Why Offshoring is an Unethical Practice Term Paper

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Offshoring an Ethical Business Practice?

The practice of offshoring jobs is one that has been discussed at length by both by critics and proponents. Proponents argue that it is an unavoidable outcome of trade agreements that are both necessary and helpful to the global economy. Critics disagree and find offshoring to be destructive to the economy. As Sir James Goldsmith has pointed out in his argument against the General Agreement on Tariffs and Trade (GATT), offshoring wrecks the domestic infrastructure by removing jobs from American cities, which negatively impacts American families. The North Atlantic Free Trade Agreement (NAFTA) serves as another example: nearly one million American jobs were lost within the first five years of the trade deal taking effect (Muhho, 2014). From the standpoint of of Buddhist Ethics, refraining from harming living things is a precept that one should follow. This same idea has been perpetuated by numerous other ethical frameworks, from the Christian to the Utilitarian. The point is that for offshoring to be viewed as an ethical business practice, it would have to be something that does not destroy or undermine the lives of families. The evidence shows, unfortunately, that offshoring does harm the domestic infrastructure and, for that reason, it should be viewed as an unethical business practice. At the same time, given the fact that corporations in the U.S. are taxed at such a high rate compared to the rest of the world, it is understandable that companies would seek to offset costs by pursuing cheaper labor abroad. Still, two wrongs do not make a right; therefore, this paper will discuss this and other issues to show why offshoring is an unethical business practice.

What Does It Mean to Be Ethical?

First, it is important to define ethics. Resnick (2011) defines ethics as a set of "norms for conduct that distinguish between acceptable and unacceptable behavior." While this definition helps to provide an understanding of what it means to be ethical, it is not quite good enough. The terms acceptable and unacceptable are susceptible to relativistic interpretations. For example, what may be acceptable by some now may not be acceptable tomorrow. Or what some find to be acceptable may not be acceptable to others. Moreover, what is determined to be acceptable by all could very well be based on false information and, were the actuality to be exposed, the majority would disapprove. A better or more precise definition of ethics can be obtained from classical philosophy. Aristotle in The Nichomachean Ethics asserts that ethics is the habit of right action (Cahn, Markie, 2011). Whether action is acceptable or unacceptable is beside the point. The nature of the action is what qualifies the behavior as ethical or unethical. The nature of action is judged, according to Aristotle, by whether it is in line with its natural aim or purpose. To gauge the ethics of offshoring, therefore, it is essential to understand the purpose of business and the context in which offshoring is conducted. Doing this will help to answer the question of whether offshoring is an ethical business practice.

The Situation in Context

Why do corporations offshore jobs? The primary reason that companies offshore is that they find more affordable tax rates in other parts of the world. Pomerleau (2016) notes that rates in the U.S. are higher than all other countries, with the exception of Puerto Rico and the United Arab Emirates. This alone offers companies incentive to find a separate labor base. It is not, however, the only factor. In the U.S., the tax rate on foreign-source income is much lower, which means that the U.S. tax code virtually enables and supports the offshoring of jobs by corporations (Hersh, Gurwitz, 2014). The phenomenon, moreover, is not limited to the U.S. Sir James Goldsmith, a big business owner and advocate of the working class, has stated that "in France the economy has grown by 80%" as a result of trade deals like GATT (Quijones, 2012).

What Goldsmith goes on to say is that this figure of growth is misleading because it does not represent growth for the whole of the citizens of France but rather for only a small segment who benefit from this growth. The key metric, he asserts, is employment, because it tells how many people are actually working and making money to support families, which in turn support the domestic infrastructure of nations: in France, Goldsmith states, "the number of unemployed has gone from 420,000 to 5.1 million," which is a catastrophic expansion, prompting him to ask, "What is the good of having an economy that grows by 80% if your unemployed -- the people excluded from active economic life -- goes from 420,000 to 5.1 million?" (Quijones, 2012).

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Publius (2015) notes that "the economy is there to serve the fundamental needs of society, which are prosperity, stability and contentment . . . If you have a situation whereby the economy grows but you create poverty and unemployment and you destabilise society, you're in trouble." A modern economy that supports the 1% at the top while denying the bottom 99% the basic means of earning an income and supporting a community is an economy that is not living up to its name. It is an economy of greed and disaster waiting to strike. Businesses that do not support the common good of society show no social responsibility, and as Goldsmith argues, businesses have a duty to be socially responsible. Indeed, the good of the community for which they produce commodities to sell depends upon sound corporate social responsibility policies.

The Purpose of Business and Labor: A Buddhist Economics Perspective

According to Buddhist Economic theory, labor may be defined as an endeavor that provides three different positive outcomes for the individual and for society as a whole (Schumacher, 1966). Instead of viewing work as a "necessary evil," which casts labor in negative terms that can later be used to justify a "lesser of two evils" approach to answering the ethical question of offshoring, Schumacher (1966) asserts that labor should be viewed in positive terms because it does yield positive fruits both personally and communally when pursued ethically (p. 2). The ways in which one should view labor, according to the philosophy of Buddhist Economics consist of the following:

1) labor is a means of providing "man a chance to utilize and develop his faculties"

2) labor assists individuals in overcoming their self-centeredness through the process of "joining with other people in a common task"

3) labor allows a community "to bring forth the goods and services needed for a becoming existence" (Schumacher, 1966, p. 2).

One can see in these three points associated with a positive view of labor that work, far from hindering man, actually helps him to grow; that it promotes less egoism and more community; that it fosters a spirit of utility.

When work is offshored, i.e., taken away from a community (jobs being sent overseas), it deprives the people of that community that opportunity to grow, to become more united under a common task, and to provide goods and services to others. In effect, offshoring undermines what it means to be a community. It completely undercuts the values and objectives that a society should have by taking away one of the fundamental aspects of a functioning society -- the ability for individuals to work. If there is no work, there is no way for a society to live.

Corporations and companies employ people not so as to give people jobs but rather that those individuals might help in the production of goods or services for consumers. The outcome is that individuals have jobs and receive income, which supports the social, political and economic frameworks of society. When corporations and companies find alternative means of obtaining labor (at far less cost to themselves) and are incentivized to do so (as is the case in the modern United States with what essentially amount to its tax breaks for companies that offshore), the temptation to send jobs overseas can be quite strong. The problem is that it is inherently unethical and bears all the hallmarks of a lack of corporate social responsibility.

From a practical point of view, the problem can be seen not just for individual laborers but also for corporations. As the American economy shrinks and GDP fails to grow, corporations look for new markets abroad where they can peddle their wares. Jobs already being offshored, markets follow. Had companies remained based in their native nations, however, and not been incentivized to move, those nations would still be more robust than they are today -- there would be more jobs, more laborers, more income and more capital to spend on the goods and services produced by businesses. By cutting out their domestic employees, businesses undermine their own productivity in the long run. At some point, the infrastructure needed to support the global marketplace is eroded as businesses put profits before people. In the end, businesses must realize that….....

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