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.
Surely a formula for success.
Actually, it isn't. It's diverting resources from the core mission (higher education) into fixing other people's mistakes.
In the end, you have a "higher education" system that turns out--at no small expense--secondary school graduates several years late and over budget, and does not turn out very many college graduates. Meanwhile, those countries who expect you to arrive at college ready to learn produce college graduates.
I'll give 'em your address and tell them to discuss their loss of income with you.
Then we could work on having fair trade, which would lead to more employment and real economic growth. Without your cheap one way imports undercutting the market and not adding demand, but adding oversupply...people would actually be able to have meaningful work and at the same time demand would expand and prices wouldn't go up at all.
Then everyone would thank me for having you close up shop.
Two way trade is the only measure that counts.
You are saying the exact same thing about MY money too. You think you have the right to force me to spend it how and on what you think I should buy.
Whats more is you think you have the right to spend my life too.
Sounds pretty arrogant to me.
Again, if businesses don't have my interests in mind, then screw them. They can rot. My interests are in having a job, and in a functional US economy, including equitable FAIR trade.
If I don't make money they don't make money.
Today though many people forget the "mutual" part.
Not necessisartily as many of the millionaires who became entrepenuers did so after a colege experience and were not so focused at the time they were in college. further you stipulated a provate University/College where your students were the privledged. I would submit a motivation for entrepenuerial spitit is morelikely to be found among those who make it to college via such things as financial aid and scholarship than among the privledged. Now if your college were reprentative of all colleges and univerities one may expect a slightly higher number possibly but as central is the questuion when in their lives did these millionaires decide they wanted their own business I have no data on this but I would expectt some would decui=ide before college. Microsoft's founder Bill Gates dropped out of college.
So what percentage of teh population are millionaires by being entreepeneurs and what subset of them ghhad decided they wanted their own business by the time the end of their Freshman year in college? What subset of that number then went to private universities of a similar ranking to your school and one may get a resonable esitmate if somewhere between 2% to 4% is a high r low number but my insinbtual nguess is taht it is a low low number and that state University or maybve even a prestige school such as a Stamford, Harvard or Yale may yeild different results.
I'll say it again. What China does with its tariffs are its business.
Wrong as a sovereign nation the USA has a right to make policy based upon other nation's policy toward the USA.
If it wants to penalize and tax its own citizens, making them poorer, while we buy their goods at value, making us richer, that's their problem.
here is the crux of our disagreement. You consider teh goods imported at value to be a net benefit for teh USA I do not consider them to be a net benefit to the USA. I consider teh exportation of capital investment goods from teh uSA to China to be a net loss for the USA and and teh exportation of consumer goods a net gain for the USA. i believe the historical reciord backs me up and your comments about teh brief period when American wages were lower than Englands I think back me up. Clearly protective tariffs were in place from 1789 until the last round of GATT.
Now you think that tariffs imposed by teh uSA are atax on Amercans where I view them as a voluntary payment made for the privledge of bring goods into the USA.
We clearly have a fundamental disagreement on what the nature of a tariff is and what its effects are. It would seem the clear way of resolving this disagreement is to look at teh historical record. Since you teach economic History at a college level I would think you would agee to this approach.
Then we could work on having fair trade, which would lead to more employment and real economic growth.
No, actually it wouldn't. You see, the folks who were involved in my import-export business still have to put food on the table and a roof over their heads, and you've just ended their employment.
Without your cheap one way imports undercutting the market and not adding demand, but adding oversupply...people would actually be able to have meaningful work and at the same time demand would expand and prices wouldn't go up at all.
Actually, they would. What did steel prices do after Bush imposed tariffs on steel? They went up.
If you restrict supply, prices go up. If you restrict supply AND increase demand (assuming that you actually managed to increase with tariffs, which is not guaranteed), then you REALLY send prices up.
Your analysis of economics is laughably Marxist.
Yup. And it's most assuredly NOT in the self-interest of anyone to employ you as long as you have the attitudes that you have.
So what. They are not entitled to a job. Send them for some new training.
Why all of the sudden are they entitled to a job?
Nice class envy, dude. Straight out of the DNC talking points.
BTW, the companies that get sued can't pass the costs on to the consumer--because they're still in price competition with those companies who haven't been sued yet.
OPIC funds is a form of corporate welfare for corporations to do business in unstable countries.
Yeah. Why can't they do that for companies that are crazy enough to stay here?
Politicians who (like you) insist upon keeping trade, visa and offshoring policies the way they are w/o intervening are why we may not be stable for much longer.
We've been "unstable" for decades now. Going to court in a civil case is not an exercise in finding fact and applying the law, it's an exercise in getting the jury to buy a plaintiff's sob story and give him that EE-VIL capitalist's money.
Damn, you sure flipped in a hurry.
Why all of the sudden are they entitled to a job?
You're the one who says they're entitled to a job, dude. Remember?
I'm pointing out that your perfect government-planned economy is going to clobber SOMEBODY. Why shouldn't that somebody go to you for a redress of grievances?
With your attitude that you're entitled to a job, no one in their right mind would hire you.
If they put their job in front of mine, and above the majority, then screw them.
I am for maximum benefit. Let the public decide.
Again, if their interests are not in my interests I could care less if they die. Doesn't matter to me.
They are seeking their self interests and I am seeking mine. In fact, my interest could be in putting them out of business.
If I am out of a job though, even the importer himself is out of work. So one way or another my employment is in his interest.
Now lets break it down...the issue here is fair and equitable trade. Importing on a one way street and having production from nations who don't buy creates more problems than it is worth.
In the 19th century and the early part of the 20th, we used protective tariffs on SOME goods to "protect" those industries. Research has shown that certainly steel didn't need those tariffs after 1840---they were counterproductive.
Please post a reference for tis assertion that the tariffs on steel by the 1840's were counter productive. I find this assertion most interesting becaus esteel was not all that common as Iron as of 1840
A quick perusal of the internet yeilds teh following.
In October, 1855, Bessemer took out a patent for his process of rendering cast iron malleable by the introduction of air into the fluid metal to remove carbon. Bessimer's industrial process was similar to a Chinese method to refine iron into steel, developed in the second century BCE. They called this process the "hundred refinings method" since they repeated the process 100 times. The story of Bessemer's steel process is a classic example of the military's impetus to technological development. During the Crimean War Bessemer invented a new type of artillery shell. The Generals reported that the cast-iron cannons of the time were not strong enough to deal with the forces of the more powerful shell. Bessemer then developed an improved iron smelting process that produced large quantities of ingots of superior quality. Modern steel is made using technology based on Bessemer's process. Much of the modern industrial age has built upon steel created for cannons of war. Among the many honors of Bessemer's life were a Knighthood by the British crown and the Fellowship of the Royal Society. Bessemer died in London on March 14, 1898.
Most of our goods did not benefit from a tariff, especially the cutting edge machine technologies like the McCormick Reaper, the Singer Sewing Machine, the refrigerated box car, electric items, and the telegraph.
However these new technologies were all developed during an age when the benefits of capital investment in the USA were clear because of the protective tariffs.
It was Vanderbilt's UNSUBSIDIZED steam lines that drove the British subsidized lines off the oceans.
Actually you are exagerating since one mus include the Canadian Cunard line and such other british steam ship lines which lasted from their founding as sail opeations until into teh 20th Centrury
It was the unsubsidized American products that captured world markets.
Of course.
None of these benefitted from a tariff.
I will accept none of these were diectly protected by a tariff. Your statement does not include indirect benfits from an improved climate for capital investment.
Interestingly, textiles did, but textiles were not our leading sector by 1840---the non protected sectors were.
No further comment necessary
When we subsidized the RRs, it was a disaster. EVERY ONE of the "protected" railroads---the Union Pacific, the Central Pacific, etc.---went broke in the Panic of 1873.
No one is is trying to defend subsidies. the initial reason for teh subsidies had more to do with defense and unifying tye nation than it did building a long term viable business of railroads west of teh Mississippi.
Only James J. Hill's UNSUBSIDIZED Great Northern remained profitable.
Clearly this had to do with tehinefficient sibsidization process of building the subsidized railroads which were compensated by the mile of track laid with land along the right of way. There was no incentive for quality so iron rails were used and the route was not laid out for the most economies. th e Great Norther was laid out to make a prfit from tranporting freight and passengers from the start. Iron rails were used and decisions were made with teh market not land to be sold in mind.
Likewise, Rockefeller benefitted from no tariff as he beat the Russians in the world kerosene market. (Now, I will admit that he did benefit from government treaties and diplomacy---but no tariffs!)
why would an emerging Kerosene industry need tariffs per se. and since his primary competion was as you state the Russian empirre at this time one wonders how serios that competition really was. The best study of this is by Doug Irwin, whos articles have appeared in the American Economic Review. Americans have ALWAYS competed against "near slave-wages" of the rest of the world precisely because America's wages have always been exceptionally high, requiring firms to invest in capital over labor, which in turn put a premium on hiring the best (most talented, skilled) labor, which in turn drove labor prices up. In the meantime, that talented skilled labor made improvements in the products and machines that drove productivity up, which then drove up profitability. There has never BEEN a time when America had lower wages than most of the rest of the world---and only very briefly were our wages lower than England's, from about 1790 to 1830. 310 posted on 08/08/2003 6:42 PM EDT by LS
Can't you two guys just get a room? Geez. I would be willing to proctor a (taped, then dvd'd) debate between you two.
Both of you love America dearly.
Lets ask them about fair two way trade.
Lets ask them about other people opening our markets to US.
Lets ask them, "If you could buy a product from country A at $20, and you could buy the exact same product for $20 from country B...the difference is, country B severely restricts our exports to them, and country A does not... who do you buy from?"
Lets get off the price issue a little. Its not nearly as sensitive as you think, as meaning, prices won't rise nearly as much as you think if we manage our trade differently.
We should also throw some questions about employment at home in there too...
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