Posted on 03/04/2004 5:08:36 PM PST by sarcasm
The trend has made globalization a dirty word even to many well-heeled professionals. It has made software engineering look like a risky major for American college kids. And it has made India suddenly relevant - in terms of US jobs and pocket cash, not nuclear warheads and Kashmir.
"Offshore outsourcing" is stirring anxiety, and with good reason. America's white-collar work force is experiencing the kind of vulnerability once felt mainly on assembly lines. Entire industries such as software have felt the shockwaves. Employers are signing up firms abroad to supply skilled services such as radiology and architecture.
Some economists, including erstwhile free-traders, now worry that the offshoring trend reflects a fundamentally new situation. Instant and cheap communication, coupled with the rise of millions of newly educated workers in low-wage nations, creates the risk of a rapid shift of jobs.
"It has never before happened," says former Reagan administration economist Paul Craig Roberts.
Most economists say the age-old benefits of unfettered global commerce still apply. But the rising debate could have far-reaching policy implications - possibly slowing the trend toward globalization that many credit with raising living standards worldwide in recent years. Now, even if the outsourcing threat is overblown, it could help put the brakes on globalization.
High wage earners, long the strongest supporters of free trade in the past, have lost much of their enthusiasm for it. Any new effort to liberalize trade could face a hard slog in Congress.
The rapid shift in national mood is reflected in a survey last month by the University of Maryland's Program on International Policy Attitudes. It found that 40 percent of Americans now see globalization as positive, down from 53 percent in 1999. Nineteen percent see it as mostly negative, and 39 percent are neutral.
Perhaps the most revealing shift is among high-income Americans. Only 28 percent of those making more than $100,000 a year support active promotion of free trade, down from 57 percent in 1999, according to a breakdown of the survey data sought by USA Today.
Most economists support freer trade, international investment, and a freer labor market - all enablers of offshore outsourcing. Though it may cause short-term job loss and other disruptions, the long-term effect is to raise living standards, they say.
But a few economists charge that economists' old trade theory no longer applies.
Mr. Roberts cites the classic theory of David Ricardo, a 19th-century British economist, that exports of a specific good would be won by nations with a "comparative advantage" in producing that good. A producer had better technology, cheap raw materials, low wages, more education, or some other advantage. All nations engaged in such trade would eventually benefit in higher living standards. But that thesis, says Mr. Roberts, hung on the idea that the "factors of production" - plants, equipment, etc. - are relatively hard to move. Increasingly, that is no longer the case.After the cold war ...
The demise of communism and socialism has invalidated this old trade theory, Roberts says. Cheap labor in Eastern Europe, not to mention burgeoning China, has suddenly and eagerly joined the global work force. India, a long-socialist economy, has an added advantage: Millions of people with English skills.
In many cases, low shipping and communication costs make it feasible to produce abroad and send the output back to the US at a cost saving for the company.
"Any worker whose job does not require daily face-to-face interaction is now in jeopardy of being replaced by a lower-paid, equally skilled worker thousands of miles away," Roberts wrote recently with Sen. Charles Schumer (D) of New York.
About 14 million jobs, or 11 percent of the US total, are at risk of being sent abroad, estimates McKinsey & Co., a management consulting firm.
John Williamson, an economist at the pro-trade Institute for International Economics in Washington, calls the Roberts thesis "a load of nonsense." The US economy, when it is firing properly, creates more than 2 million jobs a year, enough to offset losses to India or other nations. And many of these jobs will be paying well.
The classic argument is that while trade costs some jobs, it helps create more by helping the overall economy grow faster. Consumers benefit as prices for goods and services drop. And in some cases, when a company locates some jobs abroad the costs savings allow other jobs to be created at home.
Moreover, economists of all stripes agree that US jobs are disappearing - and being created - for many reasons other than outsourcing. In manufacturing, for instance, the key factor behind job losses is rising productivity.
But that doesn't diminish the dislocation caused by outsourcing. And critics aren't confident that jobs lost overseas will be replaced by well-paid jobs in the US, especially in the short term.
William Baumol, a well-known trade economist at New York University, holds that the Ricardian model "needs extension and modification" to deal with today's outsourcing issue.'Do something'
Globalization, he writes in an e-mail, "should enhance overall world welfare, but at the immediate and extreme expense of the workers in the US who lose their jobs or suffer wage cuts as a result ... it is indefensible to ignore these effects and fail to do something about them." Even in the long run, outsourcing "may reduce per capita US income or hold back its growth," he adds.
Dean Baker, an economist with the Center for Economic and Policy Research in Washington, says that outsourcing of jobs has been limited so far to those with less political clout. By going to politicians for protection, medical doctors in the US limit the number of foreign interns. US doctors' incomes are twice the average in most industrial nations. Lawyers have not standardized law sufficiently so far to let some jobs go abroad.
Politicians are trying to figure out if there are ways to discourage outsourcing without killing trade and international investment with its benefits.
Sen. Christopher Dodd (D) of Connecticut has introduced the United States Workers Protection Act, which would prohibit taxpayer dollars (tax deductions) from being used for offshore outsourcing related to work paid for with federal funds.
A Democrat sponsoring a Worker's Protection Act...how Marxist.
Here's the skinny on that legislation.
It will disallow loan guarantees to companies whose foreign workforce is increasing while their domestic force is decreasing.
Everyone cheer now!!!
Look ma!
A smart Democrat who's on our side!
YEAH!!!!
So, Toyota will expand in the American market, able to undercut Detroit because of the disparity of retirees collecting pensions and accruing medical expenses between the Big Three (524,000) and Toyota USA (49), but should an American auto company try to set up shop overseas in order to try and compete with Toyota USA...no money.
If I have an innovative idea, and want to sell the best CPU in the American market, I will be unable to get loan guarantees from the Ex-Im bank that would help me compete against the giants in the tech industry via outsourcing my parts, and grow my business.
Protecting workers my ass...protecting the people who got him elected.
There it is. Globalization is the new name for wealth re-distribution and the dupes in corporate America have bought it hook, line and sinker.
True. But I imagine the vast majority of potential workers live in India and graduate from Indian IT departments (I wish I knew the numbers, U.S. (foreign born) vs. India IT grads).
There it is. Globalization is the new name for wealth re-distribution and the dupes in corporate America have bought it hook, line and sinker.
Do you believe that the freedom to invest capital in securities abroad should be taken away? Do you have any foreign assets in your portfolio? Isn't the spread of capitalism a noble and worthwhile goal?
You can call it socialism all you want, but isn't economic liberalization and standard of living increases abroad the antithesis of socialism? We trade amongst ourselves in this country freely, and I don't see - despite our own government’s attempts to redistribute wealth - a trend towards wage equalization. So why would you fear that being the case if we had full out globalization? News flash: outsourcing has been occurring for years, but it's just that now, it has hit vulnerable, formerly high paying industries. No one seems to bitch and complain when foreign companies bring their jobs into our country do they? Of course not, because it benefits us those times. Maybe we should stop being such "one-way, all me, screw the damn foreigner" xenophobes.
This one goes out to all of the protectionist Christians who hide their distain for the foreigner behind the misused American soveignrty argument:
Luke 15:21-15:28
21Jesus went away from there, and withdrew into the district of Tyre and Sidon. 22 And a Canaanite woman from that region came out and began to cry out, saying, "Have mercy on me, Lord, Son of David; my daughter is cruelly demon-possessed." 23 But He did not answer her a word. And His disciples came and implored Him, saying, "Send her away, because she keeps shouting at us." 24 But He answered and said, "I was sent only to the lost sheep of the house of Israel." 25 But she came and began to bow down before Him, saying, "Lord, help me!" 26 And He answered and said, "It is not good to take the children's bread and throw it to the dogs." 27 But she said, "Yes, Lord; but even the dogs feed on the crumbs which fall from their masters' table." 28 Then Jesus said to her, "O woman, your faith is great; it shall be done for you as you wish." And her daughter was healed at once.
Yes, I do, all the time. Usually, the foreign students are more proficient in English than the American students.
I hear you. In the Preamble, it seems that many readers take the word "promote" as in promote the general welfare and they pervert its meaning so that "promote" becomes the word "ensure". Even the protectionists make that mistake, but since they consider themselves conservatives, they couldn't possibly be advocating for the government to ensure their economic securities, could they?
The protectionists can hide behind all the "American sovereignty" rhetoric they want but what they truly want is to not have to compete against foreigners. They'll ask for legislation to ensure that we don't have to compete, which gives the federal government more power, but they'll call us the "free traitor" and insist that we're the ones who like socialism. It's a head scratcher I'm telling you.
I suppose that it is possible that you could have such an idea.
And if it is THE BEST CPU available, you can get the premium you deserve, manufacturing in the USA.
If it's merely another knockoff, it wasn't a good idea.
Moreover, GWB just reformed Medicare to take the GM retirees OFF the GM healthcare system, remember?
I suppose that it is possible that you could have such an idea.
And if it is THE BEST CPU available, you can get the premium you deserve, manufacturing in the USA.
Furthermore, let's discuss entitlements. It seems that your concept is that YOU are entitled to MY tax dollars to set up YOUR factory overseas.
Brief response: kiss my a$$.
Moreover, GWB just reformed Medicare to take the GM retirees OFF the GM healthcare system, remember?
You can risk all YOUR capital overseas, if you wish.
Don't risk MY TAX dollars through ExIm and OPIC.
Maybe you haven't worked closely with CEOs, CFOs, etc...or maybe you are one.. All they are seeing now is the bottom line, their own survival, and making sure their mega bonuses stay intact.
I don't think this is a risk that is being overstated, I think it is a dangerous practice that is spiraling out of control. SOMETHING needs to be done about this, and fast.
SOMETHING needs to be done about this, and fast.
Reducing corporate taxes would be a nice start. Better managing trade agreements wouldn't hurt.
And let me interject a little philosophy. Perhaps American workers have gotten too beholden on large corporations for jobs. Maybe it's time to start cutting the cords, for our own sakes. Create our own jobs.
I think you'll find they already have. They're all for it. It provides an endless supply of cheap labor, fills up corporate coffers, and provides a disenfranchised, disempowered middle class with no power and nowhere to go.
There's a reason why GWB is so willing to sign the assault weapons ban. And don't think for a minute that it won't get to his desk in some form or another. An alienated constituency with to representation in the courts, no influence in the legislature, no power in the White House, and whose two major political parties are fast becoming mirror images of themselves cannot have access to guns. Period.
I'm not surprised that unemployment and offshoring have stabilized this year. It's election time. Look for both to pick up with a vengence starting next January. After that, the entire middle class house of cards will come down with a vengence.
And nobody will be able to do a thing about it.
Carroll Shelby (I think it was Shelby) developed an engine that got 80+ miles to the gallon of gas, I saw him test it on I-95 in Brevard County years ago. The engine design was purchased by one of the Big Three, and was never seen again. Independent entrepenours can't compete with the corporate giants as easily as you would have me think.
"Furthermore, let's discuss entitlements. It seems that your concept is that YOU are entitled to MY tax dollars to set up YOUR factory overseas."
YOUR dollars?
What an ego!
They're everyone's dollars first of all, not YOURS, and they are loans, not grants. Loans that earn interest and get paid back.
"Moreover, GWB just reformed Medicare to take the GM retirees OFF the GM healthcare system, remember?"
That has absolutely nothing to do with their pensions.
What an ass you are.
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