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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 77.04-0.5%Dec 31 3:59 PM EST
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To: Amy J who wrote (67496)4/7/2005 6:52:53 PM
From: pfalk  Read Replies (1) of 77400
 
Amy,

Outsourcing has definitely caused our current account deficit - That is to say, the fact that we Import more than we Export. This is a truism, follows from the definition of the term current account deficit. (Outsourcing = when you move manufacturing etc. overseas).
Note: Outsourcing might make the corporations richer while the country as a whole gets poorer. (Correctly done, this *might* lead to future richness for the Country if we are smart enough to focus on even higher value production.)

However, it is not necessarily correct to blame the falling dollar or the budget deficit or other woes of outsourcing.

It is worth noting that historically rich countries have maintained wealth by enhanced productivity rather than outsourcing, e.g. the US is *still* the worlds greatest food producer even though less than 5% of the work force is farming.

It is my belief that you cannot sustain wealth by giving up on whole sectors, you have to focus on new sectors while maintaining the ability to produce commodities cheaply through enhanced productivity through technology and capital investments.

In the last 20 to 25 years the US has given up on this paradigm of maintaining a lead in commodities while at the same time moving the focus to new areas.
First we gave up on blue collar industry - manufacturing moved to Japan etc. and hoping that we could maintain a service industry.
Now we are giving on services, hoping for what?

Peter
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