Victor Morales

Professor Joanne Martin

English 114B

25 April 2012

Economy: Outsourcing, Spending and Socialism

            There are a lot of aspects to an economy of a nation which can cause it to reach a complete downfall or prosper into one of the most powerful nations in the world such as work ethic of the nation and its employment rate. Recently, the United States has had a growing deficit in the fourth quarter of 2011. An estimate of $124.1 billion of deficit increase has been established by the Bureau of Economic Analysis, summing up the total of the nation’s deficit to $473.4 billion. There are several reasons for the nations deficit but I will only discuss three and solutions to the nations problem. First and foremost, the biggest problem today is big corporations outsourcing their raw materials to another country. Second is that the nation is not doing as much spending to stimulate the economy due to the unemployment rates that are staggering the American people. Third, there is not enough government regulation on jobs and governmental programs to help provide jobs for those in need. These three reasons not only affect the economy but they also change the living accommodations that many people have to endure, such as homelessness and poverty. Even though the United States is powerful due to its big corporations and manufacturing weapons mass destruction there is a high possibility that the most powerful nation in the world will recede and lose its title of being number one.

            Although there are several benefits to this country that cannot be found in other places around the world, it is still threatened by the possibility of failure. This country has one of the highest ratios of homelessness in the world, which brings a heavy weight to the arms of the nation’s government to help its people. With such a high percentage of people being homeless the government spends more time trying to keep them alive, spending tax payer money to provide shelters and food cabinets. This causes a distraction, which makes the government pay little attention to training them to be able to go back into the workforce.

            The nation’s problem with outsourcing has gone far and has brought a huge deficit to this country which we are not able to pay off. Big corporations such as Wal-Mart, Target, Home Depot, and many more outsource pumping money out of the nation’s Gross Domestic Product. The Gross domestic product of a nation is its value of a nation. CNN provides a long list of big corporations that outsource and stating that: “These are U.S. companies either sending American jobs overseas, or choosing to employ cheap overseas labor, instead of American workers.”(CNN.com) Here is how it works; in order for companies to expand they need to make more profit than they lose in order to expand their franchise. Doing so big corporations such as Wal-mart, Target, and Home Depot, start building factories or buy factories in foreign countries and ship all their raw materials to supposed factories. Then they hire several workers from that country and pay them little to nothing compared to what U.S citizens are being paid. The top two countries in which the U.S uses for outsourcing is China and India. Due to the high population in these countries most people will accept any wage for the labor because jobs are in such high demand in these countries. Discussed in the article on SourcingLine.com it states that it is cheaper for big companies to outsource then to stay domesticated. “Customer service representatives in China earn on average 45%, or USD $10,468, comparatively to US rates. While the savings are sizeable, they are nearly impossible to compete with those in India, where representatives’ salaries are just seventeen percent of their US counterparts.”(SourcingLine.com). There is nothing beneficial coming from outsourcing other than putting more money into the pockets of big business men. A solution to this is to install some sort of tariff to these companies in order to be able to put their products on the U.S market.

            Due to several lay-offs, reduced pay, and debts in the United States, American people have developed a serious problem in their money management. People have started spending less on the nation’s products which is promising signs of a decaying market. What most people do not understand is that, by not spending money on products, there has been a loss in jobs domestically and internationally. Corporations need people to spend more money in order to provide more jobs for the nation. Despite the fact that most corporations do outsource it keeps nations at a standstill when they choose to save money instead of spending it. Many banks invest people’s hard earned savings into companies stocks all around the world and pay them collateral as a thanks for allowing people to gamble with their money. This is a serious risk because the money that you worked so hard for is in the hands of the economic fluctuation. This problem is quite similar to causes of The Great Depression in 1929.

With the stock market crash and the fears of further economic woes, individuals from all classes stopped purchasing items. This then led to a reduction in the number of items produced and thus a reduction in the workforce. As people lost their jobs, they were unable to keep up with paying for items they had bought through installment plans and their items were repossessed. More and more inventory began to accumulate. The unemployment rate rose above 25% which meant, of course, even less spending to help alleviate the economic situation. (About.com)

The stock markets are always up and down, gradually changing, but if a serious drop occurs it could lead to the loss of millions maybe even billions of dollars in the U.S economy. A solution is to establish an even higher minimum wage bar so that people can feel more secure on their money thus spending more and in the end term, stimulate the economy.

            Finally, there is not enough government regulation in today’s economy. The main reason for this is because people believe that it will lead to socialism and eventually fascism in the United States. President Barack Obama’s Obama Care did not pass due to it bringing the nation’s health care program in the hands of the government, which many people declare as fascist. That is also the same reason why we do not have government funded programs here today. The main people advocating for these programs to stay as bills and not laws are the big corporations that would not want any damage towards their profit such as insurance corporations towards Obama Care. The primary example that government funded programs do work is former President Franklin D. Roosevelt and his New Deal. It provided thousands of jobs for the people of America and still provides to this day. It got the nation out of its depression and increased the moral of the nation’s people by putting money into their pockets. Some programs such as the CCC, FERA and the PWA started in the first hundred days of the beginning of the New Deal. As stated in the book The Living New Deal: The Unsung Benefits of the New Deal for the United States and California  by Richard A. Walker the New Deal was a huge success in taking the country out of its depression.

 Created under the Emergency Conservation Act, it was assembled with wartime efficiency, hiring 275,000 men by the summer of 1933. The CCC was the most basic kind of ‘make-work’ initiative, putting the “CCC boys” to work on reforestation, soil conservation, and park improvements under a military form of organization at a minimum wage (Walker, Richard A. 9)

With these jobs increases any nation can become the most powerful country in the world.

            There are several oppositions towards government regulation, tariffs on outsourcing, and more of population spending, however, the main apposing advocate for these solutions is the big corporations putting money into the political system thus stopping democracy in its tracks. The U.S has let these corporations get too big and control too much of the nation’s wealth to the point where there decision is law. These big corporations are putting too many people on minimum wage jobs that cannot support the daily accommodations of life. As former president Bill Clinton’s famous quote stated “It’s the economy stupid.”

Works cited

CNN. Cable News Network. Web. <http://www.cnn.com/CNN/Programs/lou.dobbs.tonight/popups/exporting.america/content.html>.

Kelly, Martin. "Top 5 Causes of the Great Depression." About.com American History. Web. http://americanhistory.about.com/od/greatdepression/tp/greatdepression.htm.

Walker, Richard A. "Institute for Research on Labor and Employment." The Living New Deal: The Unsung Benefits of the New Deal for the United States and California [eScholarship]. Working Paper Series, Institute for Research on Labor and Employment, UC Berkeley. Web. <http://escholarship.org/uc/item/6c1115sm>.