It’s time for major news services to invest in a few economists. Every time I read an article about business and economic issues, it seems that the persons writing the articles either know very little about the subject matter or worse, don’t care to get the information straight.
I read today the article from Reuters Staff Writer, Andrea Hopkins entitled U.S. CEOs Who Outsource Get Bigger Pay Hike-Survey. Before I take her to task, let me give her due credit for having identified the source of the study as the liberal Institute for Policy Studies (emphasis mine). This is certainly a step in the right direction (pun intended).
Apparently the liberal Institute for Policy Studies has found that “executive pay at the 50 firms outsourcing the most service-sector jobs increased 46 percent in 2003, while the average CEO got a 9 percent raise and regular workers saw a 2 percent boost in pay.” In my professional opinion, Duh!!
Corporations and by extension corporate executives have a fiduciary responsibility to their stockholders. They are not in the welfare business. The sole purpose is to make decisions that enhance productivity, efficiency, and profitability. It stands to reason then that those who do this best will be handsomely rewarded for their efforts. Much like the production worker who receives a bonus or other benefit for having exceeded production quotas. It’s called an incentive. Additionally, CEO remuneration is reflective of experience and responsibilities that the “regular worker” to use their vernacular, does not posses. I am certain that the statisticians and researchers at the Institute for Policy Studies do not sit around lamenting the fact that they are compensated at a much higher rate than the receptionist.
Ms. Hopkins quotes the Institutes as saying, “The fact that leading outsourcers make more money than average CEOs is one more reflection of a perverse system that rewards executives for making decisions that may improve their bottom line while hurting workers and communities.” This statement obviates the nature of the problem we face in not providing our youth with a firm foundation in basic economics. Unlike the Institute, most corporation are not non-profit entities. It is their duty to make decisions that “improve their bottom line.” They are not being rewarded for “hurting workers and communities” as the Institute suggests. This is the kind of analysis you get from those who see the economy microscopically as opposed to macroscopically. Such a person might conclude that commercial air travel poses greater risks than automobile travel based on the fact that the number of people who perish in a single airliner crash is exponentially greater than the number who perish in the typical automobile accident.
They go on to say that “it was not able to calculate the exact number of U.S. jobs affected by outsourcing last year because shipping jobs overseas has become such a sensitive political issue that firms try to avoid reporting such jobs losses.” The reason they cannot ascertain the number of US jobs lost to outsourcing is has nothing to do with corporation hiding the numbers, rather, it is because the number of jobs lost is either matched or exceeded by the number of jobs gained. Companies do not outsource out of a desire to hurt employees. They are not taking the savings and packing them away in mason jars to be buried in the South 40 for a rainy day. Outsourcing fees up capital resources which allow the companies to move them into avenues where they are most effective. This can include everything from increasing employee benefits to research and development into new products and services. Additionally while consumers benefit from lower prices and better products and services, the overall economy benefits from an influx new investment capital, which invariably leads to more jobs.
They make this way too easy.
I read today the article from Reuters Staff Writer, Andrea Hopkins entitled U.S. CEOs Who Outsource Get Bigger Pay Hike-Survey. Before I take her to task, let me give her due credit for having identified the source of the study as the liberal Institute for Policy Studies (emphasis mine). This is certainly a step in the right direction (pun intended).
Apparently the liberal Institute for Policy Studies has found that “executive pay at the 50 firms outsourcing the most service-sector jobs increased 46 percent in 2003, while the average CEO got a 9 percent raise and regular workers saw a 2 percent boost in pay.” In my professional opinion, Duh!!
Corporations and by extension corporate executives have a fiduciary responsibility to their stockholders. They are not in the welfare business. The sole purpose is to make decisions that enhance productivity, efficiency, and profitability. It stands to reason then that those who do this best will be handsomely rewarded for their efforts. Much like the production worker who receives a bonus or other benefit for having exceeded production quotas. It’s called an incentive. Additionally, CEO remuneration is reflective of experience and responsibilities that the “regular worker” to use their vernacular, does not posses. I am certain that the statisticians and researchers at the Institute for Policy Studies do not sit around lamenting the fact that they are compensated at a much higher rate than the receptionist.
Ms. Hopkins quotes the Institutes as saying, “The fact that leading outsourcers make more money than average CEOs is one more reflection of a perverse system that rewards executives for making decisions that may improve their bottom line while hurting workers and communities.” This statement obviates the nature of the problem we face in not providing our youth with a firm foundation in basic economics. Unlike the Institute, most corporation are not non-profit entities. It is their duty to make decisions that “improve their bottom line.” They are not being rewarded for “hurting workers and communities” as the Institute suggests. This is the kind of analysis you get from those who see the economy microscopically as opposed to macroscopically. Such a person might conclude that commercial air travel poses greater risks than automobile travel based on the fact that the number of people who perish in a single airliner crash is exponentially greater than the number who perish in the typical automobile accident.
They go on to say that “it was not able to calculate the exact number of U.S. jobs affected by outsourcing last year because shipping jobs overseas has become such a sensitive political issue that firms try to avoid reporting such jobs losses.” The reason they cannot ascertain the number of US jobs lost to outsourcing is has nothing to do with corporation hiding the numbers, rather, it is because the number of jobs lost is either matched or exceeded by the number of jobs gained. Companies do not outsource out of a desire to hurt employees. They are not taking the savings and packing them away in mason jars to be buried in the South 40 for a rainy day. Outsourcing fees up capital resources which allow the companies to move them into avenues where they are most effective. This can include everything from increasing employee benefits to research and development into new products and services. Additionally while consumers benefit from lower prices and better products and services, the overall economy benefits from an influx new investment capital, which invariably leads to more jobs.
They make this way too easy.
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