(December 6, 2016 at 10:53 am)Tonus Wrote: I think the more concerning thing is his explanation that workers in Mexico are so exploitable. 80% lower wages and very low rates of absenteeism and turnover. One might look at that and figure that US workers are just lazier. Another way to consider it is that US workers aren't as easy to hold hostage. Either way, it's an advantage that we cannot compete against and cannot fight the way Trump proposed during his campaign-- with crippling tariffs. I think the US is entering a new phase in our history whether we want to or not, and the sooner we acknowledge that the sooner we can start to figure out how to deal with it.
These are not the only factors. Productivity is the major factor.
The biggest single reasons for wages being lower in other countries is because productivity is lower. This productivity is hard to disaggregate. Part of it comes from a lack of capitalization (less machinery per worker) part of it comes from less training/sophistication of the workers.
That said, the reason the jobs are moving is often that the marginal productivity is still higher than the wage being paid: eg wages are 80% less but productivity is say (to pull a number out of thin air) 50-60% less => a marginal benefit to move.
Then there's the other factors: being further from your destination markets adds communication and logistical costs.
What I'm getting at is that the decision to outsource is often a hell of a lot more marginal than most people realize. Like 10-20% savings.
