Have you, personally, ever applied for unemployment benefits and depended on government checks to keep you afloat? As a manager I thought that could never happen to me, but on one dark day in my life I took my turn in the unemployment line. That has a way of bringing a person down to earth, a most humbling experience. Millions upon millions of American workers have now felt that same humiliation as their corporate masters shipped their jobs overseas.
U.S. transnational corporations have declared war on the American worker. The loss of manufacturing jobs in America has reached epidemic proportions. Since 2001 the U.S. has seen the closing of 42,000 factories employing 500 or more workers. While that has decimated our domestic manufacturing sector, apparently that blood letting was not enough to satisfy Corporate America in its lust for greater and greater profits. Therefore, corporations are now busy transferring service-type jobs to overseas nations with lower labor costs.
Many of you may have had the following experience when you had a problem with your computer, printer or other electronic device. You purchase a new computer and are having some kind of problem with the operating system. When you call the toll free number, you go through the usual menus and questions until you finally get through to a service representative.
Then who comes on the line? It is a male or female and you know by the accent that it's someone talking to you from India, Pakistan, Indonesia or some other nation thousands of miles away. I don't know about you but I find that very disturbing; first because of my personal dislike of the practice of outsourcing and, second, because I often find it nearly impossible to clearly understand what that person is saying and I don't have a hearing problem.
This practice of outsourcing customer service functions, commonly used by numerous corporations, has been a very successful management tool. These corporations no longer need American workers to manufacture their products and now they don't need them to assist customers. However, they still want the American people to continue to slavishly buy their products. That may be the height of hypocrisy, but they could care less, they have no shame whatsoever.
This is the one of the reasons why our current recession has no light at the end of the tunnel. We might think that when the recession ends, it that ever happens, businesses will once again hire manufacturing workers, but the fact of the matter is they have no intention of doing so. A recent article by Jim Oberg sheds new light on this situation and gives us greater insight into what is happening. As the purchasing power of U.S. consumers continues to decline, U.S. corporations are fully aware of the effects on their bottom lines and have an alternate strategy already in place; plans that will offset losses by tapping into the new purchasing power of those foreign based workers that are the beneficiaries of outsourcing. As the American demand for these products decreases, corporations will methodically shift their sales and marketing strategies into those new fertile fields overseas.
Will these corporations eventually just give up on America and concentrate all efforts in overseas regions of growth? I don't think they will leave America entirely and that they will continue to milk what is left of this former cash cow until it is dry. But many will likely move their headquarters and operations to overseas nations where all the future potential lies. That way they can also recruit new management employees in those countries and get rid of even more Americans.
How is this all going to evolve, where will it lead? Well, I believe that in the coming years there is going to be a radical change in the way world commerce is conducted and that it can have a great beneficial effect on America in the long run. It is becoming evident that in the not too distant future, as the emerging economic powers' demand for petroleum rapidly accelerates, the world demand for that resource will overwhelm the oil producing nations' production capacities.
When this materializes the decrease in world supply will dramatically increase the costs of oil to such levels that it will entirely change world commerce. Nations will realize that they will have to alter the way that they conduct commerce since the costs of oceanic transportation will skyrocket. The obsession with free trade will be replaced by a reliance on trade within distinct regions of the world; North and South America, Europe, Asia to name a few.
Here in America large transnational corporations will no longer be able to take advantage of using slave labor costs around the world to manufacture products and ship them thousands of miles back to America; it will become cost-prohibitive and many of these corporations will see their profits plummet. They will have a choice: they will either change their entire philosophy of doing business and face reality by, once again, using American workers as the foundation of a new domestic manufacturing agenda or: if they fail or refuse to adjust they will not survive.
But here's where the greatest danger lies. There is only one reason why China continues to loan mega-billions of dollars to America and that is the size and power of our consumer-driven economy. As our economy continues to spiral downward and the costs of ocean transportation drastically reduce the shipments of products from China to the U.S., China will no longer need America.
China will know that it is time to cut the financial cord to America. It does not even have to demand we repay the massive debt we owe them because it knows that America is nearing insolvency. But what it will do is discontinue any further loans and that will be devastating. One of the results of that cut-off of funds would be the dismantling of America's military empire and its massive network of worldwide bases. Another could be that China would cash in its "promissory" notes by acquiring major financial institutions and real estate in America; an ominous thought.
Of course, there is no guarantee that this theory will materialize. However, it certainly could since it is based upon solid evidence from a wide array of petroleum scientists and analysts who have declared that a diminishing world supply of oil is inevitable in the coming decades and it will greatly drive up transportation costs. Therefore, it is only a matter of time until we see dramatic changes in world commerce.