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To: Jim Willie CB who wrote (10327)	8/7/2004 11:48:30 PM
From: arun gera	Read Replies (3) \| Respond to of 116555

>AT WHAT POINT DO YOU RECOGNIZE THE LOWER COSTS HURT US ??? INCOMES ARE GENERATED IN FOREIGN COUNTRIES, NOT HERE> All I see around me is this. To earn a revenue of $1 million, an offshore software company first spends about a quarter to half a million dollars in computer and telecomm equipment made by north american companies (Intel, microsoft, Cisco, Avaya, Nortel). In fact 5 such companies spend that kind of money and discover that only one of them has $1 million of contracts. So one million dollars of offshore work first sends a larger amount of money to the US companies. Also, of the remaining half a million dollars paid to employees of offshore companies, a portion ends up in buying home computers, cell phones, and other goodies that contribute back to US and other developed world economies. Their kids eat at Pizza hut, KFC and Mcdonalds. They drink more Pepsi and Coke. They play video games. Watch Disney movies. Watch CNN, HBO, And ESPN. If their standards of living rises, they spend money on more sophisticated technologies. They visit hospitals that buy MRI machines made by GE. They use ATMs that use Diebold's machines. They get credit cards and pay foreign banks the high interests. They fly instead of taking the train resulting in a greater demand for aircraft made by Boeing. They generally use more power and electricity, buying heavy capital equipment from GE, Emerson electric and others. It is not a zero sum game. When one job is replaced in the US, it probably creates 5 new consumers in the offshore country. So 5 new consumers want a computer, a cell phone, washing machine, Disney, McDonalds etc. The demands of those 5 new consumers help expand the US company's output and employment, and that one job that seemed to have gone away, returns. Company output = 100 Company profit = 10 Cost of labor = 20 No of US jobs = 10 Job replaced = 1 cost per job= 2 Consumers created offshore = 5 Company'e new Output = 105 Company's profit= Old profit+extra output+wages associated with lost job = 10+5+2 No of additional people company can hire in US = additional profit/cost of labor = 7/2=3.5 So 1 job offshored gives the company a chance to hire 3.5 new employees in the US with the savings. -Arun

To: Jim Willie CB who wrote (10327)	8/8/2004 12:40:00 AM
From: BubbaFred	Read Replies (2) \| Respond to of 116555

JW - How do you propose on inflating import prices that can make domestic manufacturing competitive? Or, create wealthy class outside US who can afford and will want to buy US made goods? We need to find ways to make the wealthy folks overseas to want American specialty goods. They are people (humans) too, and they'll have flashes for fads. How to create image and fads making business so US made goods will be fashion statement and a must style for the rich. The fads have to change every 2 years so they will buy again and again to keep up with fashion. A new marketing strategy? Or else, US needs a close door policy with heavy duty import tariffs. But that will hurt domestic economy even worse. Evrything and anything made in US is automatic doubling cost, and that will cause wage inflation. Dropping US dollar by 100% will hurt European economy, and plenty of US manufacturing and real estate will be bought up by foreigners. It is just as difficult to affect higher production cost in Asia when the supply of labor and the energy of workers in Asia are so much greater than in US. They are hungrier. Even their domestic manufacturers are operatiing at much smaller profit margin than in US. For every good paying job in China, there are 1000 ready replacements willing to work for 25% less wage, and put in 25% more hours. Endless supply of labor. Car manufacturing plants in China have college graduates working in assembly line. They also know more than one language.