Posted on 08/21/2003 9:44:06 AM PDT by ZeitgeistSurfer
Veteran IBM-watchers know how testing it is to read one of the company's financial statements. In the early days of the cold war, Churchill described the Soviet Union as "a riddle wrapped in a mystery inside an enigma". But compared to earnings releases from companies such as Apple and Sun - who provide terse and lucid declarations - you can be forgiven for thinking of IBM's announcements as a cloud wrapped in a fog containing a temporary heat-haze.
However, this much is clear: IBM has shed 15,000 jobs in the past quarter: 1400 from the microelectronics division and a staggering "14,213 Global Services personnel" in response to "the recent decline in corporate spending on technology-related services". To balance the books, IBM also bunged its recent acquisition, PwC, by almost $400 million.
In an SEC filing posted last week, IBM maintained that demand was strong. So strong, it had to conduct a private pogrom in its own services division. Clearly, something doesn't add up - even by IBM's own admission.
Perhaps an email from a soon-to-be redundant HP employee to The Register sheds some light on the situation. HP announced earnings this week that fell below expectations and added that it would make 1,300 "unexpected" human sacrifices to cover the shortfall. In contrast to previous "sheddings" of fluff in the "labor market", the middle class now feels the pain.
"Sorry but I'm due in early Sunday to train my replacement in Bangalore," the (almost) ex-HPer explained. "It's because of the time difference."
Offshore drilling
Hidden beneath the already hard-to-find news of job cuts is a massive transfer of IT resources to India and China. While only a few years ago we were promised a "Long Boom" of infinite prosperity, by "gurus" such as Wired executive Kevin Kelly, it now appears that every tech job can be cut or outsourced with impunity. Kelly is never happier, by his own admission, than when he's lying down in Pacifica dreaming of insects.
For the rest of us, needs are rather more pressing.
Not to appear to be picking on IBM or HP in particular, there doesn't seem to be a tech job left that's safe.
This has yet to emerge as an election issue, although it represents an assault on middle class expectations that's unparalleled in peacetime. But it is important and needs some context.
As the world's largest democracy, and with a philosophical and scientific tradition that (outside the Muslim world) is second to none, India has every reason to look upon the recent occidental outbreak of what we call "capitalism" as a temporary aberration.
It's worth nothing that in common with his fellow Victorian political economists, Marx found the oriental model so strange that he excluded it from his theories entirely.
But outbreaks of tech independence abound. The People's Republic of China has shown both a cavalier disregard for Western IP (aka "intellectual property") and boasts a proud confidence that its own homegrown talent can transform a pay-for "IP" import into an indigenous social resource. [See Trade Wars II: China shuns Qualcomm - no CDMA tax! - EU frets over China's 3G plan and Motorola gambles big on Linux, Sinocapitalism for more details].
Given China's astonishing historical legacy of engineering excellence, this is far from foolish. Dammit, weren't our kids supposed to bring home the bacon?
On this side of the Gulf, we're sure to hear cries of anguish, as the parents of expensively educated middle-class kids learn that their investment (and, in the US, this can be upwards of $120,000 per child) has gone offshore.
Which brings us to a particularly anxious conundrum. The prosperity that we felt was assured, and by rights, ours in the West no longer belongs to us. Those college dollars look like a poor investment, when a cleverer Indian can perform the same task for a tenth of the salary. So why did we spend all that money? Who, at what point, added enough "value" to justify the investment?
It's a good question. In a historical perspective the Indian, Muslim and Chinese engineers whose forefathers created so much of this intellectual infastructure are only reaping their due rewards. For Western kids, however, this does seem a bum deal. "Weren't we supposed to be clever[-er] than everyone else?" a recent graduate asked me recently. Well, er, actually no.
Smarts is as smarts gets.
Forget your O'Reilly PERL course, and follow the money. A course in Mandarin or Arabic is probably the shrewdest investment a parent can make right now.
Go west, my son... and then keep going
The inexorable logic of digital capitalism has rewarded companies such as Dell, which add no value, and pare costs to the bone, and ruthlessly punished systems companies such as Sun and Apple, which invest in R&D. For reasons best known to themselves, these companies invest in the hard stuff that can't easily be commoditised. Logic suggests that such companies are the bulwark against copy-cat Oriental opportunism.
While you might think much of the above is facetious, the West faces a very real problem: we have a surfeit of well educated kids who, if we accept the orthodoxies of asset-stripping capitalism, simply can't compete with foreign competitors without tilting the playing field.
When capitalism went digital, the first casualties were manual laborers. Now that skilled engineering jobs are being transferred offshore, the middle class is in the firing line, and this poses a very real crisis for a large and not-entirely unimportant section of society. Go to college, learn tech skills and - oops, sorry - you're job has just gone offshore. Please accept this redundancy slip and some small token that your worthless (hard-earned) contribution has enriched the global economy. Or as the creepier types insist, the global "eco-system".
Technology once promised us vistas of endless prosperity, and saw itself aloof from the obligations of political economy or globalisation. Now these pigeons are coming home to roost, and "technology" is more of a liability than it is a blessing.
It's dry, academic stuff to be sure. But when jobs are being lost on such an extraordinary scale, scarcely reported, is there a politician bold enough even to raise the issue?
Well seeing as how he has done everything they've asked for on trade, and they are still screaming, I don't know what more he can logically do (especially without betraying the rest of his "base"). I'm not worried about you people. Bush will win easily. I really would rather keep you away from the GOP because of how many middle ground voters you scare off with your doom and gloom and paranoid conspiracy theories.
Hey, I hear ya, Pops. Like I said before, We're all doomed. Especially urban unionized blacks.
Take home income might be 12X higher by your figures, but is is nominally 10X less valuable depending on the specific item being purchased. For durable stuff like cars and homes, we haven't really changed much in the last 35 years.
6.08x less by the CPI (see my post above with link to the official CPI inflation calculator). We are much better off income and real dollar wise.
They don't care for civil unions or peace marchers but enjoy federal government protecton attempts (and that's all they are ultimately) at protecting their jobs with everyone else's money. Nice.
Bush has done nothing to halt the unchecked hemorrhaging of American jobs, clinging to the free market cant dished out by the multinational flacks around him.
Uhh... steel tariffs and farm subsidies?
Bush will win easily in 2004. I'm not worried about it. (Even though we are all doomed.)
I'm sure they can. I know the ones I've given to. That's who I was commenting on. None of them have.
I don't believe in that. I support restrictions for national security reasons as I've said many times.
"Bush is in trouble. His reelect numbers drop weekly. The situation in Iraq is worrisome. Going to the same UN we blew off last winter for help smacks of desparation. There have been encouraging economic numbers lately but they mean nothing until that 10.2% number comes down."
Bush will win easily.
I can go to Progresso, Mexico, and get all kinds of quality dental work done for a fraction of what I'd pay on this side of the border.
I too am a "displaced" IT guy. BBA - University of Texas, working the dotcom bubble most recently in Dallas and Houston.
After my layoff, and performing all the contracts I could find, I moved to a small town in South Texas because it's a lot cheaper to be unemployed down here than in Houston.
I am truly curious. What would a person major in these days? I have a bachelors which I obtained years ago. Seems like a Bachelors in Survival is gonna be at the top of the list in the future.
Your statistical observation doesn't wash with commonly observable experience. There is a big disconnect between theory and practice here. Lies, damn lies and statistics.
Sure it does. Unless you're some jaded doom and gloom Chicken Little like a lot of FR posters. Economically-speaking, most Americans would much rather take things the way they are in 2003 than 1960.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.