On 6 Sep 2003 19:37:25 -0700, jim rozen wrote:
The problem that nobody anticipated is, the feedback time
constant is way, way too far short for this to work. To
boost their profits, they need to lay off american workers.
Sure the workers have some savings, but once you lay off
the worker, they stop buying - instantly, and almost
completely.

Which leaves no market for the goods that the companies are
trying to peddle.

You're assuming that *only* the laid off workers bought their
products. That would be a very unusual business indeed. In
almost all cases, a company's workers form a *very* small
subset of its customers.

Look at it this way, out of a potential domestic market of
nearly 300 million consumers, the manufacturers lost
93,000 potential customers. That's 0.031% of the market.
That *very* small drop in the potential market size is more
than compensated by the much lower production costs
of having the product made off shore.

As long as the cost reductions exceed the loss of market
size, the company comes out a winner. Look at the auto
industry. They're having a *record* sales year (in units
sold) despite continuing shrinkage of the number of US
auto workers.

They've had to discount their prices (via rebates and zero
percent financing) to achieve that, but as long as those
discounts are less than their cost savings due to outsourcing,
they're ahead of the game, and consumers have benefited
from lower prices.

Gary