The Outsource of Confusion - When jobs go, we grow. [Pro-Outsourcing Article]

National Review ^ | 02/04/2004 | Bruce Bartlett

[Quick1]

His prediction wasn't too successful though, was it?

[Middle Man]

"now all of these jobs have been LOST to one person and one combine."
"Something to think about."

Innovation and retooling are great. But we are demonstrably turning from a manufacturing to a "service" economy. Government is the biggest employer in the U.S. now. How much useful work do you think is being done by bureaucrats?

All this means is that we are consuming more than we produce. We will not be a 'player' in this brave new global economy if we quit producing tangible, real goods altogether.

[Middle Man]

Every time we buy a product "Made in China", whose economy is getting a shot in the arm? And whose economy is getting stuck with billion$ in trade deficits?

[William Terrell]

I simply cited the fact that the tax and retail revenues from jobs that go foreign are lost. This is without question. You said government revenue didn't reflect that truth.

Anybody can see that what I said was true, but the truth of your's requires numbers. That makes it your responsibility to show some evidence of what you say.

[Middle Man]

"Arthur Laffer predicted that when excessive rates of taxation are reduced, government revenue increases."

The cornerstone of Reaganomics. Here's the scoop on that bit of legend, and Laffer had nothing to do with it.

[1rudeboy]

Microsoft was never in the S/DRAM business, though, so it would be interesting how you define "success."

[1rudeboy]

Laffer had nothing to do with what, exactly?

[1rudeboy]

I simply cited the fact that the tax and retail revenues from jobs that go foreign are lost.

Actually, you cited that Mr. Bartlett did not take that fact into consideration. You never mentioned why he should.

[Glenn]

But I don't think anyone should dismiss the very real possibility that such happenings are good for everyone in the long run.

I keep reading this line but have yet to hear just how it is going to be good for us. Can you explain it to me? Can you give me a timeline? Show me a plan?

[William Terrell]

Actually, you cited that Mr. Bartlett did not take that fact into consideration. You never mentioned why he should.

Since Mr. Bartlett seems to think this trade practice is beneficial to the citizens of the US, and since US revenue and the general economy will be affected, he should have taken this fact into consideration.

[Cronos]

The best was the mutual fund that invested in the Indian stock market that has more than doubled in value in the period from JAn 2003 to now.

[Cronos]

I wonder what inventions will be made in China and India when those countries become the world center of technology. Possibly they can surprise us, after all they were leaders in the past

Good point. That illustrates what we need to do (and what we ARE doing), we're encouraging the best and brightest from those countries to come here for higher education. Many stay on in our research labs (the creator of the 2nd fastest supercomputer (and the cheapest) was an Indian prof.). There have been quite a few inventions by Americans who had indian or Chinese backgrounds. The key word is "American". If we can get rid of some of the government baggage that has been accummulating, we will remain the leaders in R&D.

[Cronos]

A further illustration of the importance of getting high IQ immigrants -- check out any research labs, a huge percetnage of the lab technicians, scientists etc. are foreign-born. Like Nasa or uni research labs.

[A. Pole]

A further illustration of the importance of getting high IQ immigrants -- check out any research labs, a huge percetnage of the lab technicians, scientists etc. are foreign-born. Like Nasa or uni research labs.

To get such immigrants will not be easy in the future. They might be more comfortable in their own countries or go to China or India. Argentina used to attract top immigrants in the past.

[steve8714]

Nostradamus made his "predictions so inscrutable that they will all come true if interpreted a certain way...he is my favorite hunchback.

[Middle Man]

With the concept that lowering taxes would increase federal revenue.

[1rudeboy]

Are you sure? It was his theory, not Reagan's.

[Middle Man]

"Are you sure? It was his theory, not Reagan's."

The link I provided above is to the website of the actual author of the concept that Laffer is erroneously credited with having invented. Here's an excerpt that should clear it up:

"There is an incredible mythology that Ronald Reagan and Arthur B. Laffer invented the concept that lower taxes were self paying because of the increase in tax revenues from increased economic activity.

"Nothing but nothing could be further from the truth!

"This is a scan of a report that was issued by my company (Lionel D. Edie & Co. Incorporated) as written by me on January 22, 1963. It speaks for itself as you will note from the title of the report which is 'More From Less'! For a larger screen version of the report touch the page.

"What the report refers to is that in 1954 the Excess Profit Tax (put on for the Korean war) was removed at the initiative of President Eisenhower and to the shock and delight of observers the removal of that tax increased Federal revenues! I wrote this report in support of the proposals put forward for a tax cut in 1962 by President Jack Kennedy. From day one he had always taken the position that in order for the American economy to get moving taxes had to be lowered! At that time I was very close to Walter Heller and Arthur Okun, who were the key members of the Kennedy Council of Economic Advisors.

"The position of President Kennedy was pounded and pounded by the Chairman, Walter W. Heller and a member of the Council, Arthur Okun. After Walter W. Heller left the Council of Economic Advisors he gave a series of lectures at Harvard in 1966 called 'The Goodkin Lectures'.

"Those lectures were summarized and expounded in a most fascinating and perceptive book entitled 'New Dimensions of Political Economy' which was published by Harvard University Press in 1966. Here is a scan of one of his points regarding the tax cut of 1964 fostered, aided and abetted by then President Lyndon Baines Johnson. It was in the Johnson Administration that the tax cut proposed by President Kennedy in 1961 was finally enacted.

"This scan is at the bottom of page 72 of the Heller book. Note that the tax cut was set on the basis of an expansion in the economy and a return of revenues to the Federal Government. See the phrase 'the proposed cut would multiply itself...'"

"THAT WAS 16 YEARS BEFORE RONALD REAGAN, LAFFER AND REAGANOMICS!"

[gonewt]

Hogwash. Utter hogwash.

The most common defenses of outsourcing are:

1) Companies must replace American workers with 3rd world contractors in order to cut costs & stay afloat.
2) Outsourcing forces Americans to "retrain" themselves for higher-paying jobs.

Both are full o' baloney.

Sure, some companies really DO have to cut costs. But by and large, the companies participating in outsourcing are the biggies (i.e. Bank of America), who already employ tens of thousands (or more) people. Companies like that are notorious for employing tons of middle managers who do little more than occupy a desk chair from 8-5. The notion that they "need" to fire these Americans & replace them with Indians is just silly. What they "need" to do is operate more efficiently, and they'd save just as much.

Now, to the 2nd argument. I've got a masters degree, and I'm an IT professional. Most people I know who have been "outsourced" have college degrees. These people aren't blue collar laborers. These are highly skilled professionals. The notion that we must "retrain" or "get more educated" is silly, considering some of the idiots with NO skills (i.e. the aforementioned middle managers) don't get outsourced.

Outsourcing (per se) isn't evil. It's all a matter of the circumstances, and in most of them, it's a ruthless endeavor.

[1rudeboy]

This guy's company includes some graphs that show revenue increasing, and he claims that he came-up with an economic theory? C'mon.