If trade was totally efficient and the universal equalizer putting aside
polital climates and population culture (i.e. some countries people are
better at making wine) then the end game would be the US would lower it's
quality of living and offshore countries would raise theirs. Looking at
this offshoring depends on where your heart is. This offshoring in global
long terms seems to benefit. but from the US perspective doesn't look so
good which is what Presidents and Federal Reserve chairmans are supposed to
be looking out for, but if US companies aren't allowed to be competetive
globally that ain't so good either. Classic you have to stoop to the level
of your competition. Don't get me wrong I don't like this anymore than
most of you, but rationalizing this in my head. The high labor cost
countries are going to loose their software industries, just like
manufacturing was lost. As transportation costs got cheaper for
manufacturing through Ocean Cargo ships it has got cheper for software with
the Internet. Hence the Made in USA campaign with only moderate success.
The only exception I see to this was the Detroit automakers who kept the
manufacturing in this country but started using robots to build the cars.
Now unless we can come up with super 10GL: software that knows how to write
itself. Within the US there was always the Federal government to step in
to settle quibbles between states, but with the toothless United Nations
there are many controversies globally.
Regards,
-Steve
"William J. Kammerer" To:
"'EDI-L Mailing List'"
<[EMAIL PROTECTED]> cc:
Subject: Re:
[EDI-L] The compelling logic of off-shoring
01/13/2005 11:37 AM
Shan, this is all true in an Adam Smith mumbo-jumbo sort of way. But it
doesn't do the out-of-work EDI Analyst/Mapper or programmer any good in
the short term. In the meantime, the U.S. (and to a lesser extent,
British) taxpayer (e.g., the employed EDI Analyst/Mapper) is paying to
keep pirates and terrorists at bay and shipping lanes open. And,
internally, she maintains an expensive legal system for protecting
intellectual property.
This presents a classic "free-rider" or "tragedy of the commons"
problem. Theoretically, everyone participating in the global economy
(e.g., Indian outsourcers) benefits by the Pax-Americana/Britannica, but
only a few (e.g., employed American or British EDI Analyst/Mappers) pay
for it.
Perhaps my previous messages were too subtle. If Americans (and before
them, the British and the Romans) weren't providing the framework by
which commerce is made reasonably safe and reliable, there'd be no
"off-shoring" to speak of. Therefore it's only reasonable that we
attempt to "recover" some of the costs through tariffs applied to
products and work-for-hire coming from overseas. Write your
Congress-critter and Senator.
I have no doubt that - absent the costs of aircraft carriers and others
I've described - American EDI Analyst/Mapper services would be less
expensive than any out-sourced off-shored solution.
William J. Kammerer
Novannet, LLC.
Columbus, OH 43221-3859 . USA
+1 (614) 487-0320
----- Original Message -----
From: "Shan Harter" <[EMAIL PROTECTED]>
To: "'EDI-L Mailing List'" <[email protected]>
Sent: Wednesday, 12 January, 2005 05:08 PM
Subject: RE: [EDI-L] The compelling logic of off-shoring
This will be true until comparative advantage has been exceeded.
This principle says that the total output will be greatest when each
good is produced by the nation that has the lowest domestic opportunity
cost for that good. Which means as long as the relative opportunity
costs of producing goods differ among nations, there are potential gains
from trade. This is just being efficient. A simple non-service example
(but applies to service as well):
If the US produces wheat more efficiently than Brazil and Brazil
produces coffee more efficiently, then both countries are better off by
adjusting their production possibilities curve so that the US sells
wheat to Brazil and Brazil sells coffee to the US. What happens when an
economy is risen, in part by the increased jobs and revenue? Well the
gap between opportunity costs, that originally pushed out the frontier
now makes that country less attractive and no longer have their
competitive (comparative) advantage. At that point resources will be
either diverted to another country (if one exists for that good or
service) or they will be forced to use their own country resources.
Outsourcing cost benefits will not last forever because the economies
of those countries outsourced will eventually catch up to an equilibrium
point but not in the near future. These countries do this through
specialization but as they equalize, they lose that specialization.
As firm's implicit costs (opportunity costs) are consumed by their "best
alternative use." Right now its several countries like China, India,
etc.
Regards,
Shan
Shan Harter
VP of Project Services
Systrends, Inc.
7855 South River Parkway
Tempe Arizona, 85284
480-756-6777 Ext 205, fax: 480-9755, cell: 602-821-2951
-----Original Message-----
From: William J. Kammerer [mailto:[EMAIL PROTECTED]
Sent: Wednesday, January 12, 2005 2:43 PM
To: EDI-L Mailing List
Subject: [EDI-L] The compelling logic of off-shoring
To Brian Lehrhoff: see below. I was right! You can easily save 50%
when off-shoring. Consider that when you want to provide prescription
drug coverage for old farts or field armies in far-off places. Indians
may or may not be better mappers or programmers, but you have to admit
they have a heck of lot less overhead.
William J. Kammerer
Novannet, LLC.
Columbus, OH 43221-3859 . USA
+1 (614) 487-0320
.
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