One of the key drivers of downsizing and outsourcing is globalization. Recently, the Organization for Economic Cooperation and Development (OECD) acknowledged "growing unease about globalization." The organization expressed concerns that in some countries there may be a backlash against globalization because some workers have been victims of the globalization trend. The conventional wisdom that globalization could be likened to a rising tide that would lift all boats is apparently not true. Particularly, many workers with low skills in developed countries are having difficulty finding work because of the off shoring of jobs to developing countries and the increased use of technology in the manufacturing sector.
a. Discuss the extent to which accounting systems capture the cost of downsizing incurred in a particular country. Do you think decisions to downsize would be different if all of the costs of downsizing borne by a society were captured by the accounting system of the reporting entity?
b. What ethical obligation, if any, do developed countries have to supply a safety net for workers who are displaced by effects of global competition? Explain.