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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.
It's offshoring, not outsourcing.
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:
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See: http://democracynow.org/article.pl?sid=05/11/08/1
followed by: http://www.democracynow.org/article.pl?sid=05/11/
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?
Tired of all the isms, don't exploit people as an employer, or a government, mmmmK?
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
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'".
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.