Outsourcing and immigration have downsides

Washington Post columnist Robert J. Samuelson and Harvard economist Jason Furman recently wrote that America’s weak productivity growth is a mystery in an article entitled “Slower growth has real political consequences”

A Peter Skurkiss responded, commenting that “it wouldn’t be a mystery if these gentlemen would set aside their politically correct blinders”

He continued

A major factor, but certainly not the only one in low U.S. productivity growth, is due to what is called labour arbitrage

Labour arbitrage is one of the foundations on which globalism is built – it has two facets that act simultaneously:

  • Factories (and jobs) are transferred to low-cost countries like China and Mexico
  • At the same time, massive immigration is not just welcomed but actually encouraged.

The net effect of labour arbitrage is to reduce drastically the value of labour in the American market

This is not rocket science

Jobs are outsourced (lost) while large amounts of new labour are brought in to compete for the jobs that are left

This affects productivity

With inexpensive labour, there is less motivation to invest in new technology which is the lynchpin for increasing productivity

Many companies ask themselves, ‘why take the risk and trouble to innovate and invest in technology when easy profits can be made by playing the labour arbitrage game?’

And what is the fruit from the labour arbitrage tree?

It’s low productivity, high corporate profits, an immense trade deficit, a greatly diminished middle class — and Donald Trump in the White House.

Peter Skurkiss


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