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. 
Posted on 02/04/2004 6:50:48 AM PST by ClintonBeGone
Outsourcing of information-technology services continues to be a hot topic — and a sore point for many IT professionals. As they stand in unemployment lines, they see their former jobs being shipped off to India, where they are now done by people making one-fifth as much. It has aroused much bitterness and led to legislative efforts to restrict outsourcing in the name of saving jobs for Americans.
I can't really offer any comfort to unemployed programmers, but the process of outsourcing is good for both the U.S. and world economies. Any jobs saved in the short-run by restrictions on outsourcing will come at the expense of better jobs in the future that will not be created.
The problem really arises because India, rather than, say, Canada or Germany, is the perceived threat. We don't generally worry about American jobs going to wealthy industrialized countries like Canada and Germany, because their workers are highly paid and cannot undercut us based on low labor costs. Because Indian workers are paid only a fraction of what a comparable American (or Canadian or German) makes, the competition is viewed as unfair.
But how did the U.S. and other wealthy countries get that way? It was by being the low-cost producer in some area. No doubt, the European farmers of the 18th century were bitter about being undercut by American farmers, whose cost of land was a fraction of that in Europe. They must have felt that this was as unfair as unemployed IT workers feel about India. But as time went by, costs equalized as capital and labor migrated to other countries and other industries. This is all part of the process of economic growth.
An article in the February issue of Wired makes this point well. It points out that Indians now doing jobs outsourced from America are seeing a rapid rise in their wages and standard of living. In the process, they are becoming more like Americans, which is translating into demand for American goods and lifestyles. The Indians also know that they can't compete only on price; the quality also has to be there, and they believe that they are delivering it.
Daniel Pink, the author of the article, goes on to make this important point: "Isn't the emergence of a vibrant middle class in an otherwise poor country a spectacular achievement, the very confirmation of the wonders of globalization — not to mention a new market for American goods and services? And if this transition pinches a little, aren't Americans being a tad hypocritical by whining about it? After all, where is it written that IT jobs somehow belong to Americans — and that any non-American who does such work is stealing a job from its rightful owner?"
Perhaps more starkly, Carly Fiorina, CEO of Hewlett Packard, recently said, "There is no job that is America's God-given right anymore."
It's worth noting that the U.S. is not the only country where outsourcing is happening. British and Australian companies are also outsourcing to India, while European companies are outsourcing to the Czech Republic and other formerly communist countries, where wages are low but education levels are high.
It's also important to know that when countries outsource work to India or China, they are only doing so for very low-end operations that require little skill or training. The high-end work and wages stay here — work that might not be retained if it could not be augmented by outsourced functions in low-cost countries like China and India.
A Jan. 30 report in the Wall Street Journal illustrates how this works, using the case of a computer mouse manufacturer called Logitech. It sells a wireless mouse called Wanda for about $40 that is assembled in China. Of the $40, China gets only $3. The rest goes to suppliers, many based in America, which make components for the mouse, and to domestic retailers. The biggest component of Logitech's cost is its marketing department based in Fremont, California, where the staff of 450 Americans makes far more than the 4,000 Chinese who actually manufacture the product.
Those 450 Americans, making good wages in California, might not have jobs at all if Logitech wasn't able to stay competitive by outsourcing some of its costs. Studies have also shown that workers displaced by outsourcing are often retrained for better jobs within the companies doing the outsourcing. Cisco, for example, is a leader in outsourcing, but has not reduced the number of its domestic employees because they have been redeployed into other areas, doing higher value-added work. These jobs often pay better than those that were outsourced.
I know that this is no solace to those who have lost jobs due to outsourcing. But the nation as a whole will be worse off if outsourcing is restricted.
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.
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.
The cornerstone of Reaganomics. Here's the scoop on that bit of legend, and Laffer had nothing to do with it.
Actually, you cited that Mr. Bartlett did not take that fact into consideration. You never mentioned why he should.
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?
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.
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.
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!"
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