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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
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.
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?
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?
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
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.
(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.
* 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
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.
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
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 ~
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.
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.
I don't get conservatives. They espouse the merits of capitalism and the free market(one of their few good ideas), yet when it comes to actually breaking down trade barriers to free the market, they do a 180 to bend over for their base --- few of which actually understand capitalism.
A deep unwavering belief is a sure sign you're missing something...
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.
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.
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!!!
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.
- 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
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?
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.
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.
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.
"Liberal cry-baby" ad hominem aside, it is of course the ratio of these numbers that we are interested in, not the absolute figures. By your measure, China and India have the strongest employment figures, because they have hundreds of millions more people working! The drop between the '94 and '04 figures you quote is a few tenths of a percent. No impending doom, to be sure, but hardly cause for celebration, or triumphalist chest-beating, come to that.
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)
While that's partly true, most of the uptake in the "not in workforce" category is due to the increasing number of folks who are unemployed and have given up looking for work. Actually, this is discussed explicitly in the text of the report whose numbers you cite, so I presume you have read it. Anyone who had not actively looked for employment in the four weeks preceding the survey were counted as out of the workforce, but no longer considered technically unemployed either...
This is a concept the young liberalcrat, left wing, econ-morons need to deal with, or they'll get left behind
That's not much of an argument.
Mouser
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)
Social Security DID NOT FAIL.
On paper, it is flush. This is because back in '78 or so, we passed a major Social Security tax hike, with the express purpose of funding the payouts for Baby Boomers retiring post 2010.
In 1985, with eyes wide shut, the Social Security trust fund was completely wiped out. How? It was "borrowed". The fund is full of IOU's, due whenever. The money was grabbed with the sole reason of masking the humongous national deficit created by the supply sider's tax cuts.
The fund did not "fail". The same neocons that passed the tax cut made up the idiot idea that Social Security was "failing" to cover their own deception, and to create a meme that the more gullible would swallow. They knew it wasn't "failing" -- they were stealing it to get yummy tax breaks. And they had a Randian hatred of public programs, SS in particular, so they not only got gobs of cash, they also killed their hated liberal program, AND got to blame the program for a liberal "failure". A momumental game of chicanery that most Americans have swallowed.
Now, the national debt, that seven TRILLION dollars, is comprised somewhat of the IOU's owed the Social Security trust fund. IF the money was paid back, Social Security would not "fail". And as a sidenote, if the money had been left in the fund to gather interest, rather than being stolen by "borrowing" to finance giveaways to the wealthy, it would have generated large amounts of interest on investment over the last 23 years. Enough interest to have lowered Social Security taxes today.
And, one more thing: the Social Security program is still taking in more than it needs, even today. BUT THE MONEY IS BEING "BORROWED" AGAIN, for the same reason as in '85 -- to hide deficit spending.
To recap: Social Security was a success. Neocon ideologues hated it. They wanted tax cuts in '81. They hid the fiscal disaster of the tax cuts somewhat by robbing the trust fund. They blamed the trust fund for being a "failure" for having no money after they themselves robbed it. We have a stack of IOU's 7 trillion dollars high. And they are back in power, and are robbing what dreggs are left in the fund -- and Greenspan, that consistent Randian, proclaimed that we should cut SS because of the budget shortfalls.
Circular blame-the-victim garbage that will impoverish tens of millions of elderly people someday.
Let's keep this real. The program worked, was well funded, and was sucked dry by greedy rich people who didn't want to pay taxes. We need to pay the IOU's off, and restore the fund. That means RAISING TAXES. Go ahead, cry.
I do agree that standards of working conditions should be part of any trade deal though.
Drill baby drill - on Mars
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.
"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?"
Could you please repeat that about low-grade tech skills to all of my recently laid-off friends with Masters of CompSci degrees and patents pending? The statistics have shown for years that a PhD would price you out of the market. These people are as highly educated as the market will bear.
My team has to fight every week from getting Architecture and System Design from going to India. We're the cream of the crop on this project and management will only pay lip service about how some customers will want Architecture and Design to stay onshore. The reality is that every project where the customer does not make this demand, everything but QA and Business Analysis (both entry level jobs) will be offshored. Quality be damned. You can afford mistakes when they cost 20% as much. Expect another Dot Boom-Bust cycle in India due to the capital flowing in at such a high-rate.
I'm seeing this now. It is fact, there is no part of IT that is safe. There is no white collar job that is safe. No level of education or productivity is going to save your job. As for persuing these new growth markets, where the fuck are they? There are no margins anywhere anymore. The international free trade has made the system way too efficient. We've tweaked the engine as much as we can and it's running pretty hot.
If there were areas that needed efficiency added, those areas would have good margins. Where are the good margins? If you own a patent (pharmi, software, chemical) you can make good margins on your patent. If you have a copyright on popular work (TW, RIAA members, Disney, Fox, Viacom) you can make a margin on that. If you have a government mandated industry (auto/home/health insurance) you can make a margin. If you do gov contracting (esp Defense) you can make a 20% margin.
Retail electronics (consumer audio/video) are losing margins b/c of convergence and compitition from PC makers. The Economist had an article about Retail Banks overextending their risk in order to get better returns and worrying a lot of analyists in the meantime. Financial services in general are getting squeezed due to the Internet, now everyone has near-perfect information in real-time. I could go on all day listing industries whose margins have dried up in the past 15 years. Due to the lack of standardized environmental and labor regulations in most of the world, it's a free for all race to the bottom. World standards of living will not rise fast enough for this to stabilize for at least another 100 years. The US is only trying to employ about 210 million people out of 300 mil. The world needs to educate and employ about 3.5 billion people out of 6 billion.
The only solution is a legal structure that promotes fair trade so that societies can adjust to the new circumstances brought about by increased trade. This includes the US. The main street of the American economy has gone from a dirt road to an 8 lane highway, we need some traffic lights.
Those that decry regulation talk about how everything will equal out in the long run and that the opposition are just chiken littles have their head in the sand. My favorite quote from Keynes is "The market can remain irrational longer than you can remain solvent". We need the middle class to remain solvent long enough, so we can capitalize most efficiently on the new economic structure that will come out of this new trade.
We are not going to be able to magically create growth and innovation by handing the rich bigger bags of money. They'll invest it in what is safe, we should be subsidizing minimum amounts of manufacturing and tech work for national security reasons, while also creating a more progressive income and capital gains tax system. Bush's tax cuts, due to lack of Fed funding have caused sales tax to go up 30%, on average, nationally. Sales tax is regressive,
Arrogance is Confidence which lacks integrity. -- me
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."
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