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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.
Hemos adds: Ultimately, free trade works out well
then I read this in the article:
"look around this office." All the computers are from Compaq. The basic software is from Microsoft. The phones are from Lucent. The air-conditioning is by Carrier, and even the bottled water is by Coke, because when it comes to drinking water in India, people want a trusted brand. On top of all this, Nagarajan said, 90 percent of the shares in 24/7 are owned by U.S. investors.
OK, so that's how Free Trade works out well: domestic workers are put out of jobs but the big multinationals reap the benefits. Where are the phones from Lucent and the the Carrier air conditioners manufacturered? Where does Coke bottle the water? They don't ship it over from the US. They probably have a filtering and bottling plant down the street.
The 90% of the shares owned by US investors aren't owned by your next door neighbours, they're owned by multimillionaire investment traders. They don't give a shit about the people making them the money, they're just cogs in their money-machine.
Saying Free Trade works out well because faceless corporation make billions is just plain wrong.
Trolling is a art,
The idea that America has an advantage in certain areas always comes up. But what jobs are Americans better at when the definition of doing a job well is increasingly based solely on the cost of labor?
sure.. it's good for the fat cats, but when is life not going to be? the points brought up in the article - All the computers are from Compaq. The basic software is from Microsoft. The phones are from Lucent. The air-conditioning is by Carrier, and even the bottled water is by Coke - wherever the offices are in the world these things will be provided by these companies or such like. The only people whose pockets are getting lined are the Fat Cat's, not Joe Geek who just got pushed out of a job.
tim
> 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.
So it didn't work out well for the blue collars, and it's not working for the white collars. I guess it's working well for the ivory tower folk. Or are you from India, Hemos? :/
There are many Americans who must call my programming company in Tirupathi with software specifications, requirements, bug reports, and customer feedback. All of this information must be managed between the American company buying the software and our Indian engineers. Are the people who manage this information not employed?
I think customer satisfaction is a major issue in outsourcing. I remember a friend complaining non-stop about Dell's customer service being incomprehensible after Dell switched to outsourced call centers.
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.
It's easy enough for Hemos to say that -- until his job at ./ gets outsourced to India or the Philippines. You know, it'd be pretty easy to do that for all the ./ editors ... hmmmm ...
I, for one, welcome our new Antichrist overlord.
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.
This must be some new economic theory. That a $1.6 billion dollar trade increase is somehow more beneficial than tens of thousands of good paying jobs.
Very interesting.
Casual Games/Downloads
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?
Now there ya go! Drop that doomed programming-job, and hop on to become a real Coca Cola truckdriver yea!
"Honey, I feel a certain distance between us..." "Really? A 31ms ping ain't that bad..."
Seriously though, if we continue (to allow our "representatives") export middle and upper-middle class jobs, we WILL see a depression, and I don't mean like the '80s, I mean a real depression. We're more than halfway there already. It's too bad we keep electing politicians that just sit back and allow the corporate wonks to masturbate them.
"Who are in control, they are not in control of anything - they don't even control themselves!" - Glen Beck
It certainly works out for the American companies selling the products.
Except whoops, they aren't American, turns out their headquartered in the Caymans for tax reasons. And their products are manufactured in China or Malaysia, and their customer support is in India.
But it does boost their executives, who live in the U.S. Though not legally, they also legally live offshore for tax reasons.
There are lots of good arguments for free trade, but Friedman doesn't know them.
Now, could you please answer just one question? We in the US were told when we shipped all our manufacturing jobs, and most of our dirty work, to the Third World, that all would be OK, because we would retrain to do the work of the mind. Which supposedly has a higher value.
Now that all the work of the hands is gone, we are starting to ship the work of the mind elsewhere. When the work of the hands and the work of the mind is gone, what exactly is left?
Please be precise, specific, and complete in your answer. Thanks.
sPh
I'm a little confused by the article... It states that this is a plus for U.S because all of these outsource sites buy Compaq computers, drink Coca Cola, etc. So, are we to believe those same centers here would not?
One of the frequent jokes about outsourcing is that the one group that will never be outsourced is management. That's not exactly true. If you were a company that wanted to hire a firm to write software for you, who could do it cheaper? An American firm who hires Indian programmers or and Indian firm whose entire employee roster works in India, including its management? At some point down this slippery slope to the cheapest price, even the "fat cats" are going to feel the effects.
It seems that $4.1 billion is not quite as much money as is lost by the people in the US not being able to buy things HERE because they dont have jobs. All that money goes directly to the corporations, and their CEOs when they sell any product. Eventually they'll simply start producing the products in the countries they're selling them to. They can make compaq computers in India if they need to.
In the long run, outsourcing will create some jobs, but it will be a fraction of the jobs that we currently have. Sure, people can retrain and new industries will develop, but the rapid loss of jobs puts a damper on the economy, one which can be tough to bounce back from.
The corporations are not worried about this, because they can still export products to other countries. Everyone else will have trouble.
http://github.com/gbook/nidb
All it is is hiring workers who do the job best, without regards to where the worker is. No big deal. There is nothing wrong with hiring the best worker.
How is this insightful? It's just plain incorrect. It has nothing to do with the best worker, otherwise you'd have call-centers filled with highly paid experts.
It's about hiring someone who can still do a decent job and saving money, with a heavy emphasis on saving money.
Casual Games/Downloads
> I think one of the issues is that white collar jobs are just beginning to feel the pinch,
Ask anyone who has lost their job if it felt like a "pinch".
The surprise isn't how often we make bad choices; the surprise is how seldom they defeat us.
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.
Good for Indian people: more jobs.
Good for companies: cheaper labor. According to some of my Indian friends, the rupee is undervalued, so it's (currently) a win-win situation for the Indian people and the companies.
>All the computers are from Compaq. The basic software is from Microsoft. The phones are from Lucent.
Sure, that's good... until they outsource those jobs, too. What we should watch out for is that companies don't start a race towards the bottom, where everyone is fighting for scraps and the jobs go to the lowest bidder.
(start -1 Flamebait rant now)
- Manufacturing in the US (save automotives) is all but dead as those get outsourced to other nations where labor is cheaper
- Information management (programming) is outsourced off to India
- Cultural production is stifled and held in the hands of the Hollywood few
- Creativity production is stifled and bound by the overworked USPTO and overbearing DMCA
When the nation is nothing but accountants, lawyers, and doctors, whose primary role is to redistribute, rather than create, wealth, don't go crying when suddenly people realize you add nothing to the table.
(Well, this explains an awful lot of why US laws are like that. When you create woefully little, you must defend that little with all your might. Think: if the US can actually compete despite their higher costs because they add more value, what'd be the point of the tight-fisted IP laws?)
Doing the Right Thing should not be preempted by making a buck.
Would there not be a desire for Indian startups to replace the outsourcing to US comapnies, with cheaper Indian or Malayasin people? I'm sure there is an indian computer manufacture that can make a PC to run Windows, and replace Compaq in this place. Or, better yet, run Linux.
This counter-outsourcing just seems like a slowing of the bleeding.
the thing that he doesn't mention in the article is that those microsoft and compaq products he mentions are increasingly being produced by foreign workers.
microsoft is outsourcing.
i would be flabbergasted if those compaqs are made in america.
i realize that things are changing. it is inevitable. perhaps, if customer service improves due to actual customer support being economically feasible, that is a good thing.
however, what is the end game here? first, the manufacturing jobs left- but don't worry, there are going to be plenty of high-tech and knowledge worker jobs available.
now, those jobs are disappearing- both tech and knowledge. there are only going to be a limited number of those creative positions that he mentions that are available. if you don't believe that, try getting a director's job in hollywood.
i thought that maybe certain things would be immune- like washing machines, etc., that are too large to be shipped from asia- but mexico just got another manufacturing plant from maytag the other day.
and now that manufacturing barriers for media (tv, films) are declining, i don't see america maintaining its dominance there indefinitely.
what is the end game, again? what are we going to do to survive? what will pay enough to enable a family to own a house and a car?
competition is good. trade is good. but the next twenty years in america are going to be rough if we don't start thinking about these things, to avoid having a nation of burger flippers or anointed creative types and ceo's. and if the numbers get more skewed, we may yet wind up with a democracy instead of a republic.
stored on computers from birth to the grave
"The 90% of the shares owned by US investors aren't owned by your next door neighbours"
Guess who are the people driving the relentless spread and tyrannical globalisation of free markets?
Little old grannies. No kidding.
See all that money their now deceased men folk paid into pension schemes for decades? They want it back... With interest...
Government of the people, by corporate executives, for corporate profits.
* Server implementation in latest tech - We'll do that
* XSLT internationalized web gui - We'll do that too
* SOAP and XML-RPC interface - Us again
* Integration with legacy COBOL system - Give it back to the yanks
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
However, this example also illustrates a very important caveat to this whole situation: the competition can only be productive if there is an equal baseline established. As a country, we have decided that certain qualities are important to us, such as a clean environment, worker's rights, education, health care, etc. These are national policies, enshrined in institutions from the EPA to the FDA, and thus every state is subject to the same requirements. And it is here that the comparison with international Free Trade breaks down. If companies in India are not subject to the same requirements, if they are not required to care about the environment etc., then it is not really free trade. American companies can't ever hope to compete, burdened by costs they can't control. Instead, we merely subsidize a temporary exploitation of a less developed country. Once India and other countries develop to a similar level, they will likely begin to care about more of the same things, and at that point competition can begin to truly flourish without a need for restrictions. But in the mean time, I don't see how true Free Trade can exist without unfairly undermining important values we hold.
Like I said elsewhere, outsourcing is bad for companies in the long run, because they give away important knowledge:
Outsourcing is a big problem. I can't imagine why a smart thinking company with any common sense would export intimate knowledge of his core business processes and pay for it too!
So because every CEO and his goat is tripping over himself to do exactly the same as all his competitors are already doing, all these companies are flushing their corporate secrets to third world countries.
Might as well do law school then, because that will be the only business model that generates any revenue at all in the years to come. If only to sue all these outsourcing shops who suddenly decide that your (local) competitor, or your foreign competitor pays better for their (read: your) knowledge.
I am thinking in a historical sense here, so bare with me.
Us as a species in general have been pretty adaptive over the ages. We adapt to new enviroments through the plasticity of the body, we adapt to new problems through the complexity of our mind. There is a change now in the way our country outsources work to a place where it is cheaper.
Regardless of whether or not we like this, it is a business decision at best. I have seen companies make decisions like these on a daily basis, this is just in different context.
We could opt to fight for the return of the way things were done before, or we could adapt. Develop skill sets that make us innovative, and refresh the markets we currently work in.
Evolution is funny like that. The saying is only the strong survive.
Time to see who's been limping along in the herd and cull it.
*note: authors opinion is not a reflection of Slashdot's, Computer Geeks, 90% of apes with egos, or pretty much anyone but himself*
Firstly, I agree that free trade tends to work out well, in that it gets us closer to a perfect market, which theoretically will optimize allocatins of assets. If you think such an allocation is just (a big if), then free trade is good.
One way to reduce the pain that comes from the shifting of resources that accompanies the liberalization of an international trading regime is to to work at reducing frictional unemployment. The best way to do this is to subsidize education and other forms of training. More money always flows to innovators: those who engage in think-work as opposed to do-work or make-work (for lack of a more nuanced set of expressions). Subsidizing education increases our ability to create think-workers who will be more able to adapt to changing market conditions and shorten their stay in the frictional unemployment column.
In regards to the situation experienced by factory workers, and now lower-level programmers, we see yet another manifestation of ever-growing trend towards commodification. Widely available education will help move workers away from the commoditized industries and closer to more valuable forms of employment.
cleetus
Apparently fewer students are pursuing EE/CS as a career. Supposedly down 33% over the last two years at MIT, 23% in the country as a whole this year. Potential gradual students are opting for Wall Street instead. See an article in today's NYT
Yes outsourcing is putting thousands of people out of work. Duly noted.
Yes outsourcing is driving down wages. Duly noted.
Everything you would ever want to carp about regarding outsourcing has been stated, you do not need to retransmit. The issue is now what are you going to do about reality. Are you going to bellyache about it and hope your low-grade tech skills will somehow merit $80k again? Or are you going to find those spaces where outsourcing won't or can't go and pursue ruthlessly?
The US has spent a quarter century ramming free trade down the world's throat and gleefully telling everyone else to "deal with change!". Well now that goes for you too. Outsourcing is reality. Route around it or be a victim. EOM.
The slippery slope is "does the same job"; does this mean "is assigned the same position": or "performs same job with equal perfomance" I think for example having USA telephone customer support trunked to India is an example of confusion in this area.
-- www.globaltics.net
Political discussion for a new world
All the computers are from Compaq. The basic software is from Microsoft. The phones are from Lucent. The air-conditioning is by Carrier, and even the bottled water is by Coke
Right, the problem with this 'argument' is: 95% of the computer is made in Taiwan or China, the MS sofware is outsourced in India, the Coke is bottled right in India, the AC units are probably made in Japan, etc.
This article offers no proof of any kind that outsourcing is good for the US economy. It just uses a random collection of impressions ('oh my, they use Compaq here too', 'man, good thing they drink Coke, they don't get malaria') and then jumps to the conclusion: 'outsourcing is GREAT, it creates jobs in the USA!'.
Thomas Friedman has been the choir boy of the Bush administration at the NYT for quite some time now. So much for the 'liberal' media. I can't believe they keep him on staff.
there's no place like ~
What it is is that you are using the pejorative "liberal" for anyone who doesn't agree with you. Consider the possibility that different "liberals" feel strongly about different issues.
Except it has absolutely nothing to do with who is best, rather it has everything to do with who is cheaper. You really don't see any outsourcing of US IT jobs to England, Germany, Japan, etc... You see them going to India, China, Lithuania, etc... (no offense to residents of those countries) because people will simply work for less income than in the US.
Saying Android is a family of phones is akin to saying Linux is a family of PCs.
That is as BAD a generalization as any one an American makes.
Owing to hundreds of years of immigration, the US is one of the most diverse nations on Earth, despite the effort of the likes of WalMart and McDonalds to homogenize us.
"does the same job" can be a diffuse and difficult thing to measure. Witness the return of Dell support to America - because Indian workers weren't well-rooted in American culture. The same would happen if the tables were turned. Last I heard, American workers were incredibly productive.
As for overpriced, it goes with the cost of living. But that same cost of living sells lots of products for the very same companies that want to outsource. The article says that Indian companies buy US goods, but do Indian consumers? If an American company shifts an American job to India, does it also shift that purchase of its product? Will an Indian consumer base arise as fast as the American consumer base is destroyed?
The living have better things to do than to continue hating the dead.
"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.
Free trade does work out well, but the problem is that it does involve both winners and losers, in the short term. The short-term losers know exactly what to blame: free trade. The winners, by and large, are diffused through the entire economy and over the course of many years: they benefit enormously from free trade, but they don't know it.
For centuries, protectionists have traded on this asymmetry. They point to the real, obvious, and acute problems caused by trade, and deny any theoretical 'ivory-tower' benefits because they are in the unknown future. This is the thinking that resulted in the Smoot-Hawley Act in the US, and similar measures throughout the world, contributing to the profound and lasting slump through all of the 1930's.
Today's protectionists, of course, say that they aren't like that, and that they only want to stop 'bad' trade. But what is 'bad' trade? In the end it still boils down to what it has always been: 'bad' trade is trade that adversely impacts politically powerful groups (such as farmers, steelworkers, perhaps now programmers), regardless of the damage such trade restrictions cause to the economy as a whole.
What was true 200 years ago is still true today: protectionism ends up leaving us all poorer.
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.
sPh
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
You bet! Regulations about chemical safety, for instance, (like methyl-iso-cyanate) are completely unnecessary. Just ask the people of Bhopal.
The living have better things to do than to continue hating the dead.
The problem with comparing dollar amounts is the question arises as to whether we are talking about constant dollars. Assuming a 4% annual rate of inflation that $2.5 billion in 1990 would be expected to grow to $4 billion by 2002 without any real increase in exports. So it's hard to tell if this really means anything....
What you are saying is correct, but unless you own enough stock to live off dividends, that doesn't do 90% of the people any good. Who cares if the stock I own is doing great, IF I DON'T HAVE A FRICKIN JOB AND CAN'T PAY MY BILLS............... That is the boat that increasing numbers of Americans find themselves in. It's great if my investment is doing well because all the big multinationals have shipped jobs and manufacturing and accounting overseas, but my investment alone won't provide me a living....
This is a concept the young replublican, right wing, econ-nazis' need to learn to deal with, or as Dlyan said these times will be a changin'
So Long and Thanks for all the Fish.
Drill baby drill - on Mars
It isn't as though the number of manufacturing jobs in the US has shrunk, or real manufacturing wages have fallen, since the 1980s. No, that has not happened at-all.
I don't doubt that free trade will generate a great deal of wealth. The question is - who will get it? In the example of the Coca Cola-brand bottled water sold in the Indian corporate park - how much of that wealth ends up in the hands of white collar workers?
Obviously - those who have power will use it to secure for themselves a share of that wealth. Duh.
This is not even about workers in India and the United States "competing" with eachother.
Let's take an instructive look at the case of caterpillar. Caterpillar (they make tractors) maintains factories both in the United States, and in Germany, and in third world countries. They have, in fact, more factories than they need to build enough tractors to meet demand.
So, when American workers went on strike, they simply increased production in their German (and Mexican, IIRC) factories. The German workers make slightly more than their american counterparts would-have but that doesn't enter into it. With the additional power provided by their international organization, caterpillar was able to break the strike.
So, yes, free trade does generate wealth. But, as with other aspects of trade and commerce (slashdotters are most familiar with the effects of intellectual property law) it will also tend to concentrate existing wealth in the hands of those with the power to take advantage of it.
Pretending, in the case of so-called "free trade" for which ample data is now available, that this is a net benefit for the relatively powerless general population is utterly facetious.
To put it another way - there are all sorts of events, dependent on free trade, might generate wealth for the general population. However, that has no input into the process by which events are made to occur. Events are made to occur because they benefit a particular group of individuals, powerful enough to actualize them. This may or may not have some benefits (lower commodity prices, in this case) for the general population which may or may not outweigh the costs (lower wages, lower employment level) to the general population. Theory can take us this far and from here we should rely on the evidenciary record.
I think it is abundantly clear from the past ten years that the movement of jobs overseas harms the general population more that it benefits the general population.
The good and new comes from no quarter where it is looked for, and is always something different from what is expected.
Thousands of American cities and towns have never recovered from the mass exporting of jobs- autoworkers, fabric mills, shoes and garments, lumber and steel, etc etc. And now white-collar workers are getting it in the rear.
Yeah, this is like so good for the country. Christ, what kind of delusion does this guy live in? They better get those Chinese markets opened up, because Americans are going to be too poor to buy anything.
---
SCO is weenies
Gator is Spyware
Microsoft is thugs
> > fund managers make zillions based on return. they don't care.
> Fund managers don't own the funds they manage.
Parent's parent had the reasoning wrong, but he's right in his conclusion. Fund managers don't care because their remuneration is obscenely high, even though hardly any of them even match the performance of the simple index.
Incompetent as they are, I doubt most managers are quite stupid enough to buy their own funds.
The wages in Germany and other European countries are higher than the US. But germany protects it's workers and there is a "buy german" ethic by many. Germans buy german made cars, beer, furniture etc. And they have laws protecting them from outsourcing.
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 US has had 200+ years of incredible growth and opportunity as it grew to its potential. Not that our potential is filled, but for the most part our boarders are. The easy part of growth is over.
We are at the decision point.
We can either go on with 'mature growth', or we can turn aside, with things like protectionism. At the same time, we need to understand what Free Trade really means, because fairness must be part of it. IMHO, the precedent to watch is/was the Muslim world around the time of the Renaissance. Up until then, the Muslim world had been the shining light of the planet. After that, they turned their backs on all of the things that made them great. (like science and math)
Creation Science alongside Protectionism, anyone?
The living have better things to do than to continue hating the dead.
Then we tax every corp in the world, regardless of whether they do business in the U.S. or not, for the privilage of being able to sell in the US. If they don't pay, well, they'll be considered a rogue corp and dealt with occordingly.
This way we (in the U.S.) can sit around on our asses and do nothing! Think about it - permanent vacation!!!
Some people, I think the Morphia or something like that, invented this a few years ago. They call it "protection" I think.
Something to consider.
Yes, I'm joking.
There is no spoon or sig.
For similar arguements, check out a recent op-ed by economist Paul Krugman and a recent article on outsourcing in the Economist.
Yes, I referenced an article from the Economist. I realize that makes me a f#$%'n prick.
If you write free code, then how can an Indian programmer be any cheaper.
What are you guys worried about anyway?
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!!!
Middlemen and executives
No wonder there are so many out there singing the praises of outsourcing. But can anyone give an example of a working economy (I said ecomomy not market) of only managers and salesmen?Feh.
Free Mac Mini Yeah, it's
Look I used to be a tried and true replublican till I saw my friends jobs being outsourced overseas, and the suffering they went through. Then I was laid off and out of work for 9 months ( which is apparently minimal from what some folks have told me), found a new job that pays 20,000 less a year, thats a pinch, being out of work for 2+ years and having to take an $9.00 job is a punch. Basically Bush and the Fox-News crowd don't care, they have thier millions and could care less if the rest of us starve.
Then in the name of religion, they use issues like Gays, abortion, prayer in public schools... ( all issues they have used since Reagan and done extactly nothing about in the last 20 yrs) to suck in the voters from the religious right, that they would otherwise never get, to vote for them and continue looting the US, and throw the evangelicals a bone every now and then.
I have had enough, I plan to use the Reagan formula 'Are you better off than you were 4 years ago???' No, bye bye Repubs... it's that easy.
I don't care if there is Gay marrige, cats and dogs living together, whatever as long as I can provide for my family. Thats the bottom line, the rest of it is window dressing.
So Long and Thanks for all the Fish.
"I guarantee you we wouldn't have an H1-B and an outsourcing problem if these programs targeted lawyers."
Muahahaha! Quite so, sir. You're ahead of me.
I cheer myself by imagining a fantasy world where there are H1Bs for politicians.
I read Tom's comments on how he saw Pepsi and other companies expanding into South Asian markets and I think he missed at least one important point. How can he compare Pepsi's (and other low-tech companies and functions) expansion into South Asia to technology jobs outsourcing? It seems a little under-educated. Here's what I mean.
For Pepsi to move into India probably required the construction of new manufacturing and distribution facilities. Production continued in Pepsi's traditional markets and probably had little impact on peoples jobs in places such as the US. There was probably little or no job "outsourcing" required to add carmel coloring and sugar to filtered water and CO2. Pepsi's overall headcount probably increased and the net effect on the US economy was job stability (unless or until the colored fizzy sugar water is imported from overseas).
Now let's take a look at our favorite industry, computer technology. IBM, Microsoft, HP, Motorola, municipal governments, and many other groups are moving (notice I did not say expanding) jobs to India. The jobs here in the US are replaced by (perhaps several) jobs in South Asia. The net effect on the US economy is job loss.
I think this gets to the nub of why Tom is wrong. Just like with textile, steel, glass, and automobile manufacturing, jobs lost to overseas labor remain jobs lost. BushCo likes to talk about the "freeing up" of the US economy to "do other things". Nice theory. In practice the gap between the have's and the have-not's (investors/boardmembers/managers and labor) in this country is ever widening.
We keep talking about how a crisis came in the 1970s and 1980s as manufacturing jobs were destroyed in the United States, as if it were in the past tense.
r oit
But, last time I checked, all the previous centers of manufacturing that were once booming cities are still teetering impoverished ghost towns.
A small list of the casualties of the last big free trade expansion:
Akron
Boston
Buffalo
Chicago
Cleveland
Det
Erie
New York City
Philadelphia
Shall we add to the list these IT cities?
Austin
San Diego
Phoenix
Redmond
Maybe we should just trash all of our cities?
This is my sig.
It is a bad thing. Outsourcing tech support even to US companys is bad...
Why? Because it's all about time... the outsourcer gets X amount of money if they answer Y amount of calls.
The more calls they answer, the more money they get.
What usually tends to happen in this type of situation is the execs at the outsource-500-support company come up and figure "Hey, fuck helping dell's customers, more calls = more money, let's make sure every call is under 7 minutes weather the problems fixed or not"
Therefore it's no longer important to hire qualified people. You can take any common person off of the streets in india and put them in the cubicle, doesn't matter, they don't care if she fixes the problem or not... as long as they get rid of the caller in under 7 minutes.
Some qualified people end up in the tech support dept, because they want to help people... but they end up getting fired because they have a few calls that took 20 minutes to fix the callers problem..
Both US and any other outsource tech support company's use this trick... i mean hey, it brings the money in, doesn't it?
So, I'm against outsourcing tech support, as, the outsourced company never does care about the people they're handling.
Excuse my grammar,
Just my two cents,
- 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
... in the eyes of management who are so rich they don't need to work in the first place.
I am very small, utmostly microscopic.
>>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.
Blue collar work went oversea and we have ghost towns in old factory cities. Now white collor jobs are going overseas and basic service jobs. So what's left flipping burgers or being a manager. The jobs of people who do most of the spending inside the US are going away. These CEO's have to be pretty short sighted not to see they are reducing the customer base.
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.
As for your president, following his little performance on the steel tarriffs, can we class him as one of your dreaded liberals? After all, he brought in illegal protectionist measures and only backed down after the EU threatened retaliatory measures that would affect the export of goods from key states in the 2004 election.
"What is it gentlemen" indeed!
Drill baby drill - on Mars
"You actually have some good points to make, but you let yourself down with confrontational comments ..."
"I really wish that political discourse in the USA would calm down and grow up."
My instinct is to agree that civility is desirable, but other factors can trump civility. I speak here without reference to specific posts.
Would it have been the right choice to tap Ghengis Khan, or Stalin, or the gentlemen whose initials are A.H. and must never be referenced in unrelated internet discussions,politely on the shoulder and say "Excuse me, sir, but I beg you to consider that what you are doing is unfair."
Confront the wrong. Confront lies. Confront evil.
That said, confrontation and incivility are not the same thing.
The problem isn't outsourcing per-se. We all know free trade is Good Thing(tm) and putting up trade barriers will only make things worse in the long run but crap man, could you at least give the programmers a second to find a new vocation.
That's what's got us all pissed off. We spent thousands, often tens of thousands of dollars on a top notch education in a field that everyone said was the wave of the future only to lose our jobs a few years later. At least when manufacturing and textile jobs started to slide America bucked up and tried ebb the flow. Now there's a 'well, it's happened before and it turned out ok... so fuck off' attitude.
I'm not so worried about myself. I'm stable and satisified enough in my career but there are still a ton of college kids that got into the field either because it was still decently hot a few years ago or because of *gasp* a sincere interest in computers who are going to be quite screwed come graduation day. It would be nice for those fellas to have something to look forward to and hopefully the generation below them won't be stupid enough to go into something as unimportant to America as technology.
LilMikey.com... I'll stop doing it when you sto
.. sits a white caucasian guy munching a bagel. His phone rings and he leaps into life... 'Hello, thank you for calling Coca Cola India. My name is... er... Gupta. Isn't the weather in Bombay warm at this time of year? How may I help you?'
Nice job with the "Sparky" attempt at maginalizing your debating partner there, but you're full of shit.
Let's look at some Dept of Labor statistics, shall we? You can find them just like I did (given 5 minutes and an annoying Liberal cry-baby to spank).
Here's a hint, look under Employment Situation:
Jan 94: 121,971,000 employed. 65,286,000 not in workforce.
Jan 04: 138,566,000 employed. 75,298,000 not in workforce.
While there are significantly more people not in the workforce, I submit to you that most of those are retired! (baby boomers getting older, that sort of thing)
So, contrary to your whining, there are 17 MILLION MORE PEOPLE WORKING now that there were 10 years ago. There is no impending doom!
This is a concept the young liberalcrat, left wing, econ-morons need to deal with, or they'll get left behind (whining about it all the way, no doubt).
Absolutely agree with the long-term benefits and even a few of the short-term ones.
That said, no one on either side of the issue seems to have a plan for how to ease the displacement and transition those affected people into these new "better" jobs.
Pro-multinationals expound benefits and the broad horizon of "better" jobs for Americans. Great, and I'm all for that--but what are those jobs? Not a whole lot of speculation or identification of these. If this isn't dealt with, these are going to turn into the economic equivalents of Iraq WMD--everyone knows they're there, but no one seems to be able to find them when it would most benefit them. Worse still, absolutely no one promoting multi-national work has any sort of plan for how to deal with the real disruption of real lives, with real consequences. C'mon folks, someone tell me something about training, support during displacement, the things those affected by this need to hear.
The anti-multinationals are even worse--blind, reflexive resistance to an economic force that, better or worse, is going to run it's course regardless of whether we like it or not. What are these people doing to lobby and advocate for the training, support and assistance the displaced are going to need?
Hey, I'm all for better, sustainable work and a career that builds on what I've already done, rather than locking me into a single competency. So somebody start defining what that is, how I get there, and, if the cost is my immediate employment, what support I have to get there.
Right now the answer to the above seems to be: "You're on your own, because no one has a clue." If that's the best the pro-multinationals can come up with, is it any wonder so many people are knee-jerk opposed to this?
So it looks stellar! Let's think about that. The difference between $4.1 billion and $2.5 billion is $1.6 billion. In 1990 our trade deficit with India was about $700 million. In 2004, our trade deficit ballooned to $8,066 million. (That's $8.1 billion, folks!)
Plug those numbers into your trusty calculator free-trade advocate, and you will find that our exports are up a whopping 64 percent. However, our trade deficit has shot up 1,152 percent. And, what you say, you didn't think percentages could go above 100?!?
So, maybe this experience with India is anomalous. Lets take a look at China, the other major player in outsourcing. In 1990 our exports to China were $4.8 billion, while our trade deficit was a measly $10 billion. After years of outsourcing, by 2004, our exports have shot up to $28.4 billion. However, the trade deficit has enlarged to $124 billion. These respective percentages are 591 percent for exports, but 1240 percent for the trade deficit.
The truly bad part about all this, as has been pointed out earlier, is that our "exports" really may not be anything but paper goods. Apparently, these exports largely are value that American companies derive from selling products to India and China, whether the products are actually made in the U.S. or not!
Does any of this mean that outsourcing works? I think clearly not. The countries that have gotten all the American jobs are clearly benefitting in gross disproportion to the benefits we receive from sending them all our jobs.
This is not a strategy for success free-trade advocate, but it is a stellar strategy for FAILURE!
What a joke. The US trade deficit with the rest of the world is at absurd levels. For the size of the Indian domestic market US imports are paltry in comparison to what they sell here. That great sucking sound you hear is real net wealth being rapidly and permanently transfered from the US to Asia for short term gain. What exacerbates the problem is that China and India indirectly support the US domestic spending spree by plowing their profits into buying our cruddy treasuries and keeping interest rates artificially low.
an ill wind that blows no good
If you really are old enough to have remembered Goldwater, then you're old enough to have heard these tired arguments every five years every time ANY industry goes overseas. You're also old enough to (supposedly) have some historical context on this. Will all jobs go overseas? Well, over 50 years, almost ALL tech jobs will. I guarantee it. Hell, all the "tech" jobs from 1950 have. Is there anything wrong with that? No, because they're replaced by whatever becomes high tech.
Looked at another way, if the US maintains a static labor market, we will become irrelevant and reduced to 2nd-world status quickly. Would you want to have the same sort of jobs available to Americans now that existed 50 years ago? Of course not, because bolt-turning jobs don't pay well, because anyone in the world can do that now. Unless the US keeps innovating, there's nothing to sustain the high salaries commanded by US labor. Unfortunately, we haven't figured out a totally painless way of getting rid of jobs that become less-needed as we innovate, but getting rid of certain jobs has to happen. Don't worry, assuming the US economy stays healthy over the long term, they WILL be replaced. This has occurred in a healthy manner for 100 years. Note that the total loss of manufacturing jobs that has occurred over the last 50 years has had NO ill effect upon the US economy or unemployment. Do you have any reason to suspect this one is different as you claim? Or is it just because the white collar nature of these jobs hits too close to home?
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.
That's too ridiculous to even be speculative. The USSR collapsed because its centralized economy fundamentally didn't work, and because Reagan tricked them into a military spending spree - which gave us a bunch of debt but killed them. Put it this way - if you're so certain, how about a rough year for the US's USSR-style demise?
Very interesting to read.
My problem with outsourcing to countries like China, and India is that American workers can't compete, and never will be able to.
With ~ 1.2 billion ppl in China, and ~ 1 billion in India, it's a question of supply and demand. Companies that locate factories or outsource in either country can pay whatever they want, and abuse the workers any way they please, because they have a virtually unlimited supply of labor.
So basically, this is how it works. Living wage and better jobs leave the US, leaving the newly unemployed unable to help support the US economy. Those jobs go to countries where wages are extrememly low and will remain stable for the next century because of population.
In those countries, the wages are too low and the working conditions not conducive to self-sustained economy growth. Basically, no consumer-class is being created. Hence, the argument that we are "spreading the wealth" or "creating economies that we can sell to" are moot if not disengenious.
Meanwhile, in the US, an as of yet non-existent "new industry" is supposed come along to create "new! better!" jobs, than the ones previously displaced by outsourcing to other countries. Contenders for the "NEW and IMPROVED" job creation engine are:
The previously mentioned and dicounted increased global trade (hint: currently our biggest trade defecit is with China.)
And BioTech which is still about 5-10 years from any major breaktrough. (but who's to say we can't outsource gene-sequencing. Doh!)
Finally, the political realities in those countries are firmly anti-labor, pro-business, and without organized labor and/or enforced government protections for the laborers overseas there can be no uppward pressure on wages and working conditions.
In those countries the only answer to labor exploitation will unfortunately be civil war witch only creates more poverty, more terrorism and more exploitation.
Unrestricted free trade can become a good thing for the US and the world if implimented slowly over decades, (unfortunately, having a country whose leadership changes every four years doesn't help, as it's not conducive to long term stategies.) but that would eventually create equallities between economies, and businesses wouldn't be able to take advantage of the currently encouraged inequallities.
Basically, the CEO's want to make their companies look good at the expense of the world-wide, future and present, middle class, or more to the point are too short-sighted to see where we're headed.
cat sig >
Don't forget corporate CEO's and the appointed board
don't work for the people, but rather for the investors of the company.
Given this, it is obviously inevitable that offshore outsourcing will replace
many many jobs. Why? Basically it comes down to: Does the CEO and board
care about providing jobs to U.S. citizens or care about providing money to its investors?
Obviously CEO's and the board care about providing money back to the investors
by whatever means possible. "Whatever means possible" has been given alot of
meaning from insider trading scandals and cooking the books. "Whatever means possible"
also means if we can outsource the it, then so be it.
Workers will gripe because they finally wake up and realize that the company -does not care-
about the workers. Of course it is politcally incorrect to make the mistake of saying that if you
are a CEO or a member of the board.
As people are faced with these kinds of decisions in their lives, they will ultimately have to
answer for their basis, execution and consequences of their decisions.
That's right -- in fact, any kind of protectionism functions just like a tax. If American consumers can buy equivalent goods and services cheaper from other countries but are not allowed to, then the difference in price is effectively a sales tax that the government is collecting on behalf of the protected industries.
For example, Canada applies protectionist policies against cheaper American milk, so a poor single parent with three young kids is paying what amounts to a 30% sales tax (or more) to Canadian dairy farmers every time she or he buys milk.
Since when were 3rd world counties banned from having economies?
America has done astoundingly well through free trade. The fact is that, like Britain a few hundred years ago, you're very good at it. Opening up free trade with Japan (which you did at gun point, I might add) is a great example of free trade's win-win effects. Sure your car makers got a cick up the butt in the 70s, but they deserved it, and you've still got a vibrant car indurstry. Sure most toys are now made in China, but who wants to pack card board boxes with floppy bunnies every day anyway? Your economy and technology has always advanced fast enough to more than compensate.
Your economy, and therefore every enfranchised citizen, has benefited enormously from your access to other countries resources, markets, and even labour force. It was only a matter of time before the newest industry - IT - matured to the point that it became more internationaly integrated.
For a country that prides itself on it's own freedoms, and despite the overwhelmingly positive record of the US on the international stage, I'm afraid many Americans still seem very unwilling to allow that other human beings have any right to fair treatment at all.
Simon Hibbs, London.
I doubt many of us would really be interested in this as the net effects would slash personal incomes by about 40% and double the unemployment rate. Every regulation diminishes the profitability that companies can achieve, and if you think impersonal corporations and "fat cats" are the only ones affected by this you're gravely mistaken. Those profits pay salaries and reward investors, and it's pretty well established that the only factor that actually positively impacts environmental quality is wealth.
When we push regulations here and abroad, we have to be conscious of the economic impact those regulations will have. In a bunch of cases you and I will think that the pain we'll have to collectively absorb is worth it, but it's silly to evaluate the merits of regulations without regard to the economic impacts. To try to foist these regulations on other countries so we don't feel the effects of our decisions as badly as we are right now seems morally repugnant. We made these choices, and we have to live with the consequences. Other nations aren't responsible for relieving any self-inflicted pain we may be suffering.
Right now unemployment is well below 6%, long considered the absolute lowest possible sustainable unemployment rate. Personal incomes are rising across the board, and the proportion of Americans who are investors has risen well above half from a tiny fraction as little as 30 years ago. We're experiencing economic success (even now) well beyond the wildest dreams of our parents and grandparents. I don't get all this dire talk about us becoming a nation of "burger flippers" and WalMart retail employees because of free trade when all the evidence seems to show that we're far better off than the generations that preceeded us.
Of course we can remedy this success by imposing additional regulations on our economy, making foreign producers even more efficient in comparison. Or we can start ramming regulatory "reform" down the throats of countries we trade with so they'll be less able to purchase the high-value goods we tend to produce in the U.S. We can accomplish a "level playing field" in the same way that communism did, by lowering the standard of living of everyone except a small selected elite to near poverty. Yeah, that's going to help us and our environment!
Sheesh.
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.
Outsourcing is dillution of the resource of manpower. US Jobs feed by US employees = good times US Jobs feed by + US employees + India + China + ... = depression
"This is a concept the young replublican, right wing, econ-nazis' need to learn to deal with..."
Your points were great until you had to start the name calling. Calling republicans nazis makes your credibility zero.
This is a concept the young democrat, left wing, econ-commies need to learn to deal with, or as Dlylan said these times will be a changin'. It's not so nice the other way around, is it?
Yes times can change. I don't know if you realize this but we live in a democracy. We elect our leaders. In about eight months you and I will have an opportunity to elect a new President. Our system is great however over half of the U.S's eligible voters don't vote. This fact angers me deeply. We take our system for granted and then complain.
Our GDP per capita is the highest in the world. Poverty as defined is the U.S. is nothing like it is in Africa where I lived for two years. I saw things that disturb me to this day. At least in this country you won't die if you are unemployed.
Enough of my ranting and raving. Sorry for trolling and flaming but after living in what seemed as hell for two years and experiencing a truly corupt government it makes me upset when someone attacks a group of people whom they don't agree with. Instead of attacking debate them.
He says that indian companies are buying computers and that this is a net gain of sales.
However, if the call center was in the US, the US company handling it would still have to buy computers, software, drinks, etc. I don't see how an Indian company buying these instead of an American company really makes any difference to the bottom line of the selling companies. He is claiming that these sales would not have been made, but the call center would HAVE to buy what it needs to run no matter if it's American or Indian. So his entire basic premise seems to be wrong.
Evan Reynolds evanthx@hotmail.com
Two peanuts crossed the street. One was assaulted.
Assume the following:
If one aims at a bruto salary of $60000 year, that's 60000 / 0.6 = $1000000 (1 Million bucks )
If the taxes are the same on income and over selling of shares, it results in the same netto income.
So, you have to be a millionair already in order to earn from you stock portfolio the equivalent to a $60000 year salary.
And that's not even taking the higher risk in the stock portfolio into account (let's just say that you would party during half of the 90s and starve during half of the 00s)
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.
I understand the argument, but I think that it leaves out a crucial point. If the standard of living and cultural values were everywhere equal, then there are no implications to buying the cheapest global labor to get a task completed. However, if you are searching for the lowest cost of production, independent of it's source, you are tacitly approving and supporting a set of cultural values that you may not agree with. This is how you wind up with major corporations supplying rugs and apparel produced in sweat shops by children. If markets are amoral, and price is the only driver, then why not use slave labor? Definitely a cost reduction.
Ultimately, there is an implicit "import" for every "export". The import is a set of cultural values. For every imported good you buy, you are supporting the values and objectives of that society. Further, if you don't factor this value based cost into your decissions, then ultimately you are importing the another cultures values as it represents the lifestyle you will have to adopt to compete.
1970s manufacturing was similar, but, this doesn't support the argument that outsourcing is good. since the 1970s, vast portions of the US have been reduced to poverty as the jobs left...the "rust belt"..rural new england...even sunny california have all had their livelyhoods destroyed by the export of manufacturing jobs. The places that prospered were the place swith industries that could not be exported: Silicon Valley..Route 128..new york city..los angeles jobs in technology, medecine, finance, media. Is the south, manufacturing survived due the lax laws on ecology and workers' rights. What did american consumer get as workers' lost so much? well, TVs can be bought for $29 new (but forget about having them repaired). Do you really need a new tv every year? more cheap plastic junk, except that in the past ten years it is now being made in China instead of Japan. The U.S. manufacturing economy gave birth to the service (repair) economy, where TV repair, auto repair, vacuum cleaner repair, maytag repairman, etc were fixtures of small town markets along with the retailers. Now, it's cheaper to buy a new tv than repair and old one, and so there are no more repair shops. Wal-Mart has destroyed the local retailers, so they're reduced in number as well. Soon, there will be one or two banks in the US, one or two major retailers (walmart and who?), and one or two major jobs (head of major corporation, sell-out academics and economists) and a system with less wealth distribution than royal france.
We have away our manufacturing jobs witht he promise that high-paying tech jobs would be the replacement, in a world economy that we would come out on top. We haven't. Let's not give away the programming jobs as well. And then, let's take back manufacturing.
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10% of chinese export is bought by Walmart.
The average american family saves $1400 a year buying foreign goods. Since the avg family makes 30k/year, the silver lining is purchasing power.
I remember these numbers from some woman from some US agency being interviewed by a chinese news station.. Sorry, no links.
The law is a weapon of the government, not a protection for the likes of you. Surely you understand that.
--> http://www.wired.com/wired/archive/12.02/india_pr
"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.
It's not enough to know that jobs are moving over seas, you need to know why.
The simplest answer is that it is cheaper to hire people in (India), labor cost less. Materials cost nearly the same, transportation costs nearly the same, time runs at the same speed. Labor.
Why is labor cheaper in 2nd-3rd tier economies? Cost of living is cheaper. Why is cost of living cheaper? Imports cost the same, travel, utilities, products cost nearly the same barring local production costs being cheaper. What is the biggest expense month to month and year to year for anyone in the world?
Housing. Rent, Mortgage, Real Estate, Property. What can't be exported or imported? Housing and Land.
Home prices and in parallel rental expenses have been going up 12% - 24% year over year in all regions of the USA for at least a decade. What is the annual cost of living inflation rate or even the average annual wage increase? More along the lines of 3% - 8% annually. Compound this over ten years and you can see that housing expenses have become the number one increase in cost of living throughout this America.
How is this possible? People still 'buy' homes right? People still rent apartments? Yes and No. More people are renting than ever before. Homes are being mortgaged using 30 to 60 year payment plans. Nobody who has 'bought' a home in the last ten years, excepting the very wealthy, will even come close to owning their home in the next ten years. As mortgage rates go up cost of living goes up, as mortgage rates go up, comparable rental rates go up... they are directly manipulated to equal local mortgage rates.
We are a nation of debtors whose income barely equals our expenses and often does not meet it. Out of control real estate values are bankrupting our nation. The average home where I live is priced at $420,000... average, meaning 3 bedrooms, 2 baths, small yard, 1.5 car garage, built in the 1980s over 20 years old. It is worth barely half of that, most likely less.
People are still buying because the banks and credit companies let them... which encourages the value of real estate to continue increasing well beyond any reasonable expectations of anyone to pay for it and still save for retirement or for the childrens college funds. This means they have to borrow even more to pay for the 'cheap' imported products so they can save their cash for old age. Insanity.
Now real estate isn't to blame... they are simply following market forces, "what the market will bear". The problem is that the market can't really bear it without creating enormous amounts of debt to finance everything. We are spending money which won't be realized as real value for 30 to 60 years. This is billions if not trillions of dollars I'm talking about. The federal deficit is nothing compared with the amount of consumer debt which is building up quietly behind the scenes with no one watching or assuming accountability.
The worst part is that we can no longer afford to compete with the rest of the world because property holders and credit companies are holding our paychecks hostage for the rest of our lives. We are paying so much for the right to have our basic housing needs met that we can't afford to take a pay cut. Not if we want to live where there is work to be done.
Look into this. It's much scarier than I've let on.
c ya. Got to go pay the rent.
A fool throws a stone into a well and a thousand sages can not remove it.
The revised 10 "hottest jobs" list has recently been published by the Bureau of Labor Statistics.
The top seven: waiters & waitresses, retail clerks, janitors, hospital orderlies, etc.
You get the picture?
That's the future - thanks to "free trade" - which the offshoring of American jobs (and now over one-third of the US economy) has given us - although taking American labor out of the picture in favor of cheaper foreign labor has nothing to do with "free trade" whatsoever - AND THAT'S THE POSITIVE NEWS!
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.
The closer you get to retirement the more of your investments should move to safer alternatives like bonds and cash.
If you reach retirement age and all or most of your portfolio is in the stockmarket you deserve every bit of bad luck you may get.
People that made their homework or got their fat arses to the office of a good financial adviser did not have any problems because if they were on the age of retirement they were not exposed, if they were young they were on this for the long term which so far has proven more redituable.
If you were especulating, you knew the risks: suck it up and bag it as experience (i.e. you were 35 and all your savings were in a single company that happened to be a dot.bomb).
In any case the former scheme in which working people payed for the pensions of old people does not wor anymore because pensioners will outnumber working people in the near future. People with far left political inclinations have yet to explain how we are going to pay for pensions if people are not forced to take care for themselves.
The only solution is people taking care of their own pension arrangements.
If people do not take any interest on their finances they deserve to struggle. It is not black magic, it is basic arithmetic, a bit of understanding compound interest (hardly rocket science) and a basic understanding of why some investments are riskier than others.
It is not like there is no information out there, the Economist or the Financial Times are cheap (stop smoking, that is enough to buy these or other fine publications). Thanks to them I have feared pretty well, forseeing things like the Euro appreciation and the dollar devaluation and managing no too bad during the dot.bomb (hint: I had my eggs in many baskets, not only IT ones).
I am not an economist, but for goodness sakes, encourage people to take responsibility and learn about how to handle their own money.
IANAL but write like a drunk one.
The issue is that the jobs for americans are shifting. Straight coding and IT jobs are now seeing a pinch forcing Americans into project management, software architect, systems engineer (sales), and technical marketing jobs. This isn't necessarily a bad thing in the long run, but its pretty difficult for someone who has already started their career and has no desire/no training in those disciplines. As for those of us who are still in CS programs, I just really hope the top engineering schools start to realize CS graduates will be needing more skills than C++ and calculus. I think I heard of a combined undergrad in CS and business at uPenn. Thats a nice start. I know my school it gonna get kicked in the ass on this one, they have their head way too up their research *ss to see what is going on in the real world.
This is a mixed economy with all sorts of government intervention being exerted by all sorts of goverments. Calling this free trade is wrong.
I came across a columnist with an unconventional view, Paul Craig Roberts. In his June 18, 2002 column, titled, Importing people, exporting jobs, he points out the following:
"It is a mistake to see the loss of jobs and income as the workings of free trade. The downward pressure on incomes does not result from an exchange of goods. Something different is occurring. Middle class incomes are being traded away in order to gain larger bonuses for top management, and politicians are pandering to the immigrant vote at the expense of lower income native-born citizens.
The longer this process continues, the more explosive it becomes, both socially and politically."
I don't think I can say it any better. Like Paul Craig Roberts, I believe the US is heading for 3rd world status.
Wansu, th' chinese sailor
And if every programming degree left, you might be right. But they're not. In fact, I would wager that those left *permanantly* unemployed in their field because of outsourcing are NOT the people spending $30,000 for education. It's more like the ITT crowd.
Part of the problem with programmers (in fact, a lot of the problem) was overhiring in the 90's followed by dot bomb. Without all the people who majored in CS then, we'd have no problem now.
In fact, I'd say that a small fraction of 4-year-college-level jobs will leave anytime soon. I'm hearing a lot of chicken little and little evidence.
While I like free trade, couple things bother me. 1. I just cancelled my pretty expensive static IP dsl line from Ameritech that I've had for 3 years because I just spent 12 hours straight talking to customer service to go through a pretty simple issue. Main problems: They couldn't speak English and followed scripts far too much. While people in the US still follow scripts, not speaking much english on phone customer support is not acceptable. 2. I have a problem with cheap products being sent from countries that have no environmental rules to speak of. They can dump their waste into the ocean that washes up on our beaches eventually, but if we have purely free trade, their goods will simply cost less.. there need to be some limits put in place to regulate countries that harm others. Beat your own workers, but don't dump in my ocean or pollute the air I breath.
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.
>I've read many many /. posts complaining about being put out of work because their company outsourced to XYZ country. How can you say this is a bad thing at all?
When you are laid off they stop sending paychecks. That tends to be a bad thing.
I am just as qualified ( probably more so ) than an Indian when you tally up the cultural and communication skills with the technical skills, but that doesn't matter. I'll lose out because the Indian is cheaper. If a company can send the work out then they will. Mostly because the costs are lower. Just because India can do the job for less does not mean they do it better. The cost of living in India is much lower than in the States. If an Indian wants to compete in America with me, fine. If he/she wants to work for less and still deal with America's cost of living, then at least the playing field is level. I'd rather give my job up to an Indian-American who calls himself an American than see the job leave the country. I understand how the economics of this topic work. That doesn't mean I will lose my job with a smile on my face. There will come a time when the number of jobs being outsourced will approach a flat line. But until such time I am worried about having to switch careers.
I want to know when the free trade benefits will come back to the US. Who will be sending jobs to our country? I don't see that happening until it becomes cheaper to send jobs to America from another country. That means either they become "richer" or we become "poorer." Until the Global market is truly global, the US will always be the exporter of the jobs and the lowly US employee will have to be the one carrying the weight.
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If the parts are manufactured in Mexico and assembled in the US by skilled workers, so what? by the way, that's what Apple does.
The bottom line is that none of the doom and gloom you people are predicting has ever come true, and outsourcing of jobs (or mechanization of jobs) has always happened. In other words, the links to these arguments are non-unique, and the impacts therefore moot.
USSR collapsed not because of the military spending spree (they were spending A LOT during all the time of their existence, and Military Industry was providing TONS of jobs).
The real reason for the collapse was the death of the Communist ideology in the population's minds. Thus, there was no stimulus to work well and invent.
As late Soviet saying nicely summed it up: "They pretend paying us, and we pretend working".
Such an attitude can't sustain participating in a technological race. Certainly, there were inventors and scientists who have worked for the sake of it, but it was not enough. Thus, the quality of manufacturing, ergonomics and comfort&convenience were very low et al.
Also, the economy was inflexible with the planning athorities trying to plan in 1980 how many soap bars the country will need in Y2K.
This was what killed the economy and not the arms race.
Tigers respect lions, elephants and hippos. Maggots respect no one. (C) S. Dovlatov
People are always threatened by free trade, since the benefits are diffuse, but the pain concentrated.
So, here's a thought experiment:
Explain why you think outsourcing to India is bad, or evil, or should be illegal.
And then explain why the same isn't true of outsourcing to say, South Carolina.
South Carolina has lower environmental and labor standards that the rest of the us. Lower wages.
You really want every state to make their own cars? Furniture? Grow their own oranges? Wouldn't that make more jobs everywhere.
In fact, couldn't we cure suburban blight by preventing cities from importing products from their suburbs?
Now, how is that a better alternative?
And how's that meaningfully different than what's happening in India.
And yes, I am a liberal Democrat who works in the technology industry. The job that might get exported is my own. But I've also worked on a job where engineering was in India, and product management was in the US. That particular product was something that wouldn't have been worth doing at US labor rates. In many cases, this isn't a matter of exporting jobs, but creating jobs that didn't exist before, or couldn't have had as much labor behind them.
Another way to think of it: How much extra are you willing to spend on products in order to have them done in the USA. Are you willing to have your support contracts 4x higher to have an American answer them. Are you willing to pay 4x more for clothes? $400 Nikes?
Me neither.
Moreso, I'd rather have Africa get richer exporting food, Pakistan richer exporting clothes, and then get to pay even less for those goods. Ever wonder how much each of us is paying in tax dollars per American farmer?
Note that, if your income stays still, and you pay twice as much for everything, you just had a 50% pay cut. Anyone think outsourcing would get as bad as that? Nope.
As David Ricardo proved a couple of centuries ago, the strongest economy is one where everyone does what they're best at. Trying to pick winners and losers just drags everyone down.
The problem with our economy today isn't outsourcing and free trade. It's the most bolluxed up, politicized, fundamentally ignorant economics team in the history of the country. I would have been hard pressed to find a way to have spent MORE money with LESS economic stimulus than the the Bush economic "plan."
My video compression blog
Why is it that outsourcing is only thought of in terms of India?
If indians do such a crappy job, why are all the biggest firms outsourcing their businesses there, maybe to lose a few million dollars for the heck of it?
Im not defending India or outsourcing here but there must be something worthwhile that all companies are outsourcing to developing countries.Maybe India IS better than most other countries in this field.
We again come down to what America wans or the way the economy of he world works.Businness goes the way its most profitable.If outsourcing is profitable , companies WILL outsource irrespective of anything.Companies sponsor politicians so theres no way its going anywhere.
Lord of the Binges.
...is actual free trade. what we have now is a mockery of a free market, where the most powerful proponents of free trade are hoarding all sorts of leveraged trade agreements with the back hand. what we really need to do is make it tougher to have it both ways.
don't assume, of course, that i'm all for free trade. but i really wish the folks publicly gunning for it would be honest about what they're really doing.
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