Posted on 08/08/2003 7:41:52 AM PDT by samuel_adams_us
Aug. 7, 2003 / 5:32 PM ET Readers on outsourcing: I’ve been corresponding with readers this week about two Newsweek pieces, one on the “jobless recovery” phenomenon and the other on offshore outsourcing. It’s a major hot-button topic, particularly among IT workers, but the mail for the most part has been quite reasoned, if somewhat sorrowful and resigned. A few readers asked some pointed questions:
Name: Marc Hansen Hometown: Seattle When all the Microsoft, Oracle, and IBM software production has been outsourced offshore, and when all Intel factories are completely automated, and when all Home Depot stores have self-check-out lines. ... my question is: Who, in America, will be able to afford the food that the McDonald’s robots cook?
Name: EV Hometown: Annapolis, Md. Where do all of these upper level managers think they will be when everyone has been outsourced? Guess they better learn Hindi or one of the other 18 dialects. You are only a manager if there is someone left to manage.
Name: Daniel E. Platt Hometown: Putnam Valley, N.Y. Sixteenth century Spain was quite rich on gold from America. While they funded the industrial revolution in the rest of Europe, they were largely left behind in the end. Are we doomed to the same fate? Or should we purchase a future at the cost of lower profit margins now?
Rogers replies: All good questions. Here are some personal tales from the trenches:
Name: Toni Klinger Hometown: Massillon, Ohio I am so angry. My husband is 59 and lost his job to Canada four months ago. Yesterday, my sister-in-law was notified that her skip-tracing job was going to India. Hey, no problem, she’s only been with the company for 21 years! I have never been so frustrated in my life. People in their 50s just can’t start over. I hate life!
Name: G. Popsworth Hometown: Dallas, Texas I am struggling with what to suggest to my children for a course of study at college. It is becoming more and more difficult for college grads to find employment. Now with outsourcing rampant, they need something stable for their career opportunities. A small town dentist, doctor or lawyer might be appropriate.
Name: Thela Jinseet Hometown: Clinton, N.J. Here’s my story: I am a journalist for an online publication, and I’m bracing for impact. My employer’s entire technical staff is from India, making up nearly 50% of the employees here. The owners of the company are also Indian and they outsource to a team in India. Our Indian employees are a real bargain because they work ungodly hours: 10- to 12-hour days every day and on the weekends. They are also extremely bright. And it’s for low pay. But there’s more. My husband lost his electrical engineering job four days after 9-11 from a major Japanese company that closed its plant and moved its operations to France. Despite graduating with honors from a top university, it took more than a year for him to find work. And just in time: We had two weeks of unemployment benefits left, which was barely enough to pay for our mortgage. This time, he saw a substantial cut in pay. I am truly frightened after our experience. I am scared to buy another house. (We had to sell ours for his new job.) I am scared to have a baby. We can’t afford to save for retirement. Pensions are a thing of the past. My company doesn’t even have a 401(k) plan or even direct deposit for paychecks. I fear we will be poverty-stricken when we retire at 75. Why isn’t Congress listening?
Rogers replies: There were also some suggestions about what to do:
Name: Bill Hometown: Roswell, Ga. Outsourcing customer service jobs overseas is a double-edged sword. One side slashes the number of jobs that are available to U.S. employees and the other side slashes the income taxes that the federal government can collect. Uncle Sam ends up funding unemployment benefits for U.S. citizens who are denied jobs that have been sent overseas. One solution may be to penalize these outsourcing companies in the form of a negative subsidy so that they can help pay benefits for the unemployed.
Name: Mike K. Hometown: Aurora, Ill. Outsourcing makes for some really profitable companies, but fewer consumers have the money to buy that company’s products. That profit won’t last for long. Remember the big “Buy American” kick back in the 80s? I think we’re on the way to the “Hire American” craze. Find out who outsources and who doesn’t and support those who support America by hiring Americans.
You must work in IT. Welcome to the club called competition.
JMO, you would further yourself better if you were updating your resume and not focusing bitterly on the changes happening in your industry.
Yes he did, but their was a good political component in that also.
Harley Davidson was the only motorcycle maker left in America, and also the fact that Malcom Forbes was a big supporter of Harley Davidson.
We all saw what happened to Japan."
Yes, we bought their finished steel products in the form of automobiles.
As a result, I bought a 2000 Toyota Tundra made in a non-Union factory in Indiana rather than a Dodge made in Mexico or a Chevy made in Canada.
Nissan also wants to market it's first light truck with a V8 in the US, so now they have to build a factory in Smyrna GA to do so and employ American workers.
Import tariffs work.
The more common scenario is that prices remain the same but corporate profits increase in relation to companies that are not outsourcing. If you paid $59.99 to have your taxes done by H&R Block last year do you really think they are going to charge you $29.99 this year because they have reduced operating expenses by having someone in India prepare your return?
Uh dude. I went to your red highligted link in your reply #206 and didn't see the above quote, when I went to that link.
All I read was a Milwaukee Journal review of a Toyota truck.
Hey you can buy any truck you want, that's the American way.
What I can't understand is your objection to American business owners trying to cut costs especially when the resulting profits stay here, while the profit from your buying a Toyota truck went to Tokyo.
Now here is a very legitimate point of disagreement. The tax on imports is not to destroy competition but rather to provide an envirornment where investment will create more competition. Alexander Hamilton first made thsi argument and even TRhomas Jefferson subscribed to a tariff on all goods that could be produced in the USA.
You attempt to argue that tarriffs are "a protection of investment not a direct madate on wages or a subsidy." The problem with that argument is that those who support such tarriffs also argue that it is "unfair" to compete with low wage foreign countries. They don't argue that it's "unfair" to compete with "low investment" countries, now do they?
Not all those who argue for high tariffs make this argument. It is not my argument. I argue for tariffs to balance government subsidies, as bargaining chips with other nations that have high tariffs on american goods (or several other conditions) I will also argue for tariffs sufficient to maintain American industries that are vital to our national defense and I will discuss the level etc.
I am not opposed to all trade nor even real Free Tarde according the priciples delineated by either Riccardo or Adam Smith.
Indeed, it would seem that if you want to protect "investments", ie, capital, then you would be arguing that companies should be allowed to maximize profits by securing lower cost resources, not forcing them to use the highest cost resources
I am not arguing for the companies involved per se. I am agruing for a strong Amercan economy . The fact that companies will make profits if this results is nice for them but some will go out of business due to technology and or bad management etc. What I am arguing for is protecting capital within the USA. Does this make me seem calous towards other nations? Probably but I recognize that many of these nations are not places where there is respect for the individual and the current trade envirornment is doing nothing to really foster such respect for the individual and their rights. Thus the current trade envirornment is merely enriching a few olicarchical tyrants at the expense of the populations in those nations while also harming the US economy.
My argument with India specifically is that the effects of OPIC and their currency controls and the use of guest workers in our economy to artioficailly manipulate the market against those who perform IT tasks has created the current envirornment for outsourcing IT to India. Now I have proposed tariffs as a solution and i have stated repeatedly that thetariffs should not be disgned to halt all such outsourcing to India merely enough to restore a healthy IT industry in the USA. Tariffs should be lowered when the controsl on the Rupee come off. I am certain that eventually we can get to a zero traiff sutuation with India over a period of time but we should not have to live with the effects of the subsidy for overseas investment that built this industry. Now I realize there is a broad spectrum of opinion regarding tariffs including those who consider them some sort of infringement on natural law and those who would have nothing imported to the uSA that can be made in the USA.
I favor tariffs as part of a trade policy that first guartees the USA as much access as possible for our businees to sell products in foreign nations as they sell here. I favor tariffs to assure that the USA maintains industries crucial for its national defense. I also favor tariffs essential to maintain a sufficiently strong economy that we as a nation contue to grow and develop. My personal opinion is the use of tariffs for just the first two reasons will result in the third being fufilled.
No kidding. I was just surfing a bit this morning while drinking my morning tea, and decided for the heck of it to see what was over on the enemy channel, CNN. Sure enough, they were doing a round-table on Arnold's entry into the California gubernatorial race. And after listing the plusses of Arnie, and the negatives associated with Bustamonte, the hispanic Lt. Gov., the RATs best hope....the 'reporter' actually slipped up, and said after concluding his report, that "WE Could be in for trouble." ! So much for disinterested, nonpartisan objectivity. He clearly was inferring the CNN preference for the RATs. Hope the MRC folks caught that one!
Quite a difference between that case and jobs actually leaving the country in large numbers. A Japanese company that owns a skyscraper in New York will have to pay property taxes and all kinds of other fees into the onshore economy. Contrast that to offshoring, where the country not only loses tax revenue with each person who is unenployed, but has to expend money paying unemployment benefits to such people.
When unemployment through offshoring reaches critical mass, things will go to hell.
And those economists are???
BTW, I do not think that we are in the same "boat" as Europe. They(especially the French) have been following your alls economic "solutions".
What has that brought them, economic stagnation.
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What I object to is working in the IT industry as a software engineer, and training Indian H1-Bs to do my job so that they can go back to Bangalore and replicate what I'm doing here.
The IT industry isn't concerned with quality. They're concerned with inventing low hold times ("Sure, we can complete that six month project in two weeks!") which temporarily maximizes the bottom line. If the Indians produce crappy products, the company will just release a patch to fix any customer complaints in a point revision ("Oh, It's broken in 1.0? We'll fix that for you in 1.1... Now let's discuss how much we'll charge you for 1.1."). Oftentimes, there's no competition whatsoever for an identical product. Merging technologies is a design process that can't be bought off the shelf like a car. Therefore, the IT industry gets by on charging outrageous sums to fix it's own mistakes in products that it's customers have bought into for the long term. It's a win/win scenario to produce crap, and now it's a win/win/win scenario that they can pay little Indian baboos a handful of peanuts to do it. If an automaker produces a crappy car -- an Chrysler Aries "K-car", for example -- consumers will just go buy a Honda Accord.
I prefer quality. That's why I bought a Toyota. I am pleased that some factory workers in Indiana got paid from the money I spent.
Your assertation that "I heard this all before in the 1980s when Japan was going to take over America" does not apply to the current IT industry moving abroad.
I guess thats why China needs to stop it. They are the worst of the worst on that issue.
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