There has been lots of talk in recent months and years about outsourcing.

You know. That's when a U.S. company decides it's cheaper to make stuff overseas. When U.S. companies do that, it costs U.S. jobs.

That's unfortunate, but if you're a widget manufacturer, and you want to be competitive with other widget manufacturers, you might have to outsource.

What if the other widget guy is outsourcing and his widgets are cheaper than yours?

Nobody will buy yours. You'll go out of business. So I can see, on the one hand, why businesses are outsourcing. It's simple economics.

But a larger question is why labor is so much cheaper in those other countries. See, if those other countries weren't paying their workers a dollar an hour, there'd be no incentive to outsource.

But businesses in those other countries don't have things like environmental laws and worker protection laws and safety regulations to deal with.

Outsourcing wasn't a real big deal until fairly recent times because the products from overseas used to be kind of junky.

Some of them still are. But for the most part, the stuff that's manufactured in China, Taiwan, Korea, Japan or Indonesia is on par with stuff made right here in the U.S.

And a lot of that has to do with the fact that U.S. companies have imported the necessary manufacturing technology to those places.

So what happens to all that stuff that gets outsourced and manufactured overseas?

It gets imported back to the U.S., where rabid American consumers but it up by the cargo-ship load.

Take Wal-Mart, the nation's - albeit the world's - No. 1 retailer.

I read a story online that said Wal-Mart's China-made inventory hit $18 billion in 2004.

Now, remember a few years back when Wal-Mart officials liked to talk about how much of the stuff they sold was American-made?

Yeah, well, they're not talking about that any more.

In fact, according to Wal-Mart, that $18 billion is in keeping with an annual 20 percent growth rate of China-made products sold at Wal-Mart over the past two years. In 2003, the number was $15 billion.

And H. Lee Scott Jr., Wal-Mart CEO, told China Business Weekly in November 2004, "We expect our procurement stock from China to continue to grow at a similar rate in line with Wal-Mart's growth worldwide, if not faster."

Right now, around 70 percent of everything Wal-Mart sells is made in China.

And this is an interesting little fun fact told to China Business Weekly: According to Xu Jun, China's director of external affairs, "If Wal-Mart were an individual economy, it would rank as China's eighth-biggest trading partner, ahead of Russia, Australia and Canada."

The magazine notes that more than 5,000 Chinese enterprises have established steady supply alliances with Wal-Mart.

So there's really no argument that Wal-Mart sells a lot of stuff made in China.

Experts note in the magazine article that Wal-Mart's plan of buying more and more stuff from China has granted the firm a positive corporate reputation in the country.

"Buying more products in China means more job opportunities, which helps the firm win not only the government's hearts, but also the customers' appreciations," said Wang Yao, director of information department under the China General Chamber of Commerce.

That's really great - for China.

But how does that play in the U.S.?

Well, it's worth noting that Wal-Mart's imports from China have largely influenced the U.S. trade deficit in China, which is expected to reach $150 billion this year.

(Coincidentally, look down on this very page to the little story under the heading "Dollar." That'll give you a brief explanation of how a huge trade deficit devalues the dollar and scares off foreign investment.)

A big part of that trade deficit is in the textile industry, which is in the midst of a big decline in this country.

The American Manufacturing Trade Action Coalition says U.S. textile and clothing manufacturing jobs fell from 1.05 million in January 2001 to 683,400 in January 2005.

And the increase in the textile trade deficit made up about 12 percent of the total 2004 U.S. trade deficit of $617.7 billion. All this occurred, by the way, while textile import quotas were still in place. Those quotas expired Jan. 1, so things are only going to get worse for U.S. textile manufacturers.

The manufacturers want the U.S. government to do something about it, but so far there has been no action.

AMTAC says Chinese manufacturers held a 25.02 percent share of the U.S. textile import market in 2004 - a 40.74-percent increase from 2003.

China's clothing exports to the United States have risen dramatically since some import quotas were reduced after China joined the World Trade Organization in 2001. In some categories, shipments have risen by more than 700 percent since then.

How else does Wal-Mart affect the U.S. economy?

Simon Head is director of the Project on Technology and the Workplace at the Century Foundation. He has been a correspondent for the Financial Times and the New Statesman, and his writings have also appeared in The New York Review of Books.

He noted in 2004 that "the average pay of a sales clerk at Wal-Mart was $8.50 an hour, or about $14,000 a year, $1,000 below the government's definition of the poverty level for a family of three."

(Scott does a little better than that. He gets somewhere around $15 million annually.)

Then Head cites a February 2004 report by the Democratic staff of the House Education and Workforce Committee.

The report "assesses the costs to U.S. taxpayers of employees who are so badly paid that they qualify for government assistance ..."

For a 200-employee Wal-Mart store, the government is spending $108,000 a year for children's health care, $125,000 a year in tax credits and deductions for low-income families and $42,000 a year in housing assistance.

The report also estimates that a 200-employee Wal-Mart store costs federal taxpayers $420,000 a year, or about $2,103 per Wal-Mart employee.

That translates into a total annual welfare bill of $2.5 billion for Wal-Mart's 1.2 million U.S. employees." He added that state governments are burdened by Wal-Marts, too, with California spending more than $20 million on health care for Wal-Mart employees.

Frankly, that's kind of interesting. I never really thought about that.

Wal-Mart says it pays about what its competitors do and that's probably true. But Wal-Mart has driven down its competitors' wages. They're trying to compete, after all.

I will be the first to admit that I am a rabid capitalist. I think that a business should be allowed to do whatever it can within the law to make money. And Wal-Mart certainly is operating within the laws of this great land.

And to be fair, Wal-Mart does provide lots of useful, everyday products to its customers at good prices.

Sometimes I just wish the news about Wal-Mart wasn't quite so troubling. [[In-content Ad]]