economic forecast

So, this week I had to write a short (150-word) essay for my BUS 100 class.  I went over.  By a lot.  It’s 400 words.  But I simply cannot condense it anymore, so I said “screw it” and posted it anyways, for those of you that are interested, the essay is posted below.  It is a response to an article titled “Economic Recovery: Don’t Hold Your Breath” and specifically concerns the third myth in the article (how people believe the private sector will bail us out).  Feedback is totally welcome, there’s a ton of other stuff I wanted to say, so give me a run for my money!

Due to American Express’ establishment of a captive unit in India in the 1970’s, the United States has been caught up in a trend of global outsourcing that is causing a half billion people oversees to perform services for American corporations.  Add to this the double-edged sword of technological advancement in business (sure, it’s convenient, but how many people have been laid off because of machines and computers?) and you have a recipe for economic trouble.

There are those that believe the private sector will, in a glorious act of philanthropy, fix the current recession.  This will not happen without the guiding hand of the government on Big Business’ shoulder; and why should they?  The businesses themselves are seeing profits of $1.68 trillion collectively in the fourth quarter of 2010, they don’t want to lose that money…

Government interference in private business is seen as a taboo suggestion to most people who believe in the foundations of a “free America,” but what if the corporations doing all the outsourcing are simply contributing to the decline of the American economy?  Many would argue that this is exactly what is occurring, and so the proposal that the government perhaps “redirect” globalized businesses to function more ethically when it comes to domestic economy may not be so horrible after all.

A solution that President Obama has proposed is to stop the tax breaks on those businesses that outsource.  I propose we take that a step further and actually impose a small tax on companies that are spending their money in other countries for services that could be provided domestically.  We then use this tax to help create training programs (which may even be linked to the unemployment system) for Americans that need to learn a new or different trade in order to work.  The tax would be enough that it would actually end up being cheaper to hire and pay employees from the United States, thus promoting domestic economic growth.  The companies with offshore sites would end up paying the most, in the beginning, when we need the most funding for the training programs.  As these businesses begin to downsize their foreign investments to avoid the tax, the amount of revenue into the program would go down, but so would the demand for it.  In the end, this program would give businesses and workers exactly what they need: jobs filled by the American citizens that need them.

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