Posted on 12/03/2003 11:17:18 AM PST by Pikamax
BusinessWeek Online U.S. Programmers at Overseas Salaries Wednesday December 3, 8:27 am ET By David E. Gumpert
It's the great unanswered business-economic question of our day: How do we replace the hundreds of thousands of information-technology, call-center, paralegal, and other jobs rapidly exiting the U.S. for India, Russia, and other low-wage countries? The main answer that the so-called experts put forth, without a lot of conviction, is that we'll create new "high-value" jobs to replace those leaving the U.S. What are those jobs? No one seems to know. ADVERTISEMENT
In the meantime, the matter of overseas subcontracting appears to have become open-and-shut. If you're an executive with half a brain, you can come to only one conclusion when tallying the differences in costs between hiring computer programmers in the U.S., vs. India or Russia. These days, the jobs are going to Indians and Russians.
OFFSHORE BARGAINS. But what if there was another way to skin this particular cat. That's what Jon Carson wondered a few months back, when confronted with the need to complete a major programming project in a hurry, and at the lowest possible cost. Jon is a serial entrepreneur whose latest venture, cMarket, helps nonprofit organizations increase their revenues by putting fund-raising auctions online. I have known Jon for years, and -- full disclosure -- have invested in several of his ventures. I only learned about his computer-programming dilemma after the fact, though.
cMarket had been pursued, as many business owners are these days, by an intermediary who promised he could cut cMarket's programming costs significantly by outsourcing his needs to India. So last spring, when cMarket signed an agreement with the national Parent Teachers Assn. [PTA] to handle online auctions for its 20,000-plus local chapters and, simultaneously, began taking on charity auctions from Boston to Miami, Jon knew he had to rapidly expand cMarket's capabilities. He had his IT director call the intermediary and tell him that cMarket needed four programmers, pronto. Jon knew the numbers for experienced American programmers doing the specialty work he required: $80,000 a year, with benefits adding an additional $5,000 to $10,000 per programmer. The intermediary came back with the number for the services from India: $40,000 per programmer.
It seemed like a cut-and-dried decision, the kind U.S. executives are making every day without hesitating, but for some reason Jon hesitated. Much as he likes the idea of having projects completed at the lowest possible cost, and as responsible as he feels to investors, he didn't like the feeling of becoming someone who callously pushes jobs to other countries. "I'm in the entrepreneurial economy," where competition around both costs and revenues is very intense, he says. "But I was personally very uncomfortable. This situation brought me face-to-face with how easy global disintermediation is being made for folks, to the point where it is almost inevitable."
TOUGH CALL. As he thought more about his decision, Jon realized he had a valid business reason to hesitate: As the head of a startup that had been going for less than a year, he wasn't at all certain he should take the risk of having essential work done at a far-off location by people he didn't know, and with whom he could communicate only via e-mail and phone. Still, there was that matter of nearly $200,000 in annual savings. Each time he hesitated about making his decision, various confidantes reminded him about the big money at stake.
And then Jon had a brainstorm. What if he offered Americans the jobs at the same rate he would be paying for Indian programmers? It seemed like a long shot. But it also seemed worth the gamble. So Jon placed some ads in The Boston Globe, offering full-time contract programming work for $45,000 annually. [He had decided that it was worth adding a $5,000 premium to what he'd pay the Indian workers in exchange for having the programmers on site.]
The result? "We got flooded" with resumes, about 90 in total, many from highly qualified programmers having trouble finding work in the down economy, Jon says. His decision: "For $5,000 it was no contest." Jon went American. And the outcome? "I think I got the best of both worlds. I got local people who came in for 10% more [than Indians]. And I found really good ones."
HERE AND NOW. In the interim, Jon has promoted two of the programmers to full-time employees, at standard American programming salaries, rather than risk losing them to the marketplace. And he is convinced that having people working onsite gives him control over quality and timing that he wouldn't have enjoyed if he had subcontracted overseas.
While cMarket has solved its immediate challenge, the implications of Jon's approach are potentially mind-bending. What if other companies begin taking the same approach -- offering Indian-style wages to American workers? On the positive site, we could begin to solve our job-creation problems. But on the negative side, America's standard of living would inevitably decline. There's only one way to find out for sure how it all might shake out, and that is for other executives to replicate Jon's experiment. The results could be quite interesting.
Then show one study proving that. The Steel tariffs according to the USITC study van neither be proven to be harmful or beneficial. There are two hundred years worth of tariffs within American History and you are making an assertion without evidence that flies in face of document previously linked to other threads. You sir, are obviously lying and trying to spread disinformation to harm the USA.
Note, I said "overall" detriment, not applying it to that specific industry for which the protection was applied. Since your superficial analysis of Japan precludes you from understanding my last example, and why you are again wrong, I will give you (yet again) another perfect example of the overall loss to the consumer, by "protectionist" policies:
Overall detriment includes the impact on the consumers and the impact on producers. It is a net number. If you are so correct come up with at least one example. There is one in the literature that I have reviewed but there are far more that go the other way now since you say it is all tariffs come up with the references. You sir were challenged to this before and your failure to come up with evidence in support of your position is just one more example of the lying that the advocates of no American tariffs come up with. You are no better than a gun grabboid liar. You internationalist socialist.
Airbus cannot compete in an open market, with Boeing. They lose money hand over fist, yet they are still in the market, and not yet bankrupt... Why?
Because they are subsidy heavily by the E.U., since the E.U. does not want Boeing to be the only supplier of planes. Such a policy (like a protectionist tariff) protects that particular industry (in that one particular market), to the detriment of all consumers within that market. It hurts people living in the E.U., because Boeing is not allowed to compete with better planes at the same price, so Airbus raises their prices to be at the same (artificially high) level that Boeing is forced to sell at... (But maybe a few bucks cheaper, to cinch their bids.) Boeing loses the bid, Airbus sells at an artificially inflated price, and the people who fly are forced to pay higher fares to fly... The consumer in that market, loses. At the same time, it hurts competitors (Boeing and Lockheed-Martin), forcing them sacrifice profits and money that were hard-earned, and should come to the USA. Again, it's easily proven, mathematically. But only if you understand applied calculus, equilibrium pricing, marginal costs and revenues, and what an economic "dead-weight loss to society" really means...
Yet Airbus continues to be imported to the USA without tariffs in order for the European subsidized product to be competitive. It is not competitive. The European subsidy harms the USA.
You have accurately stated the harm that comes from foreign subsidies to industries and why the USA should use tariffs to take away theta subsidization advantage.
Need I go on, or are you starting to get the picture?
The only one who does not get the picture is you. You seem to think the USA has no choice but to be a good internationalist and allow foreign subsidies to continue to the detriment of American industries so that American competition to foreign producers are driven out of business.
Like I have repeatedly said foreign subsidies to business are a reason for American tariffs to negate the effect of foreign subsidies. The tax on foreign production may partially take away the artificial discount on these products.
IF we adopt such idiotic tactics as trade tariffs, it might hurt the off-shore competitors... But it hurts us more!!!
Idiotic is a person who would throw away the best negotiating tool in international trade a tariff because of a belief that is unsubstantiated by quantitative analysis that they might be harmful to the USA. In short you are still trying to peddle snake oil instead of actually coming up with quantitative analysis.
Of course, I have already given you two ideal contemporary examples, of the harm that tariffs cause. I could mathematically prove them to you, but it won't change your uninformed opinion. You have, after all, made up your mind- facts be damned.
You have yet to give one citation of a mathematical analysis. In you can prove something you would have. You obviously can not.
I suggest you return to the University and start taking some classes on economics.
Perhaps I should teach them.
Until then, any further explanations to you, is akin to explaining subatomic physics, binding energy and the true implications of isotope half-lives, to an anti-nuclear-power demonstrater.
Excuse me the insults from someone who can not even understand the basic truth that one must base one's conclusions on evidence not merely theory is I am certain beyond you. Clearly such concepts as basic physics are also beyond your abilities. I note that the explicitness of subatomic physics, binding energy, and isotope half life all are mathematical and that seems to be beyond your abilities otherwise you would have come up with the studies.
I have posted links in the past to quantitative analysis. He is one such link link. See how easy it is to post data when one has done some research and has a basic knowledge of the subject. I recommend you read other than the Cato institute and actually take some courses in history and economics and mathematics you might be able to do more than lie of course by doing this you may have to actually work but hey if you prefer ignorance so be it.
But then again, you're also an expert on nuclear power, too...
I have never ever claimed to be an expert on nuclear power
... Right? Even though you've never seen a control rod drive mechanism, main coolant pump, fuel cell or worn a TLD???
Actually I have seen control rod drive mechanisms, heat exchangers (both prior to thier being used in a hot ebvirornment admittedly). Fuel Cells I have only seen on a monitor. Yes I have worn a thermo luminscent dosimeter and they were annealed before and after.
< /sarcasm > Until further educated on this subject, you have insufficient knowledge to even enter a debate, much less prevail. And I'm starting to feel a little embarrassed for you.
Well I may be unable to prevail in this debate but it would only be due to your ability to continue your lies on this site. You understand why airbus is a travesty and how it harms the USA yet you fail to undertand why such behavior is a justification for tariffs. Such idiocy indicates an agenda either you are a hard core Clintonista or a Cato Insitute true believer. If either then you are not concerned with arriving at the correct policy for the USA through discussion and refernce to mathematical analyisis. You referred to calculus above. I have yet to see any examples of such on your side. Note, if you post the Steel Consumer's study of the Steel tariffs then you should fully expect the USITC study beig posted which includes all the numbers from the steel consumers and concludes the tariff in question being either overall harmful or beneficial is within the margin of error. In short, if one is going to mention math one should post refernces so the readers can check the math (see link above).
Obviously economics is not a subject you know. I suggest you should have taken your own advice.
Let me put this in a way that even your miniscule intellect can grasp...
Until you understand this, you will NEVER prevail in a debate on economics.
Had you the slightest knowledge of economics I would be happy to discuss things with you. had you knowledge of differential calculus I would discuss the use of derivatives in quatitative analysis but until and unless you show a scintilla of evidence you are anything more than a wannabe economist who has some knowledge of American history I will continue to call you a LIAR.
Coming from an uneducated rube such as yourself???
Simply put, you're too stupid to waste further time on...
Thats because these "high-value" jobs are a fantasy spun by the free traitors not reality.
The reality is McJobs and door-greeter at the local Great Wall-Mart.
http://www.meti.go.jp/english/report/downloadfiles/gCT0324e.pdf
Pay particular attention to Chapter 3, Economic Implications (of Tariffs), which states
The most basic effect of an import tariff is to raise domestic prices in the country imposing the tariff. In "small countries," (defined for our purposes as countries that do not have an influence on world prices), the rise in domestic price is equivalent to the amount of the tariff. In "large countries (those that have an impact on world prices), the price rise is somewhat less than the amount of the tariff because the tariff will reduce demand, which reduces world prices.
The rise in domestic prices expands domestic production of the imported good while at the same time decreasing demand for it. Tariffs benefit competing domestic producers, but harm consumers.
I've given you just one link, that took all of 30 seconds to find... Doing a quick Yahoo search gave me 343 links that will ALL tell you the same thing. Search "import tariff" and "large country."
Get educated before you start talking $h!+.
Second from the quotation given the effect of a tariff on a large nation is to reduce worldwide demand. and the increase in prioices is somewhat less than the overall tariff. Hello, no one disputes that but the question is overall harm to the economy which is measured by taking the increased capital investment in the nation imposing tariffs (the USA), the additional jobs created or prevented from going offshore, The multiplier effect of this economic activity in the nation with protective tariffs. From this one subtracts the cost of the tariff in terms of consumuing industries. Noiw one will probably need to employ regression analysis to determine the factors in teh final equations (this will be where one computes curves and the slopes of curves using more complex equations.
The overall harm to consumers may be very small while the overall benefit to the economy may be very large. IT is a question of measurement.
When you get beyond high school economics or you post a link that works please let me know or else admit that you are a liar who does not wish any benfit to the USA. Personally it is not my goal to subsidize other nations from teh USA and that is clearly what the current trade policies negotiated by Clinton had in mind. See the comments of Robert Reich on this subject for futher detail.
Like I said show me some mathematics not some opinion by someone whom I have no knowledge of their expertise. Mathemtics are independantly verifiable opinions are like certain parts of the anatomy everyone has one. And posters like you may often be aqccurately described as being one.
May I first remind you that ad homineme attacks are against Free Republic rules. Secondly it is not stupid to refuse to take the word of a poster who puts no references out and whose one link is non functional. Using a cut and paste to my browser I got no web site from your supposed link.
Please either come up with a functional link and or stop your misrepresentations of economics and stop claiming to be anything resembling educated and trying to engage in a reasonable discussion.
I did not say that tariffs alone made the US prosperous during that period. Afte 1870 the total land area of the United States of America did not grow by a a very large amount. Hawaii was annexed after that and the Phillipines, the Canal Zone, Guam, Puerto Rico and soem small Pacific Islands were added to Americna territories but the contiguous area of the USA was finished with the Gadsden purchase in the 1850's. Oh yes the people mattered but so did teh government policies. The USA grew economically far more than Mexico, Argentina or Canada. Yet in the year 1800 Mexico and Canada had vastly larger areas than the USA.
I am really tired of International Socialists misrepresentring Americna History. Come on show a single case where the mathematics actually show that a tariff was harmful. There is one out there all it takes is someone willing to do the reasearch I have given clues about how to find it.
When and if you comwe up with one perhaps we can engage in areasonable discussion of American History. In the interim you are merely blowing smoke with generalities that are not grounded in historical fact.
I'll remember that next time you start calling me a liar, when it's your ignorance that is at fault.
The link I gave you takes a while to load- it's .pdf file. Try these:
http://search.yahoo.com/search?p=%22import+tariff%22+%2B%22large+country%22&ei=UTF-8&fr=fp-tab-web-t&cop=mss&tab=
http://internationalecon.com/v1.0/ch90/90c110.html
http://www.people.vcu.edu/~smitchel/609/week5.doc
http://cc.kangwon.ac.kr/~hhlee/TradeTheory/chapter8.doc
http://www.econ.nyu.edu/user/eatonj/commercialpolicy.pdf
http://www.lebow.drexel.edu/lybecker/IntB_334/lecture09.doc
http://www.erudit.org/prepub/doc/000313pp.pdf
No more excuses. Get some knowledge and THEN come back to the table.
You just seem to be unable to come up with any example that actually links to real world data. You are great on theory without even really understanding this. The above shows absolutely nothing about the real world and is at best an unproven piece of THEORY. Unless and until theory can be linked to real world data via observation it is stricity theory that may or may not have any bearing on teh real world. You really do need a grounding in fact and not just a few web searches of economic theory.
Get some manners. You started off iunsulting towards me and have gotten really bad when I really do doubt you could pour your own P*ss out of your own boot with an instruction manual. I did not start the personal abuse you dide and you have demonstrated ignorance and have yet to post one example of a specific tariff imposed by the USA harming the USA.
ALL YOU RHETORIC AND BOMBAST HAS SHOWN IS YOU CAN NOT COME UP WITH SPECFICS Flag me when you come up with an article that is not theoretical and is based on real world measurements to verify the theory. Then we can discuss things as rational people without your typical leftist insults.
As I said before, the facts can be explained to you at great length, but you're not interested in facts. I even give you links to pictures that explain it, and STILL, you refuse to see the light.
As I said before, you're too stupid to consider seriously.
Further commentary, FReepmails, etc. will be studiously ignored.
harpseal= ignorant putz.
You have accurately stated the harm that comes from foreign subsidies to industries and why the USA should use tariffs to take away theta subsidization advantage.
Your analysis of the Airbus example given by Crapitalist Eric is spot on. Simple game theory would seem to dictate a like response is called for, if for no other reason than to negotiate from a position of equal footing.
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