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Paul Samuelson Challenges Outsourcing
Noryungi writes "Paul A. Samuelson, Nobel Laureate in Economics, a professor at MIT challenges the outsourcing of jobs (retinal scan login required) to India and China. Choice quote: To put things in simplified terms, he explained in the interview, being able to purchase groceries 20 percent cheaper at Wal-Mart does not necessarily make up for the wage losses."
And here is the Reg-Free link.
In the future please use the NY Times Blog Link Generator when linking to the soul suckers.
(retinal scan login required)
Is this really necessary anymore? How many people DON'T know about bugmenot? Hell, there is even a firefox extension to plop it straight into your browser!
Good quote, too many chars. Seriously, the slashdot 120 char limit sucks!
To put things in simplified terms... He doesn't believe in a globalized economy and honestly he should be someone that we listen to.
The western world as a whole is sadly losing more and more of it's technilogical, educational, economincal, and advantages by succumbing to the short-sighted benefits of outsourcing.
What does America produce anymore? What does any other Western country produce? Food? Consumers? It is Very depressing watching this trend. It's more depressing watching my father-in-law, a damn hard working family man lose his job just because he's getting older to some unskilled person outside of my country.
I could go on, but I'm not trying to start a flame..
"It's not stealing if you don't get caught!"
Instead of all this whining and bitching about outsourcing, wouldn't it just be easier to actualy justify your pay? After all, what logical person is going to pay for something when they can get the exact same thing for half as much?
...stop making decisions in your purchasing habits based solely on price (aka Wal*Mart shopping), and encourage those around you to do the same. Support a heterogenous shopping environment where quality, service, support AND price are all factors in the purchasing decision, rather than the first three being secondary considerations.
The corporate mentality of cutting costs to increase revenue and profits is a reaction to the market's demand for lower prices, not the other way around. My $.02.
What does it mean to wake out of a dream
and be wearing someone else's shorts?
BNL, Born on a Pirate Ship (1998)
Love those pickles
Walmart, by itself, can combat inflation. However, at what cost?
I'm in favor of oursourcing all janitorial and service related jobs.
It's easy to understand that buying cheap or from out of town or out of state causes problems with your local economy, so outsourcing (effectivly buying some things from overseas), causes problems.
But the general public will never pick up on this. They are the 5 year olds that are offered 1 oreo now or 2 in 30 minutes and they take the 1 oreo now. That's how the American public will function, and continue to function unless the media drills it into them that it's a Bad Thing and they see the tangible difference in their pocketbooks in a reasonable amount of time.
This is the kind of crappy document that makes me think there is a future for our planet. No really.
.ca) ... but it is ludicrous to think that companies will do things for a Greater Good. What will they do? They will want to make as much money as possible and who can blame them?
... saaaame thing ...
This is always good to have someone say it is better for our own good to have as many jobs as we can in our own country (I'm from
So we have outsourcing of our running shoes in these paradise islands where the only escape is 6 months of hard unpaid labor. Who think that this will NOT be the case for everything else, including computers?
In Quebec, we have doctors and graduates quitting the place for bigger bucks elsewhere in the country. Everyone says it's best not to but who to blame them when you can get 400K US per year elsewhere and 100K CDN in here.
Same thing
I love thinkers.
Don't you mean: Rectal scan login required
I was reading the english translation of a Japanese business plan (Orient Watch Compant), and the Japanese word for 'outsourcing' was translated into English as "Hollowing-out."
It's an interesting viewpoint: The English word 'outsourcing' imploys that it's just a business transaction - while the Japanese translator used a phrase that has connotations of taking out the core of a business and discarding it.
Perhaps - there's some truth in that idea.
Moneyed corporations, non-working 'poor' and criminal prisoners are turning productive citizens into tax-slaves.
It seems outsourcing costs money and resources as well as saving some. Language, time zone, cultural differences and geographic distances all contribute to the costs. But the resources used to overcome such obstacles are seldom recorded separately, and so do not show up --- leaving the management believing that they have saved money that they have not, in fact, saved.
But it is just a gut feeling.
Religion is regarded by the common people as true, by the wise as false, and by rulers as useful.
Repost this when (if ever) groceries get 20% cheaper at Wal-Mart.
I find it interesting that Samuelson's former students rebutting his article have Indian names...
Who says Mother Nature's not perverse
I wouldn't give Samuelson much credence, even if he is a Nobel Laureate -- as late as the late 80's he released an edition of his economics textbook that still touted the Soviet Union as a viable alternative economic system.
I read that as rectalscan. I didn't know they were sufficiently unique.
Norman Cook's Ode to Sl
It's easy to fix this, of course.
Just order the tide to roll back. All you have to do is pass a law commanding the tide to obey you, and then it'll have to comply.
They've been saying this in California for awhile
(Posting anonymously to preserve minute amount of karma)
Outsourcing happens to to both increase corporate profits and decrease prices. If you feel a company is charging too little, you have the right to not do business with them. You do not have to shop at Wal Mart and have the right to pay the markup for any item in order to make yourself feel better.
It comes down to basic childhood economics. I have money. I want a candy bar and a soda pop. If I shop it where it is cheap enough, I can buy both. Most children do not weigh the long-term economic ramifications of their choices. They do not care if the candy was packaged by hand or by machine either in Boston or in Bangkok. Neither do most Wal Mart shoppers care. They shop there because they stretch their budgets further.
Guilt carries a very large markup.
The baby boomers retirement income is all invested in 401k's. Social security sure can handle that generations retirement needs if their 401k's aren't flush. They're allowing todays companies to buy cheap labor to accomplish this goal.
Tomorrows economy will be servicing the baby boomers with income from their 401k's, and developing IP.
If you think their is trouble now, what happens when social security can't pay what's owed 20 years from now, and the 401k's are valueless.
09 F9 11 02 9D 74 E3 5B - D8 41 56 C5 63 56 88 C0 45 5F E1 04 22 CA 29 C4 93 3F 95 05 2B 79 2A B2
we can't even specify things well enough to get development done on time inhouse, and the there is "threats" of outsourcing ..
While I am not against job exportation ("outsourcing"), its net benefit is to lower the wages in the exporting nation. This will have some long-term negative effects - such as lower buying power and a lower tax base.
For less socialist countries this impact is lower. Everyone, however, uses government services (federal roads, police/fire officials), so these "fixed" costs need dealt with.
How well these are offset with population growth is the real factor of impact. If the population growth is in the lower incomes, more government services are needed (welfare, medicare, SS) than paid for (taxes) versus the high incomes.
For most nations, the obvious, but painful, solution is to cut government benefits to reflect the lost income (taxes).
Well I'm glad to see that we are hearing more and more opposing viewpoints on the outsourcing issue from noted economists. Like most things, the truth is probably somewhere in the middle. Indeed, the only thing that makes this round of outsourcing different is the fact that high paying relatively high skill jobs are leaving the U.S.. And as a result, wages are falling in the U.S.. In the long term the leakage will probably stop, but I think the depressed wages are here to stay until the next big thing comes along. For my part, this has all taught me to take a more entrepreneural outlook on my career and be more than just a wage slave.
To the making of books there is no end, so let's get started
I bet the cost to the taxpayers to create the artificial barriers to labor rates will be greater than the increased wages those barriers will provide. The world market will find a way and there will always be cheaper labor somewhere.
Let's not forget that Dell brought back one of its call centers from India due to excessive customer complaints. I've also read that the lower cost of labor overseas is often outweighed by lack of individual action, time zone differences and culturally-caused communication problems. I've heard from several people in ATSI (a telecommunications association) that some clients came back after getting really poor results from offshoring.
Simply put, offshoring is not as clear-cut as everyone makes it out to be once you take in a lot of intangebles. I don't worry too much about it because, sooner or later, the inflation in wages will make offshoring too expensive to consider. It's already made India much less attractive as the one-time costs are taking longer to recoup.
There is a difference between "insightful" and "inciteful" other than spelling.
There are a few interesting things about this particular Nobel. First, it wasn't created by Nobel. Second, it's the only Nobel prize where the winners are regularly granted awards for work that blatantly and entirely contradicts previous winners. (I'm not saying that this shouldn't happen; I'm saying that it shouldn't happen all the time.)
I think there's a reason why Nobel didn't include economics in his original set of prizes; I think it's because he realised that his purpose was to promote progress, and there can be no progress when people can't decide which direction is "forward".
So anyhow, I'm starting out my read not too impressed with the credential of "Nobel laureate".
Precisely what everyone's been arguing for in over the last 20 years..
So, like, maybe it's *not* the best way to run an country...
I don't know why there's all this confusion about outsourcing, since it's really very simple: Right now, the US (and other developed countries) have an economic advantage. By definition advantage means "we're better off than some others," in this case, non-developed and developing nations. If we want a "global economy," that necessarily means evening everything out, and losing our advantage.
You can either have everybody equal, or "us" better off than "them." It should be obvious that you can't have it both ways!
"[Regarding the 'cloud,'] ownership was what made America different than Russia." -- Woz
The reason why so many people have accepted as blind faith the axiom that free trade is automatically good is that the Big Money has funded more economists, columnists, talk radio hosts, etc. This vast Big Money media has for decades used words and slanted, biased, flawed studies to create a worldview friendly to "free" trade, regressive taxes, and an ever-smalled social safety net, along with increased illegal and legal immigration.
Samuelson is a reminder that there are lots of economists who think free trade is a scam. But the average American rarely hears from them. Why?
After 3 decades, the Big Money media machine owns many of the ideas in your brain, and owns the public debate. They bought the public debate with 2 billion dollars of foundations and think tanks. See more about the Tentacles of Rage from Harpers magazine article this month.
eat shiat and bark at the moon
According to the article, economist Jagdish Bhagwati (a former student of Samuelson) agrees with the theory but says it is not all that significant in practice. Speaking of the labor force that can compete with Americans for high-value IT jobs, he says:
"You have a lot of people, but that doesn't mean they are qualified. That sort of thinking is really generalizing based on the kind of Indian and Chinese people who manage to make it to Silicon Valley."
This may be true now, but Samuelson's argument is about whether the past benefits of global trade will inevitably continue. This has nothing to do with the current state of affairs. When you look at the structural issues, it does seem likely that outsourcing of high-value jobs is here to stay. There will probably be some slowing of the trend eventually -- it's easy for the Chinese economy to grow quickly, because it's "underutilized." But as their economy matures, it will slow down. Of course, by then, they will have taken many more American jobs.
The other issue is that even where there is no direct competition, the low cost of Chinese and Indian skilled labor can depress American wage growth indirectly. Even if your job cannot be outsourced, a general wage pressure is present, and employers will use the *threat* of outsourcing to press employees for more work.
Does anyone know if the paper the article is talking about is available free on-line and if so where?
In other words, he's claiming that lowering the prices of basic consumer goods for 280 million Americans do not justify the wage losses of the million people that work for WalMart.
Call me skeptic, but I tend to disagree.
What does he have against brown people?
"The Wal-Mart You Don't Knowm l
The giant retailer's low prices often come with a high cost. Wal-Mart's relentless pressure can crush the companies it does business with and force them to send jobs overseas. Are we shopping our way straight to the unemployment line?" : http://www.fastcompany.com/magazine/77/walmart.ht
Suddenly, globalization cheerleaders are saying that businesses HAVE to be allowed to ship jobs off to overseas countries because if they can manufacture their widgets for pennies on the dollar, that results in lower product prices and more consumer spending, etc etc.
And nevermind all the people that get laid off in the process.
So why the assumption that suddenly companies have to be able to shaft their workers if they want to stay competitive? Virtually all the history of manufacturing in the world is the history of innovative PROCESSES. From the printing press, to Henry Ford's assembly line, to Wal-Mart's inventory tracking. One company comes up with a really great new way of doing business, other companies in other fields pick up on it, and everybody REALLY wins.
It seems to me that allowing companies to outsource and offshore and cut wages whenever they please is a cheat. It's a bandage. No one learns anything, no new processes are invented, there is no ACTUAL progress.
There's just a competition to see who can stream the most money into the most poor countries, often, at the same time, propping up repressive governments *cough*china*cough* that are responsible for the huge poverty (and ergo, low manufacturing costs) in the first place.
For this reason, I have no problem with so-called "protectionist" policies at all. Instead of allowing business to take the quick, easy, and ultimately destructive path, they have to actually INNOVATE - as they have so many times in the past - and come up with new ways of doing business. THAT, to my mind, is putting your faith in business.
Otherwise it's just allowing them to find creative new ways to reinvent feudalism.
Bush: He's Liberal in all the wrong ways.
That's not my point, though, as a relevant story is happening in Galesburg, IL with Maytag closing down its plant there to outsource jobs to Mexico. Many speakers appeared there, including Barack Obama, to denounce outsourcing.
Next you'll be telling me that cutting taxes for the wealthy DOESN'T lead to more investment in the US and higher-paying jobs for you and me.
If you post it, they will read.
.. of the end of the American economy. Ignoring outsourcing will not stop the disapearance of the American economy either. Outsourcing is just symptom of a greater change that is taking place.
Technology has created a global market whether we like it or not. If something can be done better somewhere else it will be and the market will notice and show preference for the suppurior product.
Outsourcing is a symptom not a cause. Outsourcing is a symptom of an unproductive workforce. Things can be done cheaper faster and better in other countries because we have let our educational system, ethics system, and straight up work ethic go to shit.
Some things are outsourced because of coporate greed. If it really was a bad idea the market will correct and the jobs will return to the US.
There is a greater question about global economics here. Will the US bury it's head in the sand (protectionism) and become less competitive and eventually fall in on ourselves like the Soviets or will the US decide we need to be competitive rather than whine about globalization and outsourcing.
All change will be painful when it happens probably devestating for some people but future generation will be worse off if the US ignores these trends.
Programmers are cheaper here in India. Say an american company needs custom software written. They can either pay an american $40/hr of which the coder will only take home $25 or he can pay the Indian $10/hr of which he will take home $8. There are two reasons why we are cheaper:
1) Even if I took home the same as my american counterpart it would be cheaper for the customer because we aren't forced to put our money into crap like social security and welfare.
2) Without social security and welfare to fall back on there are many people in my country that know they have to work for a living. Hospitals will turn you away if you don't have the money up front. For this reason, we know that if we do not work we will become poor, sick, and then die young. So more people are willing to work in my country. In India if you do not work your family dies. In america if you do not work, the people who do work will give you money, through welfare.
This motiviational gap leads to an increase in the supply of Indian workers, lowering our cost.
Until America gets rid of its welfare and social security money pits, we will continue to take your jobs. Once we have taken all your jobs there will be no money in your country anymore and EVERYONE will get sick and die, not just the people who will not work.
so true. so very true.
I'm a programmer, and currently I've had to take a lower paying job programming to stay in the feild. For a while I had to go back to the service industry. Now the real affect for me are that once I get my car paied off I'm not going to by another one for a looong time. I've cut spending, I don't buy all the new geek toys I want. But this extends to every thing I do, I'm less likely to go out, less likely to buy new shoes or clothes until nessary. Other people I know in this feild are doing the same. I'm pretty sure that this WILL make a diffrence in the enconomy in the long run. Companies are creating their own resession for them selfs and the rest of America.
down to Indian level. I am not greedy but my mortgage is more than an Indian IT professional will make in a lifetime. And I have a tiny townhouse. In fact, I wouldn't be surprised if the Indian guy actually has a highter standard of living than me despite my higher sallary. The only ones who are going to benefit from this outsourcing BS are the few fatties at the tops of corporations.
His argument is flawed for three reasons, one moral, one selfish, one pramatic.
1) Why is an American job better than an Indian (or other foreign country job). From a global perspective, the best outcome is a maximization of jobs and real wages. Sure Indian programmers get paid $10/hr (well I do too and I work in the US in IT but that's beside the point), but $10 buys more in India.
2) Trade is bi-directional If we were to restrict outsourcing of labor, other countries will may complain to the WTO resulting in sanctions. Even thinking as a completely selfish nation, I do not think the sanctions would be worth the slight boost to productivity.
3) Some companies need outsourcing to survive Numerous company CEOs have reported that without being able to outsource some of their IT section, their company would've gone under. In essense, the company outsources maybe 300 lower skill IT jobs to save 1000 higher skill IT jobs in the US.
-- Political fascism requires a Fuhrer.
However, having seen two-tiered workforces in action, I can tell you from both sides that it is not a viable long-term strategy from a Company's perspective. Contract/outsourced employees just do not care enough to reach for excellence, and they have no reason to. Why would anyone give 110% to a Company that is willing to accept 80% (or 70 or 60) effort, as evinced by their willingness to tier their workforce in the first place.
Finally, I feel bad for people just starting in IT in a soft job market, where there are fewer and fewer entry level positions. The same companies that are screaming for senior level talent refuse to develop it here.
I, for one, welcome the challenge of outsourcing. If there is an Indian (or Filipino or Russian) engineer out there willing to work for 20% of my pay, then I just have to be 6 times better. Get close to the customer, master your craft, continuously improve and do not become complacent. If done properly, your lieklihood of being outsourced becomes slim to none.
...I won't sign up with SBC Global or Earthlink. I refuse to deal with their tech support, should it ever come to that.
I don't know if they figure that into the cost of outsourcing, but they should.
Mod me down with all of your hatred and your journey towards the dark side will be complete!
........like his bowtie for instance.
-Randy
First of all brilliant article by Prof. Samuelson. I've long recognized that the assumptions used by the pro-outsourcers to be flawed, the Keysian model that assumes a free flow of labor, and capital, that does not account for immigration laws, environental impact, and tax structure. A recent survey indicates that companies who use outsourcing are only saving around 20 to 40 percent, if they save money at all. This is roughly equivalent to the de-facto tax breaks obtained by outsourcing in avoiding payroll taxes. In other words the only reason anyone on average saves money outsourcing is because they avoid US payroll taxes. One would think that the current administration would be concerned about the loss of tax revenue, instead they have proclaimed that outsourcing is all good, and the lack of tax revenue is irrelevant because according to the VP 'deficits don't matter'. The good news is the outsourcing problem could be easily addressed by repealing the tax break, and forcing companies to pay taxes on outsourced labor. At least Senator Kerry claims he will address the outsourcing issue, if he is sincere, I'm sure there are things that can be done to change the tax structure to at least improve the situation. We can all go out on Nov 2 and vote to fire the current administration who financial recklessness threatens us all, and who's mantra seems to be 'Outsourcing is always good' and 'deficits don't matter'. M
We need some way to get our money back.
Nothing new here: everybody knows that the American middle class has been shortchanged by corporations and governments in order to increase shareholder value.
The mantra is, that these days everybody is shareholder, so this is not good only for the corporations, but it is great for Middleclass BlowJoe. (The others, lower on the totem pole don't matter, anyway.)
However, Middleclacc BlowJoe bought that 500 shares of BigCorp from the money he was making in the US, before his job was outsourced somewhere else.
Now Middleclass BlowJoe does not have the money to further "shareholderizing" himself. In fact, he will sell those shares at any price, first to pretend to be still Middleclass (remember the "retire as millionaire - you can do it"?) later just to make endmeats.
Middleclass BlowJoe gets screwed, BigCorp gets pats on the shoulder from The Street for an other quarter, BigCorp CEO gets big bonus and the story of ever faster increasing wealth gap in the US and all over the world will jump to #1 on the Top25 Most Censored stories (featured on Slashdot a few days ago).
Nothing new here.
Let me know when something actually happens to reverse the last 20 years trend in wealth distribution.
I'd like to live that long, to see the governments acting on behalf of the ever increasing poor segment of the population, for a change.
What a revolutionary idea, eh?
From the harpers mag article cited above, here are some of the details from the RightWing Media Machine that has promoted free trade, outsourcing, regressive taxation, mass immigration, etc:
$2 BILLION ASSETS CONSERVATIVE FOUNDATIONS (200I ASSETS)
(in $ Millions)
The Bradley Foundation $584M; Smith Richardson Foundation $494M; Scaife Family (Four Foundations) $478.4M; Earhart Foundation $84M; John M. Olin Foundation $71M; Koch Family (Three Foundations) $68M; Castle Rock (Coors) Foundation $50M; JM Foundation $25M; Philip M. McKenna Foundation $17.4M;
Departed but not disbanded. As the basic American consensus has shifted over the last thirty years from a liberal to a conservative bias, so also the senator from Arizona has come to he seen as a prophet in the western wilderness, apostle of the rich man's dream of heaven that placed Ronald Reagan in the White House in 1980 and provides the current Bush Administration with the platform on which the candidate was trundled into New York City this August with Arnold Schwarzenegger, the heavy law enforcement, and the paper elephants.*
The speeches in Madison Square Garden affirmed the great truths now routinely preached from the pulpits of Fox News and the Wall Street Journal--government the problem, not the solution; the social contract a dead letter; the free market the answer to every maid-en's prayer--and while listening to the hollow rattle of the rhetorical brass and tin, I remembered the question that Hofstadter didn't stay to answer. How did a set of ideas both archaic and bizarre make its way into the center ring of the American political circus?
Once again, here is that link. Read this article well if you want to understand American politics. Harpers is a well respected magazine. Over 100 years old. They have no website, so this article has been reproduced from the September 2004 issue.
eat shiat and bark at the moon
America [US] is becoming land of the mediocre by the decree of our own government.
/. .
"No child left behind" means no child gets ahead. Sure there are exceptions, but my wife who is a teacher has to teach to the lowest common denominator. It frustrates her because due to "social promotion" she has 7th graders who can't read/write at a 4th grade level. Now imagine being an above average student in that class where the teacher has to talk "down" to and teach to the "slowest" kids. Due to budget cuts (hey, tax cuts don't come for free), after school clubs and honor level classes are being trimmed if not entirely cut so many of the "smart" kids are being taught at a 4th grade level/pace since there are no classes/teachers for them. No wonder they lose interest in school and just start reading
"Look Lois, the two symbols of the Republican Party: an elephant, and a fat white guy who is threatened by change."
great post actually.
...the second it starts benefiting any country other than America.
You mean it doesn't matter how cheap you can make something, if someone doesn't have a job to purchase it they WON'T?!?
DEAR GOD! What will we do about an economy now?!?
The outsourcing of high-paying jobs (heck, even low-paying jobs) does nothing but "appear" to help the economy in the short term because people still have savings to purchase goods at "reduced prices." But once that money dries up, it doesn't matter if that laptop is $4000 or $40 because people will be spending their money on catfood to survive.
Ugh... really... we need to move AWAY from a consumer-driven economy.
Diplomacy is the art of saying, "Nice doggie!" until you can find a rock.
The biggest problem with a globalized economy over a nation economy comes in wartime. Theres lots of problems with petty sanctions here and there, but you need basic needs in war like oil, steel, armament factories, etc. Now US's steel industry has been collapsing as China emerges as the steel power. The US should protect its steel industry if just for wartime insurance. The problem is that once US puts tarriffs on steel, other countries threaten total sanctions against the US. Its been known since the Roman empire that gold wins wars. Today we have an economical war playing out. The US is crippling itself by borrowing tons of money when it would be wiser for the long run to go for a surplus. Most people can't see this though, they only see the war on Iraq and the war on terror. www.geocities.com/James_Sager_PA
God spoke to me.
Just out of curiosity, has there ever been a slashdot article on outsourcing that's not negative?
Slashdot, would a spell-checker for posting be too much to ask? It's not rocket science!
Hmm... in the photo of Samuelson, EVERY book title that I can read has the name "Marx" in it.
Outsourcing is done to turn a higher profit, not to sell for less. Besides, what does Wal-Mart selling groceries have to do with outsourcing? Perhaps you were referring to Wal-Mart selling clothing, but even name brands are largely made overseas, so Wal-Mart is kinda the lesser of two evils -- if you must buy from overseas, why overpay as well? Not all of us can afford Roberto Cavalli suits, or what have you, just to ensure that all parts are 100% not overseas (of course, Italy's overseas from here too, so you'd have to come up with a designer exclusively manufacturing with a 100% US all-legal labor chain, from growing the cotton to shipping to your house -- good luck with that!)
stuff |
Look, we're just the unlucky ones who are caught between waves. America leads the world in general technology advancement. When the rest of the world catches up, we let them do that job and move on to something bigger. It happened with textiles, it happened with machining, it happened with electronics. Now it's happening with knowledge work.
Screaming bloody murder about outsourcing is just saying you want progress to stop. You don't want the rest of the world to catch up, you want to stay in your sweet spot and not have to learn any new skills. I for one don't want our current state of technology to be the end of all progress. Think. Invent. Expand. Let the other countries do the repetitive programming and design jobs.
I believe this in spite of having been unable to find a permanent engineering job for two years. It just that no good thing lasts forever, so you start looking for the next good thing.
... but it is ludicrous to think that companies will do things for a Greater Good. What will they do? They will want to make as much money as possible and who can blame them?
We (US citizens) are responsible for outsourcing, not companies. We have taught companies that only lower prices matter. Don't deliver the lowest price and we will shop elsewhere and you will go out of business. Go look in some oldtimer's toolbox (US citizen again), how many of the tools were made in the US? Then go look at your local Home Depot, try to find a US made screwdriver or hammer. It is possible but how many customers care vs. how many would rather save the two dollars? Same thing with virtually any other type of product, including computers, or service. I recall Apple trying to be a "good citizen" but eventaully being forced to move more and more overseas.
Things will not change until we change our buying habits and favor locally produced products over least expensive products.
Can anyone relate a single successful software outsourcing 'story'?
love is just extroverted narcissism
If I were to stick to a policy where I buy only MADE IN USA product, I will have to earn more to stick to my budget. To earn more, my company has to pay me more and hence the product of my company will cost more for other Americans..... which will drive the cost of american product even more... resulting in decline in exports of american products...
Did you notice that the people who finally speak out for/against a policy generally wait until they are no longer impacted by it?
Today the globalization hounds must beat the drum that globalization is good. Innovaton is lost and companies cannot figure out how to make a product or service more valuable so they make the cost of providing it cheaper.
In 1820 transitions occurred over time. To become a "global player" it took literally decades to move an industry to that level. During that time the industry workers transitioned. In current examples, the transition will occur in less than a decade. With Y2k,and the internet we built the infrastructure to make transition nearly immediate.
Now, add countries that would like the US work, but do not share US values. For example, India while more than outsourcing jobs, runs one of the most protectionist regimes in the world. Try, as a non-Indian to start a business and you will be kept out at the government, economic, and even social level.
The idea that we should not protect ourselves against such countries is ludicrous. This is like saying we should not stop terrorists because, by us not being terrorists they can see the benefits and will become outstanding citizens. (What drugs are these people taking?)
In the end, we are replacing 65K+ jobs with 30k+ jobs. Samuelson is correct ""If you don't believe that changes the average wages in America, then you believe in the tooth fairy," It does not take an economist to figure out that with only half the wages, the impact is on the entire economy. Two income families that bought two cars, can only afford one, or certainly not two new cars. Home buyers that had combined incomes of 130k, now have 70k to use as their financial base.
In their paper, Mr. Bhagwati and his co-authors write that such an assessment of the education systems of India and China "almost borders on the ludicrous." In an interview, Mr. Bhagwati said, "You have a lot of people, but that doesn't mean they are qualified.
The problem is that management doesn't seem to care if they're qualified or not. If they can save a buck (or many bucks in this case) they seem to overlook the qualifications.
Some of the jobs being offshored would have lots of requirements stated in explicit detail if advertised here in the US (such that it would be virtually impossible to find anyone who has all of the required skills) , but when they're sent to India those requirements tend to get overlooked... "You've got a BSCS from Bangalore Uni - you're hired!"
The thinking on management's part seems to be that they can make up for lack of technical skills by throwing more (cheap by US standards) bodies at the problem.
Eventually they'll realize that this doesn't work (and anecdotal evidence suggests that this is already beginning to happen).
...Samuelson is getting soft in his old age.
The West certainly hasn't lost any of it's skills or expertise. It's developing countries that have, well, developed! The West may have blazed the trail for our current world economy, for good or for bad, but it was only a matter of time before other countries started catching up. Unless artificial market restrictions are employed this trend will see the wealth of the world spread out over more and more nations rather than concentrated in just a few. While it may suck for the West, it's good for the majority of people in the world.
The only question is, how do we deal with this? Do we throw our hands up in the air, say we had a good run, and walk quietly off into the sunset? Do we impose artificial trade restrictions that turn us into hypocrites? (Yes, this is the current tactic. It's already being done. Free trade is great so long as you're more free than the rest.) Our best bet is probably to try to compete better by improving our education system and finding new ways to encourage research. (Read: Overhaul the cumbersome copyright/patent system so you don't need a team of 20 lawyers and a fat bankroll for bribes in order to invent something remotely useful.) So long as we're ahead on the tech curve we'll get business. Unfortunately, other countries can do this too and they just happen to have a lot more people than we do.
Yep. It sucks to be the West right now, but it does give one hope for all the backwards shitholes on the planet. How you feel about all this depends entirely on how selfish you are I suppose. Ask not for whom the bell tolls and all that.
Well I really doubt that anyone would be stupid enough to call a nation an economic system. Except you, apparently; I'll stick with the nobel laureate, thanks.
THERE ARE NO NOBEL LAUREATES IN ECONOMICS! The prize in economics is awarded by the bank of Sweden, not by the Nobel committe.
For the last few centuries the west has been living off the cheap labour of the rest of the world. But now increasing parts of the rest of the world seem to be breaking free and are able to earn enough to live with some dignity. Whether or not this change is of our choice, this will force us to live like truly civilised people, not like feudal lords who've come up with the clever trick of hiding their slaves on the other side of the world so that we can more easily pretend we live in a world of freedom and plenty.
In soviet russia stale jokes recycle you!
I think Marx said that a capitalist is a person who will sell you the rope with which to hang him.
Outsourcing also inevitably results in skill erosion here in the US and skill development overseas. For example, if you outsource a software job by lobbing a requirements spec over the wall, just reading that requirements spec gives the vendor a better idea of the sorts of skills and ideas needed to do it themselves next time.
So, the split incentives of capitalism may result in general losses in economic value. That's why the economy is regulated. (Samuelson did not prescribe protectionism, and I don't think that's the right answer in low-skill areas, but perhaps educational subsidies and R&D credits, etc.)
Its not OutSourcing, its OffShoring we are talking about here. OutSourcing just means that a company subcontracts another company to do some work that was previously done in house. Eg a bank might outsource to IBM but IBM doesn't have to take it off-shore.
You must be.
I think that a lot of posters here need to get some basic education in economics.
5 17548232/
The point was made that outsourcing forces domestic wages down. This may be true, but it's not relevant. You're mixing up currency with wealth. Wages in dollars may decrease, but the lowered costs to industry lower prices, which increases buying power per unit currency. Overall, buying power remains constant (other things being equal).
However, other things aren't equal. For one thing, the countries supplying the labor now have more dollars. There's only one thing that dollars are good for, and that's paying for things that are priced in dollars -- i.e., American goods (actually, it might go through many hands first, but since the only source of dollars is America, they've got to wind up there eventually). This increases what the rest of the world can import from us, improving our trade balance.
Someone suggested that it's easy to see the damage that outsourcing does to a locality, but that's absurd. If I expected that all of my purchased goods be produced in my own town, I wouldn't have acces to nearly the goods that I own. It's crazy to suggest that the huge breadth of computers, entertainment devices, entertainment content (books, etc), food, tools, housewares, etc., all be produced in my town. To support the huge range of choices we have, we need to allow specialization, which requires large groups. The degree of specialization we have today requires globalization.
Please look at this book, it explains economic issues such as this better than any other source I've seen:
Economics in One Lesson by Henry Hazlitt
http://www.amazon.com/exec/obidos/ASIN/0
...Mr. Bhagwati, Mr. Panagariya, and Mr. Srinivasan are optimistic about offshoring to India.
My unemployed IT friends; Mr. Smith, Mr. Schultz, and Mrs. Mackey; do not share in their optimism.
Questions are decadent!
Lazyness is counterrevolutionary!
Fast hands mean less whipping!
I'd like to type out how bad I think this internationalization stuff is for the US economy as I sit here in a cafe sipping columbian coffee made in an italian coffee maker poured into a chinese mug, while typing on a japanese laptop connected to a tiwanese access point. Oh, I just forgot, I left my norwegian cellphone in my german car in the parking lot. Be right back!
-- Greg
Slashdot, would a spell-checker for posting be too much to ask? It's not rocket science!
Any place where the price of real estate consistently outpaces income is setting itself up for cost disadvantages. This has long been true in the coastal metro areas of the USA, and is now happening in non-metro areas, such as San Luis Obispo.
In 1969, my parents sold a nearly new 3 bedroom house in rural New York state and bought a new 4 bedroom house in a San Diego, CA, suburb for the same price. In both cases he could, as a high school graduate of no academic distinction who held a factory foreman's job, obtain a loan of about 2.5 times his gross pay. His commute to work was about 1/2 hour.
In 2002, in the Bay Area, with a tech masters degree, I'm limited in choice to a one bedroom condo with an 80 minute commute. Homes are available, but only to those with astonishing credit who are willing to live with the fear that comes with a 2% down payment and 'creative' financing.
Spiraling land values should be regarded as a crime, because they force startups to locate away from research universities.
The clearance system sounds logical. It is not. It is completely arbitrary. -- John Bolton
Well, "stupid" is just a word I used to get some attention, but seriously, every argument to combat decreased standard of living starts with "acquire more skills".
That completely ignores the fact that a percentage of people will not be able to acquire skills. It's like telling recently unemployed people in the textile industry that if they had become doctors instead of textile workers, things would be OK. It's also like telling those people to now go to medical school.
The other fatal flaw is that when the race to the bottom happens within our country, we can mitigate the severe impact of job loss by slowing it down with things like minimum wages, safety laws, etc. But when it happens between countries, with no central government to intervene or impose basic human standards, we must all participate in the race at the lowest level.
Hence if all of China is working 7-day, 18 hour weeks, we will all soon be working 7-day, 18 hour weeks if we are to compete with them. And if you don't have what it takes to be an "innovator", you better get used to it.
Oh yeah, since most of these developing countries don't have things like health care or social safety nets, we must get rid of those too, or we won't be able to compete.
My point is that Samuelson is one of the many voices that are drowned out by the Big Money Propaganda Machine.
eat shiat and bark at the moon
The Soviet Union was a police state that overspent on the military and secret police, with political hacks running agriculture and civilian production. It could be argued that their problems were more political than economic.
The clearance system sounds logical. It is not. It is completely arbitrary. -- John Bolton
The economic theory, which is perfectly sound, says that yes, wages will drop here, but prices will drop too. In the end it should be a wash.
The political reality is that companies use their clout with the government to create firewalls between countries so they can price their goods differentially in each country. Witness the FDA getting hot and bothered by people importing their drugs from Canada, and of course our long time favorite here, DMCA and DVD regionalization. The result is some people get the benefits of globalization and the benefits of protectionism combined; others get the costs of each combined.
It's just goes to prove what my old uncle Ivan, who was a cynic first and radical second, used to say. "Kid, nobody believes in capitalism. Nobody believes in socialism. It's socialism for me, capitalism for you!"
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
The guy in the 1955 chevrolet you rear-ended now has whiplash injuries because he did not yet have a headrest on his seat back. He's paralyzed, and you are still alive in your "ingotized" Nissan. Plus, ANY car built now drives circles around the '55 as far as handling and reliability. Reverse the situation and the 55 rear ends your luckless Nissan. Results again: Nissan squished and totaled, but driver is alive and walks away. '55 chev (seat belts optional as well as no safety dasboard, no collapsible steering column, no -very expensive- airbags, no safety windshield), Driver dead by either impalement, head through windshield or impact on dashboard. Cars have crumple zones to keep the passengers alive in the event of driver stupidity.
The 1955 Chevy crushed the 1955 Ford in sales because of their lively fast-running optional V8 power. Ford tried to compete by emphasizing safety and starting their own (non gov't mandated mind you) crash tests in 1956.
You are not paying manufacturing costs in kind, you are paying "life insurance" in the form of crash protection as well as payouts from auto companies to crash victims. These are features that did not exist 50 years ago.
If you mean why didn't I read the link to your blog, it is because your introductory statement is a worthless statistic.
By the thirteenth edition (1989) [Of Samuelson's economic textbook], Samuelson and Nordhaus declared, "the Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive"
Reference
No one seems to care about it and I have tried to get people to care by explaining and telling them to vote and such. People always respond with "One vote wont make any difference". My response to their apathy is that one vote may note always make a difference, but sometimes it does and when you get a lot of votes together they make a huge difference. It still doesn't move them.
While you guys are thinking what the hell is wrong with the world, I am just running a quick search on google, I'll pick a fav get rich quick scheme, by the time you suckers write the third paragraph I will have made my first million, I am well on my way to retire at 40 as a proud you-can-do-it millionaire.
I'll invest into some comfy big time aoutsourcing sweatshop center in the sexy third world, that I will run from my yacht, I'll bring those lucky bastards shiny dollars, coca cola and my taste for beautiful, exotic young girls.
You guys just keep thinking and writing, I'll come back with my profit and I'll buy you to do stuff for me for 6 bucks an hour.
I will deal with your pains and rants with a quick "screw you, get back to work", or other days with a funny "you are fired", just to make my days more fun.
Screw you all, fucking loosers... becouse I worth it!
I will RTFA after work hours, when I have time. However, most of the discussions and comments regarding outsourcing and regional specialization miss what I find to be an essential point.
Human beings have diverse sets of abilities, let alone inclinations, that support our complex social structures. Not everyone can do everything themselves, especially as society has grown more complex, and so we've developed individual specializations that allow complex social structures to be supported, with all the benefits these supply. Doctors can be such good doctors because they don't have to tailor all their own clothes, let alone grow and harvest the cotton, sheep, and oil wells they come from.
And this is not just reflected in the "elite" we all envy. There are extroverts who want to be face to face 24/7, and introverts who would like a private office, or to work by themselves out in a field. There are those who are extremely verbal, and those who are extremely visual. Those who are a whiz with a contract, and those who can keep even the most decrepit machine "alive" almost by intuition.
As we shift jobs over national boundaries and overseas, we disrupt the balance of work within a society. The jobs move, but the people are not free to follow them. Further, we essentially sell out the rights of people performing those jobs by moving them to locations where those rights don't exist. We've all heard about the labor practices in China and many other countries where manufacturing has grown. Even if a U.S. manufacturing working could move there, there would be strong disincentives.
With all this talk of "retraining", I become frustrated. Even were it to be effectively supported, not everyone is cut out to be the banker or lawyer that some think this country should become full of. 30 years ago, we needed a lot of manufacturing capability here, and people who enjoyed doing that. 50 years ago, the family farm was still a mainstay of society.
These aren't just a matter of training. They are also a matter of basic personality (whatever the details of defining such). And such things don't just change overnight, or in the span of one generation. There are people of a different mindset borne into this society who, by our very laws, deserve a place within it.
It's on the collective backs of all of us that the "elite" have become the elite. Some of them may be very gifted, in ways that are ostentatiously rewarded. But they didn't achieve this glory on their own.
And yet, we divorce ourselves of much of the infrastructure supporting those less "glorious". And we expect this to have no serious repercussions? It is a breach of social contract.
And before you say "who cares", laissez faire, or Darwin, see how long you survive when the garbage piles up into a health hazard. Or when those with no future decide that yours has been achieved at their cost. With nothing to lose, things can get very ugly. As they have in the past.
Or, see how long it is until the rest of the world realizes they don't need American bankers and American lawyers. As their social structures solidify, especially their legal codifications, ours will become superfluous.
A healthy society is one that is sustainable. What we are creating is not.
The world will get by, in the long run, but this country may become, in the meantime, a far different place, and one far less reflective of the ideals too often used as a blind in selling this shortsightedness.
Good Article.
"As an example, Mr. Bhagwati pointed to the often-repeated estimates that, because of the Internet, as many as 300 million well-educated workers, mostly from India and China, could now enter the global work force and compete with Americans for skilled jobs.
;-)
In their paper, Mr. Bhagwati and his co-authors write that such an assessment of the education systems of India and China "almost borders on the ludicrous." In an interview, Mr. Bhagwati said, "You have a lot of people, but that doesn't mean they are qualified. That sort of thinking is really generalizing based on the kind of Indian and Chinese people who manage to make it to Silicon Valley."
This may be true, but how many executives that make these type of outsourcing decisions really know if they're getting 'quality' workers? They just know it's cheap, and I bet most of the time, don't care if the quality is not up to par.
How's that saying go again... "You get what you pay for"?
- Kevin
The less confident you are, the more serious you have to act.
Seems most people including programmers are liking the short term benefits of outsourcing. They like having specs for products. They like having standards for coding to. Specs and standards are "products" which didn't exist until the implementation of software became a dirt cheap commodity available from India.
If it wasn't for outsourcing the front page news wouldn't be "OpenGL 2 Released" it would be "proprietary shading language for NVidia implemented".
It wouldn't be "bluetooth spec ratified" it would be "proprietary interconnect implementated for Samsung".
So yes, for all the complaining about declining wages, most programmers like the short term benefit of outsourcing. In the long term, as this economist states, buying software implementations from overseas is going to lower the standard of living.
Maybe he wants us to keep the long term in mind as we wait for the first OpenGL 2 implementations to come out of India. It's really hard to keep the long term reality in mind when you're being bombarded with so many great specs, though.
Try doing this in the real world, where an Indian can live on 10% of the salary of an American. It's not reasonable to expect people to somehow be able to work ten times as hard. There are limits to how hard people can work.
Of course there are limits, that's why Americans will have to put up with a lower standard of living.
The rest of the world is catching up fast and it's unrealistic to expect that the whole world can enjoy the same standard of living as Americans and Europeans do today. In a truly globalized word (unhampered markets) the distribution of wealth is fairer and people enjoy similar level of comforts everywhere.
But this level will be lower than the current American standard. People won't be able to afford 2-3 cars and a big house. This pill is hard to swallow I know. I live in Europe and know that in 10-20 years life here will be harder than it is today.
It won't happen if a global war breaks out. In that case the winner will dictate the terms for the loser and it will prey on the underdog. Just like in colonial times...
...stop making decisions in your purchasing habits based solely on price (aka Wal*Mart shopping), and encourage those around you to do the same.
Well, I don't have a degree in game theory, but it only takes me about 5 seconds to see the problem with that.
It is absolutely to my advantage to encourage others to pay a higher price, since it raises the chance of me keeping my job my a miniscule amount.
On the other hand, my paying a higher price has only a miniscule effect on my keeping a job, but it has a more significant effect on my bank account.
The optimum strategy is to shop at Walmart, but try to get everyone else in the country to pay more for their products. That way your job is still secure, and you have more spending money. When that house you want to buy goes up for sale, you can bid more for it than everyone else, and so you get the house.
Of course, this is what everyone does, and as a result lots of people lose their jobs.
Basically, it is the tragedy of the commons. There is no incentive not to cheat - since everyone else is going to cheat anyway, so if you have a 30% chance of losing your job you might as well save up for it now by joining in on the cheating.
Consumers will ALWAYS seek the lowest price for the same level of service. If you want to preserve jobs via market inefficiency you'll need to regulate it at the government level...
he is wrong and he is right..
Let me explain..there are several base tools that cost the same for programmers:
computer hardware
OS
compiler
Internet dialup
these cost similar or 85% of usa prices in India..
so whereas you wold get some wage benefits to outsourcing programmers or it if the companies making the computers are inthe us paying us taxes it does not translate to higher it wage sin US per total..
The biggest outsources per chance are also the biggest sellers of computer hardware accross all levels of both personal and it and software/services.. and their motivationis obvious not ot lower prices for India but to guarantee that their own prices will not erode as when workers earnings go up their purchasing power goes up..
Don't Tread on OpenSource
If anyone really believes in outsourcing, check out this logic:
1) Forced removal of job
2) ?
3) ?
4) Profit!!!!!!
Notice how the CEO / Executive crowd are all getting their taxcuts NOW to "stimulate the economy" while you have to give up your job and retrain for a new career for some imaginary profit later (5-10 years later? It won't be tomorrow!) Note that this is through your own sweat and worry and hard work.
Greenspan and the others pushing this outsourcing believes that the country has to go trillions into debt to finance the taxcuts *now* rather than rely on the same "innovation" that is supposed to finance YOUR pocketbook.
That's why Samuelson's "toothfairy" reference is such a good one. Only in this case it's the "innovation" toothfairy that's supposed to bring the profit. If anyone believes in innovation so much, I'm sure that they won't mind giving me their car so they can "innovate" another one later?
I always thought of competition as a nice term to describe the desire to destroy the oppositon with no mercy. Of course we can be polite and respectful to our foreign competition. So why give them an edge or lead, and allow them the opportunity to take their inexperienced/unqualified work force (as pointed by Jagdish) and help them become experienced and qualified.
Arnold last week was talking about economic girly-men, when he should've been laying out the republican plan to "drive the indians and chinese before us, and hear the lamentations of their women." Instead he gave us nothing. Not that I was holding my breath.
(I'm a liberal by the way, so I wouldn't listen to any republican plan even if they had one, but anyways...)
In either case, our country's economic goal should always be to become the lead supplier or materials, services, products, etc... if we can become that supplier. Only in times when we can't supply those high unmatched products or services should we outsource. If we don't have qualified people or great products we need to think about process improvement so we can compete abroad more competively.
Outsourcing is a cliche for exploiting cheap labor abroad. Its like Nike making shoes in vietnam or wherever, yet the price stays the same. Its happening with technology and its more profitable than shoes. Its about the fat getting fatter instead of building a stronger economy and a stronger nation.
Instead of talking about outsourcing as a the new way to compete, lets just be honest with whats happening.
(retinal scan login required)
But how is it that "we" are so fiercely independent of NYT's business model but there's no OSN (open source news) equivalent? Could it be that the NYT is actually making news by getting Dr. Samuelson to spend productive time with a non-technical publication, streamlining his argument for that audience, and editing it into a timely, coherent report? Absent the NYT et al, you end up with reprinted lies from the White House (paid for by your taxes), or "debates" between a pair of rabid orangutans shrieking "Did!" and "Did Not!" paid for by SUVs.
I don't get how some people claim to care about their society but happily bite the hand of any non-public institution that feeds them with information that helps to support a democratic society. [cheap shots removed--Ed]
"Inquiring Minds Want to Know!"
With outsourcing the education problem deepens because the of the dent in the taxes that support American schools.
If money spent had anything do do qith quality of education, I might be more inclined to believe that statement.
I think what it does do it train outsourcing companies and workers how to compete for the same market the US companies compete in. I don't think it hampers our education or drive any, just developers more competent competitors (that may have deep inside knowledge of what you do or do not do well).
"There is more worth loving than we have strength to love." - Brian Jay Stanley
What's helped the USA the MOST is having access to cheap oil. Most of that other economic stuff is academic masturbation. Not all of it, but most of it. We built up our economy after WW2 with oil at 2-4$/barrel IIRC. Once our domestic oil got marginal and expensive, we switched to getting oil at cut rate prices from ridiculous dictators on the take and "royal" poobahs overseas. Everytime one of them guys get's the wise idea that they are better off charging a better price or actually using their own oil domestically-or not using the fiat FRN as the currency that is acceptable, we send in the boys with the guns and get a new poohbah in there. Either the spooks change it or the overt military changes it. Look at Saddam, as long as it was swap or oil for US petrodollars, he could do whatever he wanted to do, for years. As soon as he started to insist on Euros, WHAM! All of a sudden he's this big threat, etc,poof, new war, he's gone. One of them amazing coincidences that really isn't.
I know this doesn't address outsourcing per se, but it's the biggest factor in helping to keep millionaires as millionaires. When even relatively cheaper oil wasn't enough, they only had two choices to keep their profits up, ship off the jobs they could to much cheaper labor place, or get another source of cheap oil. Now that there really isn't any more cheap oil,no place, there's not much more they can do. They are certainly not going to go personally broke or give up their personal jetliners and multiple mansions jazz. That leaves sticking it to the middle class here domestically, and using the stock market casino scam and normal partisan politics to keep people faked out that they can get rich, too, sometime in the future, or that it's "the other party's" fault. Heck, they even sold credit as pay to people, and they bought it, people have actually switched to the notion that being in perpetual debt is somehow accumulating wealth. Just an amazing bit of propoganda and brainwashing.
It's an admirable scam, well thought out, well implemented, seems to be working well for the globalist "elite" boys. I keep wondering when Joe and Jane sixpack will notice. Most don't until they go broke, and the more well off they were, the harder it will hit them, the ole cognitive dissonance sets in. Each of them will vote for the globaist scamster skull and bonesman of their choice, and whomever gets in, Joe and Jane will just get broker, but blame it on the OTHER globalist bonesman and the OTHER globalist party.
The redistribution of wealth comes at a premium from base.
If the base is high, say between the US and Canada (not Mexico yet,) or across most of the EU the changes mean that "A rising tide lifts all boats." Economies progress to a higher level by building on what came before.
If the base is low, say between India and the US, the flow is the same, (economics as thermodynamics) but the changes means that you get burnt by the __rate__ of the transfer.
In effect, you have a redistribution of poverty, not one of wealth.
The current immigration policies of the US (and Canada and the EU for that matter,) albeit prejudicial, flawed and exclusionary means that the __rate__ of the transfer is occuring at a tolerable pace.
The current phenomenon of __foreign__ out-sourcing (out-sourcing ''per se'' is not is a major problem since the expense base is directly comparable and commensurate,) is the cause of all the arguments.
The comparative advantage of some labour costs is __too__ great because you're comparing Apple to oranges.
The annual GDP PER CAPITA of Malaisia or India is so much lower than the US (or Caqnada or EU,) GDP PER CAPITA that instead of conferring an advantage, (which it ''does'' do in absolute dollar terms,) it leads to a reverse flow.
The wealthy get poorer instead or the poor getting richer.
I find it amusing that our politicians, who are so concerned with competing on ''a level playng field,'' are more interested in squeezing the money to be made from the difference between the poor and the rich.
MSBPodcast.com The opinions expressed here are my own. If you don't like 'em... Think up your own stuff.
While taxing outsourced labor would discurage US companies from moving jobs, it would just give the advantage to non-US companies.
Replacing all income based taxes with a consumption tax (aka National Sales Tax) would make labor in the US much more competitive with the rest of the world, both in the production of goods and in the placement of the labor pool.
serendipity, this is on drudge right now:
5 4~ 2388909,00.html
http://www.dailynews.com/Stories/0,1413,200~209
Illiteracy shockingly high in L.A.
Half of workers unable to read
By Rachel Uranga
Staff Writer
Continued immigration and a stubborn high school dropout rate have stymied efforts to improve literacy in Los Angeles County, where more than half the working-age population can't read a simple form, a report released Wednesday found.
Alarmingly, only one in every 10 workers deemed functionally illiterate is enrolled in literacy classes and half of them drop out within three weeks, said the study by the United Way of Greater Los Angeles.
"It's an emergency situation," said Mayor James Hahn, adding that poor literacy rates could jeopardize the region's economy by driving out high-tech businesses and other industries that pay well.
In the Los Angeles region, 53 percent of workers ages 16 and older were deemed functionally illiterate, the study said.
That percentage dropped to 44 percent in the greater San Fernando Valley -- which includes Agoura Hills and Santa Clarita -- but soared to 85 percent in some pockets of the Valley.
The study measured levels of literacy across the region using data from the 2000 Census, the U.S. Department of Education and a survey of literacy programs taken from last September to January.
It classified 3.8 million Los Angeles County residents as "low-literate," meaning they could not write a note explaining a billing error, use a bus schedule or locate an intersection on a street map.
And despite hundreds of millions of dollars spent in public schools over the past decade to boost literacy rates, functional illiteracy levels have remained flat because of a steady influx of non-English-speaking immigrants and a 30 percent high school dropout rate, authors of the report said.
---and some more at the URL
But! That's not NEAR as important as customised cars, the latest pop music and videos, near-universal addiction to professional sports, wearing the latest cool fashion and being able to ace videogames! We'll show 'em! Hey, let's throw MORE tax payer money at the public schools! Hey, let's just ELIMINATE borders! Hey, MORE tax breaks for corporations to move overseas! Waitaminnit! I got it! WARS! Let's just have MORE WARS and just TAKE what we need! That should work!
If you are saying the countries on the receiving end of the outsourcing well-deserves it thanks to their diligence, you are wrong. Have you ever seen a marathon runner who appears out of nowhere and receives a big applause from the crowd? Only until the crowd discovers that he was a clown who jumped into the race from behind the previous corner near the goal line. So, to have apples-to-apples comparison, let's see the foreign programmers start from the invention of a programming language. Or better, start from the invention of IC or transistor, from which computers are made of.
Download Mazes and Puzzles from www.puz.com
The Soviet Union was a police state that overspent on the military and secret police, with political hacks running agriculture and civilian production. It could be argued that their problems were more political than economic.
Please pass your analysis on to GWB, I'm sure there is a warning in there somewhere that should be taken seriously.
Instead of complaining, I don't see people offering solutions.
Here's one. Simply give employers a tax-credit for U.S. citizens working in the U.S.. It seems pretty simple and effective to me.
If there's a drawback, I sure don't see it. If you've got a better solution, please post it.
... your CEOs are GIVING them away. Don't get pissed off at an Indian or Chinese IT worker, they got offered your job and they took it. What, were they going to say "no thanks, an American should have this job"? Its your countrymen that are doing this to you, not some phantom job thieves overseas.
At least Senator Kerry claims he will address the outsourcing issue, if he is sincere, I'm sure there are things that can be done to change the tax structure to at least improve the situation.
Take a look sometime at how many of the employees of Heinz and other Kerry-affiliated companies are in the United States.
Kerry Now Claims "Benedict Arnold" Line Does Not Refer To Companies Outsourcing Jobs, Saying "I Support That." Kerry: "But the Benedict Arnold line applied, you know, I called a couple of times to overzealous speechwriters and said 'look that's not what I'm saying.' Benedict Arnold does not refer to somebody who in the normal course of business is going to go overseas and take jobs overseas. That happens. I support that. I understand that." (Jerry Seib, John Harwood and Jacob Schlesinger, "Excerpts From An Interview With John Kerry, The Wall Street Journal, 5/3/04)
Kerry Previously Railed Against "Benedict Arnold" CEOs Shipping Jobs Overseas. Kerry: "My economic policy is not to export American jobs, but to reward companies for creating and keeping good jobs in America. Unlike the Bush Administration, I want to repeal every tax break and loophole that rewards any Benedict Arnold CEO or corporation for shipping American jobs overseas." (Sen. John Kerry, Statement From John Kerry In Response To President Bush's New Economic Report, 2/10/04)
"Wealth spread out"? Dude, the amount of wealth in the world is approximately proportional to the number of smart, clear-thinking people. As more people become smarter, we all get wealthier.
The whole fixed-pie thinking about wealth is just completely wrong.
-russ
Don't piss off The Angry Economist
Yep, every book on his shelf that has a readable title has the word Marx in it. 3 out of 3 is what I count.
I dig Marx. I hope someday we can make socialism work....
eat shiat and bark at the moon
(w - W)N
(W - f)N
(W - f)N > (W - w)N
W - f > W - w
-f > -w
social sciences can never use experience to verify their statemen
Management by itself does not have any value. If you outsource everything but management, rich motherfuckers in China and India will sooner or later realise they don't really need a $1.5M a year CEO where an Indian guy will work for $150K per year and be pee-your-pants happy.
Now let's assume that majority of what this country can export is made outside the US and shit hits the fan (companies become controlled by foreign individuals). Two things happen. One, you now must buy this shit from them and since you don't really make anything but hamburgers, houses and children, they can dictate prices. Two, investors start jumping the ship, because they don't see any reason to invest in a country that hollowed itself out for a quick buck.
There are major repercussions to this related to social security, baby boomers, overstaffed military, gigantic budget deficit, etc.
For God's sake, someone PLEASE mod the parent down.
You should not be saying things like that. You might disrupt the master plan.
The vast majority of people are content to be placated and manipulated for the benefit of an elite few. People are told what to want, told how to get it, and told to buy into a system which essentially keeps them enslaved to their own mediocrity. For the most part, they obey.
If you go around pointing out how these things harm them, they might start thinking for themselves, might become discontented with their lot in life, and might start disobeying their televisions. Do you realize how disastrous that would be? Don't you see the turmoil it will create? Not only will those who have maintained power for generation after generation wind up losing everything, but the people will bring upon themselves much chaos and suffering.
Be silent.
Sure, it might not make it up for us but americans aren't better or more worthy than indians or chinese.
At best (i.e. if you don't believe the lower costs makes up for things) the outsourcing argument is pure selfishness. It says we want americans to get jobs foreigners could do more economically.
Morally, I can't see how this differs from a policy to give jobs only to white people in the 50s. Blacks are stealing white jobs we need to stop them!! Just because these people are far away and we can't see them doesn't make this any less absurd.
If you liked this thought maybe you would find my blog nice too:
I was looking forward to reading his explanation (especially since I disagree) but it isn't there. The article /. linked to is just a tease. It's an article about an article, with the meat apparently appearing in something "Journal of Economic Perspectives". Bah. Come back when you're ready to play.
So without any new input, I'll just jump into the flamefest, and say that as an economic "problem", outsourcing is identical to technological advancement. If a computer takes someone job, most Slashdotters would cheer. But if that replacement's name is Apu instead of Bender, suddenly people are screaming. I ask: WTF is the difference?
And outsourcing labor is not only equivalent to a tech advance -- it actually is one. Before you had comm technology so that an Indian could take a tech support call from an American, before you had transportation infrastructure that could move goods at high speed over vast distances, service and manufacturing couldn't be outsourced. But now it's possible. The tech advance is that somebody looked at a spreadsheet and said, "holy crap, we can actually do this now."
Protectionism is ludditism. Yummm.. now that's some good flamebait. :-)
As copyright owner of this comment, I authorize everyone to defeat any technological measure which limits access to it.
Washington D.C. - Congress today announced that the Office of President of the United States will be outsourced overseas as of October 30th, the end of this fiscal year. The move is being made to save $400K a year in salary,and a record $521 Billion in deficit expenditures and related overhead.
The cost savings will be quite significant," says Congressman Adam Smith(D-Wash), who, with the aid of the Congressional research arm, the General Accounting Office, has studied outsourcing of American jobs extensively. "We simply can no longer afford this level of outlay and remain competitive on the world stage," Congressman Smith said. Exporting American jobs has been a popular trend lately, ironically at the urging of President Bush.
Mr. Bush was informed by email this morning of the termination of his position. He will receive health coverage, expenses and salary until his final day of employment. After that, with a two week waiting period, he will then be eligible for 240 dollars a week from unemployment insurance for 13 weeks. Unfortunately, he will not be able to receive Texas state Medicaid health insurance coverage as his unemployment benefits exceed the maximum income that qualifies for such coverage.
"I'm in shock," Mr. Bush stated. "I thought for sure I'd have some job security around this here place. I have no idea what I'll do now," he further lamented.
Preparations have been underway for some time for the job move.
Sanji Gurvinder Singh of Indus Teleservices, Mumbai, India, will be assuming the Office of President of the United States as of September 1. Mr. Singh will receive a salary of $320 a month but with no health coverage or other benefits. Due to the time difference between the US and India, Mr. Singh will be working primarily at night, when offices of the US Government will also soon be open.
"I am excited to serve in this position," Mr. Singh stated in an exclusive interview. "Working nights will let me keep my day job at the American Express call center. I always knew I could be President someday."
Congress stressed patience when calling Mr. Singh as he may not be fully aware of all the issues involved with his new position. A Congressional spokesperson noted that Mr. Singh has been given a script tree to follow which will allow him to respond to most topics of concern. The spokesperson further noted that "additional savings will be realized as these scripting tools have "already been used previously by Mr. Bush here in the USA." Such scripts will enable Mr. Singh continue to provide an answer without having to actually fully understand the issue itself."
Congress continues to explore further possible cost cutting relating to the Supreme Court and Pentagon. "Why should any western government pay high salaries to figureheads when their duties can easily be performed on movie sets in Calcutta?" said Mr Smith.
"Stop throwing the Constitution in my face, it's just a goddamned piece of paper!" - George W. Bush Nov. 2005
Approximately 4.7m to 2.8m
If we attempt to lock down the out sourcing of jobs from this country what do you think other countries will do?
Duh! They will not allow the same to us. They will send the work to countries that reciprocate.
Sorry, but to whine about outsourcing just doesn't make sense. The benefits are real and the costs are truly minimal if any.
Finally, the number one issue. Most jobs outsourced are done so by large companies who employ less than 20% of the workforce. Small companies create more jobs and do so on a much more regular basis.
* Winners compare their achievements to their goals, losers compare theirs to that of others.
Thats true. Customers always want lower prices but it seems to me that they're willing to give up quality over price anytime. Once we can make sure companies understand that cheap goods don't make quality goods, they may bring those offshored jobs here and those training people in China, etc may start thier own companies (hopefully). One thing that bugs me about India is why are they so willing to depend on U.S. companies for jobs yet won't start any tech companies of thier own especially when they claim to be better than American IT workers.
Samuelson is hardly "Drowned out" especially since his stuff is regularly printed in the NYT and newsweek. Try again. In fact he is one of the more cited economists in "main stream" news type publications.
----- Question authority, but not ours. Hate the man, but we're not him.
They do provide insurance to many people who could never afford it?
Guess what, its not a right of employment to have health insurance, its a benefit and Wal-Mart does offer it and many take up on it.
Unfortunately too many whiners think its a right, which is best interpeted as "We want it, and you will buy it for us"
"Fair" does not have the same meaning as "equal". All people are not created equal and do no live in similar socio-economic conditions, as you so pointed out. Some persons are born into the wealth, such as Rockefellers, Hiltons, Heinzs, Hunts, Carnegies, to name a few. Others are born into extreme poverty.
You obviously have a beef with Conservatives who find the current support structures for poor and low-income families ineffective. Sorry, but just as you are entitled to your opinion, so are they. Perhaps they see the situation as, "Why am I contributing to a system that fails more times than it works?".
To know is to have knowledge....to understand is to be enlightened.
There's plenty of difference. If a computer takes your job, the job's still in the SAME COUNTRY. You can retrain and compete again to get the job. In offshoring, your job is now overseas. The money moved, but you're not allowed to even if you were willing to live in a country with a lower standard of living and a lower salary. ...immigration laws and all that jazz.....
It was Lenin. I think the quote was more like "the capitalists will sell us the rope with which we'll hang them".
Corporate politicians who don't like Samuelson debunking their outsourcing management utopia will just find an economist in India whose models debunk it. And since the Indian will be cheaper than the MIT brand, his work will be more easily promoted for a newer Nobel prize.
--
make install -not war
I've been challenging the economics of outsourcing, sometimes with some very similar arguments as Mr. Samuelson, for quite a while and all I get is modded "-1 Troll". Seems that Slashdot forum moderation produces a mental monoculture, because it limits points of view that contradict the "norm" of the audience.
In an interview, Mr. Bhagwati said, "You have a lot of people, but that doesn't mean they are qualified. That sort of thinking is really generalizing based on the kind of Indian and Chinese people who manage to make it to Silicon Valley."
So what are you trying to say, Mr. Bhagwati? Stupid people survive in Silicon Valley but not other professional service sectors? Don't make me laugh!
Toss in the accelerating debt growth and probable falling tax income and you'll really worry. Taxes up. Pay down. Not good.
Expect Freedom.
Embedded in the quote is part of the problem about this discussion. There are many of us who care about the person saving 20% or losing his/her wage. But then there are some of us who only care about Wal-Mart.
For the thinker who cares about the person, this requires equations, thinking, balance, logic, etc. For the thinker (and I use the term loosely) who cares only about corporate interests, this is (at least in the short term) EASY.
And so it's all the harder for someone thinking about the cost/benefit, since that thinker has to wade through a lot of complete bullshit spewed by the corporate lackeys (of which we have a lot in government, these days).
That it's not is because most senior politicians, media moguls, and the economists they put on the air keep parroting the party line stated by Dr. Bhagwati:
Off shoring yields net economic losses only when foreign nations are closing the innovation gap with the United States.
The above is true.
"But we can change the terms of trade by moving up the technology ladder,"
The above is an assumption. If the assumption is wrong, we're fucked.
The policy implications, he added, include increased investment in science, research and education.
True, and increasingly, the capital to do R&R is moving out of the US. Meanwhile, funding for education ain't happening. Investors and power brokers have decided to draw on the "education equity" created elsewhere, and that didn't cost them a thing. Back in the US, rather than make education happen over a broad base, more and more people are focusing on cutting their kid and their taxes out of the equation. This will leave us with fewer bright lights surrounded by more dim bulbs. Not a winning scenario.
And Mr. Samuelson and Mr. Bhagwati agree that the way to buffer the adjustment for the workers who lose in the global competition is with wage insurance programs.
So where are we going to get the money for that? Tax the added profits back out of the offshoring corp? No, tax those of us still working in the US.
Luke, help me take this mask off
Some efficiencies in production are gained by moving links in the supply chain to far away production centers. But the actual trade represents a loss of efficiency, as materiel must move across the distance, consuming time, energy, fuel, packaging, labor, and other valuables. The moves increase the value of the materiel only by relocating it to a higher-demand population, not by changing the materiel itself into a higher value. Of course some movement is necessary, like moving oil away from the well to the engines, but there's a cost to the transit that often cancels the benefit of the distant sale.
--
make install -not war
Too bad they suck so bad in reality. .....famous last words of the last unsuccesful would-be aeroplane inventor.
A lot of people tried to make flying machines before the Wright Bros. They all failed. Yet, it was accomplished eventually.
And those early inventors had as foes only the laws of physics. The people who have tried to make socialism work have had as foes most of the rich people and corporations in the world. Think it might be hard? You bet!
But it is still worth the fight. Just take it one step at a time.
eat shiat and bark at the moon
Classical economists have used old Samualson as a post child for discredited economics for years. If you need economic clarity read a professor of mine's book "Capitalism: A Treatise on Economics: http://www.capitalism.net/ He love beating up old Samualson!
The problem is that means dividing the pie to 6 billion instead of couple of millions. West loses a lot, the rest gain too little, if the West loses (less inovation and degrading of business climat) than the rest of the world will loose too. So in the end everybody will lose. This is the main problem.
"It is our choices, Harry, that show what we truly are, far more than our abilities." -- Prof. Dumbledore
Anyone seen the short film More? I was reminded of it by composer777's comments about turning people into jaded, arrogant CEO's: http://www.moreshort.com/
"In the future please use the NY Times Blog Link Generator [blogspace.com] when linking to the soul suckers."
For all the noise we make about registration (soul suckers). Our actions (Here's a link to the story provided by those "soul suckers") damn anything we might say (We're not karma whoring! Honest!)
Taking this statement to it's logical conclusion...
1. Outstanding engineers in America survive, maybe.
2. Average in America = pizza delivery driver.
3. Completely incompetent in India make a lot of money.
3. Average in India make a lot of money(relative to the rest of the population).
4. Outstanding in India makes a great living
So, if you're "only" 8 times as productive as the average engineer (not 10 times as productive), and you live in America, then you're in for a twenty percent reduction in salary. Sounds fair to me.
If you're only three times as productive, then you'll just have to get used to getting by on 70% less. After all, fair is fair, and being 3 times as productive just isn't cutting it anymore..
If you're twice as productive, then you'd better get used to foodstamps, and there's a homeless shelter that you can sleep at when you're not at work.
Or maybe there is actual historical evidence to show that free trade works. Read Milton Friedman's 1979 Free to Choose.
That leaves sticking it to the middle class here domestically, and using the stock market casino scam
There was this excellent Dilbert strip:
VOICE IN TV: Use your own ideas! Buy this stock.
SIXPACK JOE: Thank you, unbiased stranger!
and normal partisan politics to keep people faked out that they can get rich, too, sometime in the future
Everybody who believes a game with negative Expected Value (the lottery) is a good investment deserves to be poor. The problem is, that even my pal who studied insurance statistics does it regularly.
Heck, they even sold credit as pay to people, and they bought it, people have actually switched to the notion that being in perpetual debt is somehow accumulating wealth.
I think we should put our trust in Tyler Durden.
Each of them will vote for the globaist scamster skull and bonesman of their choice, and whomever gets in, Joe and Jane will just get broker, but blame it on the OTHER globalist bonesman and the OTHER globalist party.
But you could vote for Nader? (and waste your vote).
Fight Frist Psoting!
Browse Slashdot with 'Newest First'!
An MIT professor who has the guts to tell us that common sense transcends politically incorrect dogma spewed out of Democrat and Republican administrations alike.
Too bad we can't depend on the labor movement to actually be useful and preserve U.S. jobs as a whole.
... that means he either was grossly overpaid in the first place or his skills are of similar quality, since his job would require somebody with similar preparation.
IANAL but write like a drunk one.
Why don't we look at the working examples:
-NAFTA: all three countries had benefitted as a whole. Mexico became an exporter big tme.
-EU: the level of life in poor countries (Portugal, Ireland, Spain) has risen substantially since their insertion in the EU. The richer countries, although have structural problems, have seen a modest growth and in places like the UKor the Netherlands, the economy has been bumming for years.
SO theory is all fine, facts in day to day life point in the direction of free trade as a life improver for all the people involved.
IANAL but write like a drunk one.
And the Meister Shoemakers in Germany also dispaeared.
For goodness skae, the history of human economics is filled with examples of full professions obliterated and new ones emerging.
It was good time that we got used to thise reality.
It is a fact of life, to pretend otherwise is to be closing the eye hoping the problme goes away.
IANAL but write like a drunk one.
Masturbate furiously.
I studied in a public University in Mexico.
/.ers show their ugliest side, what a shame.
I have worked in many countries in several continents providing my expertise.
I have never feel disadvantaged in relation to colleagues and competitors with education in rich countries.
I am pretty sure that Bangalore Uni is as good as many other institutions on rich countries.
Everytime this issue surfaces USian
IANAL but write like a drunk one.
Rich countries live a life of excessive consumerism and excesses.
The major cause of death in rich countries say the history: obesity, smoking, heart attacks (at earlier and earlier ages), and car accidents, all inidicative of a wealthy society, shows clearly how people in rich countries could adjust their levels of spending and still lead a comfortable lifes.
And lets not talk about the rampant consumerism, SUVs, crazy use of energy resources (folks, turn off the air con once in a while, you don't need it 24x7).
Some adjustment is clearly possible and long overdue.
IANAL but write like a drunk one.
God knows NOT A SINGLE PERSON in the US innovates or starts a new company or attempts to advance technology anymore. Pfft. Way to troll!
Unfortunately, there's more to starting a new company than innovating. To go from a garage shop to the next Juniper Networks (or whatever) in the hardware arena requires several rounds of funding. Even to get things prototpyed typically takes a seed round and a "series A". Then B for full-blown development of a manufacturable product and C for product introduction and initial production ramp-up. A software product might get by with maybe one or even two rounds less. But given the need to set up a support and marketing organization - and to eat while burning the midnight oil - it's still not going to happen without serious money input.
So if you're not personally rich you must go to someone else for your miney. Maybe an "angel" for your seed, but for sure the venture capitalists for your funding rounds.
So what happens to innovation and startup ventures in, say, silicon valley, when the Vultures of Sand Hill Road are all flying off in a flock after the latest fad, putting over 90% of the dollar value of their investments into companies that promise to do the bulk of their engineering in India and demanding a major engineering outsourcing strategy in any business plan before they'll even consider it?
Yes you can still innovate - if you're one of the three-or-so founders forming the core archetectural and business team. But the people who would become the high-skill early hires, the mid-to-high-skill line engineers, and the "dedicated support staff" get to keep flipping burgers. Those positions will only be filled outside the US. Not because that would make real business sense. But because if you don't build your company that way you don't get the money you need to build it at all.
And it will continue in this vein until enough vultures get burned in India (or wherever) that they all flock somewhere else. And after three or so tries, it will dawn on some of those who still have some funds left that maybe the US workers really ARE a good price-performance tradeoff.
It's starting to happen in India. SO many outsourcing operations have been directed there by the herd-mentality pointy-hairs that the good, and the mediocre, engineering talent has all been snapped up (and bid up), leaving newcomers with a choice between taking the new grads and dregs or paying near-US-level prices to hire talent away from other operations. But you KNOW the vultures will try it again in a couple other places before the light finally dawns.
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
Bring the horse pulled cars!
Raise the prices of our computers, cars, TVs!
Lets eat more expensive food!
Let make the economy inneficient while we grap ourselves in the beloved flag of the U.S. of A.!
Great rethoric, the problem is that people are selfish and they will buy the best buy, because it is on their interest.
The day the US becomes so poor that goes beggin for sustenance around the world, guess what, you would have acquired the same competitive advantage than now China and India have.
Of course this is not going to happen, since Offshoring is grossly overhyped, but it is a nice rethorical point to make which shows how the system will work.
IANAL but write like a drunk one.
Ummm, I know everyone on Slashdot is all hip to ban any commerce with any of those "evil foriegners stealing our jobs"... but did anyone ever consider that maybe trade is a two way street?
What makes you think you are going to ban outsourcing to India, and India won't ban stuff from the United States? What incentive would any country have to do buisness with the United States when the U.S. stops any kind of financial transaction they deem to be to their disadvantage? I mean, far more jobs are outsourced TO the United States than outsourced FROM the United States. Do you think those other countries are going to keep hiring highly trained and well paid professionals from the U.S. when we refuse to allow a few low paid tech-support jobs go to them?
Why is concept almost totally ignored on Slashdot?
How many cars do you have?
Can you raise your hand and say that you are not a consumated consumerist?
Do you save energy?
And so on and so forth.
You are too expensive, period. You will need to adjust your level of life, which will be difficult but mostly harmless.
IANAL but write like a drunk one.
Lets face it, the people coming from India are marginally qualified. I'll bet they all have Masters Degrees in Math. That's a code word in India that means "unqualified".
Many Indian companies hold higly regarded certifications for quality and documentation of their procedures, but somehow they produce crap.
Strange I don't see the same.
IANAL but write like a drunk one.
Backwards? Shitholes? My home this is!
Sorry, but this isn't the case. While it'd be great if everyone was really smart and could sit around having interesting conversations about quantum physics, actually doing anything requires energy. Making products, building buildings, transportation, even growing food all require energy, and energy is a limited resource. This is why some countries have progressed faster--they have easier access to fossil fuels, and have developed economies around them.
If other countries try to accomplish more per person, they'll need more energy, which means they'll be competing with the western nations for it, which means more Oil Wars.
The only real way out of this mess is to develop alternative energy sources, so that more people have easier access to cheap energy. Personally, I think a moon-based solar power station would be great, but unfortunately, no one in power anywhere has any interest in doing anything besides maintaining the status quo, instead of developing new technologies that would free us of this impending crunch.
Paul Samuelson's been feeding misinformation to econ studuents since the 50's. Here's a quote from his 1989 text: "The Soviet economy is proof that, contrary to what many skeptics believed, a socialist command economy can function and even thrive."
In the 50's he worried that office automation was going to replace all the secretaries, leading to widespread unemployment.
there's no evidence that immigrants are more entrepenuerial than natives.
the reason there are so many entrepenuers who are immigrants is that there are so many immigrants.
give the natives some credit.
Indian seems to be an exception of this rule. I am not saying that those fine gentlemen mentioned in this article or chaired in various powerful positions in the country are Indian spies or doing something insidious. But, it is just too difficult for them to remain impartial. Read the biography of Professor Bhagwati. He is an advisor at the government level for both US and India. Professor Bhagwait and quite a few popular economist in his camp, e.g. T.N. Srinivasan of Columbia, Arvind Panagariya of Yale, share the same background. The conflict of interest is obvious. National policy in most cases are more important than one or two odd pieces of high tech weapons. This unquestioned practice of relying on foreign social scientists can be a real disaster.
+2 funny
what's the matter, mods? can't handle a joke?
Personally, I find outsourcing a good benefit to the global economy. We're living in the world of globalization. Everybody is on the equal playing field. If these people are willing to accept less money for more work (in India), more power to them. Thats what globalization is all about. The way I see it, this is a wake-up call to people who believes that living in a Hyperpower means, a secure high-paying job forever. What we can do is get out of our comfortable armchair, and start working on how we can improve ourselves so that we are more valuable to our employer than the guy working his/her butt off in India.
The New York Times article is pretty scant on details, so it's hard to glean much real information about Mr. Samuelson's article. The NYT article never actually explains why Mr. Samuelson believes that "being able to purchase groceries 20 percent cheaper at Wal-Mart does not necessarily make up for the wage losses" except for vague references to Ricardo's law of comparative advantage having "important qualifications." I am unable to ascertain from the NYT article whether these "qualifications" are currently known aspects of Ricardo's Law (in which case Mr. Samuelson's article would be essentially an argument about how to apply known economic theory to our current situation), or whether Mr. Samuelson is claiming that new changes to Ricardo's Law are necessary, which would be a major advance in economic theory if true. My guess at present is the former, but the NYT article is too airy for me to be sure.
This may sound like an unimportant semantic distinction, but it's actually a fairly important point: Mr. Samuelson is not "challenging outsourcing" itself, as the story title and summary suggest, but rather challenging economic theorists' apparently common assertion that outsourcing certain jobs will result in a net gain for the U.S. economy. Indeed, according to the NYT article, Mr. Samuelson emphasized in an interview about his article that "it was not meant as a justification for protectionist measures." To the original poster: please don't put words in Mr. Samuelson's mouth, and to the readers of Slashdot: please note that Mr. Samuelson is not arguing against outsourcing itself.
The standard joke about this is that if you ask five different economists the same question you'll get five different answers, six if one went to Harvard.
I can't remember who originally made the joke and I'm too lazy to look it up.
The evidence simply doesn't support your theory.
For instance take a look at indian call center workers. Their salaries and benefits are MUCH higher then what they could have recieved doing other work. Except for a few unusual examples (chinese prisoners) the workers clearly prefer the jobs in the factory to their prior alternatives (otherwise they wouldn't be taking them).
Yes, these areas have lower standards however this is to mischarachterize the primary reasons to outsource, namely labor costs which are primarily dependent on competition. Yes, it might theoretically be in these companies best interests not to raise those standards but this doesn't imply anything about the *effect* of those companies employing natives. After all if I was to believe your argument we are better off without those companies in the US either (it is in their interests to reduce standards in our country too).
In short theorizing about this is great but empirical evidence is better. If we look at countries which now have higher standards how did they get that way? Primarily by working for these kind of companies (argueably conditions in many of these places are better than those in our country or england while we were growing countries).
This little debate can be settled with a short test. I tend to believe people in other countries are just as capable as we are of making informed deciscions. They aren't ignorant savages and it isn't our role to tell them what is best for them.
ASK THE PEOPLE WHO LIVE THERE IF THEY WOULD PREFER THE COMPANIES LEAVE OR NEVER COME!
Quite frankly I feel that this argument is just a slapdash attempt to make a liberal agenda divided between labour unions and youthfull idealists sound consistant.
If you liked this thought maybe you would find my blog nice too:
The Austrians believe that the business cycle is caused primarily by fractional reserve banking, period. Until this is refuted, by neoclassical economists or anyone else, there isn't much theory to discuss. More importantly, the Austrian School is the only branch of economic study that admits that human action makes economies inherently unpredictable. People as individuals or in groups simply are not consistently rational in their economic thinking or actions. Therefore models will only ever be useful in explaining what has happened in the past, and will always be insufficient to explain what will happen in the future. Austrian School Economics Articles and Discussion; http://www.mises.org/ Austrian and Libertarian Political and Economic Articles: http://www.lewrockwell.com/
Why didn't the industrial revolution happen during the Roman era? Coal was readily available in Europe then.
-russ
Don't piss off The Angry Economist
To avoid registration, add this to a New York Times link:
&partner=osama (any word will work for a partner).
To also avoid ads (print-friendly page), add this as well:
&pagewanted=print
gewg_
is competition and the hot job market there.
The most talented folks are able to jump to a better-paying job, doing the same thing for another company--and they do, quite often in fact.
The turnover rate is making for lousy knowledge levels on products and services.
gewg_
Jobs have traditionally gone where the labor is cheapest--it's always been allowed.
What you're missing is that you, the taxpayer, are SUBSIDIZING this behavior by the corporations.
When there is no penalty (loss of tax breaks), there is no disincentive.
gewg_
...during working hours, then you shouldn't be surprised when your boss (who knows that you surf the inet on company time) recommends that your job be outsourced.
Competitive Advantage is all about productivity. It is common "freaking" knowledge that American ITers had 10 years to show management that they were productive, but spent that whole time resting on their laurels, posting to shashdot, and demanding that every day be made "casual friday".
Have you ever seen a slashdot story with a reg-free link? No? Yet a large portion of slashdot readers know how to make reg-free links? So why don't we see them?
The simplest answer is probably that the slashdot editors have agreed not to. Perhaps NYT asked, perhaps they threatened, but that's the only explanation that makes sense.
Here is how globalisation usually works:
Loo, Foo, and Poo work in the farm in Vietnam or Bangaladesh or somewhere. It is a small farm and only really needs two to work it, so Loo goes to the big city, learns to operate a sewing machine and gets a job in a garment factory at a fraction f of American wages.
In USA Jane's job in the garment factory is out-sourced, so she has to learn to do something just as boring with pipetts, and get a machine minders job with a bio-tech company. Jane is out $10000 in lost wages before she gets her new job so she is pissed
Short term outsourcing sucks, but who are the winners and losers long term? Well the garments are still getting made, and Jane is doing a real American job that wasn't getting done before, so the world economy is up by the production of an American worker.
That is a pretty cool result. Loo has gone from being under/unemployed on the family farm in nowhere-stan to working in her local third world city. You would expect global production to be up by the production of a third world worker, but because globalisation swaps things around, err, well, globally, production is up by the production of a first world worker.
How is the new wealth shared out? Loo's share is f. Americans generally get (1-f) as cheaper clothing. Jane gets her 240millionth of that, so she is still pissed about the lost wages between being outsourced and finding a new job.
Loo benefits from local economic development. Americans get buffetted by economic change abroad, but long term, they also benefit. Sometimes the Americans share of the benefits is the largest share.
The special case
Sometimes America gets so far ahead of the competition that the terms of trade are very much in America's favour. In the 1970's IBM could charge what it wanted for its computers. It was a very profitable business. But those kind of exceptional profits don't last. Other countries catch up.
Samuelson seems to be saying that there are unusual circumstances in which exceptional losses out way the usual benefits that America gets from outsourcing. If technology diffusion means that America falls back from doing wonderfully well from trade, and merely does very well from it, what kind of policy prescription could flow from that? Erecting trade barriers to make sure that one can never do wonderfully well from trade again in the future?
"Sure, it might not make it up for us but americans aren't better or more worthy than indians or chinese"
Typical anti-American nonsense.
And intellectually stupid too.
The fact that I want to continue to have my job (which I am very good at) so I can continue to feed my family, pay my mortgage and educate my children does not make me a racist.
Nor does it say Americans are superior to Indians or Chinese or whoever.
It simply means , like 99% of the world's population, I like keeping my job and taking care of my family.
And btw, Indians are if anything, get as nasty, rabid and vicious than anyone, if there is even the slightest attempt to close a multinational and take the jobs there to another country.
If anything, Americans have reacted too mildly to this wholesale rape and destruction of Americans tech jobs by greedy IT executives, who then turn round and use all the "savings" to award themselves HUGE bonuses , like what Computer Associates did when they gave their top 5 executives to the tune of $700 Million, much, much more than any "savings" they had made from the wholesale export of American jobs to India!
was that it won't effect income in total, meerly it's distribution. I could make the case that the same thing (hording, aka "saving") happens with individuals, but not as much. This is very much due to the weird incentives of our tax system.
----- Question authority, but not ours. Hate the man, but we're not him.
Along came offshoring and immediately, no previous experience required. The projects appeared to save a lot of money, but nobody cared whether they worked or not. Well it helps for an idiot on the board to say that the offshored projects succeed no matter what and anyone saying otherwise is fired.
See my journal, I write things there
There's a benefit to doing work besides the intended end product. Work is a kind of exercise.
Outsourcing is like paying a kid to do your exercise, except now it's not just physical exercise like physical production, it's mental exercise too.
Many take comfort in that our (US) best are quite often THE best, so far. But comparing our best to the world's best is like comparing olympic athletes. They all go to the best gyms (read best universities) and have the best coaches. The best are all comparable.
But you have to compare full distributions, not just tails, if you want to see what's happening to societies. And you have to notice trends in the shapes of distributions.
OJT produces off-book assets, so it doesn't show up in quarterly report balance sheets.
But OJT-produced assets will show up in what a country can do for itself when it can't get cooperation from other countries for some reason (e.g., disaster, trade-war, changed politics, etc.).
That should be a true security concern, if you ask me. Meanwhile, back at the ranch, the powers that be put their faith in bullying to guarantee cooperation of those upon whom we are increasingly dependent. They don't seem to be able to conceive of non-fearful motives for cooperation, or self-restraint.
Don't forget to vote ;-/