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IBM, Other Multinationals "Detaching" From the US
theodp writes "If you're brilliant, work really hard, and earn a world-class doctorate from a US university, IBM has a job for you at one of its US research sites — as a 'complementary worker' (as this 1996 piece defined the then-emerging term). But be prepared to ship out to India or China after you've soaked up knowledge for 13 months as a 'long-term supplemental worker.' Newsweek sketches some of the bigger picture, reporting that IBM, HP, Accenture, and others are finding it profitable to detach from the United States (even patenting the process). 'IBM is one of the multinationals that propelled America to the apex of its power, and it is now emblematic of the process of creative destruction pushing America to a new, less dominant, and less comfortable position.'"
I recommend reading a book called "IBM and the Holocaust" (http://www.ibmandtheholocaust.com).
This is a company that happily accepted huge sums of money from the Germans during WWII to computerize the process of hunting down and exterminating Jews, and even "hardened" several of their facilities so they'd survive Allied bombings. All the while, they claimed to be an American business.
It's arguable that in a sense, they "left" the United States back then, even if they still retained a big physical presence here. Despite the law preventing IBM from being able to move their profits out of German banks during the war, they STILL happily worked on their projects for them, knowing full-well they couldn't even touch the money for years.
Well, let them all move to India/China/etc, then.
Let them move to countries that rely more on rote memorization of facts, and little in the way of independent thinking. Let them move to countries where the employees could feed themselves for a year by stealing a few pieces of their product. Let them move to countries where the government could very well decide that the company isn't pious or nationalistic enough, and take over their assets.
America has many great and successful companies for a reason.
It's hard to put a dollar amount on how much money will be lost by them moving overseas, but I guarantee it'll be a net loss. I look forward to hearing some CEO's say, "Well, we had record profits this year, but no one can seem to actually find any of this money, and we can't even pay rent on some of our offices anymore!" Metrics aren't perfect, and no one with a marketing degree or above the level of middle management seems to know that.
Job? I don't have time to get a job! Who will sit around and bitch about being broke and unemployed then?
That policy works until other nations start retaliating against your primary export.
Canada managed to get away with it for a while because Canada isn't that significant in international trade and primarily trades in raw materials. But, in the end, even Canada preferred free trade over protectionism, which is why it joined NAFTA.
That would be the sensible solution, I agree. But I suspect it in no way would benefit the corporations who whine about corporate tax: they want it to have a high headline rate (so they can whine) but lots of hidden deductions (so they don't have to pay it). In particular, if you were to pick any exception as a place to start eliminating loopholes, you'd immediately run into an army of lobbyists who care very much about that particular exception. They're all there for a reason, after all, and usually the reason is that someone with deep pockets really wanted that loophole.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
The truth is, nowadays more than ever, getting a top management position is due to effectively manipulating other people - and who is more effective at manipulating than corporate psychopaths, especially in the chaotic world of publicly traded corporations?
This is why
1) executives rarely care for the long-term viability of the company they lead, opting instead for a short-term uptick where they can cash in and then leave.
2) these people can always find another executive position, once they leave their previous company, regardless of how dire the state they caused their company to get into - they can manipulate people so well that they will find an accepting armchair immediately.
3) BODs are filled with people who just move from company to company, from one executive position to the other.
4) golf is so damn important for them - that's where they network and prepare their parachutes.
I strongly recommend you read this book. It's an eye-opener.
"The agriculture ministry is not in charge of Gundam" - Japanese ministry official.
I agree with all of this, and it's sad that someone has to point it out. In a globalized economy, the US is not able to compete on price. We don't have the natural resources. We don't have the cheap labor.
We can only compete on quality. We have many advantages. Low population density, decent schools, lots of infrastructure. But with free trade, even that probably isn't enough to keep us on top. Developing countries will eventually catch up.
If we import immigrants to compete with third world countries, we will become a third world country. If we export capital in order to "raise up" third world countries, same result.
Let's face it. We aren't particularly productive. Our government is not particularly great. We aren't particularly "free".
But we have a head start. So we don't have to bend over backwards in order to prevent companies like IBM from leaving. They don't do anything that other companies can't do. Western countries are still their primary market. Their employees are still educated in Western schools.
So let's just shut the door behind them. Raise tariffs on so-called "multinationals" that produce elsewhere and sell here. And rid ourselves of the delusion that Americans owning stock in these companies is worth the loss of jobs and revenue that goes with them when they decide to flee the country.
"I assumed blithely that there were no elves out there in the darkness"
Look I am an Indian, and I think that there are a few things all of you need to know.
America is not going anywhere for now. The fundamentals of your future lie in the hands of your people, especially the select few who have a vision and can buck the status quo. As long as you have plenty of such individuals you are going to weather any geo-political storm.
Whereas in my nation life is so linear that it is a goddamn joke.
Almost every kid is expected to be an engineer and most of these engineers hardly even know what the hell they are talking about. As Feynman would say their knowledge is fragile.
Our educational system itself is a joke. Trust me on this.
At the same time entrepeneurs are discouraged and looked down upon. They are sorta treated with ice, as everyone wants a *son* in an MNC with a prestigous MBA. So, basically our society is choking itself. Sure, these people are awesome paper pushers, but despite the fact that some of them do have a decent brain they all seem to fail to do anything different.
No revolutions are put into motion. No brilliant new synthesis are formulated. No groundbreaking patents are filed. In short, the truly important stuff is in stasis.
Your society whereas pushes its outliers and that is why, as Kay once put it, most software is written on one side of the atlantic. I think that you should stop looking at IBM and start looking at MIT. That is where your future lies.
And seriously drop all of that economics mumbo-jumbo. As the foundations of society are the ability to create things, transport those things and dessiminate them. I think that those earning a living by making a killing in stocks are living a sham.
Oh and Thomas Jefferson would kill himself if he saw Bush in action. Despite his failings Obama is, at least, a breath of fresh air. So, value him for that. At least he had the courage (unlike me) to step up to the plate.
P.S. - /.s javascript is screwed, haven't they heard of simplicity?
Exxon, They paid about 44% in 2007 and 47% in 2008. BTW, that comes to around 35 billion per year in taxes they paid.
The rate isn't there to be actually paid. The government provided deductions and exemptions in order to steer businesses into certain directions and to get certain things accomplished that wouldn't have normally happened. The rate, just like you do no pay your actual rate, is 1: graduated progressively so it will never be the entire amount, and 2: it's there only for people and companies who do not follow the direction the government wants them to.
That's not always the case but to be fair, unless you were born into wealth, you have to work smarter and harder than everyone else.
:D But seriously, having to move somewhere, after building up a credit history and making something of yourself, to then find you have to start all over from scratch and can't even get a bank account because you haven't lived here long enough makes you re-think things. Having to start from scratch, with nothing, twice also makes you realise it's not that bad and I'm half tempted, if I get the opportunity, to go off to somewhere in Asia to help with off-shoring. Starting from scratch can make you feel youthful again and you gotta go where the money is.
Except for periods where I feel burnt out and need to slack a bit, if I'm not sleeping or running on the treadmill, then I'm coding for myself or my employer.
My existence, at the moment, is probably a bit pathetic to some (though I make time for some all Friday night to Saturday morning benders) but I'm am building up cash for investments through working a lot harder than my co-workers and I'm working on my own stuff which, hopefully, will turn into something I can I can either deploy and make money with or sell.
In the end I fully expect to retire early. My goal is to retire 1 year early. That doesn't sound like much but I do find if I set the bar lower, I then find I'm going to achieve that quite early on and raise the bar and keep raising it as time goes on.
It just depends what you want. Do you want small bits of work over a long period or bust your nuts for a shorter period and relax for a longer time?
You need money to make money. If I bust my balls now coding and buying up trademarks and hopefully some patents then hopefully I can spend more time doing fuck all.
Maybe this is the wrong mentality and I'll die tomorrow having busted my balls with nothing in return but this is the gambleI'm taking.
I am an American who moved to the UK and that did change me. For starters, I don't have to buy private health care.
Things have change a bit in how they work but the over all theme has stayed the same; you don't get something for nothing and smart hard work always pays off.
Following the Great Depression and World War II, the leaders of our society decided to start taxing the wealthy more and more, while using that money for the betterment of society as a whole. It was called the New Deal. And this policy worked quite well, propelling America into a period of rapid economic growth, while at the same time creating a profound sense of economic security for the middle class. Vacation pay became the norm (it largely didn't exist before the Great Depression), and middle class Americans had enough disposable income to spend on luxuries like vacations.
This system was made possible by several other policies that prevented the rich from quickly withdrawing their money from the country. If you were wealthy in the UK in the 1950's, it was extremely difficult to get your money out of the country. It became common in this period for rich British citizens to build huge sailing yachts, which they sailed to other countries and then sold. They used their boats as a store of their wealth (read Myles Smeeton's Once is Enough for a story of one such couple).
Then came the right wing "neo-liberal/neo-conservative" politicians. When they got into power, one of the first things they did was to remove the barriers to capital mobility. Money was able to flow almost completely freely across national borders. This has brought economic growth for some, especially in countries like China. But it has also ensured that the countries that originally used taxes on the wealthy to ensure a healthy middle class were at a huge disadvantage. Rich individuals have withdrawn their money from America, and invested it in countries like China.
What many of us don't realize is that the complete and free mobility of capital will lead to the virtual disappearance of the American middle class as we have seen it over the past four decades, because it will ensure that money will flow away from countries with high taxes towards productive countries with low taxes. The country will increasingly look like Britain in the 1800's during the beginning of the industrial revolution (i.e. the world of Oliver Twist). There will be a very wealthy class. And there will be a worker class, which will comprise the vast majority of the population. Things like vacation pay, comfortable pensions, affordable quality health care, and disposable income will slowly but surely disappear for the vast majority of the former middle class. I am not prophesizing this; I am watching it happen before my eyes. IT IS ALREADY HAPPENING! Take an honest look at America right now, and tell me that our standard of living isn't slipping. And this at a time when we have never been able to make products more efficiently!
And to those of you who reflexively demonize those like me as "liberals", ask yourself this question? Are you a Billionaire? If not, then why are you thinking like a billionaire? Why do you think that lower wages for most of society is in your interest? Why do you think that taxing billionaires and spending that money to build roads isn't in your interest?
Do you think that the $20000 you have invested in stocks will pay for your comfortable retirement? What you seem to forget is that the billionaire who owns $200 million of those same stocks will make slightly more than you. And he will use the money he makes to buy even more stocks. Meanwhile, you, with your ever decreasing salary will have less and less disposable money to invest.
This and no other is the root from which a tyrant springs; when first he appears as a protector - Plato (423 to 327 BC)
Instead of blaming them for leaving, why don't we stop chasing them away?
I have a better idea - bar them from operating in the US altogether, and give their smaller competitors an opportunity to fill the void.
Progressivism: Parasites helping parasites to help themselves - to other people's stuff.
Chasing them away? They seek lower "labor overhead" and they are getting it overseas. Taxes are far from the only and certainly not the most important reason for what we are seeing. We limit the amount of cheap labor they can import and punish them for breaking the law when they abuse the worker import programs.
It seems to me that being a bit more protectionist rather than less is an appropriate measure. Take away more than their foreign workers -- take away their government contracts and their right to operate in the U.S. entirely. Sure they might survive even under those circumstances, but the U.S. is STILL likely to be their biggest customers.
We have a horrible imbalance of wealth in the U.S. that people don't like talking about. We've heard about the disappearing middle class but no one seems to be listening or caring. The problem is that the stuff that is being sold is less and less affordable by the people in the U.S. For the past 20 years, people have failed to notice it because we've all been practicing "Reaganomics" or "debt financing" or "deficit spending" or however you prefer to phrase it. Instead of having a savings and an investment portfolio, the average American doesn't even have more than $2000 in the bank at any one time living paycheck to paycheck and trying to keep their credit cards paid. That can't work for much longer as people are making less and less money.
The free market without controls and preventative measures allows unscrupulous people to get away all sorts of evil things. Greed knows no limits and greedy people know no limits. Screaming for "more free market" is just a cry for "please look somewhere else while I pull another Enron or Madoff!" The free market forces leading to the brain drain in the U.S. has been weaking this country for a VERY long time and we're just about to hit the bottom that the few have been warning everyone about. The U.S. won't be #1 much longer and we can see why.
It's been well documented for seven years now: http://www.ibmandtheholocaust.com/