Each country in the world has certain core competencies (India has been a source for IT talent to US, cheap labor to the Middle East and a back office location too), China has been good at manufacturing products at cheaper cost,Germany for its engineering exports and several Oil producing countries for their hydrocarbon reserves etc...this list goes on...

Money in any economy is based on the provision of certain goods/ services

Every country thus produces goods / services which are either consumed internally or exported. Similarly there is import of certain goods / services from other countries. Each country then gets to derive a certain 'trade gap' which is the difference between export and imports. Globally trade gap is assumed to be zero, since all trade takes place within the premises of the world.

Profit (gross margin) in any trade is defined as the net revenue less all costs incurred. Net margin is gross margin less tax, dividends, interest etc.

With this backdrop in mind, every company that is in business, will automatically strategize towards reducing operating costs in order to increase margins. For most companies in the US, the largest % of operating costs are in the area of direct & indirect staff costs, incl salary, benefits, staff welfare, etc. The idea of outsourcing is based on margin preservation, since the revenues would not increase dramatically since any product/ service will decrease in its potential value, once it loses its niche market and hence becomes a commodity. E.g the value we associate with toothpaste (Colgate/ Signal) is significantly lesser than a special use toothpaste (as prescribed by a dentist). It is reasonably assumed that all products once considered niche, will eventually become a commodity over a certain time horizon (which differs by product/ service type).

I gave you this backdrop for all to understand that so long as the economic driver for outsourcing exists, businesses will find one way or the other to leverage that. By making strictures, the US government is only driving business away from the US. As a businessman myself, I am not too sure of business in the US, since Mr.Geithner wants to revamp financial regulation, and President Obama wants to revamp the tax structures by next year end. With that background, do I want to do business in the US, or do I go elsewhere, where in these problems do not exist. Remember, the fiduciary responsibility of a director in any business is to drive towards preserving and growing the investor's money, without which the investor will find alternate ways to do that, which means that he/she will pull the money out of the company and invest elsewhere.

The current crisis is due to the following...

Lack of regulation

Over complicated risk management, so the top management barely understand what risks they are taking ( I have seen conversations ranging from the sqaure-root of one-fifteenth of the price of oil in Ukraine...to the most complicated quantitative analytics in the world)

Lack of strategy on the part of the US to preserve its American dream and drive innovation and in fact attract immigrants

Concept of over leveraging credit

Lack of understanding of the end use of the funds, on the part of investment/ fund managers
Lack on one basic concept - repayment capacity of the borrower ( in debt instruments); How the heck does someone borrow 10-20 times of annual pay...

I leave you all with one final thought. If we all drive protectionism in our own thoughts and drive this up to our governments, we will then end up in a situation, where an Indian cannot eat fried rice (its a Chinese product originally), even if it is cheap and an American will not get to see a pizza (it's basically Italian food, remember) and the English will not see chicken tikka masala for the rest of their life.Do we want that world guys... Let's go forward, rather than backwards folks, we need a free world, devoid of such strictures , to ensure our livelihood and also to leave behind a wonderful world for our children...