Warren Buffett on Capitalism, Trade, Outsourcing and the American Standard of Living

Outsourcing is the contracting out of an internal business process to a third-party organization. The term "outsourcing" became popular in the United States near the turn of the 21st century. Outsourcing sometimes involves transferring employees and assets from one firm to another, but not always. Outsourcing is a practice that should not be considered without considering the impact on the organization. The definition of outsourcing includes both foreign and domestic contracting, and sometimes includes offshoring, which means relocating a business function to another country. Financial savings from lower international labor rates is a big motivation for outsourcing/offshoring. The opposite of outsourcing is called insourcing, which entails bringing processes handled by third-party firms in-house, and is sometimes accomplished via vertical integration. However, a business can provide a contract service to another business without necessarily insourcing that business process. http://en.wikipedia.org/wiki/Outsourcing The standard of living in the United States is one of the top 20 in the world by the standards economists use as measures of standards of living. Per capita income is high but also less evenly distributed than in most other developed countries; as a result, the United States fares particularly well in measures of average material well being that do not place weight on equality aspects. http://en.wikipedia.org/wiki/Standard_of_living_in_the_United_States Capitalism is an economic system characterized by private or corporate ownership of capital assets and goods. In a capitalist economy, investors are free to buy, sell, produce, and distribute goods and services with at most limited government control, at prices determined primarily by a competition for profit in a free market.[1][2][3] Central elements of capitalism include capital accumulation, competitive markets, and a price system.[4] Capitalism has existed under many forms of government, in many different times, places, and cultures.[5] Following the demise of feudalism, capitalism became the dominant economic system in the Western world. Capitalism successfully overcame a challenge by communism and is now the dominant system worldwide.[6][7] Economists, political economists, and historians have taken different perspectives in their analysis of capitalism and recognized various forms of it in practice. These include laissez-faire capitalism, welfare capitalism and state capitalism, all characterizing varying levels of state power and public capital control. A pejorative characterization, crony capitalism, refers to a state of affairs in which insider corruption, nepotism and cartels dominate the system. This is considered to be the normal state of mature capitalism in Marxian economics but as an aberrant state by advocates of capitalism. All such characterizations are subjective and tend to mark out a point of view either more or less sympathetic to attempts by voters to regulate business. Laissez-faire economists emphasize the degree to which government does not have control over markets and the importance of property rights.[8][9] Others emphasize the need for government regulation, to prevent monopolies and to soften the effects of the boom and bust cycle.[10] Most political economists emphasize private property as well, in addition to power relations, wage labor, class, and the uniqueness of capitalism as a historical formation.[11] The extent to which different markets are free, as well as the rules defining private property, is a matter of politics and policy. Many states have what are termed mixed economies, referring to the varying degree of planned and market-driven elements in an economic system.[11] Proponents of capitalism use historical precedent to claim that it is the greatest wealth-producing system known to man, and that its benefits are mainly to the ordinary person.[12] Critics of capitalism associate it with economic instability[13] and an inability to provide for the well-being of all people.[14] The term capitalism, in its modern sense, is often attributed to Karl Marx.[5][15] However, Marx was far more concerned with characterizing the sociological effects of capital economics. The "ism" was used only twice in the more political interpretations of Marx's work, which were primarily authored by Frederick Engels. In the 20th century defenders of the capitalist system often replaced the term capitalism with phrases such as free enterprise and private enterprise and replaced capitalist with investor in reaction to the negative connotations sometimes associated with capitalism.[16] The author Ayn Rand attempted a positive moral defense of capitalism as such but in highly romantic or literary terms that did not stand logical or historical scrutiny. http://en.wikipedia.org/wiki/Capitalism