Outsourcing As A Source Of U.S. Jobs 948
An anonymous reader writes "The Economic Times, India's leading financial newspaper, reports that Diana Farrell, Director, McKinsey Global Institute during her speech at Nasscom 2004 said that Bureau of Labour Statistics is predicting a job gain of 22m in the US by 2010, against a job loss of 2m, due to offshoring. You can read the full article here."
Re:Some more statistics on the subject (Score:5, Informative)
Re:Some more statistics on the subject (Score:5, Informative)
Re:But what *kind* of jobs? (Score:5, Informative)
It is true that most places frown on two Bachelors degrees unless they're from different colleges, like one in CS and one in art or theater. Once you get your Bachelors, you can load up on as many Masters and PhDs as you have time for.
Economically none of this is surprising (Score:1, Informative)
Why? Because when products are made overseas, they are made for a whole lot cheaper. Consumers not only can buy more, but they use their excess cash to spend on other goods or to invest in other business, both of which stimulate the economy and the very people who 'lost' their jobs get hired back.
Re:$22 million in jobs (Score:2, Informative)
Re:$22 million in jobs (Score:1, Informative)
Comparative advantage may be not as fun. e.g.
[theperspective.org]
this and this [dieoff.org]
JOIN TOGETHER (Score:2, Informative)
The truth of the matter is, the rich CEOs couldnt give a f**k about us, and if things continue the way they have been going there isnt going to be a middle class in this country anymore, just the very poor and the very rich (the gap between the top and bottom quartiles has been increasing non-stop!)
Some good websites are:
http://www.rescueamericanjobs.org/
http://www.washtech.org/wt/
http://www.techsunite.org/
http://www.cwa-union.org/
Re:This is basic economics people! (Score:0, Informative)
Perhaps you'd care more if you were the one whose job got outsourced to India?
The fact of the matter is that many, many jobs have been lost. Those jobs translate to real, living people, some of whom you might actually know. It's a lot easier to be detatched about job loss when it doesn't affect you.
Re:Really? (Score:5, Informative)
Once it's a publicly traded company with subsidiaries and partnerships in multiple countries it doesn't really matter. The ships will be re-flagged, the profits will be transfer priced to tax havens, and the plants will be upgraded to wherever labour and environmental standards are the worst.
With agreements like the MAI, it doesn't really matter where the head office is. If the company's publicly traded, it'll be held by Institutional investors and round and round the profits go. The only ones that see the benefits are the executives.
Here's where you're wrong. Profits do not lead to growth; Growth may be a strategy to increase profits. Growth (in business terms) may not lead to more jobs, or those jobs may be elsewhere.
The desire for more profits may lead to expansion, but only if that's what will result in higher profits. Take Porsche for example. Increasing their production capacity tenfold would likely lead to lower net profit, as it would erode their sticker price. Prestige is their buying motivation. Make Porsches commonplace and you lose the prestige.
In the forest industry, it was quite common in the 90's for a company to open one new higher capacity plant while closing an old plant. The old plant often employed more people (the new one was more mechanized). The company has grown, but less people are employed.
Similarly, An auto manufacturer may "grow", increasing it's production capacity by outsourcing parts that had been produced in-house to multiple offshore subsidiaries. By shifting it's ratios of parts supplied by each plant they can keep costs the lowest, while billing the highest in the countries with the lowest effective taxes (transfer pricing). Now the company has grown by increasing it's profits, but there are less jobs.
Offshoring depends on the market for your product not decreasing to increase profits. Unfortunately, if production is commonly offshored from the consuming market, incomes fall in the market, leading to less sales, which decreases profits.
(For those who've never taken an ethics course, this is called Kant's Categorical Imperative.)
This is only true is the growth is distributed evenly. Logic does not bear your assertion out.
A "growing economy", in business terms simply means that larger amounts of money are being transferred. If I were to sell you a rock for a promissory note for 200 trillion dollars, then buy the rock back for the promissory note, we would have increased the GDP by 400 trillion dollars, which is about 4000%. But who did this benefit? Only me, as I'd now have an asset with a book value of 200 trillion dollars (liquidating this asset is annother matter).
Much of what goes on in the economy (and one of the areas of largest growth) is companies acquiring eachother and merging. Often this is done by a stock swap. If two large companies swap stock at market value, the book value of the transaction adds to the GDP, and it appears that the economy has grown. Rarely are jobs created by stock swaps. The merged company may decide to grow, but often the reason to merge is something that precludes growth.
Re:surplus value (Score:3, Informative)
Supply side economics are the economic theory for stimulating the US economy with giant tax cuts, even when the Bushers admit it's going to the rich people and corporations. The connection between that ripoff and the attack on un/organized labor is political, just like the rest of the control wielded by Washington on the economic self-determination of American people, which threatens their corporate agenda.
Re:Some more statistics on the subject (Score:2, Informative)
Since June 2003, before the most recent tax cuts, unemployment has fallen from a 6.3 peak to 5.6. The tax cuts specifically reduce personal income tax rates, not corporate tax rates, and increase business-like personal income deductions. This makes self and small business employment more competitive against business establishment employment than before. It is no surprise that the employment has increased significantly since then while payroll job numbers have been flat. This divergence is a good thing. Working for yourself or directly for a small business owner is much preferable than working for pointy-haired-bosses in big corporations. I guess most slashdotters would prefer to work for PHBs, and so they only pay attention to the establishment payroll statistics.
"Middle Class" a small fraction of country... (Score:3, Informative)
So, yes, India is becoming richer, but it's going to take a long time for that wealth to make it all the way around the community.
Wrong. (Score:3, Informative)
Your figures are absolutely and completely wrong.
Firstly, corporate profits as a % of US GDP have been falling for the last 8-10 years, and represent c. 8% of GDP from 12% at their peak. In the last 100 years profits as a % of GDP has ranged from 6-12%. (Source: Datastream.)
Secondly, taxes are paid of out of income. Either through consumption taxes (out of income) or straight income taxes. Corporate taxes (see this weeks Economist at www.economist.com) account for only a few percent of GDP.
Thirdly, I tend to agree with you re supply-side. *BUT* that doesn't mean you know diddly-squat about economics.
Regards,
Robret
Re:right (Score:3, Informative)
The bulk of GDP is paid to workers, either through dividends or wages.
Now - here is the interesting bit; we're actually becoming a more equal society.
The % of people who own their own property, or shares (through their 401K) has never been higher.
Forty years ago, only rich people owned shares in businesses. Now, through mutual funds and 401Ks, millions of people do.
Institutional (rather than rich people) holdings of shares account for 65%+ of stock market capitalisation.
We don't feel richer, because we all need to save for our ever longer and more expensive retirements (rather than relying on extended families, dying young, having cheap health care or the government). But nevertheless, me, an average joe, owns shares in a bunch of enterprises!
I have a (very small!) stake in the future of America. (And Britain, and France, and India...)
Also - I don't get your argument about taxes falling as a % of corporate profits. If you notice, most of the scandals we see these days (Enron, WorldCom, etc.) is about people OVERSTATING profitability
India recently pre-paid its debts (Score:4, Informative)
http://www.siliconindia.com/shownewsdata.asp?ne
The amount was 13.5 billion dollars.
US used to grant an aid of $25 million to India annually. That too was stopped when Congress got worked up over some issue. But India is now attracting investment, not aid. See the various projects underway here:
http://www.bharat-rakshak.com/ubb/ultimate
Lies, Damn Lies, Statistics (Score:3, Informative)
From the article: She pointed out that the Bureau of Labour Statistics was predicting a job gain of 22m in the US by '10, against a job loss of 2m due to offshoring.
And then there's this article [cnn.com], which points out that because of globalization, technology and stagnant prices, none of the old statistical models of employment work, and apparently no economist has come up with a new model, since their predictions over the past year have been completely wrong.
So I doubt I'd trust what any economist, or group of economists, or the BLS, has to say about future employment numbers.
--Rob
Re:Central planning falacy. All "jobs" not equal. (Score:3, Informative)
Re:surplus value (Score:4, Informative)
If you examine the Reagan Economic Record [cato.org] you'll see that Supply Side economics worked very well. During the Reagan years, real family incomes [cato.org] increased for all income quantiles, proving that a rising tide indeed does lift all boats.
Re:Sauces, use thereof (Score:3, Informative)
I have some good news. You are mistaken about this being capitalism. It isn't! You can still love capitalism and hate this!
Capitalism is where you invest money and if it pays off you receive a return on your investment either as interest or dividends or as property in some form or another. Honestly what is going on has nothing to do with this. Investors are not getting paid and Interest is essentially gone as well. Property is disappearing as fast as it has ever gone in history or faster. So this isn't capitalism
The reality is quite simple. There is a Trade War by the US Congress against the American People. India and China are not at fault. They are merely opportunists who are taking what comes to them. The US Congress is tariffing the US Labor to a level that causes about a 150% markup. Because no other labor in the US Market or Goods or Services pays this tariff, the situation is definitionally a Trade War.
While suffering this Trade War US Labor has been led to believe that it was suffering foreign attack. In reality the US Government was spending their money like a drunken sailor. (Apologies to drunken sailors here) The reason US Labor is too expensive is simply that it is burdened down with this spending but is not protected by the one who is doing the spending.
The behaviour of CEO's under the current tax laws which have essentially outlawed Capitalism and earning a profit in the USA is quite expectable. These guys cannot earn money and pay dividends or the USA will tax them out of existence. The alternatives are to treat the company like your own private cookie jar or to go out of business. (Not very pretty options)
In this environment Capitalism has no chance. For with all the tarrifs on labor the amaizing reality is that US Labor earns profits. When it does, the US Corporate Income Tax punishes them for doing so. For if one earns for his employer more than about 2.25 times the cost for freight on import for goods and or services there is a definite Tax Incentive to Export the job. This leaves US Workers in the Damned position that if they actually earn money (As capitalism is supposed to reward) for their boss, they actually cause themselves to be fired! If they don't earn money than any reason to keep them on the payroll fails to exist. The only safe zone is the modest level where freight protects the trade by making an advantage for the local population.
For those in the rest of the world this has terrifying potential as well. For what happens is that US Labor being the Cheapest Labor on Earth (Per UNIT OF PRODUCTION) now finds itself having to discount sale its products into your markets driving your wages down as well. If the USA enacts measures that compensate for the Taxes Domestically, the great efficiency differentials of US Capital absolutely wipe you from the market.
The effect is that this Trade War against US Labor Crushes world wide labor. It has disrupted the economies of Asia, Europe, the Americas and Africa. The result has been the collapse of many governments and social systems. The resulting situation threatens all civil order. This is in no small part a CAUSE OF THE WAR ON TERROR.
Islamic Forces are gathering force because of this underlying world wide trade war, which the National Geographic refered to as "Slavery." Frankly this policy is the greatest expanision of Slavery in the history of the world. The Circumstances in Central America have the USA seeing the greatest Illegal Immigration Flood in its history. It should be noted that what Americans know as the "Irish Potato Famine" was in fact a Trade War of "Free Traders" in England of exactly the same type policy and effect. It caused a flood of refugees then.
India's great economic troubles post world war II were also from such a "Free Trade" policy set. These "Free Trade" policies were justified and encouraged by the "Old South" of the (CSA) US (1861-1865). They even said that the "Economy will collapse" if they stopped. Actually the Economy Collaps
Re:surplus value (Score:1, Informative)
"The Cato Institute seeks to broaden the parameters of public policy debate to allow consideration of the traditional American principles of limited government, individual liberty, free markets and peace. Toward that goal, the Institute strives to achieve greater involvement of the intelligent, concerned lay public in questions of policy and the proper role of government. "
Tired of being Trickled on (Score:2, Informative)
How did things look under Clinton?
Unemployment
4.3 percent unemployment -- the lowest peacetime rate since 1957. The unemployment rate has stayed below 5 percent for 24 months in a row. [Bureau of Labor Statistics, 7/2/99]
Income
Typical family income was up $3,517 (8.6 percent) from 1993 to 1997. Median family income increased from $41,051 in 1993 to $44,568 in 1997. [Money Income in the United States: 1997, Bureau of the Census, 9/24/98]
Wages
Under President Clinton and Vice President Gore, real wages rose 6.2 percent compared to declining 4.3 percent during the Reagan and Bush years. After adjusting for inflation, wages increased almost 2.7 percent in 1998 -- the fastest real wage growth in more than two decades and the third year in a row and the longest sustained growth since the early 1970s. [Bureau of Labor Statistics, 7/2/99]