Neil Boortz responds to outsourcing critique

[Drbio]

Not sure about this (got it by email)....but enjoy anyways......


An email to Talk Show Host Neil Boortz read:

Neil,

Just where and when did outsourcing come from and who if any president started it. I thought it came as a WTO treaty agreement. My friend is disgusted with the the choice of either presidency. I wish I could give him hope. According to him, one stands for immoral behavior the other seems to have hurt the economy. He is a registered democrat but doesn't want to be associated with homosexuality or abortion. But yet he can't seem to do well economically. Anything I could say may lessen the pain.



To wit he responded........


Outsourcing is not a government program. It’s a business move to increase the quality of products and to sell them for a lower price. It’s based on global economics, global markets, and an integrated global economic system.

Manufacturing jobs in particular, but not exclusively, are being outsourced, and it is happening because consumers (that’s you and me) demand lower prices and higher quality. Consider the company Wal-Mart. It was just an idea in 1960—literally it existed inside the head of Sam Walton. When he conceived the concept for Wal-Mart, he offered it to Ben Franklin stores for nothing, but they wanted no part of it. Thus, he put everything he owned at risk and did it himself. In 1960, there was no shortage of places to buy things and companies like Sears, Macys, J.C. Penny, Kmart, Belks, etc., etc. ruled in the retail market. But in just over 30 years, Wal-Mart was the largest retailer in the world. In slightly more than 3 decades, Wal-Mart went from the concept phase to the world’s leading retailer in a market that most retailers thought was a saturated market.

In 1993 while I was writing Vision, Values & Courage, I mentioned to one of my marketing colleagues at UVA that Wal-Mart had become the largest retailer in the world, and he looked at me as if I didn’t know what I was talking about. Then aggressively he said, “They are not!” He proceeded to list the major retailers he knew about and told me that all of them were bigger than Wal-Mart. Of course, he was wrong, but the reason I bring this up is that it all happened in such a way that most people didn’t know it was taking place. Wall Street understood it, though, and the company’s stock was flying high. In the early 2000s, Wal-Mart became the largest business of any type in the world. They were bigger than IBM, GM, Ford, Toyota, Honda, etc., etc., etc. And what was their credo? What set them apart? It is written on the side of their stores: “We sell for less.”

You should remember the flap in the 1990s when Wal-Mart was touting a buy American strategy, and the company was accused of misleading the public because it sold many imported products. Thus, Wal-Mart dropped any pretense of buying American and stayed with the strategy that worked: “We sell for less.” Here’s the bottom line. If you want to be competitive on quality and price in the world as it exists right now, you cannot “buy American.” Our labor costs are too high, and we can buy less expensive products from countries like China, India, Vietnam, Cambodia, Sri Lanka, Thailand, etc. that are at least as good as identical products made in the U.S. In fact, many times we import products that are less expensive and they are also far superior to similar U.S. made products. The good news is that the quality of U.S. products has improved dramatically in the past 2 decades. The bad news from a buy American perspective is that the quality of imported products has improved even more during the same 20-year period.

You can see evidence of this in every high-end store. Take a look at where the products in these stores were made. From textiles, to apparel, to pots and pans, to tools, to whatever, the products sold in these stores are not made in the U.S. At lower-end stores, it is even more difficult to find products made in the U.S. And you have to keep in mind that these stores are doing what their customers demand. They want high quality and competitive prices, and if you want to survive in business you will give your customers what they want. If you don’t, your competitor will, and you are history.

Again, the government didn’t do this, consumers did, and the government cannot legislate it away. If they imposed higher import duties on imported products, that would be inconsistent with the free market principles we espouse, and it would create trade wars with almost every other country in the world. Also, if the government made such a move, consumers would experience higher prices and lower quality, and they would vote the politicians out of office who they thought were responsible for their lower standard of living.

The only solution to this problem is the one President Bush pushed consistently for 4 years: lower taxes, more rapid depreciation of plant and equipment, etc., etc. More investment and higher productivity are the solutions, but Kerry portrayed this strategy as favoring the rich over the poor. That’s nonsense, and I think it’s a lie because the company his wife sucks from (Heinz) is doing the same thing every other company is doing, and for the same reasons. If Kerry doesn’t know this, then he’s ignorant, at best, and leaning toward being stupid. Kerry may be lazy, immoral, and calculating, but he is not ignorant or stupid. Thankfully, as I write this it is becoming obvious that the American people rejected the Kerry/Edwards attempt to demonize President Bush, and the electorate saw their campaign for what it was: pure horse hockey.


Neil