Globalization Decimating US I.T. Jobs

mrraven writes, "According to Ronald Reagan's former deputy secretary of the treasury in this article in Counterpunch, globalization is destroying US I.T. jobs. From the article: 'During the past five years (January 01 – January 06), the information sector of the US economy lost 644,000 jobs, or 17.4 per cent of its work force. Computer systems design and related work lost 105,000 jobs, or 8.5 per cent of its work force. Clearly, jobs offshoring is not creating jobs in computers and information technology.'" Paul Craig Roberts quotes a number of formerly pro-globalization economists who are now seeing the light of the harrowing of the US middle class. It's not limited to I.T. Roberts quotes one recanting economist, Alan Blinder, as saying that 42–56 million American service-sector jobs are susceptible to offshoring.

Comments

Re:In more trouble than most realize...

[PygmySurfer]

It's offshoring, not outsourcing.

Re:Speak for yourself I never liked globalization

[mrraven]

You've never actually listened to Democracy Now have you? Amy Goodman has broken a lot of stories with serious investigative journalism like following the deposed president of Haiti Aristide to Jamaica after he was ousted in U.S. backed coup. Or being the first to report on the use of white phosphorus as a chemical weapon against the Iraqi people which was latter admitted by the U.S. government:

See: http://democracynow.org/article.pl?sid=05/11/08/15 16227

followed by: http://www.democracynow.org/article.pl?sid=05/11/1 7/1515223

As for Noam Chomsky he has been documenting U.S. war crimes in places from Nicaragua to Vietnam for 40 years now. He is an American hero and if the MSM dared to give him a voice and people were made aware of the level of violence the U.S.government has committed against the world we might see new leadership in the U.S. and live in a much more ethical country. Of course we will never see that because it would threaten the corporate bottom line.

If you were to listen to Democracy Now and read a Chomsky book you might actually learn something. Of course it's much easier to not to read or listen and just smear with a cheap ad hominem attack, right?

Re:It's not the globalization.

[Anonymous Coward]

It is a myth that third world workers can live like kings on $10. At least in India, the fact is that for most things that US residents would consider as necessities, the cost of those things is between 10% and 1000% higher. I speak from personal experience. I've lived in the US (as an H1-B engineer) and in India subsequently. I wanted to share some data points to help with the discussion.

Here are some of the costs:
Housing: The cost of a house in Delhi or Bangalore can range from $100K to $2 million.
As a practical example the flat I live in on the outskirts of Delhi costs, $120K and its
quality is nowhere near that of the two bedroom flat I use to live in on the outskirts
of Seattle. For example, running water is not available for more than an 45 mins a day.
The absolute quantity I am able to use is about 25 gallons per day. Compare this with my
usage of 120 gallons per day in Seattle. Electricity is only available for about 18
hours a day and typically not available when most needed (5-8 am, and 7-9 pm) BTW the
local electric utility charges me at least 2 times more per kWh.

Car: My car (a Honda) costs about $18,000. I pay an interest rate of 15% on the car loan.
It is also less safe. A better model sold in the US costs a little less. The US
model comes with a more poweful engine and is equipped with airbag. Auto insurance
will rarely cover the cost of hospitalization in the event of a serious accident. Delhi
is amongst the most dangerous cities in the world to drive in.

Internet
Connectivity:
Internet connectivity costs about the same per month as it does in the US ($20 pm for
a DSL connection), but the speeds are between 256 and 512Kbps, significantly
slower than that available in the US for a comparable price.

Several other things that relate to quality of life are poorer. But most people already know that.

My income is lower though, by a factor of about 4 to 5. (I earn about 30K a year, ).
So in sum, I'm simply poorer than I was in the US.
I am also less productive than I was in the US.

It is true that compared to the average Indian, with an income of $450 a year, I am fabulously wealthy, but that is an unfair comparison. A more appropriate comparison would be with folks similarly qualified: I am an engineer, with an undergraduate degree from a good Indian school, masters in CS from a reasonably good,(top 20) US program, and an MBA from an Ivy league school.
Nothing specatacular, but probably above average. My peers with such a background would earn significantly more.

Don't get the idea though, that I'm whining here. Indian IT is a bit like the Wild west. The
potential opportunity, for creating new businesses is enormous, and this was one of the reasons
I returned to the country. There was never better time to be a capitalist in India.

Those who oppose the H1-B program on the grounds that it takes away American jobs, and
lowers the wages for American workers, seem to be overlooking a very significant issue. The

Re:Who is this "you all"?

[zascandil]

I am writing from the other part of the ocean, I am Spanish myself and I could give you more details about some of the topics of what you are saying. Bear my bad English and blame the "good" language system We had in some western countries :)

About the gold that came from South America mines, at least what my History teacher told us that the most of it was spent by Charles V (I of Germany) in the wars He had in Belgium (Flemish part). Most of the gold that was arriving in Seville, was sent to suppport the armies that were sent around Europe and in other parts of the world. Do not forget that Filippus II, Charles son had the biggest empire ever known in the world. To maintain this, you needed lot of gold, loads of it.

Enough about old Spanish history (which I am not very proud of, actually). Our recent history after the 70s was different. We took profit of globalization, and main manufacturer industries landed in Spain because of the cheap and valuable labour, mainly automotive industries. Of course, this helped in improving our economy but in the end this cheap labour turned into a more and more expensive labour and companies started to think to move to eastern countries, Slovakia and other ones. In the end, some companies moved and other stayed, to get a qualified and productive group takes lot of time and resources and it is not just a matter of moving one factory to a different country. Some companies that moved to eastern europe countries, they changed their mind and went back, since they realized those factories were no so productive, as someone mentioned, the percentage of errors were very big and it was not worth the cut of costs...Anyway, former comunist easter countries had very well educated people and they are becoming European Union countries, so this situation could change...

Recently I was asked by an English colleague if our company was outsourcing. It is not the case in my company, since normally the client was always in Spain and you needed to sit next to fullfil the requirements made by the client. He told me that in their case was not so good, people from India were very talented, but they did not share their views and reach agreement was not always easy.

I have recently read that wages in India are increasing (which I think is good) and companies are starting to look to China. As someone has mentioned, people are not free there, unions are controlled by the Goverment so they assure the companies that nobody would complain. Some friends that travelled to China, they told me that in some companies the employees even sleep in their companies! :-O (for instance She saw a supermarket with the lights on and employees lying sleeping everywhere: counters, floor). This is neither free market nor they are comunist anymore...

And finally, myself I am trying to find a job in the US, since my girlfriend was one of the thousands of Europeans (and other countries as well) that moved to the US for a post-doctoral fellowship for two years, and I wanted to learn how the Americans do. I was assuming that in America things are different that in Spain or in Europe, where interns are doing the job and when after two or three years hacking any code, you are kept away from keyboards and start coordinating other interns...My assumption is that in IT, in the US, you have a longer career from Junior, to mid or senior employee and talent is well seen (and paid). I just want to point out what I have seen so far in the US wages. The average Spaniard Junior programmer in IT earns 18-20K Euros (which could be around 26K USD). A senior administrator or programmer could not earn more than 36-40 K Euros which is less than 50K USD and although in the rest of Europe the situation could be a bit better, nothing compared to the US wages and most of this difference is because of the strength of the Euro. At least in Spain the standard of living is not very far from the US standards, at least what I have seen from my girlfriend living in Baltimore. Renting an appartment i

Re:In more trouble than most realize...

[carpeweb]

They told the regulators how much it took to run a telephone system, and the regulators marked that figure up.

IIRC, they were regulated under a CAPM regime. Under the Capital Asset Pricing Model, regulators allow for a "fair" rate of return on invested capital. (The definition of "fair" might or might not include a reduction or negative premium to account for the near-zero risk, but that's not relevant to my point.) So, regulated monopolies such as AT&T had a very strong incentive to boost their fixed assets. Any "investment" (i.e., spending) they could capitalize would go into their rate base, which would allow them to earn more profit. (They also had an equally strong incentive to use the slowest depreciation accounting methods, thereby extending the allowed earnings on those "investments".) It doesn't completely explain their investments in R&D, but it does help explain the very posh nature of the physical plant at the old Bell Labs, for example.

But it goes to show if you're going to waste money, at least you should waste it on something useful.

Not really. The lesson was, "if you're going to waste money, at least convince the regulators that it was 'investment' and not 'spending'".

Re:Speak for yourself I never liked globalization

[cold fjord]

Or being the first to report on the use of white phosphorus as a chemical weapon against the Iraqi people which was latter admitted by the U.S. government:

Not correct. White Phosphorus, although a chemical, is not a chemical weapon within the meaning the the Chemical Weapons Convention:

The CWC is monitored by the Organisation for the Prohibition of Chemical Weapons, based in The Hague. Its spokesman Peter Kaiser was asked if WP was banned by the CWC and he had this to say:

"No it's not forbidden by the CWC if it is used within the context of a military application which does not require or does not intend to use the toxic properties of white phosphorus. White phosphorus is normally used to produce smoke, to camouflage movement.

"If that is the purpose for which the white phosphorus is used, then that is considered under the Convention legitimate use.

"If on the other hand the toxic properties of white phosphorus, the caustic properties, are specifically intended to be used as a weapon, that of course is prohibited, because the way the Convention is structured or the way it is in fact applied, any chemicals used against humans or animals that cause harm or death through the toxic properties of the chemical are considered chemical weapons."

WP - the arguments

So WP itself is not a chemical weapon and therefore not illegal. However, used in a certain way, it might become one. Not that "a certain way" can easily be defined, if at all.

The US can say therefore that this is not a chemical weapon and further, it argues that it is not the toxic properties but the heat from WP which causes the damage. And, this argument goes, since incendiary weapons are not covered by the CWC, therefore the use of WP against combatants is not prohibited.

White phosphorous is no more of a "chemical weapon", as normally understood, than napalm. Or course, flame weapons have been subject to controversy of their own.

As for Noam Chomsky he has been documenting U.S. war crimes in places from Nicaragua to Vietnam for 40 years now. He is an American hero and if the MSM dared to give him a voice and people were made aware of the level of violence the U.S.government has committed against the world we might see new leadership in the U.S. and live in a much more ethical country. Of course we will never see that because it would threaten the corporate bottom line.

There are other views about Chomsky. And it isn't the corporate bottom line I would worry so much about....

Left-Wing Monster: Pol Pot

While Pol Pot was carrying out his genocide, numerous American leftists functioned as his apologists. Notable among these was the American-hating MIT professor Noam Chomsky, who viewed Pol Pot as a revolutionary hero. When news of the "killing fields" became increasingly publicized, Chomsky's faith in Pol Pot could not be shaken. He initially tried to minimize the magnitude of Pol Pot's atrocities (saying that he had killed only "a few thousand people at most").[64] He suggested that the forced expulsion of the population from Phnom Penh was most likely necessitated by the failure of the 1976 rice crop. Wrote Chomsky, "the evacuation of Phnom Penh, widely denounced at the time and since for its undoubted brutality, may actually have saved many lives."[65] In a 1977 article in The Nation, Chomsky attacked those witnesses and writers who were shedding ever-brighter rays of light on Pol Pot's holocaust; he accused them of trying to spread anti-communist propaganda. In 1980, when it was indisputable that a huge proportion of Cambodia's population had died at the hands of the Khmer Rouge, Chomsky again blamed an unfortunate failure of the rice c

Re:In more trouble than most realize...

[thePowerOfGrayskull]

Actually, the real problem is that IT management is so impressed by the initial dollar savings that they are completely oblivious to the utter lack of quality in the work coming back from offshore. Our organization has outsourced about 2/3rds of its internal development to one of the largest companies in India (InfoSys). The product we receive back from them is consistently of poor quality, bug-ridden, and unmaintainable.

Unfortunately, upper management is still so pleased with the low hourly rates that they're not realizing that in the long term, they're paying for three times as many hours than would be necessary if the software were written correctly in the first place. I don't have much hope that they will come to their senses -- this has been going on for four years here now.

Re:In more trouble than most realize...

[plumby]

There is a significant difference between the two -

Outsourcing without offshoring is usually a positive strategic choice, and a result of businesses moving non-core activities to firms more focussed on that activity and likely to be more efficient/effective at that activity. For instance, most large firms outsource their catering to an external provider. It may have some effect on the overall job market, but usually just means that your role gets moved to a more specialist employer. As this is a move based largely on specialist people being able to do the job better, costs should stay cheaper.

Offshoring, on the other hand, is almost always negative and tactical and little more than a race to the bottom on simple employee cost (usually as a result of poor employment regulation/health and safety/general standard of living etc in the target country). Eventually, however, increased demand for jobs in that country will force wages up, and the only option is to move on to the next cheap economy.

Re:RD Offsored Too. Everyone SOL.

[ichigo 2.0]

Well, doesn't it? Hoarding causes that money not to participate in the economy. At the same time, the money is still there, so the value of the money that does circulate stays the same. So, in effect, less value is participating in the economy. Isn't that a recession? I'm just asking; I'm not an economist.

If someone hoards a huge amount of money and keeps it out of circulation, then the market adjusts and starts to behave as if the money no longer exists, causing deflation, which is an increase in an individual dollar's purchasing power. Now, inflation and deflation are the opposite of each other, and both have their pros and cons.

Inflation is good at fighting unemployment, as the continual decrease in purchasing power is an effective way of circumventing minimum wage laws. E.g. if the minimum wage is 5 dollars per hour, and there was an inflation of 5% during the following year, then the real wage, i.e. the purchasing power of the 5 dollars have decreased by 5%. Thus employers are now effectively paying 5% less to their employees, even though the amount of dollars paid is the same, and this means that it now becomes profitable to employ people for less productive work, resulting in an decrease of unemployment.
The downside of inflation is the reduction in PP, and the higher demands on ROI. If inflation is 5% a particular year, and a company's profits grow only 3% that year, then the real profit of the company has decreased. This also works on a individual level, i.e. I have 5000$ today, wait a year, and then I have lost 5% of my wealth, even though the amount of dollars I have is unchanged. What this results in is that any investment that has a ROI that is less than inflation, is actually making you poorer. No need to wonder why stockholders/owners/investors demand ever-increasing profits from corporations, inflation is the culprit.

Deflation is pretty much the exact opposite. If there's a deflation of 5%, then even investments with a negative ROI are profitable as long as deflation is higher. This makes having money lying on a bank account a good investment, as you'll be able to buy more stuff with that money after a year.
Of course this also increases unemployment, at least unless the minimum wages are decreased at the same rate as deflation.

Another bad/good side of inflation/deflation (depending on if you have debt or have borrowed money to others) is that as the PP of a dollar increases, the real size of a debt also increases, which is bad for those who have debt. Again the opposite is true.

IANA(K)E, which could be seen as a good thing, depending on which school you follow. :)

Re:In more trouble than most realize...

[lawpoop]

I have thought a lot about it. I've also traveled around the world, in a non-tourist capacity, and witnessed the reality first-hand.

If excessive taxation caused the middle class to shrink, Europe would have a small, rich, wealthy class, and throngs of poor people, and relatively unregulated, untaxed places like Africa and South America should have a burgeoning middle class.

But in fact the exact opposite is true. Places without regulation like South America have a wealthy, ruling class of a few, well-connected families. The other 95% of the population are living on the edge. It wasn't until I lived in South America that I saw homeless families -- mom, dad, and kids -- living on the streets. Until then, I had thought that a homeless person was just a crazy guy who heard voices and couldn't hold down a job.

So then in Europe, with high taxes, extensive regulation, and strong unions, we see the largest middle classes and the highest standards of living. So, the reality is the opposite of what your theory predicts. The states with the most regulation, highest taxes, and stongest unions are those with most highest per capita income and the highest standard of living.

Without government regulation, greedy wealthy people will exploit the average joe to maintain their wealth. There are good, honest rich people who want to treat people humanely and compete fairly in the marketplace. However, they are quickly outcompeted by rich people with no ethics, who have no problem bribing officials and having people killed to get what they want. You can't compete with a cheater when you are playing fairly. So what happens is that a kleptocracy arises -- the best cheaters rise to the top.

What government regulation does is keep the game fair, so that honest players have a chance at winning. It's not a perfect solution, but it is far better than the alternative.

Again, I with you would think more critically about these issues. As the slashdot sig goes, the plural of 'anecdote' is not 'data'. I am glad you and your friends are having a good experience with work, but your situation is not representative of reality for most Americans. You can't just look at what is immediately in front of you and think, "Things are going well for me; therefore, things are going well for all Americans."