President Defends Global Outsourcing

mytrip wrote to mention a New York Times article discussing President Bush's trip to the Indian subcontinent. There, he urged Americans to welcome global competition for their jobs. From the article: "Mr. Bush, reiterating a theme of his trip, strongly defended the outsourcing of American jobs to India as the reality of a global economy, and said that the United States should instead focus on India as a vital new market for American goods ... 'The classic opportunity for our American farmers and entrepreneurs and small businesses to understand is there is a 300 million-person market of middle class citizens here in India, and that if we can make a product they want, that it becomes viable,'"

Comments

Bush Whacked.

[JehCt]

The classic opportunity for our American farmers and entrepreneurs and small businesses to understand is there is a 300 million-person market of middle class citizens here in India

How many of you are making more money because of all the people in China, India, and other cheap-labor locales, who buy stuff that you produce? To vote, Click here

Now, how many of you know somebody who lost their job because of overseas competition? To vote, Click here

Based on that unscientific survey, I'd say that George Bush is talking smack. The only people who really benefit from offshoring are the business owners who can costs by firing American workers and replacing them with cheap overseas labor. There may be more wealth, but it's all concentrated in a few hands.

Bush can't understand what's it's like for an ordinary family to suffer the devastation of unemployment because he's never lived through it.

Re:Bush Whacked.

[CyricZ]

Please keep in mind that the Democrats are, much like the Republicans, funded by the very corporations and wealthy individuals who gain the most from outsourcing. Voting for them is basically a vote for the status quo.

Re:Bush Whacked.

[Cyphertube]

Which is one of the reasons we need serious campaign finance reform.

Corporate donations should be out, as should corporate lobbying.

Lobbying should be funded solely with private donations that are capped. If you want to do more yourself, then lobby yourself, but organisations should be limited.

And I'd like to make campaigning limited to local funds. I don't want funds from New England rich boys or Texas oil tycoons funding political ads in my state. If you want to campaign for a federal office (House, Senate, or Presidency) in my state, then you should have to have the funding come from MY STATE. If you can't raise funds here for your advertising, well, too bad.

Imagine what THAT would do to corporations. It would strip their power to screw over the average citizen. Then, perhaps, politicians might actually have to listen to their home base, instead of big oil or big media.

Re:Bush Whacked.

[John Courtland]

Why? He/she does not represent you, you are not their constituent, you should have no say. If you would like a bill considered in a specific way, you use the channels available to you, your representative and senators.

Re:Bush Whacked.

[stinerman]

I don't think anyone here of a liberal stripe would argue that things wouldn't be better under Gore/Kerry/etc. What CyricZ and like minded /.ers are saying is that on many key issues there is no substantive difference between the Democrats and Republicans.

Examples:

USA PATRIOT Act renewal
Bankruptcy "reform"
Highway Pork Bill

I can come up with more examples if you like.

Notice we are not saying the Republicans and Democrats are the same. We are saying that they are close enough to warrant voting for someone other than them.

Outsource him

[chrismcdirty]

Perhaps we should offer someone in India the job of American President for 1/10 of the salary he makes. Then we'll see how much he supports it.

Umm, I'm not so sure about this

[Calibax]

'The classic opportunity for our American farmers and entrepreneurs and small businesses to understand is there is a 300 million-person market of middle class citizens here in India, and that if we can make a product they want, that it becomes viable,'

What becomes viable? Almost any manufactured product the Indian middle class want can be made in India less expensively than the US can make it. If the Indians can't do it, the Chinese will do it for them.

I can envisage US companies making products in Asia for sale in Asia, with the profits coming back to the US companies. The only people in the US who will benefit are the owners of the companies who do are successful doing this.

It looks to me like Bush is one more pushing the "increased business profits are good for my friends" line. I'm not sure how the average US citizen will benefit from this strategy.

Re:Umm, I'm not so sure about this

[mellon]

So the reason why this is true is that there is an economic imbalance; labor in the United States is valued higher than labor in, say, India. Outsourcing levels the playing field a little, but outsourcing is expensive - the only reason it's worth doing is that imbalance - the overhead cost of outsourcing plus the cost of labor in the outsource location is less than the raw cost of labor in the location from which the outsourcing is occurring. One of the results of heavy outsourcing is that the imbalance levels out.

If you're okay with children starving in China, then it's fine to oppose this leveling. But if you actually want the world to be a better place, outsourcing is a good thing. Leveling the labor playing field is a good thing. Why is it that it's better for someone in the U.S. to prosper than someone in India? Think about it.

Historically what we've seen is that changes like this float all boats. Although I am not fond of him in general, Bush is right in saying that increased prosperity elsewhere creates opportunity here. The suck is that the imbalance will take a while to level out, and while that's happening we will experience some economic woes. But if the value of labor were the same in every country in the world, the result would be global prosperity, not global poverty.

I'll get back to you about whether this is okay with me when my job gets outsourced, but at least in the abstract it seems like a good thing.

Editors Shouldn't Bitch, Their Own Company Does It

[Anonymous Coward]

Here's one article on it.

VA Software in Fremont, Calif., a provider of software, information and community support to IT managers and development professionals, keeps core, business-critical work at home, according to Colin Bodell, CTO. "Work that benefits from close proximity to our customers stays in the U.S. Work that can be done anywhere is typically sent to India," he says.

Bottom line: Slashdot's parent company and President Bush are on the same boat on this one. Editors shouldn't ignore or forget that.

Easy to swallow

[Quasar1999]

Just lately here in Ontario (Canada), a bunch of manufacturing jobs disappeared. I am unaffected by it, since I work as a software developer. When the local politicians spin it as opportunity to grow towards more of a service workforce from a manufacturing one, I listen and agree... but when the bubble burst for dot-coms, I couldn't care less what they said, I was worried about my future employment.

Long story short, those unaffected by outsourcing directly will agree with Bush's view that there is a market to sell other goods (that are not already outsourced to India), and that is good for the country. Those affected by the outsourcing won't give a shit about a new market, and only care about their lost job/income/life.

Time to realize the world doesn't care.

[Shivetya]

Too many people will either object because its Bush or object because they feel entitled to their job.

The fact is the world doesn't care. We either compete to win or we lose. If all you are willing to do is bitch about Bush or your employer (or usually the case - portraying yourself as victim even though it happened to someone else) then your going to lose.

The world economy is such fun. It doesn't care what you think and it don't care what you think your entitled to. Accept it and then deal with.

Comparative advantage, not surplus.

[CyricZ]

It's not about trading what one has in surplus. The theory is that one trades in the goods in which one has a comparative advantage. That is, you trade in the goods that cost you the least to produce.

A surplus of a particular good will end up being eliminated by market forces. If the supply exceeds the demand, then the price will lower until there is no more surplus.

Re:Comparative advantage, not surplus.

[CyricZ]

No, not everything can be made cheaper somewhere else.

Suppose it takes China 10 h to produce a computer, and 2 h to produce a car . It takes America 2 h to produce a computer, and 1 h to produce a car. America has an absolute advantage over China, as they can produce more computers and cars in a fixed amount of time.

In the US, 1 computer costs 2 cars. In China, 1 computer costs 5 cars. In the US, 1 car costs 0.5 computers. In China, 1 car costs only 0.2 computers. As we can see, China gives up fewer computers for each car produced than the US does.

Thus, even though the US can produce both goods faster, and can hence produce more goods in a fixed period of time, it still costs them more to produce a car (in terms of computers). Thus China should focus on producing cars, while the US manufactures computers, because they each have a comparative advantage in that area.

Now, that's very basic trade economics. It doesn't necessarily apply well to the real world, but such examples do show us that one country can never produce everything for less than another nation. Even if both nations have the same productivity, the result is that neither has a comparative advantage nor an absolute advantage over the other.

Re:Comparative advantage, not surplus.

[Marxist Hacker 42]

No, not everything can be made cheaper somewhere else.

You're wrong about that.

Suppose it takes China 10 h to produce a computer, and 2 h to produce a car . It takes America 2 h to produce a computer, and 1 h to produce a car. America has an absolute advantage over China, as they can produce more computers and cars in a fixed amount of time.

But since China's minimum wage is 1/100th of ours- they pay only the eqivalent of .1 hour to produce a computer, and .02 hours to produce a car. It's still cheaper to do both in China- NO abosolute advantage for America at all.

In the US, 1 computer costs 2 cars. In China, 1 computer costs 5 cars. In the US, 1 car costs 0.5 computers. In China, 1 car costs only 0.2 computers. As we can see, China gives up fewer computers for each car produced than the US does.

But- here's the big one- China has a billion workers to feed. They have a virtually unlimited supply of labor. So they can make all the computers and cars THEY need, PLUS enough for export to swamp the markets of the United States and Europe with computers and cars, and drive the native manufacturers in the US and Europe out of business entirely, of both computers and cars.

Thus, even though the US can produce both goods faster, and can hence produce more goods in a fixed period of time, it still costs them more to produce a car (in terms of computers). Thus China should focus on producing cars, while the US manufactures computers, because they each have a comparative advantage in that area.

But since China has a relatively unlimited supply of workers, they can just bring more factories online and outproduce the United States in both cars and computers- thus utterly destroying the US market with cheaper goods.

Now, that's very basic trade economics.

It's also complete bullshit at this point, since China's wages are 1/100th of ours and they have no shortage of labor.

It doesn't necessarily apply well to the real world, but such examples do show us that one country can never produce everything for less than another nation.

It actually shows no such thing, because it has a severe lack of input data.

Even if both nations have the same productivity, the result is that neither has a comparative advantage nor an absolute advantage over the other.

Productivity means NOTHING when you have a billion starving workers to feed- you can always overcome productivity with sheer numbers. Ricardo was an idiot and if he were alive today I'd shoot him just for proposing such a dangerous piece of sheer propaganda and lies.

Re:Good.

[eln]

A completely free market inevitably leads to the concentration of wealth in a few hands, because as people become successful they erect barriers to prevent other people from following in their footsteps. We saw this happen before with the plutocratic oligarchy of the early 20th century. Various antitrust legislation and government reform helped to bring things a little more into balance, but now those things have been largely abandoned, and we're headed back to a state where a very few people control the vast majority of the wealth.

100% free capitalism cannot sustain itself over the long term, we've seen that before. This is why the government has a role to play in the economy. There is a vast middle ground between pure capitalism and pure socialism, and neither extreme can produce a sustainable economy.

Re:Indians have programmed for years.

[maelstrom]

2010's - Indian programmers program for Indian corporations in India
2020's - Indian programmers program for major Indian corporations in India
2030's - US programmers program for major Indian corporations in the US

I find it intriguing...

[Infonaut]

how the often libertarian gestalt of Slashdot suddenly advocates government-sponsored trade protectionism as soon as the topic of *computer-related* jobs comes up. Farm subsidies are economically inefficient, and they distort the true price of food. The same thing is true of the oil industry. Why can't the government get smart and start allowing non-distorted prices for gasoline?! Obviously the government is in the hands of special interests. Ah, but then the subject of outsourcing comes up, and the tech industry is under threat and in need of assistance!

There's clear hypocrisy at play here. We want competition and open markets, we want global cooperation in open source software development, we just don't want to give up top dog status in areas that directly affect our jobs.

Made in China is fine and programming in India is fine, as long as the price of laptops keeps dropping. When a product is even a few dollars more expensive than average, Slashdotters are more than willing to scream and yell about it. Well, lower prices are the result of global markets. More buyers, more sources of cheap production.

We'd rather get cheap, well-made goods and donate to aid organizations than truly allow developing economies to compete with us.

Ya' know, I'm starting to think...

[swelke]

Ya' know, I'm starting to think that Bush finally figured out that he no longer has to worry about getting reelected. When controversial stuff like the Dubai port deal and Indian nuclear power come out on the news, he hardly even defends his position any more. He just does whatever he feels like.

The mask is off. Now we get to meet the real Dubya.

What do we have to sell?

[khasim]

...I think there is a point to be made in the fact that we don't try nearly as hard to sell our crap overseas as foreigners do selling their crap to us. Outsourcing wouldn't be such an issue if we weren't the only people buying our stuff.

But what do we have to sell?

Almost anything we make can be made cheaper in China or even India.

And as time goes by, more manufacturing will be moved there.

This isn't about DIFFERENT products. There aren't any different products. I can outfit an entire house at WalMart and almost all of their stuff is imported from China. So any country that would be a consumer of our products would be smarter to just get those same products from China. We do.

I'm in favour of a global economy, but not in the way it is being done.

Right now, we're in a race to the bottom because we aren't putting any barriers on countries without the same worker protections or environmental protections that we have.

Rather than dragging us down, we need to bring them up.

When Americans No Longer Own America

[Philip K Dickhead]

Published on Monday, February 27, 2006 by CommonDreams.org

When Americans No Longer Own America

by Thom Hartmann

The Dubai Ports World deal is waking Americans up to a painful reality: So-called "conservatives" and "flat world" globalists have bankrupted our nation for their own bag of silver, and in the process are selling off America.

Through a combination of the "Fast Track" authority pushed for by Reagan and GHW Bush, sweetheart trade deals involving "most favored nation status" for dictatorships like China, and Clinton pushing us into NAFTA and the WTO (via GATT), we've abandoned the principles of tariff-based trade that built American industry and kept us strong for over 200 years.

The old concept was that if there was a dollar's worth of labor in a pair of shoes made in the USA, and somebody wanted to import shoes from China where there may only be ten cents worth of labor in those shoes, we'd level the playing field for labor by putting a 90-cent import tariff on each pair of shoes. Companies could choose to make their products here or overseas, but the ultimate cost of labor would be the same.

Then came the flat-worlders, led by misguided true believers and promoted by multinational corporations. Do away with those tariffs, they said, because they "restrain trade." Let everything in, and tax nothing. The result has been an explosion of cheap goods coming into our nation, and the loss of millions of good manufacturing jobs and thousands of manufacturing companies. Entire industry sectors have been wiped out.

These policies have kneecapped the American middle class. Our nation's largest employer has gone from being the unionized General Motors to the poverty-wages Wal-Mart. Americans have gone from having a net savings rate around 10 percent in the 1970s to a minus .5 percent in 2005 - meaning that they're going into debt or selling off their assets just to maintain their lifestyle.

At the same time, federal policy has been to do the same thing at a national level. Because our so-called "free trade" policies have left us with an over $700 billion annual trade deficit, other countries are sitting on huge piles of the dollars we gave them to buy their stuff (via Wal-Mart and other "low cost" retailers). But we no longer manufacture anything they want to buy with those dollars.

So instead of buying our manufactured goods, they are doing what we used to do with Third World nations - they are buying us, the USA, chunk by chunk. In particular, they want to buy things in America that will continue to produce profits, and then to take those profits overseas where they're invested to make other nations strong. The "things" they're buying are, by and large, corporations, utilities, and natural resources.

Back in the pre-Reagan days, American companies made profits that were distributed among Americans. They used their profits to build more factories, or diversify into other businesses. The profits stayed in America.

Today, foreigners awash with our consumer dollars are on a two-decades-long buying spree. The UK's BP bought Amoco for $48 billion - now Amoco's profits go to England. Deutsche Telekom bought VoiceStream Wireless, so their profits go to Germany, which is where most of the profits from Random House, Allied Signal, Chrysler, Doubleday, Cyprus Amax's US Coal Mining Operations, GTE/Sylvania, and Westinghouse's Power Generation profits go as well. Ralston Purina's profits go to Switzerland, along with Gerber's; TransAmerica's profits go to The Netherlands, while John Hancock Insurance's profits go to Canada. Even American Bankers Insurance Group is owned now by Fortis AG in Belgium.

Foreign companies are buying up our water systems, our power generating systems, our mines, and our few remaining factories. All because "flat world" so-called "free trade" p

Useless to Argue

[tabdelgawad]

When it comes to outsourcing discussions, Slashdot is at its populist worst. No one wants to explain why it's ok to buy PC hardware from Taiwan, but not PC software from India (outsourcing is simply importing a service, and there's no meaningful difference between it and importing goods). And no one wants to explain why, despite all the wailing and gnashing of teeth about outsourcing, unemployment numbers look like they do here:

http://data.bls.gov/cgi-bin/surveymost?bls

(select the 4th item and have them draw a graph for you!)

Re:Good.

[drinkypoo]

The majority of the wealth will always be concentrated in the hands of a small group of people. Even in a utopian society(unless pure communism is your idea of a utopia), there will be people who are willing to work very hard to be better off than most.

While that is true, the inequity would be sharply curbed if you couldn't make money from the labors of others. It would be within an order of magnitude, not six of them or so.

The media consists of corporations.

[CyricZ]

We must remember that the media itself consists of corporations. Just take the case of NBC. It's owned by General Electric. General Electric is also well-known for their manufacturing of military products.

We all know that war is often very profitable for both those who manufacture the supplies consumed during conflict, as well as for those who report on said conflict. Therefore it seems unlikely that those who are benefitting the most from a rather pro-war administration (if not an entire system) will stand against it.

Such an initiative would require the corporate mass media of the US to in turn speak out against itself. Again, it's doubtful that it would do it, at least to the extent where real change may happen.

s/give you scholarship/remove existing subsidies/

[bigtrike]

The scholarship thing is quite amusing. In order to fund more tax cuts, student loan interest subsidies have been drastically slashed. I know a bunch of people will probably jump on me saying that we shouldn't be subsidizing these things in the first place. Please don't bother unless you're willing to give up your mortgage deduction handouts and communist public highway system.

Re:This is just ignorance.

[Hee-Man]

Why should our economy be locked into these few things like software development when diverting our resources into more needy areas would be a greater benefit?

The US economy is current diverting resources to needy areas such as government bureaucracy, the retail and service sectors, housing construction and the armed forces. Thank goodness we're not locked into software development and manufacturing!

Re:Good.

[Kismet]

A completely free market inevitably leads to the concentration of wealth in a few hands, because as people become successful they erect barriers to prevent other people from following in their footsteps. We saw this happen before with the plutocratic oligarchy of the early 20th century.

Right. Rich men decided that a truly free market wouldn't always guarantee them a fortune. So they began to tinker with it by shutting out the smaller entrepreneurs who might have produced competition. They craved a leveled and massified population whom they could count on to keep the capital moving in their direction (because the people work for them!). They've intervened on the free market and made it something else instead. You said an oligarchy. I think you're right. I like that term for it, because it reveals the true nature of business today: Businesses are sovereign nations unto themselves. And they have no borders. We aren't mere Americans (etc.), we are citizens of the companies we work for, and we abide by their policies. If possible, our companies care less for our well-being than our government does; the profit must come first (whereas the government was intended for the people).

But your argument now becomes very interesting:

100% free capitalism cannot sustain itself over the long term, we've seen that before. This is why the government has a role to play in the economy. There is a vast middle ground between pure capitalism and pure socialism, and neither extreme can produce a sustainable economy.

Here I say you are wrong. The problem with our "free market" is that it isn't a free market. It's dominated by monopoly and oligarchy, as you said. To fix the problem, we need to free the market again. Government tinkering doesn't make it any more free. Read the proceedings of the 73rd congress, 1934. You'll get a better idea of why government wants to regulate the economy. As it turns out, it's for the exact same reason that wealthy businessmen have for their own meddling. We want businessmen AND politicians out of the economy. There is no role for either of them. We need a FREE market.

A free market is a largely local market sustained by small business. International trade is performed by local entrepreneurs. The same principles of small government ought to apply equally to the business-state. We have to step back and ask ourselves, why are we working for somebody else? That's the root of the problem, and it won't be fixed easily.

If we had a government that could be relied on for its integrity and honesty, I would agree with you that the government should play a role in the economy. If we could have such a government, we might have a chance at a truly free market.

Mr. Bush has reinforced his belief that government serves not the people, but the economy (he will contend that "government serves the people best through the economy. I say: the people are the economy."). Mr. Bush refuses to protect "some Americans" for the sake of a robust bottom line. This was not the Founder's vision for our Republic, and such is a great crime against the people and a violation of our nation's charter.

Let me get this straight...

[terrahertz]

"Americans" working for an average salary in the 5 digit range should welcome the competition, because it's "the reality of a global economy," but Halliburton, working for an average contract in the 10 digit range, doesn't need the competition and should instead receive no-bid contracts. I wonder why that is? Is Halliburton participating in the economy of some other globe we don't know about?

Outsource Everyone

[Phoenix666]

Top and middle management travel so frequently that it would make almost no practical difference in results if we outsourced them. It would, however, make an enormous difference to the profitability of corporations and shareholder returns. Imagine how desirable it would be to save $150 million golden parachute and reinvest in R&D or employee retention? And so many foreign students have come and earned MBAs in U.S. business schools that there is absolutely no argument there that foreign CEOs couldn't do as good a job as American CEOs. Aha! the American CEO might say, 'but business is about communication and bold action, and that's something that people from protectionist economies and repressive societies just can't match.' Uh-huh. The average foreign student scores higher on any test of English than any American does. And bold action? Apparently they've never seen Chinese grandmas trying to get on a Beijing bus.

In short, what's good for the goose is good for the gander. The single best way to cut U.S. corporate labor costs is to outsource the top of the pyramid.