- Politics and Social Issues
The global economic crisis, US job outsourcing, and earthquakes are natural phenomena
Tsunamis kill thousands
Earthquakes crack structures
An economic earthquake
The global crisis following the fall of Lehman Brothers and collapse of the US financial market have cost the Americans dearly. Jobs and lives have been lost, financial institutions have fallen, and prospects of the US citizen have taken a beating. Fortunately, the United States has been blessed with a forward-looking leader in President Obama. One idea of the president that I consider half-baked is his move against outsourcing.
Outsourcing is a fact of the global economy and product of the market economy. If you wish to consume the sweets of the global market, you would have to swallow a few bitter global facts, and the bitterest and most global of these is outsourcing. Outsourcing has come to stay as part of economic evolution.
Yes, outsourcing has cost Americans their jobs. But when you open up your markets to open market competition, you cannot selectively filter out what you would like to keep out and filter in what you would like to keep in. A US firm competing in the global market will be facing competition from developing countries, where labor is comparatively cheap. So a little economic sense would show how half-baked the proposal to do away with outsourcing is.
Labor is the major component of most products in the global market. China and India could face the brunt of the global crisis only because of their comparatively cheap labor. In a global economy, the mean marginal utility of competing markets needs to hover over an equilibrium range for market stability. Thus, the US labor cost has to move south for American economic stability. Doing away with outsourcing by force is economically suicidal in a global economy. The only way out for the US is to reduce its labor costs through legislation, which is economically necessary but politically suicidal. Though bitter, this tablet has to be swallowed, and it would be good for America if Dr. Obama realizes this fact soon and take remedial measures instead of banning what is bitterly sustaining the US economy.
As an unbiased economist, I consider the global crisis a necessary shock toward equilibrium, just like an earthquake. While an earthquake is an attempt of God's globe to attain geological equilibrium, the so-called global crisis is an attempt of the global economy to attain economic equilibrium. While the former kills thousands through tsunamis, the latter kills even more through financial collapses and suicides, both of these shocks necessary to attain equilibrium, geological and economic, respectively