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The Full Outsourcing Discussion
GileadGreene writes "Thomas Friedman of the New York Times recently did an interesting Op-Ed piece about the "silver lining of overseas outsourcing": the growth that it generates in the US job market as Indian companies outsource work that US workers are better at. Apparently total exports from US companies to India have grown from $2.5 billion in 1990 to $4.1 billion in 2002 as well. So maybe this outsourcing thing isn't so bad after all." Ultimately, free trade works out well; I think one of the issues is that white collar jobs are just beginning to feel the pinch, and are acting like manufacturers did in the 1970s and 1980s.
I don't get liberals- they tell us that we are supposed to care about third-world countries, and stop being greedy a--holes, but when it comes to discussions of outsourcing, all prior arguements are revered 180 degrees.
So what is it, gentlemen?
I sig, therefore I was.
With blue and white collar jobs fleeting, what's left? Pin-stripe lapels? The money gained from exportation primarily helps out those at the top, and most people can't be at the top. So while that's great for people with far too much money anyway, where does that leave the majority of people who need money to survive?
Also note how the fellow mentions that people want a good brand when buying water: The people don't care about the bottle, just who bottles it.
A good book on branding BS and the marketting that goes with it is No Logo (Naomi Klein). A decent read.
Trolling is a art,
Oh really?
I'd wager that the person who submitted that article is probably about 25 years old, and not a student of history. Let me explain.
We were pushed out of the consumer electronics industry by the Japanese before the end of the 80's. 10's of thousands of white collar jobs were lost. Likewise, we were pushed out of textiles, steel, and many many other goods.
In the early 70's all the way up till now we've seen a steady decline of the auto industry, and the ONE THIRD of the country's economy that the auto industry directly or indirectly touches.
There are many other examples. Read your history and learn about it. Or you'll be certain to repeat it.
I can bet they were talking bad about early car manufacturers. Adapt and overcome. Learn new skills. Go to work for those giant megacorps, or don't. Start one yourself. They all started small. But just talking bad about outsourcing is not going to stop it. I think it's a natural business response, companies are only here to make a profit, if you can help them make a profit, they will need you. It's neither good nor evil, it just is
"Most of the shares are owned by individuals through: 1. pension funds, 2. 401k plans, 3. mutual funds."
Think about it. If the entire employment of the US is outsourced (other than politicians, lawyers, doctors, nurses, hair dressers, and food preparation workers), there isn't going to be much of a market for stocks among the peons. Not only that, but the lawyers will sue the doctors, the doctors will malpractice the lawyers, and the politicians will have no constituents, only a rebellion.
And don't bother accusing me of parroting "democrat liberal mantra bs lines" because it won't wash. I bucked the trend by backing Barry Goldwater in high school in 1964, and have always favored conservatives.
UNTIL NOW. Until this issue opened my eyes.
Face it, this isn't a liberal/conservative issue anyway. The US is staring at its onrushing demise just like the USSR was a few years ago. In both cases it will be due to corruption and selfishness.
In the USSR, the State owned industry, and corrupted its house to death.
In the US, industry owns the State, and is corrupting its house to death.
When you travel 180 degrees on a circle either to the Right or the Left, you end up in the same place.
Sure, let's all just pretend Free Trade Works No Matter What. Once upon time, people used to emphasize Communism Works No Matter What, and the results were excellent. Such is how idealogy works, except in America we don't look at "Free Trade" as an ideology because all its proponents have convinced of the wonderful brainwashing trick called TINA--"There Is No Alternative."
Capital is free to move, but laborers are not. If a corporation sees a market that has cheaper labor, it is free to move its capital into that market (read: country) and start up factories there, reaping the benefits. Meanwhile, if I, as a poor suffering laborer, want to move into another market, things are not quite so easy.
"Free Trade" is a misnomer. It's "Free" for corporations and concentrations of wealth to do what they want, while it's chains and shackles for the rest of us, the laborers. We're stuck exactly where we are, stuck with whatever hand the prevailing corporations of the day deal to us.
I want to remind everyone that the reason corporations exist is because at some point we granted corporate charters (that's We, The People, granted corporate charters) which could be revoked if the corporations did not serve our economic interests. During many years of judicial distortion, corporations gained rights of personhood, and, through further distortion, became not just people, but people who get the rights of being a person but do not have any of the responsibilities (if a corporation steals, it is not prosecuted as a person who steals, but as an entity with thieves within).
What a distortion it is to think that we, the people, want corporations whose leaders can enjoy the benefits of the US but not give anythink back the country that allowed it to exist. What do I mean by this? They don't give us taxes, because they base their corporation in the Caymans, or whatever. They don't give us jobs, because the outsource. But the upper crust of the corporation benefits from the American lifestyle, and the corporation itself benefits from the captive American market.
If this were a different day, any corporation that could be described in this way would not be allowed to exist. But nowadays, we have schmucks like Friedman telling us it's just the matter of course, that Free Trade will prevail. That people accept this as anything other than a heavy pile of bullshit blows my mind.
This is not about us American laborers being able to compete with those cheap Indians. It's about us not jumping headlong into a world where we allow corporations the rights to do whatever they want, include exploit our market and our laws, without serving the public's economic interest in the slightest.
I hope this becomes and STAYS a national issue. If we have politicians worth a damn, they'll understand that this may be the single most important issue in the coming years. We cannot be manipulated into buying into an idealogy that does serve us. And this is an idealogy, like any other.
I was listening to a debate on this issue on NPR recently (with keen interest, as you might imagine), and one of the economists in the discussion put the issue much better than I could have. Every text on international trade says that free trade works because differing factors of production (technology, labor, capital) create comparative advantages among nations. Each country focuses on exploiting its comparative advantage and trades to obtain goods and services it's at a comparative disadvantage for producing.
But the present situation violates the key condition for the mutual beneficience of free trade -- low mobility of factors of production. Capital and technology have been able to cross borders for decades, but only now, with increasing virtualization via ultra-high bandwidth communications, is labor able to "virtually" cross borders at will. Indian engineers striving to take my job away, from the point of the hiring corporation, might as well be in the U.S for the most part. (The obvious difference being that they can work for 1/10 my salary, in part because of the lax environmental, health, and other regulations there, and any form of social contract.) The same is true for any occupation which does not require a physical presence at the point of sale or production. To say, "This is just like when manufacturing jobs went overseas and the American worker will just have to bootstrap and retrain" is ridiculous. What kind of knowledge work can we retrain for that isn't just as likely to get shipped overseas? The pro-outsourcing ideologues are short on examples.
Clearly, we're experiencing a paradigm shift and will be forced to re-evaluate the dogmatic appraisals of free trade. In my opinion, the answer is to tax outsourcing companies in proportion to the difference between the costs of compliance with publicly beneficial regulations in the U.S, for example the aforementioned health, environmental, and social laws. India can afford to undercut U.S. labor because the majority of its populations lives "like animals", in the words of a family member of mine who's just been there.
I'm not afraid of competition, but I want a level playing field.
As a liberal who believes in free trade, I take offense at your remark. While there are "protectionist liberals" (eg Gephardt), there are plenty of "free trade liberals" (eg Clinton), and on the other side, there exist "protectionist conservatives" (eg Bush).
The ways in which I (as a free-trade liberal) might differ from a free-trade conservative is that I believe in more unemployment protection, lower taxes on the middle class, figuring out how to deal with the Cayman Island issue, and ensuring that environmental and worker protection occurs worldwide.
However, all of these issues are complex: there may be reasons to delay certain elements of free-trade to ensure that it is done properly (the same way that implementing capitalism in post-USSR Eastern Europe worked best when they waited for the appropriate institutions to be developed rather than just saying "free market! go!"). Read Stiglitz, Globalization and its Discontents, to see how a free-trade believing economist can see major problems with how free trade is being implemented...
-Marcus
Check Out This Modern World for some more commentary on this...
Part of the issue hinges on whether the US jobs of the companies mentioned are being affected.
One person has family who work in one of the US Carrier plants. That plant is closing and the work is being transferred to three other US based Carrier plants, and one in Mexico. The one that is closing is a Union plant. The other ones... aren't.
So, the company is doing its best to screw the US workers for as much as it can. Carrier also have (who'd have thought) non US plants. just because the brand name is American, it doesn't mean that any of the workers who made/packed that product are in the US.
Z.
-- Under/Overrated is meta-moderation, and therefore is Redundant.
The article points nothing out about how the average worker is going to benefit.
I read Thomas Friedman but this little snipet has nothing to do about a Silver lining.
WOW an indian anmimation company outsources to the US for animators and writers to put a Hollywood finishing touch on an Indian Folk tale.
I think Thomas Friedman is spot on about Arab/Israeli issues but he is way off in the America outsourcing jobs issue.
Probably the solution is for American workers to move to India and teach the Indians that they need to unionize and create medical insurance, workers Comp and stock benefits.
What this really comes down to is that US companies are finding it harder to find Slave labor to create mega profits for themselves.
The US was built on Slave Labor.
The RailRoads, Textiles, the industrial revolution.
Hell they put Henry Ford on trial because he wanted to pay his workers $5.00 a day!!!
"This whole thread is a bit off-topic"
Wrong, it's within the scope of the topic because the originting comment ot the thread specifically said that 90% of the investments in those offshoring ventures are from the U.S.
"Mutual fund managers, for example, typically receive a percentage of the fund value every year"
Half Truth Alert ! What you neglect to mention is that they not only get paid for performance ( oh that their BMW payment was DIRECTLY tied to the fund's performance !), but also how many unknowing saps they get to BUY in to the fund ( loaded or not ), because better funded funds generally "appear" to be performing, to the "public" en masse.
Frankly, I think the whole "funds" business should be completely contingency based, with a cap on the said "peformance percentage" that the manager is remunerated. Taking 30% of a 5% increased ( I'm being conservative, of course )100 million fund is still a ridiculously high contingency fee ratio. Especially since you usually find that most managers aren't in fact managers of just any given single fund.
- The vast majority of job losses since the start of the decade are cyclical in nature, not structural
- Higher productivity is the only way to lower prices and increase wealth across the whole economy. Outsourcing helps companies to lower prices and improve the standard of living across the board. In any case, outsourcing's contribution to the overall jobless figures is overstated. Over 2 million jobs a month are in a state of flux in the US economy, with jobs being created as others disappear.
- Although IT jobs are currently undergoing what manufacturing went through in the 1990s, many more jobs will be created in the US as a result of the lower costs associated with outsourcing IT work. The jobs created at home will be higher paid too.
I think of this in the same way as the metaphor of the digger. Two men are walking past a building site where a house is being constructed and see a man working with a mechanical digger. One says to the other, "If it weren't for that machine you could have ten men out with shovels doing that work." The other says, "If it weren't for your shovels, you could have a hundred men out there with teaspoons doing it." What would be the point? All that would result would be the house being too expensive for anyone to buy.Bottom line: If you make stuff cheaper, society as a whole benefits. Yes there are painful individual cases where people lose their jobs, but because the house is so much cheaper, they don't have to work huge hours to buy a house when they do get a new job.
One final point of my own. I'm a bit worried by the rising tide of protectionism in the US. It was protectionism and xenophobia that ultimately set up the economic conditions for two world wars.
Drill baby drill - on Mars
The company I work for is in the process of outsourcing a substantial part of its workforce to India. Since the transition to India started, the company has conducted a series of information sharing sessions with its employees, during which they have been releasing and revising their justifications for outsourcing. Here is the latest (paraphrased):
Have any other companies tried using this Baby Boomer excuse? In a sense, I suppose it gives some hope to those who have been laid off (just live off of your *savings* until 2010 when there will be more work than you could handle), but I doubt it.
Transnational corporations will destroy their own markets. Perhaps this seems apocalyptic but allow me to clarify.
There is the historical "fordist" model of development. No when Ford started out - very few people could afford to purchase his products - so he paid a very good wage to his employees which granted them sufficient buying power to purchase his product. The spinoff benefits from this increase in buying power spread through the economy and the buying power of many increased. (This is of course over simplified)
Many people believe that:
"Ultimately, free trade works out well; I think one of the issues is that white collar jobs are just beginning to feel the pinch, and are acting like manufacturers did in the 1970s and 1980s."
The real problem is this. Transnational corporations (this term is interchangable with multinational corporations but it is a more effective term in that it accurately demonstrates that such corporations exist among many nations and also supersede the boundaries and perhaps legal jurisdiction of nation states) are moving jobs out of the country to areas where workers have the necessary skills but not the same level of income requirements as workers within developed nations. Therefore Company X may move its software development efforts to India. Great, these people are now receiving a wage they might not otherwise have had - BUT they do not have the same purchasing power as the now fired employee in the developed nation had.
This is key. Transnational corporations WILL NOT lower their prices because their costs of production are lower - simply because their costs of production are lower (such a move would be dictated by external competition or another initiative) so the prices of these products remain relatively constant. But the buying power of the United States, Canada, and Europe etc. is decreased. They will be producing a product at a price their traditional markets cannot afford - and they won't pay their new markets enough to improve their buying power to the point where they can consume the produced goods.
This is how transnational corporations are slowly destroying their own market. A revisitation of the Fordist perspective or an understanding of the importance of the strength of key domestic markets would be helpful.
Susan Strange has written two books that would be an excellent primer regarding many of these issues and other issues surrounding globalization and financial capital. Mad Money - and Casino Capitalism are very much worth the read.
Sorry to disappont you but what you are saying is current Conservative drizzle. When someone retires they need the money now and for a few years. If we look at the Stock market crash in the 30' and more recently the crash in the .com market and the more recent blick due to Enron, World Com and the World trade center, you can see that in the short term the market, not just individual stocks can be strongly effected. Lets look at the recent Mutual Funds problems. A safe haven for your stock, you would think so until some idiot starts wanting to be richer.
So CEO robery can effect the entire market and for a long time. The privatization typically gives peoplc choices to play the stock lottery with their retirements. How informed is you great Aunt at making choices. Who in the market can make good long term choices. There are none.
You probably know what an S&P index fund is. Most people don't. Should they have to understand that there are some times you should shift your money to bond funds out of stock funds. If you do that wrong you loose both ways. If its your retirement money to live on, you have no way of recooping that loss. Lets just send everyone to Los Vegas for retirement and if they loose Soylent Green.
"and are acting like manufacturers did in the 1970s and 1980s"
Yes, and we all know how well that worked out for the manufacturing workers in the US. What a stupid comment by Hemos.
Of course, this is to be expected from Slashdot staff, whose parent corporation VALINUX produces software to assist in the offshoring of jobs. Don't believe me? Check out their press releases or my journal for more info.
Social Security DID NOT FAIL.
On paper, it is flush. This is because back in '78 or so, we passed a major Social Security tax hike, with the express purpose of funding the payouts for Baby Boomers retiring post 2010.
In 1985, with eyes wide shut, the Social Security trust fund was completely wiped out. How? It was "borrowed". The fund is full of IOU's, due whenever. The money was grabbed with the sole reason of masking the humongous national deficit created by the supply sider's tax cuts.
The fund did not "fail". The same neocons that passed the tax cut made up the idiot idea that Social Security was "failing" to cover their own deception, and to create a meme that the more gullible would swallow. They knew it wasn't "failing" -- they were stealing it to get yummy tax breaks. And they had a Randian hatred of public programs, SS in particular, so they not only got gobs of cash, they also killed their hated liberal program, AND got to blame the program for a liberal "failure". A momumental game of chicanery that most Americans have swallowed.
Now, the national debt, that seven TRILLION dollars, is comprised somewhat of the IOU's owed the Social Security trust fund. IF the money was paid back, Social Security would not "fail". And as a sidenote, if the money had been left in the fund to gather interest, rather than being stolen by "borrowing" to finance giveaways to the wealthy, it would have generated large amounts of interest on investment over the last 23 years. Enough interest to have lowered Social Security taxes today.
And, one more thing: the Social Security program is still taking in more than it needs, even today. BUT THE MONEY IS BEING "BORROWED" AGAIN, for the same reason as in '85 -- to hide deficit spending.
To recap: Social Security was a success. Neocon ideologues hated it. They wanted tax cuts in '81. They hid the fiscal disaster of the tax cuts somewhat by robbing the trust fund. They blamed the trust fund for being a "failure" for having no money after they themselves robbed it. We have a stack of IOU's 7 trillion dollars high. And they are back in power, and are robbing what dreggs are left in the fund -- and Greenspan, that consistent Randian, proclaimed that we should cut SS because of the budget shortfalls.
Circular blame-the-victim garbage that will impoverish tens of millions of elderly people someday.
Let's keep this real. The program worked, was well funded, and was sucked dry by greedy rich people who didn't want to pay taxes. We need to pay the IOU's off, and restore the fund. That means RAISING TAXES. Go ahead, cry.
I'm personally disturbed by the outsourcing trend currently occuring since I am an employee in the US IT field. However, I have to respond to the whining that I see going on with regards to this subject.
It seems naive when an employee is upset that someone else won't take responsibility for maintaining their standard of living.
It's been a very very long time since businesses felt responsible for the financial security of their workers. Legally, companies are only required to pay their employees the minimum wage for work delivered. Anything outside of this has been offered strictly because companies want to acquire and retain those workers that provide better services than the norm.
People that work for a living are deluding themselves into thinking that they are more secure than if they started their own business. If you really want to beat downsizing, outsourcing and whatever the next big business buzzword is, stop working 80 hour weeks for someone that has no interest in your financial future and spend that time building your own software package, service or product.
I know that's what I'll be doing.
Look what happened to the Levis clothing company. Jacob Davis first approached Levi Strauss back in 1872 with a new way of making stronger pants. Levi had the capital and decided to go into business with Jacob after they file the patent for making the pants. So the company made a fortune and let's fast forward to today. I believe that Levis has shutdown their last clothing manufacturing plant in the United States last year. All their clothing is being 'outsourced' to non-American factories. It's disgusting seeing a company like Levis sellout like that. Now they get to have their clothing made dirt cheap and they expect us to buy their stuff? No way.