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I have a question about Ron Paul

First off, let me say, that Ron Paul is more than just my first pick among the presidential candidiates... the man is my hero. Anyways, here is my question:

Does anyone know where exactly Ron stands on the issue of outsourcing? Outsourcing, as we all know, is the practice of taking good paying jobs away from American workers and shipping those good paying jobs to the thrid world to take advantage of their virtual slave labor. I know Ron is an economist, a stout believer in small government and a free market.... so I'm curious as to how Ron Paul would address the issue. If anyone can give me a quick answer I'd appreciate it.

Remember the 5th of November!

Semper Fortis




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Missing The Boat on "Outsourcing"

Foremost, "outsourcing" & "globalization" are VERY BAD! Corporate Amerika is running overseas and whoring out the American worker! To boot, the prostitutes in Congress fast-track H1-B visas for Software Engineers to come over here from India! Too many "simplistic" examples here. I would LOVE to hear from a RP backer who is a Software Engineer to enlighten us on what is really happening to the American worker.

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Comparative advantage by Ricardo

Free trade and globalization ARE good. Outsourcing is not bad.

David Ricardo described it in his theory of comparative advantage.
Suppose there are only two countries, the usa and china, and only two products, t-shirts and computers. Let's suppose further that the US is more productive than china at both products, but its advantage at producing computers is bigger than its advantage at producing t-shirts. Than it is advantageous for the US to outsource its t-shirt production to china and concentrate on producing computers. By than trading t-shirts and computers with china, BOTH countries will have more, the chinese AND the US.

Another example:
If a doctor is better than his secretary in medicine and in fixing appointments, it is still better for the doctor to concentrate on medicine and outsource the desk work to the secretary. As a team they both have more.

outsourcing

There's no one simple answer. All of the comments above touch on at least some of the elements.
From my perspective, I think the biggest push has to do with the fact that our entire monetary system is based on paper money and debt.
Labor rates are a factor of course, but the issue is total cost per unit produced, not labor cost per hour.
Here in the US we have such an overtaxed over regulated economy that an entrepreneur must spend huge amounts of capital just getting past all the rules, laws, regulations and taxes before he can even produce one unit of his product.
Add to that the fact that this country isn't producing capital any more. Capital comes from savings. Nobody saves any more. The average savings rate in the US is close to zero, and sometimes it's actually negative meaning we borrow more than we save. This is a function of paper money. It doesn't pay to save when you know that the value of your savings will simply disappear over time.
China has policies in place that encourage (even require) savings. The savings rate in China is approaching 50%. This allows them to build their capital stock at an astonishing rate.
Here, our fiat money policies and huge debt destroy savings and thus the capital we need to fuel our industries simply isn't there. Add to that the cost of maintaining an empire and you have a formula for disaster. The steel we need to build and maintain our factories is all tied up in weapons systems. The fuel we need to power our industries is burned by the Pentagon. (Ron Paul recently commented that the Pentagon burns more fuel than Sweden.)
Our "managed" trade policies don't help. They only benefit those with the inside track.
Real trade is supposed to be value for value. We ship you X number of our goods, you send back Y number of yours, with the rate between the two the subject of negotiation. What happens in our economy today is simply "Send us X number of your goods and we'll print up Y number of our dollars for you." We're buying goods from over seas with wealth we don't have. We're not trading, we're just bankrupting ourselves. Just exactly what NAFTA, CAFTA, the WTO etc were DESIGNED to do.
We need Ron Paul to undo all of that mess. Then we can get back on track.

Fastest Way to "insource" our Jobs

I suspect Ron Paul realizes that the fastest way to "in-source" our jobs would be the elimination of the Income Tax.... both Corporate and Personal.
Without calling for a restriction upon anyones freedom, just changing USA tax policy would change the rate and direction of job flow.

Its been stated in many places by many business analysts that the lowest of the low wages plus transportation, insurance and timing costs places most products at a 30-35% price advantage.

Take Hush Puppy shoes produced in Bangladesh, perhaps the poorest wage country as an example. Materials must be transported there, then the shoes made there, then the shoes shipped to California and New York (soon Mexico's port of entry). Manufactures can do this and make money selling inside the USA because of high regulation costs & high wage costs & high taxation costs (corporate taxes).

Yet we can keep the first two, high regulation costs and high wage costs and just eliminating the income tax on individuals and corporations, we would make up that 30-35% price/cost advantage. Thus by ending the corporate and personal income tax, we would bring industry back to the USA. The brand "Made in America" would mean something again. Materials for production are already here, so is labor and so is the biggest consumer market on earth. There is no reason, for example, that we could not make shoes here in the USA. This can be said for most products. As our machines to manufacture excels, we will further lower unit costs of production.

Treg

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Outsoucing and the real problem

One major cause of outsoucing is the US tax system and other related beaurocratic issues. Ron Paul is clearly for eliminating this burden. This would help keep jobs in the US. Of course I don't think you will see Nike bringing its factories here. I am in IT and I know if you eliminate the government pains and tax expense you will see a lot of the jobs come back.

tariffs on slave labor

Since China is a big reason we need to spend so much on defense (arguably), shouldn't companies exploiting Chinese slave labor pay extra , in the form of special tariffs, for the defense budget?

Famous Quote from Justice William O. Douglas

"The Constitution is not neutral.
It was designed to take the government
off the backs of people."

Famous Quote from Justice William O. Douglas

"The Constitution is not neutral.
It was designed to take the government
off the backs of people."

No to tariffs

Tariffs, whatever the reason for which they are imposed, are protectionist. Protectionism is isolationism. Ron Paul is against isolationism (no matter what the mainstream media journalists try to say).

Tariffs are bad because they penalize the American consumer: he has to pay higher prices for imported goods. They protect the most inefficient American companies, thereby tying up workers who could be employed by the most efficient American companies instead.

Ron Paul has made the point over and over again that China cannot invade the United States any time soon, so keeping a military within our borders to deter her should be fairly cheap.

Besides, please see my point earlier about not using the word "slave" labor to describe people who work in these factories voluntarily. If there is any slave labor on this planet, it is you and me who are taxed by the Inland Revenue at gunpoint!

Mandatory minimunm wage and Coersive legislation forcing

Businesses in some instances to hire or not fire unoin workers are the cause of outsourcing.

If not for these types of artificial wage raising influences which are anathema to free markets we would be able to find 'virtual slave labor' as you put it, right here in the USA. Businesses and workers would be able together to find the optimal wage rates for profitable business.

Some say this is just a way for big corporations to rape the populace. I disagree, they do that through coercive anticompetitive legislation through government influence. Special interest peddling. Special tax exemptions and other goverment failures of the poeple. When there are no government hurdles to entrepenureship, new businesses will spring up in a free market economy to address the failures of the old ones.

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A small body of determined spirits fired by an unquenchable faith in their mission can alter the course of history.
~Mahatma Gandhi

One last thing...People

One last thing...People around the world likes to come to America bec it is the land of the free and where our dreams can come true. I believe if we ensure the society we have is free, then we will continue to lead in opportunity, economy and serve as a beacon that it used to be, assuming tyranny can be stemmed...now.

If the government stops restricting individual liberties, I think there can be another revolution in releasing innovation energies and brain power within us that we all witnessed within ourselves by being RP supporters.

Constitutional Republic is a new concept compared to tyranny, monarchy, oligarchy, fascism etc.

Labor are not all equal. We can innovate for the 21st century and beyond, away from technology of killing efficiently.

Outsourcing

The American worker is smart, hard-working and productive. If you freed him from all the red tape and the various taxes imposed by the Federal Government, it is him who would take the good jobs from his overseas rivals, not the other way around. The only jobs that would get outsourced then would be the ones for which Americans have no comparative advantage.

Reducing outsourcing beyond that, and even eliminating it completely, is not desirable. For every good or service produced more cheaply overseas, there is one happy American consumer who kept the price difference in his pocket. As every American is also a consumer, everyone benefits from having a minimum of outsourcing.

Also, low-paid laborers in other countries should not be called "virtual slaves". The fact is that nobody is pointing a gun to their head. These people freely choose to work in these factories because the wage they get, although it is very low by American standards, is higher than what they could get in other jobs open to them. This is their way out of misery. Only they can decide for themselves whether it is worth their time to work for this pay, and they signal it is a yes simply by showing up for work every morning.

In China they are actual slaves

Since some factories actually operate using prison labor. Also, if you are not free to associate, or complain, and the government fixes the wages, you are pretty close to a slave.

That said, some places people are freely choosing the low wage.

Freedom to quit

The freedom to associate or complain is not necessary. The only freedom you need is the freedom to not show up one morning and go back to doing whatever it is you were doing before the factory opened.

When the Chinese government fixes the wages, I wouldn't go so far as to call that slavery, but I still agree it is very bad. I think the best way to stop that is to show them the example of how prosperous a country can be with zero government interference in the economy. The US are not there quite yet, but with Ron Paul there is some hope...

Regarding prison labor, I agree the inmates don't have the option to "quit". But presumably they've done something evil like killing or raping someone, and they're paying back their dues to society. Personally I think they should be paying it back to their victims or the victims' family, instead of to "society" (which means the government), but that's another story...

I am not an economist, but I

I am not an economist, but I think RP mentioned that it is 10 times easier and faster to open a business in China than it is to go through the bureaucratic red tape to do the same business here in the US. Now that adds not only $ cost but opportunity cost. Then taxing US businesses could potentially make it less attractive to do the business here than overseas.

Finally, the IRS come in to demand businesses for income tax and FICA. How do you think this affects the business' bottom line. So overall, I think RP has the wholistic solution to our problem that I think I and many of us do not fully understand.

Of course we have to be taxed bec the government has been our nanny and the expense our government incur to maintain our empire and for the bad boys to play god and their favorite toys. The politicians needs to get elected by ignorant and sedated constituents and they figured as long as Americans are dumb, the way to win election is to bring home the pork.

You see, it seems to me this is a whole slew of interrelated issues that only RP and an aware and awakened citizenry can change for the better.

I have a counter-question I hope Ron Paul would ask, too.

How much of the outsourcing to China we've seen over the past 2 decades would have happened if Nixonian politicians had paid attention to the Founders/Constitution and stuck with honest money instead of fiat toilet-paper? People talk about markets as if they're not manipulated these days...At least for gold and silver, that's sadly mistaken...
JMR

I agree, Also

The government subsidizes the transport cost, and the security cost of overseas businesses. Further, companies from the US get breaks on tariffs in some cases. If imports from China and mexico were not regulated such that U.S. companies had an advantage, they would have to compete with the foreign companies on an equal footing, then U.S. labor would start to have some advantages.

Outsourcing, or taking your

Outsourcing, or taking your business outside the country, is a natural byproduct of the free enterprise system. The system of free enterprise is in a constant state of flux as businesses fight to convince you to spend your money on them, and one of the ways they do that is to try to find ways to make their product more cheaply. Naturally, cheap foreign labor is one way to do that, and competition for the manufacturing dollar is natural. Government intervention into this process, like so many others, sounds good on the surface, but like so many things in government, the cure is much, much worse than the disease. For example, once government gets involved in prohibiting companies from hiring outside our borders, where do they stop? Does that mean NO American company can build a factory in a foreign country? Or does it mean that if they do, that they can't sell the goods manufactured there in the U.S.? And if that's the case, does it mean that goods that are manufactured by foreign corporations cannot be sold in the U.S. because U.S. could not compete with them price-wise because of their cheaper labor rates? Do you prohibit ALL outsourcing, or just for some products? If it's just for SOME products, then you can see how companies will invest a lot of money in Washington on lobbyists to make sure that it is their competitors who are prohibited from outsourcing, but not themselves.

You can begin to see answering the question on government regulation of outsourcing has no short answer. The only short answer is that the less government intervention into the free market, the better. The market will find its own solutions. It always does.
www.paulforronpaul.com

bump

Nice summation.

The good kind of globalisation

Ron Paul believes in free trade and free markets.

This means that if a company wants to, they can move their jobs overseas in order to become more efficient. He would never use government force to stop them...and with so many multinational corporations..that isn't even feasible.

What most people dont realize is that outsourcing and a global economy are not bad things.

For example, take the United States textile industry. It is almost non-existant nowadays and what is left of it only exists because of government intervention.

A shirt made in the US costs 10 dollars to make.
The same shirt made in China costs 5 dollars to make.

The company obviously has incentives to move its manufacturing to China..but who benefits the most in the end? Yes, a few jobs are lost in this country...but the entire country is able to purchase shirts cheaper. This means that the entire United States has more disposable income. The five dollars saved will still be spent....but on a hot dog. (Obviously, these are just odd examples.) So while the textile industry suffers, the overall wealth of the country is increased. The textile workers can find work in an industry that the United States excels in.

Outsourcing.

I DON'T KNOW how Ron Paul would react to this, so what I'm telling you is just my GUESS based on his opinions and what I know about him.

While it is true that many manufacturing jobs go to China partially because of "Slave Labor," the reality of the matter is that many of the "White Collar Jobs" that go to countries like India have nothing to do with "Slave Labor."

The OTHER component that causes jobs to leave America is virtually undiscussed in the mainstream media and Ron Paul is the only one discussing it.

It has to do with the Fiat Currency.

Many of those jobs go to those countries because "it's cheaper there" and it makes sense for the businesses. These 3rd World Countries have their currencies "pegged low" against the Dollar (enabling them to export more goods and import more jobs). Because after all, they are all "just paper" not backed by anything so they can easily be manipulated.

At the end of the day while living costs vary from place to place, people have the same basic needs everywhere: 1) to have a place to live and 2) be able to feed their family, 3) clothing 4) Healthcare, etc. India has a rising middle class and has benefited from this at the expense of Americans. The truth of the matter is that the "White Collar Jobs" that go to India, the people there are not "Slave Labor" and actually have very decent lives making $10,000 a year as a Computer Programmer (maybe even better than here depending on how you look at it).

The solution is not to "prevent businesses" from moving jobs abroad as that is unjust.

The solution is "Sound Money" that would prevent the "conditions" that allow for outsourcing to take place.

Think about this. While America was on the Gold Standard, did it make any "economic sense" for any business to "outsource jobs"???

I beleive, and correct me if

I beleive, and correct me if I'm wrong, that his position would be that in a Free Market economy, the responsibility belongs to the people to choose not to support & purchase goods from companies that do these types of things.

If people refuse to shop at Wal-Mart because of their inhumane business practices in China, and lack of American made products, then Wal-Mart will be forced to change policy to compete.

We have the power to create change without government intervention.

On Outsourcing

This is how in my mind Ron Paul would answer:
Firms are free to hire employees wherever they choose across the world. So he would having nothing against outsourcing as to prevent it would be to encroach on liberty.

BUT if you look at the causes of outsourcing... i.e. the over taxed, unfriendly, excessively regulated markets and broken immigration policy here at home and realize that a Ron Paul administration would fix the root causes of outsourcing. It wouldn't be anywhere near the issue it is today.