Unsustainable growth
If people never stopped growing physically, we would probably be 20ft tall by the time we die of all the consussions from hitting our heads on low hanging objects or from bending over just to fit into our homes. If the world population continued growing, the world would run out of space for everyone but not before our small blue planet ran out of food, clean water and natural resources.
When corporations go public, they sell off part of the company in exchange for cash. When people buy stocks in the initial public offering, they are paying the company for a small piece of the pie. Stock holders demand continuous growth or the stock price is pummeled. The corporations are eager to please the stock holder because retirement and pay packages are often padded with stocks so it is often in the best interest of the corporate leadership to keep the stock price high for their own personal advantage.
One of the side effects of directly linking the stockprice valuation with corporate salaries is the pursuit of short term gains.
One factor that might affect a company's profit margin is costs. if they can reduce costs, the profit margin rises. Moving jobs or manufacturing offshore using an outsource model enables a company to pay much lower wages as well as avoid medical coverage. This is no different than using illegal immigrant labor which gets plenty of negative sentiment in the media but the difference is fairly important. Outsourced labor replaces jobs that middle class people want compared to the menial labor performed by illegal immigrants which most Americans don't care to compete for.
The implications of outsourcing are vast at the macro level as well as the micro level. With fewer people paying into medical insurance, the premiums rise dramatically for the remaining insured (since the number of people paying into the insurance is not able to allow the medical insurance companies to operate profitably).
Government economic stimulation ends up stimulating other countries since mostly everything is now made offshore. Taxpayers get a small check which they end up spending at Walmart. The federal reserve would like to devalue the dollar in order to reduce the trade deficit by making american goods comparitively cheaper, this will drive up inflation and have little impact to the trade deficit because most everything is manafactured in cheaper 3rd world countries.
So we have companies that embrace outsourcing resources because it increases profit margins, you also have the US Govt emracing outsourced manufacturing because it artificially keeps the reported rate of inflation at a low percentage year over year.
The failure of outsourcing
Corporations tout the cost savings from outsourcing but they haven't fully understood the longer term effects of the new working culture as a result of outsourcing. Delays associated to time zone differences, loss of accountability, poor quality, increased processes and red tape to ensure work is properly completed.
It has been argued that there are not enough skilled technical resources to handle the demand of corporations but if companies don't have the demand for skilled technical resources in the US there will be no demand for training them in the first place.
In India, automobile and motorcycle mechanics are all over the place and willing to repair your vehicles for you for next to no money, so the path of least resistance is to let them fix it and before you know it, you have a generation of adults with no idea what to do when the car or motorcycle stops moving.
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