Newsweek column on outsourcing

Newsweek ^ | 8-07-2003 | Michael Rogers

[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.

[hchutch]

I submit there are better ways to level the field than a tariff.

Taking out the corporate income tax - or at least making it so simple that they don't need to file returns that are thousands of pages - would do just as much to make us more competitive. Maybe even more.

Serious tort reform would also do that. Look at the number of doctors who are getting out because of the malpractice insurance rates they have to pay.

The law of supply and demand CANNOT be repealed by an act of Congress.

[mrustow]

Is "offshoring" the same as "outsourcing"?

[Cronos]

I don't think Harley has 1/5th of the world's market for motorbikes -- it's bikes are too top of the line for that. The largest motorbike seller must be either Suzuki, Yamaha or Honda and their largest sellers will be the dinky 100cc bikes.

[hedgetrimmer]

I submit there are better ways to level the field than a tariff.

I don't think its a better way,but it is a way that is in play right now. Deflate American wages so that they are equivalent to third world countries. It is a strategy promoted by the UN in the conference on sustainable development in South Africa last year. It is being implemented by the WTO as they punish America with their trade laws, and by our own government, which is populated with many globalist who don't want America to be "the big dog on the block" anymore.

Big dog quote courtesy of Bill Clinton.

[samuel_adams_us]

Honda is the largest followed by Kawasaki, Yamaha and the Suzuki.

[Cronos]

To support that, here's a link To HONDA

Honda is the largest motorcycle manufacturer in the world. Honda produced 6 million motorcycles in 2000, 2,5 million cars and 3,6 million power products.

Of course that doesn't take anythign away from Harley which makes fantastic bikes which are aimed at a whole different market.

The competition for the Japanese superbikes comes from , ta da, Italians, like Ducati, Moto Guzzi etc.

[Cronos]

Correctomundo. Now while I admire a Harley's looks and sheer muscle, I must admit I luv my Honda CBR, it's awesome. Plus it's less noisy, but then, some folks like the noise made by the cruisers. In either case, they're both leaders in their particular niches and they're both great bikes.

[SouthParkRepublican]

”Whew your reply #232 is full of American hating liberal generalizations.

Again with the name calling! You have a corner on “conservatism” and anyone who does not agree with your flawed reasoning hates America.

You are advocating guidelines pertaining to international trade that we are neither legally or morally obligated to follow. Most of the people on this thread are suggesting that the Fed do something that it is CONSTITUTIONALLY PERMITTED to do that they feel will benefit themselves. Since when does asking the government to live up to the Constitution make someone a lib?

[samuel_adams_us]

Honda makes superior engines, their engineers are tops, while Yamaha builds a great tough bike, Kawasaki get's it done very well but not the peak in engineering all the while Suzuki builds a bullet proof engine, not super peak horse power, but their handling is spot on.

[Cronos]

I love the sound the Honda engine makes. It's super smooth. However, I think the Yamaha's growl is glorious! The Suzuki's whine is a bit irritating and the Kawasaki's varies too much to judge...

[harpseal]

So, according to you the above is okeley dokeley in regards to the steel industry, but all of the sudden is the spawn of satan when it happens in the IT field.

Actually I am all in favor of increased American productivity in any field especially IT. Now if you have a problem with that I would suggest you are being disingenuous. What happened in Steel in the 1970's was very much a stimulus to replace aging plant and equipment. Now since I have clearly supported teh recent implementation of Steel tariffs by GWB I doubrt you can make your special interest charge stick but feel free to try. I have been very specific in what I support do not try to mischaracterize it. I support investment in teh uSA and using tariff policy to balance out interferences from that natural investment flow. I also favor tariffs to protect activity in certain critical industries. Those are industries essential to national defense. Thirdly I favor if necessary tariffs implemented to provide a good overall busioness economy but i doubt such will be necessary if conditions 1 and 2 are met.

I also would have no obvjection to replacing our current tax code with tariffs and excise taxes. Can anybody say special interest.

[SouthParkRepublican]

”The law of supply and demand CANNOT be repealed by an act of Congress.

To begin with let me say that I agree with most of your points regarding deregulation and tort reform. Still, I think it’s a far cry to say that asking for a tariff on imports from a nation that has it’s own tariffs set against our exports is the same as trying to do away with supply and demand.

[dogbyte12]

Curious to see if any of the free trade crowd thought that trading with Saddam, or Khomeni was a good idea.

China is different though. Ummm, they are Chinese. It's totally different to prop up a communist state by using prison labor and near slave wages. It's our way of welcoming them into the world community. They learn our value system that way.

Whatever.

[samuel_adams_us]

I used to race dirt bikes, yamaha at first, then Suzuki, but went into racing sleds, Arctic Cat, which of course is powered by Suzuki. Honda's are sweet, they are smooth as glass! Their trolling motors, 4 stroke, are so smooth you can't really hear them running and they sure make it easier to catch fish than trolling with that johnson or evinrude.

[harpseal]

You threaten to put a tariff on a nation with barriers you want gone, they might just add more barriers.

Then eventually they will lose all acess to our markets since we are already denied access to theirs we have lost nothing as a nation.

As for me, I favor complete elimination of the corporate income tax, or failing that a simple flat tax.

I will of course support such proposals unfortunately they have not yet gotten very far

"Let me ask you specifically what would you use to force the Chinese to remove their 50% tariffs on American products?"

And what makes you think the United States has a right to FORCE another country to remove a tariff?

As much right as they have to put on a tariff or we have to put on a tariff there is no right by foreign nations to access American markets without tariffs otherwise Aricle 1 of the US Constitution would not have provided for duties and imposts. Now from your statement I see you are not interested in Free Trade only interested in no tariffs on Chinese products so they may continue their economic warfare. So Once again before you cross that line let me ask you what measures would you employ to provide for market access of American products in China to be the same as market access of Chinese products to the USA.

[harpseal]

I am just going from anarticle reporting on Harley's success in teh world maerket said article was on Free Republic this week.

[Cronos]

Yeah, a honda engine is smooth as silk mmmmmmmmmm..... Have you heard that gag by some comic who said that all motobikes soudn like their names with the hoooooonnnnnnnnndaaaaaaaaaaaa and the Harley harley harley harley DAVIDson.

[Paul Ross]

You asked: And what makes you think the United States has a right to FORCE another country to remove a tariff?

(And I thought you valued FREE TRADE. T'sk, t'sk. )

Answer: You do acknowledge that we have the right to impose a tariff? Never hear of reciprocity? The right of self-defense. It's an inalienable right of sovereignty. And if the Chinese want to put up a 200% tariff to stop American goods from flooding the wealthy suburbs of China (NOT!) then we can certainly reciprocate. That would be a spiral that would only be good for the U.S.

[hchutch]

But the tariff is only a band-aid.

Killing the corporate income tax, deregulation (I prefer to call it "common sense regulations" instead - better on TV) and tort reform will solve the problems that make outsourcing or offshoring an attractive option.

But those will involve taking on some powerful interests who want to see present trends continue, particularly the "soak the rich" crowd, the trial lawyers, and the BANANA (Build Absolutely Nothing Anywhere Near Anything) crowd. It's going to mean some heavy lifting.

[SouthParkRepublican]

”It's totally different to prop up a communist state by using prison labor and near slave wages. It's our way of welcoming them into the world community.”

Someone made a similar point earlier. What vestigial tail of the cold war is prohibiting us from having free trade with Cuba but permitting it with China? I guess this is the century of one big happy world where Communism is no longer a menace and fascists should be embraced so long as it makes for a better quarterly report.