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Originally Posted by SANguru
BTW, so what's wrong with outsourcing? Outsourcing ONLY hurts the less skilled. For simple tasks, outsourcing companies such as TATA (1 of the biggest comglomerates in the world) does an awesome job a lot cheaper than workers in the US can. That leaves US workers to do a lot more of the complicated jobs. It IS a win/win situation except for the lazy. Again, business and econ 101 - comparative advantage.
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Oh...outsourcing is great for the corporations. It hurts everyone else.
Welcome to outsourcing 101:
1) Company X makes a deal with the Chinese government to open a factory and pay workers $5 per day to produce Widgets. This allows them to produce Widgets for $1 each.
2) When the Widgets are produced, they are put on a ship to be brought to the United States.
3) While in reality the Widgets go straight from China to the United States, on paper it looks quite different.
4) On paper, the Widgets are sold from Company X in China to Company Y which is located in the Kamen Islands. Company Y buys the Widgets for $1.25 each.
5) Company Y then sells the Widgets to Company Z in the United States for $9.75 each. The profits of $8.50 per Widget made by Company Y is tax free since the Kamen Islands have no corporate income tax.
6) Company Z (i.e. Wallmart) then sells the Widgets in stores for $10, profiting $0.25 per Widget.
So for a summary of the taxes paid:
Company X pays the Chinese government taxes on profits of $0.25 per Widget
Company Y pays no taxes on profits of $8.50 per Widget because the Kamen Islands is tax free
Company Z pays the United States government taxes on $0.25 per Widget.
Company X, Y and Z are all subsidiaries of eachother.
This wonderful operation which involves outsourcing jobs, paying foreign workers crap wages, and cheating both governments out of taxes, is only possible because of the wonderful "free trade" agreements courtesy of the World Trade Organization. 