Thursday, July 19, 2012

Counteracting Outsourcing Hysteria; Households "Outsource" Every Time They Eat at a Restaurant

Another round of outsourcing hysteria is flaring up again, fueled by the China-made Olympic uniform controversy, claims by Obama and Democrats that Mitt Romney outsourced American jobs overseas during his days at Bain Capital, claims by Romney that some Obama stimulus money went to foreign firms and workers, and a recent bill introduced in the Senate that would ban American companies from deducting expenses of moving production overseas from the U.S.  

Back in 2004, another presidential election year, the first large wave of U.S. companies outsourcing operations overseas was underway (e.g. call centers in India), and the outsourcing hysteria was exploding, and it became a huge political issue. In the midst of that hysteria 8 years ago, I tried to bring some sanity to the discussion and I provide a few excerpts of that effort here:

Outsourcing is nothing more than acquiring goods or services from a foreign source. For example, we could grow bananas under glass in artificial environments in North Dakota but we choose instead to outsource them to places like Honduras.

To better understand the controversy, consider how much you benefit directly from “household outsourcing” and the jobs created both directly and indirectly when you engage in it.

Every time you buy groceries or clothes, use the services of a dry cleaner or a car wash, or eat in a restaurant, you are outsourcing. Just like a business, you compare the cost of producing those items or performing those services yourself, to the cost of acquiring them from others.

Outsourcing greatly lowers our cost of consumption, raises our standard of living tremendously and directly supports many jobs. Those are just some of the visible benefits. There are also secondary and indirect benefits. Jobs are created in many industries throughout the economy by the spending made possible because of our initial cost savings from outsourcing. Getting bananas from Honduras for 30 cents a pound instead of “North Dakota-grown” bananas for three dollars a pound frees up $2.70 for you to buy other things, to extend our hypothetical example.

At the state level, we outsource production for most of our food to workers in other states. Farmers elsewhere produce oranges, avocados, and sweet potatoes at lower cost than could Michigan farmers, and we benefit as a state from their greater efficiency. Fortunately for Michigan, consumers around the country in turn outsource the production of motor vehicles to Michigan workers, helping support 700,000 manufacturing jobs here. The outsourcing of some jobs outside of Michigan is fortunately accompanied by the insourcing of just as many, if not more, jobs into Michigan.

As a country, we globally source the production of roses, emeralds, coffee, and hundreds of other goods to workers in South America. Lumber production is outsourced to workers in Canada, tomato production to Mexico farmers, and clothing production to workers in India and Mexico.

To survive, firms have to operate as efficiently as possible, and this requires them to consider all possible locations for producing goods or providing services at the lowest cost. The result is lower prices for consumers and greater overall output. The process indeed displaces some workers (almost always temporarily) but that should not blind us to the overwhelming benefits everyone derives from encouraging trade and the economic prosperity it yields.

105 Comments:

At 7/19/2012 5:18 PM, Blogger sethstorm said...

The problem with that - if one were to stretch the definition to include such local activities - is that there is no fear of disclosure. You don't care that you're going out. It matters when work goes to another nation.

With offshore outsourcing and otherwise, businesses are too afraid of the backlash from disclosing it - until the time comes for the pink slip or the conditional "train the replacement" severance.

If one were to apply the Hippocratic Oath, neither decision would leave it unbroken. If the path is to do so, one causes lasting harm. If the path is not to do so, harm is created as well.

To preempt the arguments that distill down to "but but consumer wins!":

It doesn't raise our standard of living given that it acts to reduce quality. You get what you pay to get.

To survive, firms can opt for the country to protect its own and develop strong companies from within. We're not obligated to aid foreign countries at the detriment to our own.

Until there is a better way to properly address the displaced other than by letting business demand more out of them, the only proper measure is to insulate the US from any effects of the world.

 
At 7/19/2012 5:33 PM, Blogger Krishnan said...

Trading to get goods less expensively ALWAYS raises the standard of living - thanks for a terrific essay. There are no real national boundaries for goods, skills - except those created by politicians or those that seek to protect their own interests. It would be amazing indeed how the world will prosper if we drop all barriers to trade - including that of labor - Imagine life if people can move to where they want to work and innovate, create -

(yes, yes I can hear some complaints - "all they would do is come and collect welfare" or ...)

It is indeed time for all nations to allow for the free exchange of everything - Stupid as our policies are on trade, poorer countries are even worse - India for decades kept all sorts of imports out to "protect" local companies - which allowed a few people to get ENORMOUSLY rich while making inferior products.

 
At 7/19/2012 5:38 PM, Blogger Larry G said...

what good are lower prices if people have lost their jobs?

that seems to be the conundrum.

if you outsource "too much" then who will be left with a job to benefit from the lower prices?

Sure a shirt will cost 1/2 of what it used to but the customer will be making less than 1/2 of what he made before his job was outsourced.

right?

 
At 7/19/2012 5:59 PM, Blogger Ken said...

Larry,

if you outsource "too much" then who will be left with a job to benefit from the lower prices?

What does this even mean? If you hire too many people, there won't be anyone who can afford anything?

Sure a shirt will cost 1/2 of what it used to but the customer will be making less than 1/2 of what he made before his job was outsourced.

right?


Wrong.

 
At 7/19/2012 6:34 PM, Blogger Craig Howard said...

Until there is a better way to properly address the displaced other than by letting business demand more out of them, the only proper measure is to insulate the US from any effects of the world.

More nonsense from the troll who [and he actually uses the same screen name] caused "Café Hayek" to eliminate comments. Hope there's a way to block him. He will disrupt the place otherwise.

 
At 7/19/2012 6:38 PM, Blogger Ken said...

Craig,

sethstrom was a minor character on Cafe Hayek, showing up only occasionally. The biggest troll was Invisible Backhand, followed by muirgeo.

 
At 7/19/2012 6:39 PM, Blogger Jon Murphy said...

It matters when work goes to another nation.

Why?

 
At 7/19/2012 6:41 PM, Blogger Jon Murphy said...

Craig-

Cafe Hayek didn't eliminate the comments. You can still post, you just need a Facebook account.

But, in all fairness, people like I deserve some of the blame, too. We like to kick the hornets's nest and see what stupidity spills out.

 
At 7/19/2012 6:43 PM, Blogger Jon Murphy said...

Larry-

All due respect, your comment assumes there is a fixed number of jobs, and the gain of jobs in one place (India) necessitates the loss of jobs in another (America). Historically, that is not true. What we see is, when trade is allowed between two countries, the number of jobs grow in both countries.

 
At 7/19/2012 6:46 PM, Blogger Larry G said...

All due respect, your comment assumes there is a fixed number of jobs, and the gain of jobs in one place (India) necessitates the loss of jobs in another (America). Historically, that is not true. What we see is, when trade is allowed between two countries, the number of jobs grow in both countries.



that's the claim - the perception is that we are losing jobs to outsourcing and not replacing them and ending up with stubborn high unemployment as a result.

that's a perception...

we're told that people need to re-train ... which basically is an admission that those jobs are gone and workers need to find some other way to make a living.

wrong?

 
At 7/19/2012 6:51 PM, Blogger Jon Murphy said...

we're told that people need to re-train ... which basically is an admission that those jobs are gone and workers need to find some other way to make a living.

Yes, but that happens is any healthy economy. If it didn't, we'd have stagnation (look at the Soviet Union).

At the risk of sounding callous, a level of unemployment is a good thing in an economy. If everyone has a job, then an economy cannot grow. Who would fill the new jobs?

But that's beside the point. Is there any kind of advance, technological or otherwise, that does not displace workers?

 
At 7/19/2012 6:52 PM, Blogger morganovich said...

"what good are lower prices if people have lost their jobs?"

that's a false trade off.

does your going out to the eat dinner cost jobs?

lower prices create jobs too.

the dollar you did not spend on jeans, you can spend somewhere else, say on a landscaper.

this notion that somehow low prices destroy us jobs is just foolish.

it creates wealth.

stop and apply your thinking iteratively for a minute.

does your buying a car made in Detroit cost jobs in Massachusetts?

by your logic, they would be better off making their own cars.

does buying a car made in Boston cost jobs on cape cod? should they make their own too?

how about each side of town? hell, how about each family member?

further, you are starting from a bad assumption.

economies do not exist to create jobs. they exist because people want to trade scare resources to better themselves. jobs are a by product.

to run an economy to maximize jobs greatly harms well being.

we could get more jobs by banning shovels and making people dig with spoons.

does that seem like a path to prosperity to you?

 
At 7/19/2012 7:00 PM, Blogger Larry G said...

I'm not advocating protecting jobs or import restrictions but I am asking about the perception that jobs are lost and replacement jobs pay much less and so for those that end up like that - there is no benefit to lower prices if their salary dropped lower than the prices did.

It DOES create wealth - for the foreign worker who now earns twice as much as he used to but not so much for the guy whose job was displaced by a worker earning 1/10 what he used to.

keep in mind here - that I am saying "perception"....

when we have an unemployment rate that is said to be twice as much as the official rate... and it stays that way for years...people are not convinced that new jobs replace the ones that are lost.

 
At 7/19/2012 7:01 PM, Blogger morganovich said...

"
that's the claim - the perception is that we are losing jobs to outsourcing and not replacing them and ending up with stubborn high unemployment as a result.

that's a perception.."

it's also completely wrong.

we are not "shipping manufacturing jobs overseas".

the % of worker in manufacturing is dropping all over the world.

http://mjperry.blogspot.com/2012/01/decline-of-manufacturing-is-global.html

it's a sign of productivity. that is a good thing. this will no more harm us than did the vast loss of farming jobs.

productivity is a good thing.

to try to defend jobs at the expense of productivity is the road to ruin, not riches.

we are going to need fewer and fewer people in manufacturing to create the same amount of stuff just as we needed fewer and fewer farmers to grow all our food.

this "stubborn unemployment" you describe has ZERO to do with outsourcing. outsourcing was at it's peak BEFORE the recession started, yet there were jobs.

the jobs lost were not lost to outsourcing. the "stubborn" unemployment has far more to do with longer unemployment benefits and a weak economy than anyhting else.

arguing that we should pay more for the same goods is an argument against productivity and efficiency. it's the argument of an economic Luddite.

 
At 7/19/2012 7:04 PM, Blogger Jon Murphy said...

Larry-

The only way to combat that perception is through knowledge.

of course, in an economic environment such as this, everything is magnified. That is why the job of the free-marketer is even more vital now than ever before.

 
At 7/19/2012 7:05 PM, Blogger morganovich said...

larry-

what you are saying makes no sense.

hiding behind the word "perception" does not change that.

when you pay less for a car, does it make you worse off?

no. it leaves you with more money to spend, money others will seek to provide things you want (otherwise known as a job) to get.

you always seem to get mired in these one factor analyses.

you see the job lost, but not the jobs created by the money saved.

economies change. some jobs go away, other jobs come to be. generally, productivity rises and with it, real wealth.

this is what trade does.

your "perceptions" are just plain wrong.

are you trying to argue that just because people believe somehting untrue, we should treat them as if they are right?

 
At 7/19/2012 7:14 PM, Blogger Larry G said...

what you are saying makes no sense.

hiding behind the word "perception" does not change that.

when you pay less for a car, does it make you worse off?

no. it leaves you with more money to spend, money others will seek to provide things you want (otherwise known as a job) to get.


not if you are unemployed and lost your job to outsourcing


you always seem to get mired in these one factor analyses.

you see the job lost, but not the jobs created by the money saved.


well if we had an unemployment rate of 6%, that logic would play well.

economies change. some jobs go away, other jobs come to be. generally, productivity rises and with it, real wealth.

this is what trade does.

your "perceptions" are just plain wrong.


well... it's not mine... I said "the perception" which indicates that a lot of those that are unemployed and lost their jobs to outsourcing don't really accept that argument.

are you trying to argue that just because people believe somehting untrue, we should treat them as if they are right?



no, of course not but they do vote.

and that also notice that we do have policies to protect some kinds of jobs like sugar and corn, right?

In order to do away with the perception about outsourcing - the economy will have to recover and "prove" it to workers that we can have low unemployment even as we outsource.

so far..that's not the case, right?

 
At 7/19/2012 7:15 PM, Blogger Paul said...

Sethstorm,

" We're not obligated to aid foreign countries at the detriment to our own."

Who is "we?" Nobody owes you jack shit.

 
At 7/19/2012 7:26 PM, Blogger morganovich said...

larry-

"
not if you are unemployed and lost your job to outsourcing"

you seem unable to grasp this very simple idea. let me try again and use VERY SMALL WORDS.

a factory for toys mores to asia.

10 guys lose jobs.

toys become cheaper.

10,000 people save money. they all wind up better off. jobs are created in shipping and retail. jobs are created as the money those money savers saved gets spent. thus, jobs are CREATED too and people are better off.

the economy as a whole has a net gain from the lower prices, not a net loss. there may be some temporary dislocation, but over time, the economy as a whole wins.

stop and think about what you are saying.

so, if the factory moved to texas instead of china, would that be OK?

why or why not?

people still lost jobs back in michigan or wherever. those texas were willing to work more cheaply.

so, does that harm the economy? should we prevent any business from ever moving? do you think that would make us prosper?

 
At 7/19/2012 7:26 PM, Blogger Paul said...

"well if we had an unemployment rate of 6%, that logic would play well."

You're talking about how sound economics are packaged for the masses.

Also, there are other variables to consider. We're not in a miserable job situation because of outsourcing.

 
At 7/19/2012 7:29 PM, Blogger Paul said...

"10 guys lose jobs."

And those are the guys who get guest spots in Democrat commercials.

 
At 7/19/2012 7:32 PM, Blogger Larry G said...

10,000 people save money. they all wind up better off. jobs are created in shipping and retail. jobs are created as the money those money savers saved gets spent. thus, jobs are CREATED too and people are better off.



let me parse this. people have extra money because toys are cheaper so they spend it on something else - and that demand creates jobs for the folks that lost their jobs?

I have to admit - this makes sense as long as the money saved and spent on other stuff is not on stuff also being imported from overseas and the displaced over here don't get replacement jobs.

It would seem that most unskilled / lower skilled jobs will be outsourced and those in those lower skilled jobs will not likely find replacement jobs if most of them are being outsourced.

wrong?

 
At 7/19/2012 7:34 PM, Blogger morganovich said...

"well if we had an unemployment rate of 6%, that logic would play well."

this is just ridiculous. so, the truth changes based on the unemployment rate? seriously, are you able to think at all? ideas like "keeping jobs onshore" are even more dangerous during bad times.

"
well... it's not mine... I said "the perception" which indicates that a lot of those that are unemployed and lost their jobs to outsourcing don't really accept that argument."

so what? then why are you wasting everyone's time and making it worse?

"
and that also notice that we do have policies to protect some kinds of jobs like sugar and corn, right?"

and they are stupid policies that need to go away. this is another from your endless bad of logical fallacy.

let me ask you a serious question, and i'm sorry if this sound mean:

is there any point at all in explaining your repeated logical fallacies to you? it is my hope that at some point you catch on. but you don;t.

you keep making the same provable bad arguments over and over.

they do x is not a justification for doing Y if y is like x. (eg i stole larrys car because paul stole rons) i have probably explained this to you 20 times. do you just not care that you keep commuting egregious and provable fallacies? is it just beyond your ability to comprehend?

i'm actually asking you a serious question here. if you are never going to get this, then at least let me know so i can stop wasting my time trying to get you to see the horrible thinking you keep trying to pass off.

if you really don't understand what i am saying, then make that clear and i will explain it again, but this is like trying to shovel back the tide.

 
At 7/19/2012 7:37 PM, Blogger morganovich said...

"I have to admit - this makes sense as long as the money saved and spent on other stuff is not on stuff also being imported from overseas and the displaced over here don't get replacement jobs."

and again, you get stuck in the one factor world mud. what you are saying does not matter.

this works iteratively.

more real buying power in the us creates jobs here.

you are literally trying to say that the same thing you just admitted was beneficial suddenly becomes harmful if you do it again.

that does not make any sense.

 
At 7/19/2012 7:43 PM, Blogger morganovich said...

lower/unskilled jobs are ALWAYS in the process of disappearing.

think of the farm labor that got displaced by the tractor.

did that make us poor?

no. farming employment dropped from 90% to under 5% and we thrived. manufacturing is following the same path. that is how productivity gains work.

people move on to service industries and on to information industries.

economies change. that's not easy on everyone. i'm sure some buggywhip manufacturer and whaling ship captains had trouble adapting.

but compared to a stagnant economy that does not change, it's a small issue.

 
At 7/19/2012 7:46 PM, Blogger Larry G said...


more real buying power in the us creates jobs here.

you are literally trying to say that the same thing you just admitted was beneficial suddenly becomes harmful if you do it again.

that does not make any sense.


sometimes I think we talk past each other.

the politicians tell us that lower skilled workers whose jobs are outsourced, need to be re-trained because ultimately all lower-skilled jobs will be outsourced and our economy will be based on higher-skilled jobs.

Have you ever heard that ?

 
At 7/19/2012 7:46 PM, Blogger morganovich said...

larry-

i note you ducked this:

"
stop and think about what you are saying.

so, if the factory moved to texas instead of china, would that be OK?

why or why not?

people still lost jobs back in michigan or wherever. those texas were willing to work more cheaply.

so, does that harm the economy? should we prevent any business from ever moving? do you think that would make us prosper?"

i think you need to answer it.

it's no fair asking a zillion questions then refusing to answer the ones you get in return.

 
At 7/19/2012 7:49 PM, Blogger Larry G said...


i note you ducked this:


"
stop and think about what you are saying.

so, if the factory moved to texas instead of china, would that be OK?

why or why not?

people still lost jobs back in michigan or wherever. those texas were willing to work more cheaply.

so, does that harm the economy? should we prevent any business from ever moving? do you think that would make us prosper?"

i think you need to answer it.


well the workers in Michigan can move to Texas but they will make less money and buy less products so that means less production of the things they buy and in theory less jobs since demand is down.

when people take lower paying jobs - doesn't that reduce demand from the workers with lower wages?

 
At 7/19/2012 7:50 PM, Blogger morganovich said...

larry-

why are you asking me what the economically illiterate say to rile up the uneducated populists?

make arguments of fact or stop wasting our time.

it does not take much "retraining" to enter many careers. this idea that every displaced guy from a cannery deserves a new job as a cisco engineer is just populist grandstanding.

 
At 7/19/2012 7:54 PM, Blogger morganovich said...

1. you really did not answer that. try harder.

2. "
when people take lower paying jobs - doesn't that reduce demand from the workers with lower wages?"

perhaps, perhaps not. you are thinking nominally. lower priced good result from lower priced workers.

if you get 10% less salary but goods are 12% cheaper, then you actually gained well being.

we live in real, not nominal terms.

if you produce goods worth $200k and get paid $30k then your losing your jobs is a net economic gain if the products wind up more than 30% cheaper. there is now enough money to hire you again.

how do i get through to you that you are thinking about this much too simply? why is it always a one factor world with you?

 
At 7/19/2012 7:55 PM, Blogger Larry G said...


it does not take much "retraining" to enter many careers. this idea that every displaced guy from a cannery deserves a new job as a cisco engineer is just populist grandstanding.


Actually it's a pragmatic recognition that "re-training" for some folks is not very realistic.

Take a textile plant in a small town in SW Virginia. It closes down and there are no other plants to work at in the area and he's supposed to move to Roanoke and find a place to work but he has a 10th grade education.

No..he will never work for cisco .. I agree.

 
At 7/19/2012 7:55 PM, Blogger morganovich said...

sorry, that should read 15% cheaper.

 
At 7/19/2012 7:58 PM, Blogger Larry G said...


how do i get through to you that you are thinking about this much too simply? why is it always a one factor world with you?


I realize the world is more complicated but was trying to keep it on a simple level to better understand the basic concept.

people who make less money than they did before, will buy less stuff unless all stuff they buy becomes cheaper and that's not a reality.

More likely they will make less money and the basic needs of food and shelter will not be cheaper.

 
At 7/19/2012 8:01 PM, Blogger morganovich said...

"
Actually it's a pragmatic recognition that "re-training" for some folks is not very realistic.

Take a textile plant in a small town in SW Virginia. It closes down and there are no other plants to work at in the area and he's supposed to move to Roanoke and find a place to work but he has a 10th grade education"

pragmatically, a great many service jobs need very little education or training. far less than most manufacturing jobs.

there are parts of the country right now where they are DESPERATE for service workers.

so why is our loom operator sitting on his but?

oh yeah, 96 weeks of unemployment benefits...

 
At 7/19/2012 8:04 PM, Blogger morganovich said...

"
people who make less money than they did before, will buy less stuff unless all stuff they buy becomes cheaper and that's not a reality."

it is a reality.

have you not seen what walmart and costco etc did to the pricing of lots of consumer staples?

they probably dropped prices 50%.

all the money that is saved there gets spent on somehting else. serving that demand creates new jobs.

is every signle person better off? maybe not. but the society as a whole is MUCH better off.

just because one guy si not doing as well is no reason to destroy the wealt of a nation.

 
At 7/19/2012 8:04 PM, Blogger Paul said...

"Take a textile plant in a small town in SW Virginia. It closes down and there are no other plants to work at in the area and he's supposed to move to Roanoke and find a place to work but he has a 10th grade education."

So he might have to move to N Dakota.

 
At 7/19/2012 8:04 PM, Blogger morganovich said...

also:

simplify too much (as you are doing) and you miss the basic concept entirely.

 
At 7/19/2012 8:05 PM, Blogger Benjamin said...

Shouldn't we outsource for our military needs?

A Foreign Legion, with gurkha-type soldiers, would cost the taxpayers a lot less.

 
At 7/19/2012 8:06 PM, Blogger morganovich said...

"
More likely they will make less money and the basic needs of food and shelter will not be cheaper."

oh, and you think rent in a mill town does not drop like a rock if the mill closes?

 
At 7/19/2012 8:07 PM, Blogger Larry G said...


so why is our loom operator sitting on his but?

oh yeah, 96 weeks of unemployment benefits...


well in SW Va, they usually have a double-wide on land they own and would have to move to an area where they could not afford a place to live.

It's one thing to toss pizzas when you are 18 and living with parents... but a lot harder when you are 35 and have a wife and kids, a 10th grade education and slim prospects for a job other than as a loom operator...

this is where your chronic unemployment comes from.

 
At 7/19/2012 8:15 PM, Blogger morganovich said...

"
this is where your chronic unemployment comes from."

funny, outsourcing was not causing much of it in the decade up to 2008.

then we add in huge benefits, and wow, the worst jobs recovery since the depression (the last time we had benefits like this)

the % unemployed for more that 27 weeks has been at post ww2 highs for about 3 years now.

when something that was not a problem before suddenly becomes a huge one, you look at what changed. outsourcing did not accelerate wildly since 2007. it's actually slowed down.

it's the unemployment benefits that soared.

 
At 7/19/2012 8:20 PM, Blogger Larry G said...


it's the unemployment benefits that soared.


you tickle me sometimes

didn't unemployment itself increase?

then we add in huge benefits, and wow, the worst jobs recovery since the depression (the last time we had benefits like this)


and you think this is because of unemployment benefits and not less jobs?

 
At 7/19/2012 8:20 PM, Blogger Larry G said...


More likely they will make less money and the basic needs of food and shelter will not be cheaper."

oh, and you think rent in a mill town does not drop like a rock if the mill closes?


but not for "free".

:-)

in many town/rural areas there may be several generations of family and they all have land handed down to them and some sort of basic shelter, often a trailer ....

it's not much but the price is right and they can heat with firewood and have a garden.

but when the plant closes... moving is not a simple option.

you multiply this out to 3000 people in one small town area - and unemployment benefits are the least of the entitlements.

You end up with SNAP, MedicAid, and welfare benefits - for years.

Of course SW Va used to have a vibrant economy when they had stills!

 
At 7/19/2012 8:49 PM, Blogger juandos said...

"what good are lower prices if people have lost their jobs?"...

Unemployed people give the 'humanitarians' something to eat that isn't outsourced larry g...

 
At 7/20/2012 12:13 AM, Blogger Don Culo said...

a factory for toys mores to asia.
10 guys lose jobs.
toys become cheaper.

*****************

I learn so much from this blog, only 10 jobs have been lost due toy manufacturing moving over seas.

 
At 7/20/2012 6:34 AM, Blogger marmico said...

Outsourcing is an issue of cost-benefit analysis.

Perry's essay is light on the costs. If I read it correctly the only reference to costs is:

The process indeed displaces some workers (almost always temporarily)

Outsourcing is a net benefit to households and capitalists. But the costs need to be mitigated. Should the capitalist or the government or some combination thereof pay for the mitigation?

It seems to me that the capitalists rely on the government and then whine about it.

 
At 7/20/2012 7:40 AM, Blogger Moe said...

My going to the grocery store, dry cleaners or butcher is NOT outsourcing. Never has been. Never will be. Not even if you call it "household outsourcing". It is called being a consumer.

 
At 7/20/2012 8:55 AM, Blogger morganovich said...

"Outsourcing is a net benefit to households and capitalists. But the costs need to be mitigated. Should the capitalist or the government or some combination thereof pay for the mitigation?"

so, if i build a new factory that puts your factory out of business by building better, cheaper products, should i have to pay for mitigation of your losses?

that seems to subvert the whole notion of capitalism and demolish any incentive to invest and make progress.

capitalism as a whole doe mitigate those things. money is saved in real terms. you old customers that are now my customers have more money to spend. this provides an opportunity for new capitalists.

but asking every new innovator to make good the business and jobs they take away from the incumbent is no basis for anyhting. so we demand that standard oil compensate whaling ship captains for taking away their market? or we demand that the new grocery store with bigger selection and lower prices compensate the existing corner store?

how does that make sense?

if you outsource, perhaps you stay in business. if you do not, you may get beaten out by imports and even more jobs would be lost. what is your answer to that? trade restriction?

we all know that causes a big dead-weight loss.

i just cannot see how the sort of "mitigation" you describe is possible without destroying the incentive to innovate.

economies change and everyone must adapt. sure, that's not always easy for everyone, but it's far better than having a stagnant economy. personally, i'm glad not to have whale oil lamps.

 
At 7/20/2012 8:57 AM, Blogger morganovich said...

moe-

"My going to the grocery store, dry cleaners or butcher is NOT outsourcing. Never has been. Never will be. Not even if you call it "household outsourcing". It is called being a consumer"

so, then hiring an outside janitor firm is not outsourcing?

how about a caterer?

how about a sub assembly manufacturer?

can you please pay out what you think the difference is between your hiring a butcher to supply and cut your meat and gm using a contractor to cut and shape piece of metal?

i do not really see how you are drawing the distinction.

 
At 7/20/2012 9:01 AM, Blogger Mark J. Perry said...

Moe: But you could have grown your own food and washed/ironed/cleaned your own clothes, i.e. used internal household production. But if you buy food from a grocery store or use a dry cleaner, you have sourced the production of those goods and services outside your household.

My point is that a household is like a small corporation, or a corporation is like a large household, and in both cases decisions are made daily about internal vs. external production.

 
At 7/20/2012 9:06 AM, Blogger Larry G said...

we might need a better definition of outsourcing in a global economy.

If Virginia gains 100 jobs when a plant closes in North Carolina - that's different when North Carolina loses 100 jobs and there is no compensating offset.

since Countries are real entities and trade is not a zero-sum proposition when it comes to jobs - there are, in fact, winners and losers - at the job level.

 
At 7/20/2012 9:12 AM, Blogger morganovich said...

larry-

are you trying not to understand this?

there are other jobs too. wages drop, new folks want to hire, etc etc.

the economy is a dynamic thing and labor is just another commodity.

price drops, demand rises.

so a mill closes, wages drop, and now maybe it is economic to hire people to do somehting else.

you seem to be unable to think in dynamic terms.

you look at one action and not how a system will respond to that action.

moving is an option. it's maybe not the one you prefer, but what other option was there anyway?

if you have plant that cannot compete with overseas offerings, what are you going to do? outsourcing at least saves the company. if you do not do it, you'll get driven out of business entirely by imports.

so what is it you want to do, ban imports and inflict the dead-weight loss of a tariff on the whole economy to save a few jobs?

just what is it you see as a viable option here? you seem to be trying to take the effects of any sort of competition and ascribe them to outsourcing or off-shoring.

 
At 7/20/2012 9:15 AM, Blogger Moe said...

I don't have a cow handy. I don't have a yard big enough for it to graze in if I did. I don't have the tools to butcher it. I cannot do it myself, so I go to someone who can.

I am not outsourcing anything here.

GM has the tools, facilities and employees to cut the metal - but it can do it cheaper elsewhere so it outsources.

 
At 7/20/2012 9:17 AM, Blogger morganovich said...

"
If Virginia gains 100 jobs when a plant closes in North Carolina - that's different when North Carolina loses 100 jobs and there is no compensating offset."

you still seem determined not to get this.

if 100 jobs are lost, production is lost (or productivity gained). in either case, you get less money spent.

if those 100 people were the whole factory, then the factory goes under. it no longer produces goods. thus, the money spent on those goods gets spent elsewhere creating a new opportunity.

if the 100 people get fired and production stays the same, then price drop or profits rise. (productivity gains). this too inject more money for purchase or investment.

so long as you persist in oversimplifying the system, you are never going to understand how this work.

 
At 7/20/2012 9:19 AM, Blogger morganovich said...

moe-

"I don't have a cow handy. I don't have a yard big enough for it to graze in if I did. I don't have the tools to butcher it. I cannot do it myself, so I go to someone who can.

I am not outsourcing anything here.

GM has the tools, facilities and employees to cut the metal - but it can do it cheaper elsewhere so it outsources"

but you could. you could have those things. you would have invested instead of outsourced.

gm does not "have those things". they outsourced the function. why would they keep the tools? many of the new plants never even had them.

saying that they could have the tools is like saying you could have a pasture.

 
At 7/20/2012 9:22 AM, Blogger morganovich said...

"I cannot do it myself, so I go to someone who can."

this is simply false.

you COULD do it yourself. you CHOOSE not to. you seem like a smart guy. i'm sure you could find some land, but a cow, read a good book on butchery or take a lesson.

this is not about CAN, it's about CHOOSE.

you COULD make your own shoes. you CHOOSE not to. you feel yourself to be better off as a result (and almost certainly are).

yet somehow when a business makes the same choice, you view it differently. why is that?

why is the standard for your shoes CHOOSE and for GM door assemblies CAN?

that seems inconsistent to the point that it makes your whole conclusion untenable.

 
At 7/20/2012 9:29 AM, Blogger Larry G said...

if those 100 people were the whole factory, then the factory goes under. it no longer produces goods. thus, the money spent on those goods gets spent elsewhere creating a new opportunity.

In a global economy though the spending "elsewhere" may be on products made in other countries giving jobs to other countries instead of domestic jobs replacing domestic jobs.

Thus you end up with a 100 people in NC who have no jobs and no chance at a domestic replacement job.

I would answer your question about "not seeing this" with one directed at you. Do you not see that the 100 jobs in NC don't get replaced?

Again, I'm NOT advocating restricting trade or preventing outsourcing, I'm asking how we handle in if jobs are outsourced and not replaced as in the case of the 100 in NC.

 
At 7/20/2012 9:46 AM, Blogger morganovich said...

"In a global economy though the spending "elsewhere" may be on products made in other countries giving jobs to other countries instead of domestic jobs replacing domestic jobs."

larry, you seem utterly determined not to get this. i'm going to try one more time.

first off, so what? in a national economy, opening a new factory in texas may harm one in california. a new one in dallas may harm austin. where are you going to draw a line? there is nothing magical about a national border in economics.

second, then you get cheaper goods, more buying power, more spending on other things. this does not cause harm, it causes prosperity.

you keep acting like jobs are zero sum.

they are not. productivity increase the demand for everyhting.

by your logic, losing all those farm jobs should have destroyed the us.

we don't to "handle" it. it handles itself.

more buying power leads to more jobs. lower wages increase demand for workers. it's all self correcting. nothing needs to be "handled".

this is called emergent order. it's how economics works. adam smith called it the invisible hand.

you persist in trying to think in one factor and one timeperiod. as a result, your views on what is a dynamic system are consistently wrong.

i don't know how else to explain it to you.

it's like you are watching a ballet and only seeing one tree in the scenery.

 
At 7/20/2012 10:02 AM, Blogger morganovich said...

do you make your own shoes larry?

why not?

why outsource that?

do you only buy shoes made in your city or town?

why not?

how about in your state?

would doing so make you better off?

would it even make your state better off?

go read your ricardo on comparative advantage.

you are better off specializing in items where you have comparative advantage and trading. it makes the whole pie bigger.

http://iang.org/free_banking/david.html

outsourcing is just another kind of trade.

there is nothing here to be handled. it handles itself.

"handling" it goes against trade and innovation and winds up doing far more harm than good.

 
At 7/20/2012 10:04 AM, Blogger Moe said...

you COULD do it yourself. you CHOOSE not to. you seem like a smart guy. i'm sure you could find some land, but a cow, read a good book on butchery or take a lesson.

Would it be practical for me to so?
Do I have the money?
Would it make financial sense even if I did?

The world I live in is one that is constrained by responsibilities, time and money.

My issue here is a term used to define a corporate strategy is being stretched to it's breaking point to apply to John and Mary Doe - to justifiy outsourcing. I have no problem with corporate outsourcing - I just think this argument strains credibility.

 
At 7/20/2012 10:07 AM, Blogger Larry G said...

first off, so what? in a national economy, opening a new factory in texas may harm one in california. a new one in dallas may harm austin. where are you going to draw a line? there is nothing magical about a national border in economics.

second, then you get cheaper goods, more buying power, more spending on other things. this does not cause harm, it causes prosperity.

you keep acting like jobs are zero sum.

they are not. productivity increase the demand for everyhting.

by your logic, losing all those farm jobs should have destroyed the us.

we don't to "handle" it. it handles itself.

more buying power leads to more jobs. lower wages increase demand for workers. it's all self correcting. nothing needs to be "handled".

this is called emergent order. it's how economics works. adam smith called it the invisible hand.

you persist in trying to think in one factor and one timeperiod. as a result, your views on what is a dynamic system are consistently wrong.

i don't know how else to explain it to you.

it's like you are watching a ballet and only seeing one tree in the scenery.


Morg - do you not see any difference between domestic jobs and globalization?

When 100 people in NC lose their local textile job to a plant overseas - do you not see that as a net loss of 100 jobs to the folks in NC who cannot move overseas to follow their job?

What would those 100 people do for a new job if the only thing they knew how to do was work in a textile plant and they were 45 years old?

If they moved to Raleigh or Charlotte what kind of work would they likely be able to get?

would they be able to afford a place to live if they could only find a service job that paid them 1/3 of what they made before?

you keep saying that all of this works itself out but clearly it does not and we have a pretty stubborn unemployment rate where even people with good education cannot find work.

Some economists say that some of us have been living above our sustainable standard of living and that inevitably some will end up with lowered standards of living.

If this is true then it means that these folks will be buying LESS goods and services than they used to not more and their incomes will primarily be devoted to food and shelter and a lot less discretionary spending.

but my primary question is do you not see any difference from a largely domestic economy for each country verses a global economy where jobs much more easily move from one country to another?

Right now, our economy is not even producing enough new jobs to handle population growth - right?

If we outsource even more jobs isn't that going to lead to even more unemployment?

 
At 7/20/2012 10:09 AM, Blogger morganovich said...

"Would it be practical for me to so?
Do I have the money?
Would it make financial sense even if I did?

The world I live in is one that is constrained by responsibilities, time and money"

precisely. now how is that any different from gm deciding to have someone else make muffler assemblies?

this is not a stretch, it's precisely the same thing.

you choose not to make your own shoes. surely you could. you have the money and the resources.

gm could make their own mufflers, but they face the same exact choice that you do with shoes:

is it practical? does it make financial sense? can i get better cheaper product somewhere else.

no one is well served by being totally vertically and horizontally integrated.

this is obvious to all or us that do not make our own clothes. why treat a corporation differently for responding to the exact same incentives in the exact same way?

 
At 7/20/2012 10:12 AM, Blogger morganovich said...

larry-

here's another way to look at it:

why does anyhting need to be "handled"?

just because your actions affect me does not make you responsible to me.

if you and i compete for a job and you get it and i do not, i lack a job that you got. but it's not your responsibility to compensate me.

if we both have the same job and one of us gets fired, the one keepig the job does not owe half his paycheck to the other guy.

if i open a restaurant and it drives yours out of business, i do not owe you.

so where is this need to "handle" things coming from?

you seem to be creating some sort of obligation where none exists.

 
At 7/20/2012 10:17 AM, Blogger morganovich said...

"but my primary question is do you not see any difference from a largely domestic economy for each country verses a global economy where jobs much more easily move from one country to another?"

yes, i see a difference. we are better off and richer if jobs and goods can move.

restricting such movement reduces the production and consumption possibility frontiers in BOTH countries.

what you are describing is called "protectionism". labor is just another good. preventing is movement is just another tariff or NTB.

all tariffs have dead-weight losses to both the imposer and those affected.

http://mjperry.blogspot.com/2011/03/econ-101-protectionism-for-dummies.html

tryign to protect local jobs is just like trying to protect local sugar:

a few benefit, but on balance, the economy loses.

 
At 7/20/2012 10:17 AM, Blogger Larry G said...

here's another way to look at it:

why does anyhting need to be "handled"?

just because your actions affect me does not make you responsible to me.

if you and i compete for a job and you get it and i do not, i lack a job that you got. but it's not your responsibility to compensate me.

if we both have the same job and one of us gets fired, the one keepig the job does not owe half his paycheck to the other guy.

if i open a restaurant and it drives yours out of business, i do not owe you.

so where is this need to "handle" things coming from?

you seem to be creating some sort of obligation where none exists.



Actually I agree with you 100% on what you say but I'm not seeing this as a response I understand to my question about globalization.

Do you not see globalization as a different thing that domestic job creation and destruction?

If you see globalization as the same thing then that's where our perspectives don't agree and perhaps you do better understand the bigger picture and I do not but you have to put a little more on the table to back up what you're saying.

I'm actually with much of what you say - until we put it in a global context and then I'm not so confident.

 
At 7/20/2012 10:24 AM, Blogger morganovich said...

"
Do you not see globalization as a different thing that domestic job creation and destruction?"

no. it's exactly the same thing. trade with the next country is just like trade with the next state or the next town.

the only difference is is the minds of economically illiterate politicians trying to whip up luddite anger.

any argument you can make from new york about outsourcing to china can be made just the same way with texas.

and benefit to trading with texas is just the same if it is china.

inventing notions of "national interest" do not alter the economic laws, they just make us poorer.

ricardo works between individuals, towns, states, and countries all in the same exact way.

what rational reason is there to believe that the laws of economics suddenly change at a border?

 
At 7/20/2012 10:31 AM, Blogger Moe said...

I see a big difference between me having to learn to butcher a cow or go to the grocery store. Versus, say a Wells Fargo closing its existing St. Louis call center and outsourcing it to India.

(all due respect Morganovich)

 
At 7/20/2012 10:47 AM, Blogger Paul said...

"you keep saying that all of this works itself out but clearly it does not and we have a pretty stubborn unemployment rate where even people with good education cannot find work."

They could always go work on the Keystone Pipeline. Oh wait...

 
At 7/20/2012 10:47 AM, Blogger Larry G said...

what rational reason is there to believe that the laws of economics suddenly change at a border?

well...things like GDP and unemployment are measured with specific borders....

I still don't see a good answer to the 100 who lost their jobs in a small NC town.

How does a global economy mitigate, compensate for transfer of jobs from one country to another?

one more quick question:

If we did have one border-less global economy would it function any differently than what you say it does right now with borders?

you're making some inroads on my views here.

 
At 7/20/2012 10:52 AM, Blogger Larry G said...

They could always go work on the Keystone Pipeline. Oh wait...

of course there are dozens, hundreds of EXISTING pipeline rights of ways that are available for additional pipes and in fact new pipes are ongoing in these existing rights of way.

The Keystone investors COULD be negotiating for space on existing rights of ways instead of demanding taking property rights away from people for their own benefit.

Keystone does not want to negotiate willing-seller, willing-buyer - they want the govt to take property rights away from people who do not want to give them up.

so we blather on about "liberty" and "freedom" until of course the Keystone folks come along and we fall all over ourselves to support using eminent domain.

so much for the property rights crowd, eh?

 
At 7/20/2012 10:52 AM, Blogger morganovich said...

"see a big difference between me having to learn to butcher a cow or go to the grocery store. Versus, say a Wells Fargo closing its existing St. Louis call center and outsourcing it to India. "

how about your going to a carwash instead of washing your own car like you used to?

surely you can think of things you used to do but decide you would be better of paying someone else to do.

make dinner?

mow the lawn?

clean the house?

you keep saying you do not think they are the same thing, but unless i missed it, you have not explained why they are not the same thing.

what is it you think is different about wells fargo moving a call center and your ceasing to clean your own house and hiring someone to do it?

 
At 7/20/2012 10:59 AM, Blogger morganovich said...

"
well...things like GDP and unemployment are measured with specific borders...."

totally arbitrary. we measure state and county gdp too. so what?

i have answered your mitigation question about 4 times larry. go back and read.

low rpices up buying power. that creates jobs. lower wages result in more jobs which, ultimately, increases wages. it's a self adjusting cycle.

you seem to be really struggling with the concept of a real economy and basic supply and demand relationships.

"
If we did have one border-less global economy would it function any differently than what you say it does right now with borders?"

borders do not mean anyhting. they are lines on a map. they have ZERO effect on economic relationships except that we have a class of economically illiterate politicians who either pretend or erroneously believe that they matter.

look at the graph on tariffs.

if we stopped pretending that the national border mattered, they would all go away and the US would get big gains.

restricting trade harms the economy. outsourcing is just another kind of trade. allowing ti to run is a net benefit. there may be some who do not benefit and even lose out, but what is the alternative? punish the whole economy to protect a few?

paying $2 to save $1 worth of jobs is not the road to prosperity.

 
At 7/20/2012 11:18 AM, Blogger Moe said...

In my example Wells is outsourcing something it already had sourced internally, whereas I am simply sourcing something I do not have a source for.

I am not against coporate outsourcing - just this argument.

Taking a corporate strategy concept like outsourcing and applying it to Mom and Pop to make a pro-outsourcing point - strains logic here and there. Thus, it will never convert anyone who is against outsourcing.

 
At 7/20/2012 11:24 AM, Blogger Paul said...

"of course there are dozens, hundreds of EXISTING pipeline rights of ways that are available for additional pipes and in fact new pipes are ongoing in these existing rights of way."

True, but the environmental nut jobs haven't ordered Obama to shut those projects down.

"The Keystone investors COULD be negotiating for space on existing rights of ways instead of demanding taking property rights away from people for their own benefit."

They could? How do you know? The pipeline needs to cross the international border. Are you seriously saying Transcanada wants to build the pipeline in order to take property rights away? Is that your newest and most pathetic defense of Obama yet?

 
At 7/20/2012 11:32 AM, Blogger morganovich said...

moe-

"in my example Wells is outsourcing something it already had sourced internally, whereas I am simply sourcing something I do not have a source for."

mark used the example of a restaurant. i suspect you have a kitchen. i suspect that you sometime make your own dinner.

but sometimes you eat out.

or perhaps you used to mow your own lawn and no pay a landscaper.

perhaps you used to scrub your own toilet but now have a housekeeper.

i do not see how those are any different from what you describe wells as doing.

you used to mow your lawn. now you outsource it.

i'm not trying to be difficult or to beat a dead horse here, i really just do not see any difference.

 
At 7/20/2012 11:35 AM, Blogger morganovich said...

also:

why does it matter if you used to do it?

so, it's outsourcing id they had a center and moved it, but if i open up bank of moragnovich and never have my customer service capabilities in house, that is somehow not outsourcing?

i'm not sure your standard makes sense.

i would describe both those things as outsourcing, just as i would your ceasing to mow you lawn and paying someone and your buying shoes from someone else.

it's the same decision, it's just a question of when it was made.

 
At 7/20/2012 2:00 PM, Blogger Larry G said...

They could? How do you know? The pipeline needs to cross the international border. Are you seriously saying Transcanada wants to build the pipeline in order to take property rights away? Is that your newest and most pathetic defense of Obama yet?

how about this:
http://switchboard.nrdc.org/blogs/aswift/keystone_xl_is_a_tar_sands_pip.html

 
At 7/20/2012 2:02 PM, Blogger Larry G said...

Morg - thank you for your explanations. I'm still not 100% convinced but you made persuasive points.

Now why doesn't Mr. Romney defend that position?

 
At 7/20/2012 2:15 PM, Blogger morganovich said...

larry-

i don't know why mittens does what he does.

perhaps (and alas) it is easier to pander to an ill informed electorate that it is to educate them and change their minds.

this is the great problem with deomcracies and why i tend to favor rights and liberty instead.

how does putting a group of economic illiterates together with a coupe of demogouges up front lead to sound economic policy?

it's liars leading the blind.

i suggest caplan's wonderful book "the myth of the rational voter" on the topic.

there are numerous errors that democracies routinely make.

the best way to avoid the consequences of such errors is to take power away from government and give it back to the individual in the form of inalienable rights and liberty.

the median american has likely never taken even one econ class in his/her life.

aggregating them together does not suddenly make them a good judge of the effect of policy, especially in areas like protectionism where the 200 guys who lost steel mill jobs are easy to show on tv but the 300 million people who all paid $20 more last year as a result of steel tariffs are not.

even when the diffuse harm is many multiples of the focused benefits to a small group aided by protectionism, democracies do not see the trade off well. this is why free trade is not something you want to trust to voters, it's something you want to establish as a right.

 
At 7/20/2012 2:48 PM, Blogger sethstorm said...


if we stopped pretending that the national border mattered, they would all go away and the US would get big gains.

None of which would be of any use to any the multitudes of displaced citizens.



what is it you think is different about wells fargo moving a call center and your ceasing to clean your own house and hiring someone to do it?

Plenty. Moving a call center deals with a regulatory bound at the country level while you present a red herring in comparison. They are dissimilar events in dissimilar scales.

Before you complain, my bank has its call centers in worker friendly Holland, Michigan. In addition, the bank does not look like it's going to change anytime soon.

 
At 7/20/2012 3:29 PM, Blogger Moe said...

how does putting a group of economic illiterates together with a coupe of demogouges up front lead to sound economic policy?


the nail has been hit on the head!

 
At 7/20/2012 3:34 PM, Blogger Larry G said...

well.. Romney, in theory should know and understand the reality.

the question is does he have the backbone to stand tall on the issue.

 
At 7/20/2012 5:02 PM, Blogger juandos said...

"how about this: NRDC"...

Good one larry g!

Yeah, that's were I want to get my information from...

A collection of hypocritical, leftist, junk science pushing fools is always my first stop when looking for credible material...

 
At 7/20/2012 5:43 PM, Blogger Paul said...

Yeah, what Juandos said, Larry the Liberal. You might as well link Earth First as the NRDC extremists.

 
At 7/20/2012 5:44 PM, Blogger Larry G said...

You might as well link Earth First as the NRDC

did I make the NRDC comment in THIS thread?

 
At 7/20/2012 5:55 PM, Blogger Paul said...

Yeah.

 
At 7/20/2012 5:58 PM, Blogger Paul said...

"Now why doesn't Mr. Romney defend that position?"

Love this. Romney panders, but he's Adam Smith compared to Alinskyite Obama. Larry the Liberal never ever asks why his hero Obama continues to throw out red meat to the pitchfork crowd. Or perhaps Obama is just that f'ing ignorant?

Who cares? Larry will be lined up to the pull the hopeychanger lever come Nov 7.

 
At 7/20/2012 6:00 PM, Blogger Larry G said...

Who cares? Larry will be lined up to the pull the hopeychanger lever come Nov 7.

actually I'm waiting to hear Romney make his case.

so far, he's about as feckless as the rest of the GOP.

The GOP is your basic spineless hypocrites these days... you know...

 
At 7/20/2012 6:37 PM, Blogger juandos said...

"The GOP is your basic spineless hypocrites these days... you know"...

Well larry g that statement isn't you pissing in the wind this time...

You've kind of nailed it pretty good...

The GOP/R.I.N.O. House members have really disappointed conservatives...

From the NOT liberal, lamestream media we have this CNSNew item: Debt Up $1.59T Under GOP House—More in 15 Months Than First 97 Congresses Combined
By Terence P. Jeffrey
June 1, 2012

In the fifteen months that the Republican-controlled House of Representatives--led by Speaker John Boehner--has effectively enjoyed a constitutional veto over federal spending, the federal government’s debt has increased by about $1.59 trillion...

 
At 7/20/2012 6:46 PM, Blogger Larry G said...

In the fifteen months that the Republican-controlled House of Representatives--led by Speaker John Boehner--has effectively enjoyed a constitutional veto over federal spending, the federal government’s debt has increased by about $1.59 trillion...

Much of what is in the current budget was put there by the GOP under Bush and it remained in the budget despite the GOP calling for "cuts" - they wanted Obama to name the cuts.

So Obama signed off on sequestration - and listen to the spineless GOP now... bellyaching and crying that out of a 900 billion dollar DOD budget, that $50 billion will "hollow it out".

it appears the GOP like govt spending and stimulus also but for DOD.

 
At 7/20/2012 11:09 PM, Blogger juandos said...

"Much of what is in the current budget was put there by the GOP under Bush and it remained in the budget despite the GOP calling for "cuts" - they wanted Obama to name the cuts"...

Hey larry g, are the color of your eyes same color as that of your comment, 'fecal brown'?

 
At 7/21/2012 5:07 AM, Blogger Larry G said...

adding-to-the-deficit-bush-vs-obama

 
At 7/21/2012 12:14 PM, Blogger Paul said...

"In the fifteen months that the Republican-controlled House of Representatives--led by Speaker John Boehner--has effectively enjoyed a constitutional veto over federal spending, the federal government’s debt has increased by about $1.59 trillion..."

Bullshit. The GOP passed the Ryan budget 2 yrs in a row and then Harry Reid just ignores them unlawfully. The Senate has not passed a budget in over 3 yrs. This spending is not the GOP's fault.

 
At 7/21/2012 12:17 PM, Blogger Paul said...

"adding-to-the-deficit-bush-vs-obama"

What a load, Larry the Liberal. There's no disputing Obama has added over 5 trillion in less than 4 yrs vs. 4 trillion in 8 yrs for Obama. Your chart is bunk

 
At 7/21/2012 12:20 PM, Blogger Larry G said...

There's no disputing Obama has added over 5 trillion in less than 4 yrs vs. 4 trillion in 8 yrs for Obama. Your chart is bunk

virtually all of the stuff in the deficit, Obama did not put there.

It's true he has not cut it either but most of it was already there when he took office...and it just adds every year that it's not cut.

Remember, Obama supports across the board cuts - sequestration and the feckless GOP has got their panties in a wad about it.

So Obama supports cut and the GOP runs away from cuts.

the truth hurts Paul!

 
At 7/21/2012 12:21 PM, Blogger Paul said...

"So Obama signed off on sequestration - and listen to the spineless GOP now... bellyaching and crying that out of a 900 billion dollar DOD budget, that $50 billion will "hollow it out".

Larry the Liberal is all for sequestration because entitlements, the government gravy train that pulls up to his mailbox every month, is exempted.

 
At 7/21/2012 12:24 PM, Blogger Larry G said...

Larry the Liberal is all for sequestration because entitlements, the government gravy train that pulls up to his mailbox every month, is exempted

I thought across the board meant everything...

no?

 
At 7/21/2012 5:12 PM, Blogger Paul said...

"I thought across the board meant everything...

no?"

Right, Larry. I'm so sure you didn't know entitlements are off the table.

"So Obama supports cut and the GOP runs away from cuts."

Bullshit.

Bullshit.
Bullshit.
Bullshit.

Clearly, Obama and the Democrats favor freeloaders over U.S. Marines.

 
At 7/21/2012 6:01 PM, Blogger Larry G said...

Non-defense sequestration. The $54.7 billion in non-defense cuts will come from both mandatory (entitlement) and discretionary (non-entitlement) programs.

http://www.cbpp.org/cms/?fa=view&id=3635

Scotty Starnes's Blog??? WTF?

 
At 7/21/2012 6:31 PM, Blogger Paul said...

"Instead of blanket across-the-board cuts to all programs, the Budget Control Act imposes exemptions from this sequestration process. Certain programs such as Social Security and Medicaid would be exempt altogether. Any cuts to Medicare would be limited to no greater than 2% of the program's costs, and any such cuts would come from payments to providers only. "

http://www.medicareadvocacy.org/2011/08/04/what-does-the-debt-ceiling-agreement-mean-for-medicare/

 
At 7/21/2012 6:34 PM, Blogger Paul said...

Scotty directly linked this Reuters article: http://www.reuters.com/article/2012/05/10/us-usa-budget-veto-idUSBRE84901K20120510

 
At 7/21/2012 6:54 PM, Blogger Larry G said...

it makes no sense to "cut" SS in the sequester.

Didn't the GOP AGREE originally with the sequester?

 
At 7/21/2012 7:30 PM, Blogger Fire Eagle said...

Yea there is an argument that "outsourcing" is not all that bad. But it is not my opinion "outsourcing" needs to be subsidize with my tax money, like the Repubs under Pres. Bush did to my job. Remember the Repubs in-acted a full credit for all costs of relocating production operations overseas. There went my electronic technician job to China and I paid for it.

 
At 7/21/2012 9:46 PM, Blogger Paul said...

"it makes no sense to "cut" SS in the sequester."

Not to you, you only want the rest of us to get the squeeze. Clinton "raised the tax" social security in '94, which is really the same as cutting spending. The greedy geezer lobby you belong to ensures this is a rare event.

"Didn't the GOP AGREE originally with the sequester?"

The sequester was the hamfisted fallback if all else failed. Obama ensured GOP attempts to roll back the freeloaders failed.

 
At 7/21/2012 10:13 PM, Blogger Larry G said...

"it makes no sense to "cut" SS in the sequester."

Not to you, you only want the rest of us to get the squeeze. Clinton "raised the tax" social security in '94, which is really the same as cutting spending. The greedy geezer lobby you belong to ensures this is a rare event.


no. cutting it doesn't do anything for the budget deficit.

you are opposed to SS but this is about the budget and deficit and cutting SS does nothing to help that.

Medicare - you could cut but what that really would mean would be an increase in premiums which, would drop the subsidy and that WOULD help the budget. (and we should do it IMHO).

But Medicare is about 300 billion for Parts B,C,D and the deficit is over a trillion.

MedicAid is another 300 billion or so but you'd not zero it. You'd cut 10-20% of it.

there is no way to balance the budget without cutting both entitlements and DOD.

if you are the GOP are actually serious about balancing the budget as opposed to blaming Obama..you have to face the realities and the GOP is a bunch of spineless cowards on the budget - and they had a large hand in causing the deficit to start with.

 

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