Saturday, February 13, 2010

The Fallacy that shouldn't effect your business

There is a common fallacy that exist in the business world that if not fixed could lead to a very dangerous end of the business world. This is the misconception that international trade and labor outsourcing is a competition between us and other nations, and that if we do not stop it now we will lose this so called competition.
The truth of the matter is first and for most that there is no competition for trade or labor between us and any other nation. Any such interaction is only help us as a nation, and more importantly your business. It is a fact that a business that outsources its labor can make a first-world profit while paying third-world wage. Some believe that this is extortion and is not fair to the country, however this is not true. A nation that receives labor from another country is still better off in there industry than if they would have produced their own labor. So the presence of another country only stimulates their economy. But simply one business cannot change a whole nation. To make such a change will take the effort of many businesses. As their presences increases in a poorer nation the overall economy of that nation will improve, thus raising that nation from the dust of poverty.
However this is hardly the bulk of the problem of which I speak. The common world believes what fame and fortune tell them. If you were to look for legal counsel you will make sure it comes from someone with a legal education, the same being said for council on public defense. However that same stipulation does not seem to exist within economics, opening the door to all types of people that can give their opinion on economical issues and pass it as educated. The danger is this: these people who are generally educated pass themselves for being economically educated and play off of the popular opinion of the common person. Both the educated and the common person have little to no experience in economics. Combined they over exaggerate the opinion that the world is a competition and that the common opinion is the right opinion. These people have been given too much power and sooner or later will inflict the misconception on others causing a slow degeneration of the economic stability of the world.
The simple truth is this. Trade is good. International outsourcing is good. Helping others is good, and anyone who tells you differently does not know what they are talking about.

Pop Internationalism, Paul Krugman

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