I think the governments in the developed countries should declare a extra tax on the profits of the MNCs that serve demand in developed countries and are based in the developed countries as a function of how much they actually manufacture in the developed countries. So companies which manufacture more locally are taxed less.
This will help them bridge their deficits and make the MNCs take up more sustainable business models.
One of the commentators commented you want to outsource to stay closer to your customers and that is the heart of the matter. You will have customers only where you have manufacturing jobs. A country which doesn't have any manufacturing jobs will have 17% unemployment - no way you have a growing customer base here. It's like the chicken and egg problem. Once you start off shoring, the very act of off shoring drives more businesses and employment and that's where you see the growth.
To be sustainable, any economy will have to have manufacturing and related jobs. A business model that I think will help balance this will be identical to the one used by the car industry. You manufacture in each country to cater to the demands of that country. Developing countries will see growing manufacturing as their demand grows and developed countries will be able to retain their manufacturing to sustain their huge demand. Manufacturing in one country to sustain demand in another is not sustainable. It will drive demand to the country where you do the manufacturing.
There is no doubt its all about short term gains and the dollar. Its easy to say its cruel unless its you that is outsourced. Bottom line terrible management leads to problems intially but then snowballs and then we have the outsourcing because by then the company is already stretched out and it becomes easy to dump us for the quick return while the whole time the brain surgeons in mgt. were supposed to do their jobs before it got to that point!
From the bottom of the food chain it appears that the management of our companies has become more focused on making money than on providing a product or service to the mutual benifit of their customers and themselves. The current condition of our economy shows that in the end they may not be all that good at making money or anything else.
Much of this outsourcing is related to:
a) free/cheap capital available overseas (through government grants, sovereign funds etc.)
b) variation in tax treatment that hide the true competitiveness of any give firm or operation.
Outsourcing has nothing to do with "getting closer to customers" and all with chasing cheap monies and short term gains.
Recently built US fabs are more productive than their Asian peers but they are typically below scale and not clustered geographically which prevents further productivity gains.
Asian governments rely on steady job creation for legitimacy and stability. Playing fair is not part of it and it's sad to see US-based companies not seeing through that.
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