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“Lou Dobbs is doing a great disservice to the viewing public of CNN.”
As
the Executive Director of Temple University’s Institute for
Global Management Studies, Dr. Arvind Phatak is disturbed by the one-sided
and often incorrect information offered on Mr. Dobbs’ CNN television
program. As opposed to Lou Dobbs who presents the negative case of outsourcing,
focusing only on job displacement, Dr. Phatak offers an alternative point
of view, expressing the positive attributes and the benefits resulting
from globalization.
Dr. Phatak asserts that outsourcing enables companies to become more efficient in their use of capital by decreasing their production costs; thereby allowing them to remain competitive in the global marketplace against domestic and foreign competitors who most likely are also outsourcing their production. By shaving production cost, the value is passed down to the consumer through lower prices. Nationally, more productive and capital efficient companies contribute to a generally healthier US economy.
What is the alternative to outsourcing? According to Phatak, it is higher prices leading to companies performing poorly on their bottom lines. With higher prices, companies can’t compete with less expensive foreign goods. “The American public does not really care who makes the products or where. At the end of the day, consumers are driven by price.” Financially inefficient companies will not survive their foreign competitors. For example, the automobile industry continues to lose market share to foreign companies who have been able to produce a similar product at a cheaper price.
Increasingly more foreign companies practice outsourcing here in the United States subsequently the national agenda must promote global free trade. There are many examples of Japanese, Korean, German and other companies outsourcing to American companies, creating hundreds of thousands of new jobs, here in America.
There are negative social consequences to outsourcing – jobs lost – an impact on the personal level that cannot be ignored. Yet, nationally, the economic benefits of more productive and economically efficient firms outweigh the short term negatives.
“Lou Dobbs is a great thinker and analyst, but he presents only one side of the argument about outsourcing.” Discussion needs to be focused on how we reconcile these short-term personal impacts on our labor force with the long-term benefits that positively effect both labor and consumer.
Dr. Phatak is the co-author of the forthcoming book entitled International Management: Managing in a Diverse and Dynamic Global Environment, to be released by McGraw-Hill/Irwin in July 2004.
At Temple University Fox School of Business and Management, Dr. Phatak is the Laura H. Carnell Professor of General and Strategic Management Chair and Executive Director of the Institute for Global Management Studies and the Temple Center for International Business Education and Research. Contact: arvind@phatak.com