The Dangers of Outsourcing

For some, outsourcing is perfectly fine -- for others, it's dangerous. In today's episode, the guys dive into the ins and outs of outsourcing, from the advantages to the drawbacks... to the conspiracies and corruption surrounding it.

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Episode Transcript

Speaker 1 (00:00):
From UFOs to psychic powers and government conspiracies. History is
riddled with unexplained events. You can turn back now or
learn the stuff they don't want you to know. A
production of My Heart Radio. Hello, welcome back to the show.

(00:25):
My name is Matt, my name is All. They called
me Ben. We're joined as always with our super producer
all Mission Control Decade. Most importantly, you are you. You
are here, and that makes this the stuff they don't
want you to know. Uh today, Just a heads up, folks,
there's not going to be a lot of strong language.
But this is a subject that is very sensitive to

(00:49):
a lot of people. Uh, So we're going to navigate
it together. Maybe the best way to start is with
a question who does the actual work? Right? This is
a question that comes up in pretty much much any partnership,
whether it's professional or romantic, corporate America, your personal life,
everything from like grade school projects, two decades long marriages

(01:11):
inevitably run into this question at one point or another,
who does the actual stuff? And not infrequently, in the
world of business, companies would rather you not know who's
doing the actual work powering the products and the services
you buy. This tendency can be tragically familiar to all
of us listening today in one way or another, but

(01:33):
it's reached a new apex in the modern age um,
a dark sort of capitalist sorcery, one that is capable
of cutting the all important bottom line and exchange for
very real, long term consequences. Today's episode Outsourcing, here are
the facts. Oh my god, are we gonna get outsourced

(01:55):
after this? I don't know how I like to to
other podcasters in India something or somehow, I already feel outsourced.
But it's more an internal it's an insourcing. I don't
know how to explain it. It's complex, it's it's layered,
it's very onion le. But let's start off by defining
some terms. Um, what exactly is outsourcing? Uh? In the

(02:18):
context of business, that describes the process of hiring individuals
or companies outside of your company to perform tasks, or
provide services, or handle operations or managerial kind of you know,
organizational tasks that were previously done by employees within the company.

(02:39):
So pretty simple, but turns out it's very very complex
in terms of those consequences you were talking about, Ben. Yeah,
And it's important to note that this isn't in and
of itself a particularly inherently sinister thing. You know, in
some ways it's very very common, Like consider your job
stuff processing payroll or insurance claims. Tons of large companies

(03:05):
outsource those tasks to a third party because they specialize
in that field. Right, we make widgets. We don't do
workplace injuries. So let's have a company that specializes in
workplace injuries take care of it, because one, they're better
at it, and to they're way less likely to mess
it up and get us an even more trouble. Right,

(03:27):
this happens with small companies. Like if we if the
five of us here at stuff they don't want you
to know. If we didn't have a podcast, Let's say
we started a landscaping company instead, and we got kind
of big. There are a lot of yards in Atlanta.
We've got multiple locations, various teams of cruise and employees,

(03:49):
and we're really good at maintaining yards and outdoor spaces.
And for a while we had like one accountant handling things.
Let's be unfair Paul and say he was our accountant.
But we've grown so much that now it's too much
work for one person. Even though Paul is the best
accountant in town. He's one person. So we get together,

(04:12):
we do the math, and we say, hey, we cannot
only take care of our accounting issue, but we can
save money by paying an accounting firm to handle the
whole kitten caboodle for us. This isn't going to make
a difference to most of our employees. They'll still get
the same checks every two weeks, maybe bonuses when times

(04:32):
are good, because hopefully we're not an evil landscape company. Well,
it's almost like you get like a bulk rate kind
of right if if you're retaining a firm that only
hires accountants rather than hiring a single accountant for your
form or a team, you are essentially benefiting from the
fact that this other firm specializes an accounting it only

(04:54):
has accountants on their payroll. So you're almost like getting
a discount by virtue of the fact that they just
have like dozen of accountants on staff, rather than you
having to pay the salary of one or two or
three or four individual accountants to be on your team. Specifically, Yeah,
I'm thinking like, uh, I don't have a name for
the landscaping company yet, but how about the c P

(05:15):
A firm is called discountant. No, no, it sounds like
they lose money. Can be called conspirat escapers. There we go,
I see, yeah, green lighted. So it's weird because you know,
you we've looked into a lot of research on this,
and we've seen a lot of you know, bombastic uh

(05:39):
statements by pundits in mainstream media and stuff, and there's
there's a lot of good business to be made by
excoriating the corporate fat cats of the world. They get
a lot of heat, and honestly, in many cases they
deserve it. But in those explorations, people often don't point
out that other folks practice out sourcing in our own lives.

(06:01):
On a microeconomic scale. You might hire your own CPA
around tax season. You don't talk to that person every
you know, Tuesday or something, just probably right before April,
and then you talk to them again next year. People
pay parents pay daycares or nanny's all the time. And
it's not because they're bad parents. It's not because they're

(06:23):
worried about their families profit margin. It's because they have
to have jobs, you know, and they have to make
sure their kids are in a safe place and have
an opportunity to learn and have a socially enriched life.
That's still kind of outsourcing, is it not? So it
definitely is uh, And it's not like this is a

(06:43):
new thing. We right before we recorded, we shared this
video from two thousand nine from the Onion that was
making fun of outsourcing tactics like we're talking about right now.
And the point of the video was that even individual
employees are outsourcing their entire jobs to other countries. And
you know, that's two thousand nine. Go back a little further,

(07:05):
and then keep going back, and then keep going back
to the time when lace making was one of the
primary things to be done, one of the tasks that
needed to be done. It makes me think of the
Union episode, the Union's episodes that we just did. The
tactic is as old as beans. I don't know why
I like that phrase. I don't know if it's a
real phrase. Nobody quotas, but yeah, well, we talked about

(07:27):
cottage industries not a super creative name. Back in the day,
shopkeepers would outsource this really and we're intensive labor, time
intensive stuff like lace making to people who were literally
sitting around in their cottages. So outsourcing has existed for
very very long time. It just didn't have the name.
Uh it's a portmanteau for outside resourcing, and it didn't

(07:50):
really inter common usage until nineteen eight one, and then
it became kind of a mainstream business practice around nineteen
eighty nine. You could say in the US, well, I
mean it's like you could say, you know, most manufacturing
of the products and goods that we use are outsourced.
I mean, there are American companies that we buy things

(08:13):
from the outsourced all of their manufacturing to countries like
China because of the lower cost of labor and the
you know, more ready supply of materials and supply chains stuff.
So what used to be called a cottage industry referring
to like outsourcing a labor intensive service is now kind
of more of a stand in for like a niche

(08:35):
kind of bespoke handmade type industry or or you know,
creator manufacturer. Like if something is a cottage industry, that
means it's probably made by a small team by hand
in the country where the country where the company is located. Yeah,
you know, like local peanut brittle makers. You know. Yeah, Well,
it's important to note there that outsourcing doesn't just mean,

(08:57):
you know, sending labor off to an their country. It
could be something that's just sending labor outside of your organization, right.
Uh So hiring someone to do something, even if they're
in your same state or in the office building next
to you, that's still outsourcing. Yeah, what we're talking about
is interesting. There's a Vin diagram here of two things

(09:18):
that are closely related but somewhat distinct. We're in modern terms.
When most people are talking about outsourcing, they're talking about
a specific genre called off shoring. That's where you move
some kind of business function to a different country, and
that's where corporations make a lot of money. Uh. Some

(09:41):
outsourcing includes offshoring, but not all. Outsourcing can be entirely domestic.
It can be macro and micro, and there are a
lot of advantages if you're a business owner, obviously this
makes sense. You can potentially save a ton of money
and a ton of headaches as long as you get
away with it. I mean, first, don't have to pay
for all the expenses of in house labor, things like insurance, benefits,

(10:05):
vacation time, maybe a four oh one case, stuff that
full time in house employees theoretically would expect or would
strive for. And then second you can employ fewer people.
Don't need for that piskey I T department. We have
a company that just leases and services all our computers.
We signed a four year deal. If something goes wrong

(10:27):
with the printer, just call those guys. I think his
name is Chuck. It's not always Chuck, but it's usually Chuck.
Like that's very common. You know, anybody who has an
office printer might be familiar with that. And maybe most importantly,
you save time, the only real currency of our age.
You don't have to spend hours training unemployee to do

(10:49):
this thing. You don't have to pay a premium to
bring someone else's expertise in house. And maybe best of
all for really busy UM, really busy executive is you
don't have to really learn something new yourself. You can
just delegate it. But the big money is interested in
some big loopholes, this stuff like um, going to a

(11:12):
country with a different tax system that's maybe a little
more friendly to you, a country that's not as you know,
hot and bothered about some aspects of workers rights, or
you know, they say, hey, the environment can take care
of itself. We don't need to regulate that it becomes
like when you start listing those benefits, it becomes increasingly
like made for TV infomercial. But wait, there's more, because

(11:36):
there's always something else that would not fly in the
United States that might fly in another country. And you know, honestly,
taxation is a big part and they're ridiculous, ridiculous. We're
gonna get into a ridiculous number of companies out there
that will outsource your work. And it's a crazy competitive market.

(11:58):
You can find article after or article written by companies
or representatives of companies that are extolling these things. Have
been as describing all of the made for TV commercials,
uh for outsourcing for everything from legal stuff like we
were talking about taxes I t uh, even teaching, even
teaching like educational jobs. Uh, it's crazy, but there's like

(12:24):
there's like apps and stuff for this. Now you know,
we we've done ads I think for zip recruiter, which
would be you know, considered I guess outsourcing hiring right
like you're or like legal zoom, which is what you
were just describing, mat like outsourcing legal task and then
those things are very functional and make a lot of
sense if you are a small company, but when you
start seeing larger companies doing this stuff at at at scale,

(12:46):
you know, to use a douchy kind of business buzzword, um,
that is when it starts being problematic because I've seen
things like, for example, um outsourcing of graphic design. Uh, say,
like for a big company using some of these kind
of like outsourcing graphic design uh sites and services that
essentially go for the lowest bidder um in other countries

(13:10):
where you know, wages are much much lower in order
to get a logo design or something like that, something
that maybe could go to an independent freelance graphic designer
or small you know, independently owned graphic design firm in America.
And again I'm not saying that these other you know,
uh workers, these other freelancers and other countries shouldn't be
getting work, but it's kind of for like a weird,

(13:31):
slightly sketchy reason, you know, like, at what point is
are you saving money at the detriment of your own
countries um economy? Yeah, this, I'm glad you mentioned two
things guys. First, that two thousand nine onion article. We'll
get back to that in a second, uh. And then

(13:52):
we'll get back to that later in this episode. And
then secondly, uh, corporate buzz terms because since I have
uh uh absolute iron grasp on priorities, I stayed up
late last night doing research and then I stopped and
just wrote out fake, fake buzzwords because you hear so many,

(14:13):
especially on the pro outsourcing side. You know, I was
thinking about specific forms of outsourcing, how you make them
sound more customer friendly, like trout sourcing, pout sourcing, you
know what I mean, route sourcing, SAP. Yeah, cloud sourcing
was one of the first ones because I had to
talk with someone in l A today. But spoiler, not
everyone loves outsourcing. Not only not everyone sees it in

(14:37):
this kind of idealistic Thomas Friedman esque way. When we
ask why they don't like it, we know that a
lot of the critics dislike it for the same reasons
a lot of business owners and shareholders love it. And
these critics, by the way, are from all areas of
the political spectrum, and they don't all agree about why

(14:59):
they think out sourcing is bad. Uh. In their view,
though you could say that they would generally argue outsourcing
is not just an at times ruthless move to increase revenue.
It's a dangerous tactic with consequences far beyond quarterly profits.
And in some cases they argue it's a conspiracy. What

(15:20):
do we mean when we say that, We'll tell you
after a word from our sponsors. Here's where it gets crazy,
all right. As Van Morrison's once said, cast your memory
back there. But we're not going back to the Brown

(15:40):
Eyed Girls song. We're going back to the nineteen nineties,
which was an uncomfortably long time ago now and what
would that be thirty thirty years ago? Oh? It's you
know the math that makes you really feel old or
really feel the passes of time when you say, like,
we're as far away from the nineteen nineties and the
nineteen nineties was from the nineteen fifties something, yeah, sixties, Yeah,

(16:05):
But there was something really weird happening. There was a
ce change, and I think the ocean is a good
parallel for what we're going to explore today. There was
a c change in the world of US business, a
massive migration of manufacturing jobs. You know, all those like
those solid gigs that people once had in the trades manufacturing.

(16:28):
You know, you didn't have to go to college for
four years. You could get out of high school or
get out of military service, and then you could make
a pretty good living doing what people would sometimes call
blue collar work, right, and you could send your kids
to college. You could maybe go to college if you
wanted to, But why would you when you had a
solid job just waiting for you. The thing was, these

(16:50):
jobs were no longer solid. They were relocating to developing
countries because of those lower wage standards, because of little
to no safety stand inder, it's environmental regulations, all these
other factors, each of which dramatically lowers production costs for
these companies. And to be fair, you know, the people
on the other side, the people in the countries that

(17:13):
are practicing what we call in sourcing, I know these buzzwords, uh,
the insourcing employees, we're just regular people too. They are
just regular people. And in some cases, in many cases,
you could say this was good for those perspective employees.
They weren't making as much as they would uh, you know,
were they doing the same job in the US, which

(17:35):
is pretty much the whole point for the corporations, But
they would have a solid, hopefully sustainable job. In theory,
because sometimes these situations were disastrous. And when we talked
about disaster. We got to talk about all these really
disturbing short and long term consequences. I think the first
fewer obvious, but it gets muddy really quickly. So firstly,

(18:00):
um and I think most obviously, unless people working at
the original location move with the job, accepting those lower
wages and those standards, they're gonna become unemployed and forced
to find another, hopefully comparable job somewhere else. So that's
the obvious short term consequence for the people that are
directly involved. Me and it makes me think of, like,

(18:22):
I don't know, we have labor standards in America, we
have health and safety standards in America, but the companies
don't really put their money where their mouth is. They're
basically saying, like, wouldn't it be better if we were
back at the beginning of the industrial Revolution, when you know,
we could just like have children working in coal mines
and stuff. Wouldn't that be great? So how about instead

(18:45):
of like paying you know, American workers a fair wage
under these safe situations, let's just go to countries that
more resemble that situation. That'd be cool. So so it
really isn't about people at all. Nobody really cares about
people getting in shared or being an unsafe situations, or
being exploited. They're they're just it's another loophole they have

(19:06):
to figure out a way to deal with. I would
say they think about people. It's just tier seven on
the list of priorities. Well people. They think of people
as capital. They think of people as like a means
to an end, but not as like identities with families,
you know, and and and mortgages. That's just not part
of the equation. And you could argue that's by design.

(19:26):
Why should it be part of the equation. I picture
the corporate boardroom and they're wrapping up the end of
the medium. They've gone through the six big benefits, right
about relocating uh their business to a developing country. And
then number seven, as people are like shuffling their papers
and uh, you know, checking their phones, number seven is also, uh,
some of these new employees are probably not going to die.

(19:50):
And then someone goes, oh, that's nice, all right, Hey,
anybody want to get Chipotle? Huh, it's an app for that.
I want to give you as a quick quote from
an article titled five indicators that you need to outsource,
written by Derek Gallimore, who is apparently a Forbes Council's member. Uh.
He says, this is a quote from an article he

(20:13):
has written that says, you know, this is why you
need to outsource as a company. It says, quote, your
employees are still humans. They have a tendency to get
overworked on certain projects. Two thousand nineteen, Asana study or
a Sauna study stated that more than eighty percent of
workers feel burned out at work, which could pose a
problem for your company. So let's let them get to

(20:36):
just the edge of burning out and then the extra
ten percent push over the cliff. Will outsource that bit,
which was the original definition of edgy. I gotta say,
I gotta say one tiny little quote. It's just like
it always when we're talking about corporation, that the way
they view people. I always think of this incredible Mr.
Show sketch where there's a CEO and a board. I've

(20:59):
we've in the people business since you are in short pants.
My grandfather started this company with one rickety slave ship
and a motto, people selling people people. That is, I
kid you not my favorite line in the entire I
quote it all the time. It's so appropriate. And that

(21:20):
guy is actually in the new season a better called Saul.
He's the fake uh, the fake judge. I forget the
actor's name, but I'll love all seeing all the Mr
Show folks pop up in Saul. Here and true story.
Many years ago, I emailed HBO to ask who specifically
wrote that sketch because I wanted to find out I didn't.
I didn't hear back. But HBO is a big company. Uh, well,

(21:45):
we'll talk about media companies in another episode. Here's the thing, though,
so we know the obvious stuff, right, This can be
a really terrible situation for the employees who don't have
the wherewithal or the opportunity to move to this factory
that's relocating or whatever. But outsourcing doesn't just affect one

(22:09):
company in an industry. It is contagious. It creates what
I would describe as a feedback loop. So let's say
there's a hypothetical company that makes Uh looking on my
notes here farfig lugers in parentheses, I put whatever. Okay, sorry,
it's clearly just making that up. So whatever you think

(22:30):
of when you think far fig luger, I hope that's
a made up word. Anyway, they outsource, they lower their
prices they're still up in their profits. At the same time,
all the executives are getting bonus as shareholders are getting dividends.
And let's say these executives aren't entirely crooked, so they
take part of their profits and they reinvest it in
the business, getting more infrastructure, research into new improved farfig

(22:54):
Luger two point ohs or whatever. All the other companies
in the Farfigluger industry notice this, and they need to
stay competitive, so it won't take too long for company
be to start outsourcing, and then other companies do it,
and it creates a feedback loop. It's normalized. It's the
thing you have to do to stay alive in the

(23:15):
cutthroat industry of the far far fig lookers. That's a
direct call back to our CEO pay episode, where it
was just a trend that began and it continued increasing
and everybody had to join in or fall behind. Yeah,
and then that's that's where we see the rise of

(23:36):
a few manufacturers who go a different route and they'll say,
you know the fact that we have an outsource insert
product here is a selling point for us. So we're
going to make sure that all our far figlookers are
stamped made in the USA, and we'll appeal to people's patriotism.
So you know what. Another example of outsourcing in media

(23:59):
as animation that's been happening for a long time, like
you know, the Simpson's animating team that's actually based in
America will draw the key frames and then they'll ship
it out to Korea to have it, you know, fully
animated for for much less money. UM I would argue
that's maybe a slightly less gross version of it because
they're really good at animating in Korea, you know, and

(24:21):
in Japan. It's like it's just a thing. But also
it gets the job done quicker and they're able to
you know, hire higher paid you know, writers and key
animators in in the the U S team instead of
having to have a whole like stable of like you know,
kind of more workman like animators. So I don't know,
do you think does that is that better or worse?

(24:41):
Or am I just like giving them a pass because
I like cartoons like uh, I think myself. North Korean
animation in particular is avazing. It's fantastic. Uh there are
a lot of really talented animators, but there you know,
we have to understand the multiple perspecti those play because

(25:01):
the people who are getting these jobs are glad to
be getting work, but you have to ask if they
are being treated fairly. And in many cases, whether we're
talking animation or farfiglookers, or semiconductors or iphotes, they're not
being treated fairly. So like, let's go back. Let's go

(25:22):
back to the u S to our hapless former employee.
They worked for Company A making farfiglogers. Company A moved
all their operations overseas, and they say, well, I'm great
at making these things. I have done this job for years, decades.
Potentially any competitor in a normal environment would love to
hire me. The problem is because outsourcing is contagious in

(25:45):
an industry, every single other company making this stuff has
also outsourced production. So now for this person, it doesn't
matter how good they are at their job, because their job,
in very real way no longer exists in their country.
And like, yes, of course, our our fictional product here

(26:08):
writing fake commercials, none of them are going to make
it in UH. This is a made up thing, but
the process is real and it has real consequences. UH.
The Economic Policy Institute found that American corporations alone outsourced
more than five million jobs in nine thousand plants from

(26:28):
n to last year. Well, I'm really thinking now back
given that to the animator example that we got for
the Simpsons we talked about, I guess it was like
lower level hires animators who would be doing the busy work.
Is not busy work, it's art, but it's creating the
actual animations between the key frames, right in order for

(26:52):
someone to become a key frame animator. To me, it
seems like you would need to have years of training
being that lower level of all animator just to understand
the process, to understand how it all flows, and to
gain those skills, right your journeyman or apprentice kind of
programs that maybe are a thing these days. So if

(27:15):
you if you're outsourcing that position from your company, that
lower level position where somebody needs to have that knowledge
to be a higher level position, it feels like outsourcing it,
you're going to lose your next batch of potential key
frame artists at your company, at least if you're growing
from within. It's a very astute observation. I think it's

(27:38):
a pipeline issue. And then the whole point here is
has been what you've got on the outline. If you
outsource like that, you're not just losing a particular job
or a particular product. You are outsourcing the critical knowledge
and skills and tools that you would need to further
along whatever process it is that that you have going
at your company, whatever product you're making, exactly. And this

(28:02):
this is potentially very very good for the insourcing industry,
and this is part of where things get muddy. So
this new manufacturing base starts to build its own supply chain.
That's that's the ideal passage, right, Why would you continue
importing lumber from the US If you are manufacturing base

(28:25):
is now relocated to the somewhere in the Pacific RIM,
You're going to find a closer, more affordable source of timber.
So this new supply chain begins to form, and then
research on whatever you're making tends to move to that
new country as well, because that's where things are happening, right.
People want to be where the things are happening. And

(28:46):
over time, this new manufacturing concern becomes its own thing
from stem to stern, and it can spin off into
a new entity for legal and tax purposes, UH and
also to remove account of bility on the part of
the US based company, and this example, the shareholders still
get their cut. The US employees and all their support

(29:08):
industries they get cut out, and eventually, and some critics
argue inevitably, that US based company ends up building something
that later becomes its own competitor. So if you are,
if you're very, very pro outsourcing and you think it's
unfairly dumped on, just know that the consequences aren't just

(29:29):
for people, the normal people on either side of the equation.
These businesses build their own enemies sometimes and quite by accident,
quite by a myopic focus on the short term. And
while we're doing that, just gonna throw this in here.
We can talk about it later in the episode. Outsourcing
does also not infrequently lead to forced labor. That's right,

(29:51):
fellow conspiracy realist. Outsourcing does lead to slavery. But we're
talking hypothetically, you know, landscaping companies, whatever. If our the
glooger is, let's look at some real world examples. Uh.
This This came to us from Michael Collins over at
Industry Week, and he started to name some of the

(30:12):
biggest US companies that have outsourced. He says the biggest
outsources of American manufacturing jobs include General Electric, Caterpillar, Microsoft, Chevron,
United Technologies, General Motors, Ford, Georgia, Pacific, Harley Davidson, Kimberly, Clark,
Briggs and Stratton, honeywell merk IBM, Feiser, and Boeing. Good gracious,

(30:32):
that's like all of them. That's a lot. Yeah, I
mean yeah, not not certainly, not all of them. But again,
you know, it's like you pay a premium for things
that are not outsourced, so even if they're not outsourcing,
they're passing on that cost to you the consumer a
lot of the time as well. Mm hmmm. And Collins

(30:55):
did something really interesting. He was able to trace clients
in no less than thirty eight different manufacturing industries. He
started in two thousand two, and he said, let's pick
these thirty eight things and see, you know, how they're doing.
And what he found was, first, there were things you
would recognize um industries that are known to have outsourced extensively,

(31:20):
like furniture, right, cutlery, stuff like that. So he said, okay,
that makes sense, they're outsourcing. But then he found these
other industries that were indirectly affected by outsourcing. Mainly things
that are like mainly industries that are fundamental to making
other products. So industries that help make things that people

(31:44):
actually buy. We're talking machine tools, tool and die forging foundries, semiconductors.
You know, like you're you're probably not going to go
buy your own tool and die kit on a regular basis.
It's not a normal thing in every American household, but
it's the factory industry right exactly exactly, And Collins had

(32:07):
he Collins spent some time talking about semi conductors. He
said that in his own state and Oregon, Intel is
largest corporate employer, and they said they might outsource their
advanced chip production to their biggest competitor company called t
s MC. In Taiwan, US chip producers account for half

(32:28):
of the microchip designs in the world, but only of
the manufacturing, and that's because almost all of them have
already outsourced their production. Collins closes by saying Intel is
the only US based manufacturer of micro processors also semi
conductors in Taiwan. It's playing a big role in Taiwan

(32:50):
Chinese US tension right now, for sure. And he goes
on to state something here I'm gonna read a bit
of a quote. Uh, he states. In an open letter
to President Biden, Bob Swan, the CEO of Intel, asked
Biden to pursue a manufacturing strategy for the semiconductor industry, which,

(33:11):
according to the Boston Consulting Group, needs fifty billion dollars
in investment to survive. Uh. Okay, uh whoa so one
might ask. He continues, how did we get to this
point in the semiconductor industry where the industry needs a bailout?
And how many more outsourced industries will need the same

(33:33):
mm hmm. And again it's a long tail consequence. So
at this point you might be saying, that's fine. You know,
I'm aware of the problem, guys. I'm aware of the dangers.
I'm aware how complex this is. That's why I buy local.
That's why I go to a farmer's market, you know.
That's why I shop at a local craft fairs. That's uh.

(33:59):
That's why if I buy something in a store, I
make sure it says made in the USA. But what
does that actually mean. We'll tell you after a word
from our sponsor. Okay, this is this might sound weird

(34:19):
to people who are who have not lived in the US.
Or haven't spent much time here. You when you go
into a store, you're pretty likely to see at least
a few products that have a stamp on them or
might be sewn into it if it's a shirt or something,
and says made in the USA for people who are

(34:40):
opponents of outsourcing or concerned about it. This makes you
feel good. It's kind of warm and fuzzy. You know,
I'm paying a little premium, sure, but I am somehow,
however indirectly supporting other people in the US, and I'm
supporting wage and labor standards. Bruce Springsteen would be proud.
Brew Springsteen would be so stoked right now. I wish

(35:03):
he was in this t J Max with me, But
that's unfortunately not always the case. There's a story behind
those labels, and this is a story that made international
news a number of years ago, but it doesn't get
brought up too often now. It's the case of the
Northern Marianas. So this involves political corruption, uh part of it.

(35:28):
It got a lot of pressed due to the Jack
Abramoff lobbying scandal. Just let you know where we are
in time. There were these recruiters who would go to
different areas of China, the Philippines, and Bangladesh, and then
they would lure guest workers by saying, hey, come, you know,
we've got a job opportunity for you in the United States.

(35:48):
We will take care of all the legal stuff, all
the immigration stuff. Don't worry about it. And they these
folks would agree. It sounded like a good deal. It
sounds like a good faith offer, which very much was not.
They were not taken to the mainland United States. They
were taken to the Northern Marianas and there they were

(36:10):
essentially forced into sweatshop labor. You can hear um a
great a short interview on MPR with some human rights
activists and some former employees of this scam. But because
of political corruption in the US and in this island region,
in many cases, these folks were working as little more

(36:31):
than enslaved people. Like barbed wire preventing you from leaving
the factory. Uh, impossible to meet quotas. You're already kind
of a wage slave because they charge you five thousand
dollars to go, and then you gotta pay it back.
You gotta work. Essentially, it's indentured servicey because you're working
to pay that back and sometimes don't they confiscate your

(36:53):
visa and passport and things like that. Well, also it
gets worse than that. They also um for for women
working there. They would sometimes be forced into sex work allegedly,
that's what some of the survivors said, or forced to
work in clubs at night. But since the Mariannas you see,

(37:17):
became a US commonwealth in nineteen seventies six, these companies
stamped made in the USA on all their sweatshops slash
slave labor made products, clothing, and so on, and this
loophole allowed them to get around import quotas and duties,
you name it. Business was great human misery. However, at

(37:40):
on the island was at an all time high. This
is a little different, but I heard a piece on
in PR the other day from a guy who was
a very top level guy at Adidas, and he was
really sick of all the like fashion waste, Like there's
a lot of like you know, um plastics for throwing, yeah, exactly.
So he wanted to start a company that, like you know,
was was trendy and fashionable, but used entirely plant based materials.

(38:04):
He pointed out something that I thought was interesting, and
I didn't know that is very similar to what you're
talking about in terms of the claim made in the USA,
the claim of one cotton uh, that is also largely
bs uh and it is it has to do more
with legal um designations for duties and import and export
taxes than it does the actual reality of the garment.

(38:26):
Because I think as long as like the base part
of it is made of cotton, any of the little
rings or the edges around the necks and sleeves and
all that stuff can be made of you know, God
knows what um rayon or like, you know, a polyester
rather that's like got the plastic stuff in it, y'all
on a we by on cotton. Do not imply that

(38:47):
the entirety of the goverment in question is cotton. However,
the cotton that is within this garment, we argue, is
one cotton, and one percent of it was in fact
picked by slaves of wage slaves at the very least.
I'm I'm sorry, and we're not that far removed telling

(39:09):
you when you get into the prison stuff and like,
all of this kind of stuff just makes you realize
how toothless so many of these laws are, and how
easy it is for these giant corporations to circumvent all
this stuff and just do whatever they want just like
it used to be. But it just can't happen exactly
on American soil. But they still sanction the same horrendous
practices that have been you know, happening for for you

(39:31):
know generations. Yeah, that's what I'm saying, Made in the
USA doesn't always mean what it appears to mean, and that,
like the Crooked Laws, is very much a conspiracy and
it's very much by design. Really quickly, I want to
give one more example of a larger example like this
before we jump to call centers, because I think that's

(39:52):
one of the main things that at least I think
about when I think about our outsourced jobs and how
I interact with the jobs that I know for sure
are being outsourced. Uh. There's a video from Vice News
that was released in two thousand nineteen, and it is
it's titled America's newest outsourced job of public school teachers.

(40:13):
So just really quickly, guys, this is speaking of this
weird relationship that you have with some third party company
that is going to get you a job somewhere else
or you know, from somewhere else. And then you having
to pay that company for the privilege of getting that job,
and then it can potentially become a situation where you're

(40:34):
just having to pay that company back over and over
and over again to to work off whatever debt you have.
There's a company called Trades and Professions Incorporated that does
something really potentially helpful. They acquire J one visas, which
are these specific visas that are meant to be given
uh to educators to come over from another country to

(40:55):
the United States to fill a teaching position that's vacant
within the US. And this company, Trades and Professions Incorporated,
specifically gets teachers to come over from the Philippines and
a teaching job in the Philippines in one example they've
given that video is around four thousand dollars a year
at least a starting teaching position, and they're then offered

(41:18):
a position in the United States for fifty four thousand
dollars a year. And the the huge difference in there
means that there's a high demand for teachers in the
Philippines to come over to the US and teach. But
the thing is, in order to get that job, you
have to pay Trades and Professions I think it's around
twelve thousand dollars US just to get the visa and

(41:40):
the job position, which means then if you're only making
four thousand a year and you've got all your expenses,
you're paying that debt off for a long time until
I guess the first money comes in at least from
the teaching position in the US. They'll make a deal
with you because they want you right, so they'll let
you go into debt. It's part of it's part of

(42:02):
the game. Yeah, and I'm glad you mentioned call centers too,
So this is These are multiple industries. I'm sure, um,
all of us listening today we'll have our own examples
and maybe personal experience with these. But for many people
who say, you know, I'm not really thinking about things
on a global scale. I got my own stuff going

(42:23):
on here. Uh, your experience with call centers might be
your most direct experience with outsourcing. Because products are not
the only things outsourced. Skills services those are outsourced as well.
Many many people have called a company to find that
their phone service has been outsourced to another country, and

(42:44):
in a lot of tragic cases, those people calling also
outsourced their racism to the absolutely innocent people on the
other end of the line. There was this study in
two thousand seventeen that went across UH several call centers
in India for two years, and they found that it

(43:06):
was known and normalized and to a degree expected by
these workers that they would be targeted with racial abuse
from callers in the US in particular. And that's another
wrinkle in the corporate conspiracy of outsourcing, because some opponents
of outsourcing across the line from supporting the US economy

(43:29):
or worrying about long long term erosion of the country,
and they start becoming pretty stridently racist in their rhetoric,
and so they conjure up these completely untrue caricatures of
these you know, scheming villains on foreign shows out to
ruin that country instead of you know, just being people

(43:51):
like almost everyone else across the planet, people who just
need a job, you know. And you have to remember
the villains, the people that you are actually mad at,
are never the people who answer the phone when you
call those companies. You you know, there are a few
companies that I'm totally on the record having no respect for,

(44:13):
but I know that the volks that the call centers
don't get consulted about these positions that these companies take.
So just exercise and empathy. Be nice to them. You
know they're they're doing their best, just as you are,
and they have been hired by the people you're actually
mad at to be sort of a scrimmage line, a

(44:34):
buffer between you and them. Don't forget that. Now. That's
even that's if you even get a person, right, because
I mean, how many menus do you have to navigate
and like automated voice responses, you know, telling the computer
what you actually are calling for before you finally just
hit zero enough times they give you a person. They

(44:56):
don't want to give you a person. That's that's that's
that's a premium. They want your problem to be solved
by uh bots, you know, artificial intelligence to some degree,
and you could argue that that's not particularly intelligent artificial intelligence.
A lot of these systems are pretty antiquated. But with
the advent of like voice recognition and like, you know,
being able to feed input into the phone and have

(45:17):
it kind of understand generally what you want and give
you some sort of solution, that's definitely somewhat next level
but still pretty clunky. But that's going to improve because
it's in the best interest of these companies to improve
that technology, which means they're gonna need fewer and fewer
of those outsourced jobs because outsourcing to robots and artificial

(45:39):
intelligence and the computer systems and neural nets makes a
whole lot more sense, and it's much more scalable and
doesn't require any of that human capital until you need installation,
right right. Uh, well, there's something that I think we
need to mention. I've mentioned this in previous episodes, and
it always seems to need more visibility. There's another advantage

(46:01):
to those voice systems, which is that it creates another
revenue stream, the revenue stream in which you do not
take a cut, but it uses your audio patterns. Right,
Those can be sold, Those can be monetized, so be
very aware of that. That is why I have made

(46:22):
the decision to do my utmost due diligence avoiding those
voice recognition things. And it really, you know, it doesn't
even matter for me. We like, I host multiple podcast
you know what I mean. My voice is out there.
It's that that ship has sailed for all three of

(46:43):
us here. Ben, I hate to break this to you,
but you have a an AI version of your voice now, so, yeah,
that ship has sailed. Um. But I also I gotta
say I don't feel as as guilty being rumpy with
an AI uh as as you might with you know,

(47:03):
an outsourced human. Um. So I make it a habit.
Every time I do respond to one of these systems,
I do it and the grumpiest voice possible and just
sound completely you know, and it's real. I'm not putting
it on. I'm just kind of like, no, yes, I'll
do an accent. Sometimes I get a person, please, I'll

(47:23):
see what slang I can for. There's a couple of
companies that require quote unquote require a verbal yes or
something to end a call or pull an action, and
I always try to see what I can get away with,
Like how much slang for yes? Does this algorithm or
the software no so you know, affirmative or green lit?

(47:46):
Buddy for real? For real? No cap on god right
right right right? And uh uh let's see, Oh, go
nuts does not work for some reason. It's like, would
you like to continue with this payment? Yeah? Go nuts?
What about let's do it? I hate that one so much.

(48:08):
Mat you have any idea how my blood boils anytime
I see somebody bragging about a thing on the Internet,
followed by let's go, we're so cool, let's do the thing.
I just hate it. I don't know why, it just
it's just so douchey to me. I for a long
time I probably mentioned this for but for a long time,
I didn't know what ft W meant. I thought it

(48:31):
means for the wind. I thought it meant and beat
me here, Paul. I thought it meant the world. And
so I would see these people saying these really happy,
nice things like oh, look who just got uh you
know her phdo class of twenty twenty ft W, and
I'm like, wow, that's what is your degree? And stuff

(48:53):
like people would say like, oh right, you know it's
um it's little Hammy's first day of second grade or something.
Big things ahead ft W. Do you hate your child?
For Hanfred might be Hamish? Yeah, uh but but yeah

(49:15):
so internet acronyms and uh slang for yes aside, tell
us your favorite ridiculous thing to say to an automated line.
That's true. That's the future of what we consider outsourcing.
The next wave of outsourcing is gonna involve fewer and
fewer people jobs won't be going to workers in other countries,
as we said, they'll be going to automated systems. But Matt,

(49:39):
you raised a great point. There are some industries that
are much more difficult to outsource for any number of reasons,
and one of those big reasons is the physical requirements
of work. So I was thinking a good example, I
hope this makes sense. You can buy any number of
pipes and fittings made almost anywhere on the planet, but

(50:02):
you need a plumber to physically be there to install
a plumbing system for now at least, well, but you've
got those like Boston Dynamic robots, you know, that are
like approaching the ability to be like tech bots that
could come in and install your modem and drill the
holes and run the thing. It requires camera, you know, recognition,
and like things maybe aren't quite there yet. But do

(50:23):
you really think that these companies that we're talking about
are gonna hesitate one iota once the technology is there.
I mean, we already see the groundwork being laid for this,
like in terms of like self checkout kiosks at grocery stores,
and you know, these jobs that are just eventually going
to disappear. But what happened to those people? Whe Where
do they go? Like what? Like this is not a

(50:45):
very thought out, like humane, big picture outlook. Eventually it's
just gonna lead to like more homelessness and then what
what's what's next? What what dys topia follows? We just
execute these people like who don't who are unemployable? Like
told this, Yeah, there's I called I like to call
this discrepancy the post work economy versus the post worker economy.

(51:08):
So where yes, there is a possibility for some sort
of utopian star trek post scarcity world where people don't
have to have a job due to the grind of
the strange ideology of capitalism. But between now and between
that future era, there is another very dangerous era, which

(51:30):
is going to be the post worker economy, being a
world in which humans still live, billions of them, and
they still need the same basic things, yet they do
not have the opportunity to earn those things, leading to
stuff like neo feudalism the rise of a new global
peasant class. That's why it's important to think, like going

(51:52):
back to the ocean analogy, it's important to think of
outsourcing as a wave because it affects the destination country
as well. Let me break down the system real quick.
So new opportunities. Right, your country is insourced some stuff.
You're you're you live in China in the mid ninety nineties. Right,
there's a new factory opening up. You can get a

(52:14):
new job. It's one of the highest paying jobs you've
ever had. This creates a growing economy, which leads often
to a growing middle class, which leads to pushes, collective
pushes for more rights, higher wages, things like that wall
of which leads that original company that outsourced in the

(52:35):
first place to pick up their toys and go to
a different country because now that other countries cheaper, which
just starts the process over and over again. It's a
feedback loop. It's a title system. Yeah, there's only so
much landmass on this planet to be able to do
that for a limited amount of time. Don't ever say

(52:56):
that about capitalism. It's continued growth. Nobody too far ahead.
Once the moon colonies are making all the earth stuff,
we'll just continue to outsource. Can I can you kind
of add the like that this robotic outsourcing isn't just
limited to like entry level or low wage jobs. I mean,
we jokingly mentioned the whole AI representation of our voices

(53:19):
that we did as part of this pilot program to
you know, there's there's reasons to do it to like
geo target advertisements and things, so we don't actually have
to do it every time or do a read for
each one. But given advancement, further advancement of that kind
of technology, could you replace any personality, whether it be
a talking head on television using deep fake technology like

(53:41):
that um that I believe was it North Korean or
a Japanese politician. We did a whole episode about this. Yeah,
exactly what I'm saying, Like, there's a world where you
don't that the idea, Oh no, we we've we're safe
because we have personalities or artists are safe because an
AI could never generate the same kind of you know,
inspirational material that like a human mind could. But given

(54:05):
enough time, a are people going to care and be
will the technology be such that it's almost indistinguishable from
the output of a quote unquote creative mind or an artist,
right like a touring test threshold? Yet, I mean again,
I know the phrase artificial intelligence is far from perfect.
You know, what we're aiming for is like a consciousness,

(54:26):
whether regardless of its origins. But right now those algorithms
and that software they are replacing very like um rarefied
cognitive work, you know from the edges of math two.
Weapon design. In an earlier Strange News segment a while back,

(54:48):
I believe we talked about a some software that had
already made improvements to some weaponry I believe in China
as well. So it's on the way, that's that's what
you need to know. Like the the car has already
careened off the road, we're heading for the tree. You
just have to decide what you're gonna do when when

(55:10):
the car hits the tree. And and the main thing
to remember is again, not everybody thinks it is bad.
Proponents of free market ideology say that, yeah, this practice
is imperfect, but ultimately it is a net benefit. Ultimately
is a greater good for everybody involved. And while that's possible,
it's also not always the case, and to pretend otherwise

(55:32):
is willfully purposely misleading, often for short term profits, by
the way. So yeah, we have to remember, at least
here in our little corner of the world in the US,
outsourcing is only going to continue, and the people on
either side of the equation. The non shareholders, I mean,
they're not the villains here, not at all. They are
the grass on the battlefield. And as the old saying goes,

(55:55):
when elephants wage war, it's the grass that suffers. And
in many cases, that's something those companies don't want you
to know. Ben No, I figured out the real villain
of this story. It's twa it's toal sources. No, it's globalization.
I don't think companies were ever should have ever been

(56:19):
able to grow as large as they have. I don't
think you were supposed to be able to ship your
goods from you know, across the Pacific two, then manufacture
them in a different country than ship those pieced together
parts back to your country, then assemble them, then ship

(56:39):
them back as finalized products across the Pacific to the
country that put them together. Not to mention all the
added pollution that all of that transit adds to the equation,
you know, shipping things back and forth and back and
forth across the ocean. I mean, think about those uh
consequences and what were yeah, what were you going to

(57:04):
say that the wrong time that was supposed to happen,
That wasn't supposed to happen. That was supposed to be
something that we all collectively realized, Oh, that's wasteful, that
doesn't make sense. Why would we do that. We don't
have to have one company that sells all of the
hamburgers to every country, like Hamburger, Hamburger. I'm just saying,
hamburgers are great, but you could sell them. You know,

(57:26):
a company that's on that side of specific sells those
hamburgers and they're awesome and they do a great job.
You worst timeline though, too, you know where It's like,
what I'm hearing is that you hate fun, you like parties?
How about lemonade? Do you do you like chuckolate? And

(57:47):
I'm being somewhat facetious, but I do. It does feel
like there's a route to the problem, and it's just
that certain companies needed to continue growing in order to
sus saying themselves like you had to continue growing. It's
the whole welcome we we we we knew that we could,
but didn't stop to think if we should, you know,

(58:09):
because we were not in the We're not in the
long term consequences game here in America. The species of
humanity completely good at it. But yeah, no, I I
agree with you guys completely. I mean, you have to
ask yourself how we are. I always like to think
of it this way when some when you're trying to

(58:32):
figure out if something is a net good or positive,
or you know, when you're trying to suss out complex issues,
it's really helpful to say, Okay, years from now, if
humans are around, some version will be uh, what will
those future historians think? How will they describe what I'm

(58:54):
talking about or what I'm thinking about? And in the
case of future historians thing get a multinational corporations, private
for profit entities, they'll point out that it's pretty weird
for something to exist that's so large and has so
few actual responsibilities. Right. Imagine being an entity so powerful

(59:19):
that if you don't like the laws of one country,
you can either go to one of the other countries
you have a presence in, or you can just try
hard enough and get those laws changed. Those are superpowers,
and they may be too much for any one group
of people to be quite honest, and unless those people

(59:42):
are a government, and even then with a government, it's
like a case by case basis. We are so fun
at parties eliminate is tasty, but generate is for the birds,
just just nihilism and misery for me, please and science. Well, folks,

(01:00:02):
now we are going to outsource the rest of our
show to you. What do you think about outsourcing? Do
you have the answer, because we'll we'll put it on air.
Have you been personally affected by this tactic in a
negative or a positive way? Because again, not everyone is
an opponent of it. Who should bear the responsibility? This
is one of the most important questions to me. Right, So,

(01:00:25):
a lot of companies use outsourcing as a way to
purposely turn a blind eye to things like forced labor.
And they can say, hey, we outsourced this. Our job
is just to pay them x and they deliver why
on a quarterly basis? Right? And we visited the factory
once and everything seemed fine and dandy. Right, But why, like,

(01:00:49):
how legitimate is that argument? Who should bear the responsibility
for those abuses? And should the US take substance steps
to bring those domestic industries back from decline or is
this all just kind of how the sausage gets made?
Is this just a function of global progress? We don't
know sausage. Yeah, let us Yeah, it's about lunchtime over here.

(01:01:16):
So we're gonna call it. But guys, just really quickly,
you got to go on Food Court with Richard Blaze,
I don't know, years ago to talk about bacon versus sausage. Uh.
And I just got to go on there yesterday and
record an episode that I don't know when it's coming out,
but I had so much fun and we basically talked
about you guys the whole time as to what you

(01:01:37):
were defending or yeah better, I can't say I like that.
I like by the laws of Food Court, Yes, serious,
serious laws. Yeah yeah, what a fun show. And what
a cool guy with excellent hair. He's such a nice
person too. He's fun to hang out with. But yeah,
you can check out Food Court. I can't wait to
hear your episode, matt Um while people. Actually, I'm gonna

(01:02:00):
bug you about this soft air and see if we
can get a lot get get around in those pesky
food Court laws. Right. Well, we're just we're just talking
behind the curtain. But in the meantime, if you're online,
if you have answers to these questions were questions of
your own, we'd love to hear from you. We try
to be easy to find on the internet. That's right.
You can find us on Facebook, you can find us
on YouTube, but you can find us on Twitter at

(01:02:22):
the handle Conspiracy Stuff on Instagram or Conspiracy Stuff Show.
But you can also you know, throw the social media
to the winds and and and find us elsewhere. We
have a telephone number where you can reach us. Yeah,
so number is one eight three three st d w
y t K. Give it a call. Tell me about
your character on Diablo Immortal because that just came out

(01:02:45):
and you know playing, or tell me because I get
in I get into voicemail too. After your life fifth
fully leveled up elden Ring character, you need something else
to occupy your time. I suppose absolutely us call It's
not just me. I'm sorry. I didn't mean to implay.
It's just me. I just want to personally hear about
your You're one point. That's what we want to establish.

(01:03:09):
That be aware there's a non zero chance that Matt
Frederick may call you back. The abyss can call back.
You're not an abyss. I just love that Nietzsche quote.
But yeah, yeah, we list we we uh, we check
on the socials. We've got some exciting stuff coming out

(01:03:29):
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(01:03:52):
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