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.
Implicit within that power is the power to set wage levels and to determine the number of workers in a particular industry.
That assetion is unsupported by the Historical record but even if it were suppoprted then we are discussing the very nature of what constitutes the United States of America.
(that's just another manifestation of the living wage) Of course, if the government is going to do that for textile workers, how about auto workers? If you're going to influence wages and employment levels, then you're into the relative levels between industry. And, that is the old argument about "compartive worth". Should a textile worker make more or less than an autoworker? Do we really want to go down this path?
No it is not just another manifestation of tthe living wage. Under a tariff system the market determines the wages. This was the case from 1789 on. Tariffs were not about living wagesthey were about letting the Free market operate within the USA. The historical record shows that your inferences are unsupported on this.
Ooooooh, if it got its way, all computers (or at least new ones) would had to have lockdown built into them.
A good place to begin it Frank Taussig's traditional history of the tariff, where you can see the rates and impact for yourself.
While I know few will take my word for it, I do survey the economic history literature every 2-3 months, and the current debate has pretty much concluded that a) the ONLY protective tariff that had any impact at all was the one on textiles; b) the iron tariff was steadily reduced BEFORE America became a leading iron/steel producing country; and c) the debate is how much (if any) the textile tariff affected the domestic industry.
There are some (C. Knick Harley) who continue to maintain that the tariff "protected" the textile industry (which never eclipsed England's before the Civil War); but other, more recent studies, have found that there were key differences in the U.S. textiles an British textiles---we made low-end goods (i.e., like China) and the free trade British made high-end, value-added goods (like quality shirts, dress coats, etc.). We did not start to capture the latter market until after the tariffs were significantly reduced.
There is a third issue, though, that cannot be avoided, which is that the SOUTH inevitably ended up supporting the NORTH, because the South's goods were not "protected," but her citizens had to pay the higher prices. Hammond, Calhoun (who was wrong about a lot, but right about this), Thomas E. Dew, and even Jefferson Davis all recognized this. While I do not agree with Lincoln-bashers that the tariff was "the cause" of the Civil War (slavery was), it is undeniable that the tariff helped further separate the two sections.
Once you have gotten to this point in the scholarship, next look at Doug Irwin and Mario Crucini, two young, contemporary scholars who have worked on tariffs and who have a devastating critique of their impact on American business and labor forces.
The populist sentiment (which is in no way conservative) here of late desires more government intervention, believes that someone owes someone a job and a certain standard of living, and scuttles the idea of private property by desiring penalties against companies doing what they are in business to do, profit.
What is the appreciable difference between this sentiment and the Leftist thinking that shouts the same thing(s) only using slightly different language? I mean, really, what gives?
Amen! You just broke it down, and as my late uncle used to say, let it be broke! ;-)
The best study on the antebellum tariff is Doublas Irwin and Peter Temin, "The Antebellum Tariff on Cotton Textiles Revisited," Journal of Economic History, 61, Sept. 2001, 777-805; and Temin, "Product Quality and Vertical INtegration in the EArly Cotton Textile Industry," (same source), 48, (1988), 891-907. A contrary viewpoint is expressed in C. Knick Harley, "International Competitiveness of the Antebellum American Cotton Textile Industry," (same journal), 52 (1992), 559-584, but then see the comments by Harley following the Irwin/Temin article. The main problem is lack of data prior to 1830, due to the poor collection of reports, but Irwin and Temin conclude that "the u.S. cotton-tetile industry was largely independent of the tariff by the early 1830s." Even after the tariff was drastically lowered---AND IMPORTS SUBSTANTIALLY INCREASED---there was no decline in domestic output, because we made "different stuff" than the British did. Harley tries to explain the differences by claiming the reasearchers were using "different sources" than he was---unpersuasive. (BTW, Temin, if I'm not mistaken, used to be a "pro-tariff" guy).
On Vandy, see Burt Folsom's very readable book, "Myth of the Robber Barons." It's quite well researched. And no, Vandy's triumph was no insignificant. It was quite impressive, as was his victory over SUBSIDIZED businesses every time he contronted them.
As for the late 19th century, Irwin's paper "Explaining America's Surge in Manufactured Exports, 1880-1913" (Review of Economics and Statistics, May 2003, 364-376) shows that natural resource changes, particularly the discovery of the Mesabi iron ore range, accounted for the productivity improvements and price declines, not other factors (especially not tariffs). "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." Irrelevent. Has nothing to do with the tariff. They were enacted because it was profitable to do so.
Your comment on Bessemer is interesting. Carnegie did not benefit greatly from the light steel tariff, yet he instantly replaced his furnaces with Bessemer the minute he could, and then outproduced the British, even accounting for the tariff.
This cirucular argument that the non-protected areas surged BECAUSE they were not protected is amazing. Indeed, no further comment IS necessary, and I'll leave it to readers to figure out which of the two of us is more logical.
I'm not going to go through two pages worth of discussions, so keep it to one or two questions---it starts to get too much like teaching. :)
How, exactly, should higher education "correct" the problems of the lower-end schools. Do you hire incompetent people just so you can train them? The purpose of a university is to provide ADVANCED degrees. It defeats its purpose if you do remedial stuff. I do not support dumbing down of our colleges. I support AMERICAN students getting their butts in gear and learning, even in spite of the cruddy schools, like our competitors do.
BTW, Britain had no tariffs, on anything, when she was at the peak of her industrial might. It was only after she started to adopt socialist policies (welfare, etc) that she lost her edge. THEN she started to adopt tariffs, and that was the end. If tariffs were so great, why did the Brits not "come back" by adopting tariffs?
First, the premise that the tariffs in place in 1848 in the USA were not protectionist in nature would have been news to the Southern politicians oif that era. Noe have you ever heard of the doctrine of nullification. It reffered top protective tariffs. lets start with the premise there were tariffs in place in 1848.
While I know few will take my word for it, I do survey the economic history literature every 2-3 months, and the current debate has pretty much concluded that a) the ONLY protective tariff that had any impact at all was the one on textiles; b) the iron tariff was steadily reduced BEFORE America became a leading iron/steel producing country; and c) the debate is how much (if any) the textile tariff affected the domestic industry.
Excuse me the current economic literature is mostly a reinterpretaion iof the data whos econclusions are irrelevant and not specifically germain to a debate on the histroical record. Presumptions that do not necessarily conform to the actual history of the period are not germmain to the issue.
There are some (C. Knick Harley) who continue to maintain that the tariff "protected" the textile industry (which never eclipsed England's before the Civil War); but other, more recent studies, have found that there were key differences in the U.S. textiles an British textiles---we made low-end goods (i.e., like China) and the free trade British made high-end, value-added goods (like quality shirts, dress coats, etc.). We did not start to capture the latter market until after the tariffs were significantly reduced.
Again with the references to others opinions and no hard data facts. You did understand teh challenge it was on the Historical record. We are not here to bring in others conclusions whether they agree or disagree.
There is a third issue, though, that cannot be avoided, which is that the SOUTH inevitably ended up supporting the NORTH, because the South's goods were not "protected," but her citizens had to pay the higher prices. Hammond, Calhoun (who was wrong about a lot, but right about this), Thomas E. Dew, and even Jefferson Davis all recognized this. While I do not agree with Lincoln-bashers that the tariff was "the cause" of the Civil War (slavery was), it is undeniable that the tariff helped further separate the two sections.
I personally agrre that the underlying issue of Slavery was the primary cause of the Civil War but it is also clear from the South Carolina secession resolution that the tariff was an immediate concern. I will stipulate that the politicians you mentioned all disliked the tariffs in question which were in effect but I do not admit they were correct on this issue.
Once you have gotten to this point in the scholarship, next look at Doug Irwin and Mario Crucini, two young, contemporary scholars who have worked on tariffs and who have a devastating critique of their impact on American business and labor forces.
Perhaps instead of your conclusions and recommending two young scholars who ageree with your viewpoint you could have actually referenced the records and tried to show any harm from tariffs. You have yet to do anything remotely likke this.
Please understand the addressing of government subsidies was meant for Poohbah not you. you were copied as a courtesy because I was mentioning you.
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