Outsourcing Jobs and the Stock Market

Many business reporters defend moving jobs overseas by citing the advantages of cheap labor and cheap building costs. During the last 20 years, 2/3 of America's manufacturing jobs have disappeared. Some blame many businesses for not recognizing the profit potential of moving the jobs. This short sighted view loses track of the ultimate effect on the value of stocks and on the purchasing power of American consumers. Without an American capability to buy the goods, companies will lose sales and find the value of their stocks shrinking.Third World countries certainly can't afford to buy American production, even when the products are manufactured in the Third World.

Continuing layoffs, company mergers, lowered wages, reduced benefits and restructuring may temporarily increase the value of stocks but when the consumers can no longer make purchases, a worldwide depression is inevitable.