a HDD is consisted of the casing, the platters, the R/W head assembly, motors, and control electronics. But, if you look beneath the surface, nothing is the same as it was 20 years ago - even the casing has shrink. For example, the platters now use a different material for substrate, and the magnetic coating can hold a much higher density. Ditto with other parts.

Originally posted by Ned
But, why do the components cost less? They too are made offshore. Circuits, heads, disks, motors - all are made offshore.

Other important factors - miniturisation and automation. If you look at a TV, the electronics have evolved from vacuum tubes to transistors to ICs to programmable controllers. When workers were used to require to assemble a PCB, now a machine does all the work. All these result in greater efficiency, lowering the costs.

[faded glory]

Ned Disk drives isnt even a human manufacturing job anymore. Its mostly machines that do it all now.

"None make disk drives in the US."

My Seagate is. Says made in the USA.

[faded glory]

Also Pny Ram and the USR (3Com) modem in USA.


Man Im bored, really wanna get an OS on that system. I cant wait till I get enough for XP. Grrrr!

[Imran Siddiqui]

Ned Disk drives isnt even a human manufacturing job anymore. Its mostly machines that do it all now.

It's called capitalism, fg. It's inherant in the word 'capital' . In theory, machines should replace much of human labor through the technological progress.