Labor income grows below the rate of Inflation over the last year--2.4% compared to an Inflation rate of 2.7%(EPI). The slow expanion of Wages seems due to the slack Labor market, while the American economy spent about 5.6% more than it produced in the third Quarter, some $1.8 billion per day(EPI). Import of Goods and Services was 54% higher than Exports in the third Quarter. A basic Products Chain, Family Dollar, reports Profit skidded 14% in third Quarter despite increasing Sales, because of a Consumer shift from discretionary items to more basic need Products (AP). Circuit City's same-store Sales fell 4.3% over the previous year period(AP). GM is reporting disappointing December Sales--traditional large Sale month. The Bureau of Labor Statistics reports real disposable Family income declined 0.4% in November, identical with the decline in October, making two months in a row where it declined while 'core' consumer prices rose 0.2% each month.
The decline in the Dollar--47% against the euro since Febuary 2002--has not even slowed the growth of the current accounts deficit:
"Firms that get the greatest value from outsourcing aren't those whose operations shops can't deliver in America; it's the ones that already run a lean op shop here and know how to calibrate incentives to customer needs and reap gains from going to India. They achieve shorter times to market and can add on to existing product lines."
The Quote, from 'Offshore Outsourcing: What's Working, What's Not', clearly expresses Outsourcing comes not from American Labor inefficiency, but sheer Corporate and Business desire for marginal Profits. These marginal Profit gains probably do not exceed an approximate $200 billion per year, but generation of such Profits maintain all the troubles of the American economy listed above.
It seems time to alter a traditionally American policy of 'Free Trade' at any cost, and start to impose a Imports tax to curb such Outsourcing for marginal Profits. lgl
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