How India is Saving Capitalism

alphakappa writes "Salon goes onsite to Chennai (Madras) in India to investigate the whole offshoring phenemenon (free daypass) and comes up with an interesting series of stories. Katharine Mieszkowski starts with a company CollabNet which creates collaboration software for teams to work together on projects from locations all over the globe, and has centers in Brisbane (CA,US) and Chennai (India) - a company that would not exist if they didn't have access to engineers from India. She makes the case that in most cases, it is the necessity to survive, rather than greed that has fed the offshoring process. As Behlendorf from CollabNet puts it - 'We saved the jobs of the people who are employed in San Francisco by hiring people here [in India],' he says. 'I don't know that we would be around as a company if we hadn't done that. What was the right thing to do, morally?'"

Morally?

[pbrinich]

Since when did capitalism have anything to do with morality?

Re:Morally?

[JanneM]

And why, exactly, is hiring people in other countries immoral?

One must remember

[kemapa]

that every company's situation is different. While it may be true that CollabNet has to outsource to survive, other companies (Dell comes to mind) DO NOT need to outsource to survive, they outsource because it is cheaper. We can argue all day about the morality of outsourcing, but the bottom line is going to be profit in many cases.

Right thing?

[rot26]

'I don't know that we would be around as a company if we hadn't done that. What was the right thing to do, morally?'"

The right thing to do, morally, is probably to go out of business. What if the choice was to not pay for workman's comp insurance or go out of business? Or to pay their employees $2 an hour or go out of business? Using "but... but... we'll go out of business if we don't do this" is a lame ass excuse.

And uh...

[Jason Hood]

Nike wouldnt exist if it wasnt for childeren in Pakistan. http://www.american.edu/TED/nike.htm

Capitalism Sux

[Anonymous Coward]

It's a system where you compete against your fellow human. I prefer co-operation. That's one reason I use linux.

Re:Great...

[sebmol]

Then maybe instead of whining and complaining about it, Americans need to be proactive about making employment more competitive. There's no good reason why a company should keep jobs in the US if they can get the same quality of work somewhere else for half the price or less.

Re:Right thing?

[Anonymous Coward]

So, the right thing to do is to lay off everyone (go out of business), rather than laying off some fraction of everyone? How odd....

The real question

[pbrinich]

The real question here should be not was this right morally, I think we Americans are being far too self-righteous (not like that'd be unusual..) if we put it in terms of morality. What we really should be asking here is what can we do to warrant our pay? How can we become more competitive in an increasingly connected world? Rather than complaining about outsourcing, we need to find out how to be more competitive. Any ideas?

Rationalizations begin

[ghostlibrary]

The old rationalization was "we outsource to increase value for our shareholders". How generous!
Now, this rationalization, it's "we outsource so at least some people in the US can keep their jobs". How noble!

Prediction: later it will be "we outsource because otherwise we'd have to move entirely out of country and then the US wouldn't get our taxes." How civic!

All have the same underlying message they wish to send, "we want to help people!" But corporations don't generally exist to help people, they exist to make money.

There are 2 _good_ reasons to outsource, both based on the fact that labor is always the number one expense for a company.

1) We can stay in business, whereas otherwise we can't. 2) It makes us more money long-term (not just short-term profit sheets). Unfortunately, both may be true right now.

Comment removed

[account_deleted]

Comment removed based on user account deletion

Re:sure.

[sebmol]

How is refusing to go off shore in the best interest of the company and its shareholders if they can cut costs and increase profits?

Re:Morally?

[HMA2000]

The moral thing to do is for management is to uphold their DUTY to the shareholders, if it is not a corporation then management must uphold their duty to the stakeholders.

Either way the idea that outsourcing is somehow immoral when it fulfills the duties that management is committed to seems absurd.

Re:sure.

[jabberjaw]

If companies refused to go off shore, then everyone would be able to survive and we wouldn't lose any jobs.
Or the company cannot keep costs down and thus fails to meet shareholder's expectations and flounders, bringing everyone down with it.

Re:Oh please.

[kmonsen]

The important thing here is that the race includes labour protection laws, minimum wages and even basic human rights. As soon as you start the "This is better than nothing" justification you should know you are wrong. I am not against outsourcing (hey, I don't live in the US), but I think we should restrict our trading with countries that follow basic human rights. If not we will all loose the few rights we still have.

chickenegg argument

[erroneus]

I believe that it can be shown with little doubt that it is corporate greed that has led to the current situation. That said, it is not necessarily corporate greed that is the current motivator... it just started the chain of events.

With all other corporate scandals and problems taking place, greed is essentially at the center of the motivation wht with pump and dump activities, monopoly abuse, anti-trusts and the lot going on. But the start of the trend changed the landscape considerably.

I complained in-person to a Dell representative about Dell's off-shoring of support to India. I exclaimed that I would never again buy Dell while they are off-shoring the ONE thing that made Dell great -- their support. The representative said it was a decision made so that it could remain competitive. I still think it's a tremendously stupid and inappropriate thing for Dell to do -- sell-out on their one and only unique selling-point and gambling with their brand-name as their primary value...bad idea guys! Now Dell is just another clone! Back to IBM for big business.

Anyway, I digress. I believe that the start of this is corporate greed and the current status of the problem is now competitive culture. The end of it, if there will be any, will start with legislation. Only law can correct the problems that greed/capitalism creates.

Re:Morally?

[cshark]

Since when did anything have anything to do with morality?

You're absolutely right.
Let's you and me go to India and open up a sweatshop.

Re:Morally?

[michaelmalak]

It's immoral to lay off a head of household to hire someone outside the country just to increase profits.

Hiring someone outside the country while not firing anyone is a different question. There the question is the morality of negatively impacting job opportunities in the short term while possibly (if we are to believe the globalists and if we believe that somehow multi-national monopolies will be reined in) improving the economy (and the job situation) in the long term.

This critical distinction has been untouched by the media.

Re:Great...

[skaffen42]

I was planning on making some "In Soviet Russia" joke, but I guess you won't understand why it was funny.

PS. Just the fact that you are posting on /. probably means that you fall in that top 2% (when you consider the planet as a whole). Remember, the majority in this case is the billions of people in the third world who also want a piece of the action.

Re:Morally?

[kraut]

Why is the person outside of your country - probably also the head of a household - less deserving than the person in your country?

Sorry, that's not a moral argument.

Spiralling down

[MrIrwin]

Globalisation and the wto aim to bring about economic harmony by breaking down trade barriers so, e.g. developing countries such as India get the chance to enter into lucrative markets.

In one sense this is helping to achieve some economic unity, but by and large as far as I can see the general trend is for things to "spiral down" into a competitive frenzy.

Ideally, standards in developing countries should rise to those in developed countries. Instead we are seeing some rise in developing countries at the expense of a fall in economy in the developed countries.

IMHO, protectionist import taxes should be avoided, but it is high time the wto encouraged countries such as India to impose taxes on these boom industries and feed the revenues back into thier own infrastructure so that health, education and other structures can be improved. Perhaps a start would be impose "export taxes" to limit thier growth to agreed limits.

Ridiculous

[Anonymous Coward]

" The moral thing to do is for management is to uphold their DUTY to the shareholders"

That isn't a moral imperative, that's a fiscal imperative. But fiscal duty can and must take a back seat to moral imperative, otherwise you can justify virtually anything by saying "I had a duty to the shareholders...".

NO.

Corporations exist as a legal fiction primarily because society decided the benefit outweighed the risks. If corporations become more of a burden or risk to society than they pay back, they will simply be done away with (in a legal sense).

There is no inherent right for a corporation to exist.

Solution?

[remc0]

Keep bringin in the problems: -Capitalism -Outsourcing -Jobloss in US Now give me the solution? -Communism? Anarchism? -Companies going down? -Still no jobs for countrys like India It seems to me that this egoism of some countries is that they want their jobs kept, on the cost of jobs for people from countries who arent as rich as the US. We all are so noble to keep saying we want wealth spread over the world, and not let "those capitalist pigs" from the US keep the most money. But how do we react if countries like India take our jobs for being cheap and being good? We scream as if we where an poor country! C'mon, those countries and companies are beginning how it works, how the US has done it for decennia. Dont start worrying if they get the jobs for being cheaper, cause thats how capitalisme works, the cheaper guy gets the job, just as you buy the cheaper product for same quality. So the problem is capitalism? Maybe, but that because we need to evolve to a form a capitalism (opposed to the original form of Adam Smith), where we can care about people. And with people I mean the US, Europe, China, India, and all others. We could manage ourselves perfectly, because we where the strong ones. Now that other formal poor countries are coming to an strong and educated civilation we cry like we get hurt where it hurts, like we have been hurting them for a long time. So now it is time for us to show we are 'more civilisized' once again, and come to a more social form of capitalism, where we care about the people who get or dont get the jobs. But dont yell at the India or their companies for picking up any job they could get, we have been doing it for way to long.

The Sky is Always Falling

[copponex]

You know, there's a similar situation going on in the farming industry. It's been declining since the 70s - THE 1770s. Back then I think 90% of people were farmers, and thanks to *progress*, we don't need that many people working to feed the country. There are people all over the midwest complaining that their way of life is going to disappear, and we all pay extra taxes to subsidize their plight -- the plight of people unwilling to change jobs when the market disappears.

And not only do we pay higher taxes, and higher prices for food, but farmers in places like Africa have nowhere to send their goods, and they don't have the infrastructure to do anything else.

I think it was Bill Maher who said (and I'm paraphrasing), "Americans seemed to be more concerned with taking their own lifestyles from 10 to 11 than to help others bring theirs from 0 to 1." And that's the absolute truth. No one reading this is starving. Even if you did nothing but collect welfare, your lifestyle would still be better than 90% of the world.

So, you're a programmer. Someone else can do your job for 1/4 of the price with the same quality. You have a few choices:

1. Find an employer who requires a warm ass in a seat in the States.
2. Raise the quality of your work.
3. Be your own boss.
4. Change careers.

You know how the RIAA doesn't provide a unique service anymore? Neither do you. You have lots of competition, and right now you can't compete. Or can you?

Re:Morally?

[Anonymous Coward]

That's impossible due to economic reasons. The guy in india who gets paid 1/4 your salary can actually live on that amount of money there. You probably couldn't do that in america.

Yes, it is a moral issue. If some company is willing to lay off loyal workers who've been there for a decade or more just so that they can increase bottom line a little more, that's scummy and unethical in my book.

How brainwashed have people become where they feel that "as long as it looks like capitalism, it's a-ok!" ??

Re:Morally?

[JanneM]

Again, why is "outside of the country" the critical variable?

Why not "outside of your town", or "outside of your circle of aqcuaintances"? Or, indeed, given the terms of your post, "outside of your extended family"? You are aware that you are, by extension, advocating nepotism?

Re:sure.

[Slick_Snake]

If everyone is out sourcing their work off shore then there will less money going into the pockets of potential customers (laid off employees) and thus fewer products will be bought. The key to a successful economy is the circulation of currency within the economy not out of the economy.

You can't just look at this in a company by company basis. Capitalism works of the principle of supply and demand. There will only be a demand for products when there is money to buy them. There will only be money to buy them if people have jobs.

It's called the bandwagon policy

[Walkiry]

That is, if you see any bandwagon passing by that sounds like a plausible explanation to the real motivation, jump to it and see where the ride takes you.

First, it was because it just meant reconverting lower-tech jobs into "creative jobs", whatever the hell it means. That didn't quite float.

Then you see another bandwagon, say, a study that says students are not choosing computer science as much as they used to [slashdot.org] and claim that the reason why you're moving the jobs is because you can't find enough skilled people locally. Apparently the masses of skilled people finding themselves in the unemployed lists didn't quite bite that one either.

Next one, let's turn things around and show how the offshoring is actually helping the economy and the people by creating New Exciting(TM) employement opportunities as a middle-man parasite. Anyone wants to wager how far that bandwagon will travel?

The fact is that companies are doing that to cut costs and increase profit. Plain and simple in a capitalist market. The interesting thing is that they have to try so hard to make whacky justifications about it, pointing out the general consumer population (remember, we're not people, we're consumers) doesn't quite like the idea.

Skewed markets

[mikey_boy]

My biggest problem with outsourcing is that it is the product of a system which is skewed in favour of corporates, and screws the little guy. The problem as I see it is that one of the reasons why wage costs are so high in developed nations is because our cost of living is equally high. And one of the reasons for the cost of living being so high is because people cost too much to hire. But the problem we are getting now is that companies don't want to hire expensive people so they outsource. But the prices don't go down to reflect this. So as a labour force we still can't compete because our cost of living remains too high.

shamelessly reproduced from an article I read...

[AshleyB]

"Major American companies get most of their business from the WORLD. It was convenient for Americans to enjoy record growth and prosperity when the world sent their huge investment dollars to the U.S., purchased tickets to watch Hollywood movies, and purchased American products. During these very same boom years, 99.9% of Americans completely ignored the plight of poor workers in the Third World who complained of illegal farm subsidies and globalization issues. Now, some of these same Third World countries have opened up their markets (India/China), educated themselves, adopted American-style marketing and are competing on a more level playing field. American workers...have to show why they should be paid more for a job that can be done equally well for a lower cost in India/China. If they can't show this, they will have to develop new industries and skills to adjust for their lack of advantage."

Re:Morally?

[TopShelf]

"It's immoral to lay off a head of household to hire someone outside the country just to increase profits."

But what if you hire two heads of households outside the country to replace the one domestic worker just laid off, and still cut costs?

And who, exactly, is being immoral under your judgement? The executive who makes the decision, or the buying public, who continuously sends strong signals to companies that lowering prices is the most important thing they can do to increase sales? People vote with their buying power every day, and you've seen the results in the rise of discount chains like Wal-Mart and Best Buy.

The bottom line here is that white-collar types have gotten fat and happy over the last several decades, and are now shocked to find that they are facing global competition much like agricultural and manufacturing workers have for decades.

Re:Morally?

[LinuxHam]

Because they don't contribute their hard-earned money back into our* economy. The money doesn't flow in a circular fashion. Its a one-way flow outbound. When people spend money, they create jobs. The salaries of those heads of household are creating jobs wherever said heads of household live.

* - "our" doesn't only mean "American".

Re:Morally?

[EvilTwinSkippy]

What we are talking about has absolutely nothing to do with capitalism. Adam Smith was a revolutionary in his time for wanting Kings and state out of the marketplace, and let products and suppliers succeed or fail on their own merits.

If Adam Smith were alive today he would be up in arms about the amount with which large corporations thwart the will of the market. Between volume discounts, incestuous relation between big business and regulators, and corporate empire building.

We don't have capitalism.

Re:Capitalism Sux

[SpermanHerman]

What do you prefer, socialism? Why don't you go live in canada for a while and see how you like it. You'll work just as hard but the gov't will take half of your money. Boy that sounds like a good deal... eh?

~SpermanHerman

Re:Morally?

[dnoyeb]

The immorality is not in hiring the foreign worker, its in paying that worker an immoral wage.

AlI still don't believe they *had* to hire Indian workers or go broke. If you are at the point where the only savings left is cutting engineers, then you have the most efficient company in the history of the world. And I have a hard time believing that management which could design such efficient processes can only think of cutting engineers as a cost save.

Typically what happens is the quality managers design the process, then move on to other companies. The new managers want to make some change, since they think that's their value...Easiest one to talk about is the India change. Its probably the hardest one to implement.

I'd like to see a study on how many companies go broke trying to outsource their technical work to india.

Re:sure.

[YanceyAI]

Exactly, and well said.

How can we have happy shareholders who boost stock prices if we don't have a gainfully employed population. We can't invest in if we have nothing to invest with.

Re:Right thing?

[gcaseye6677]

This is exactly what French companies must do, and as a result, there is not much economic growth in France. When it costs so much to hire people and its so hard to fire them, not surprisingly companys don't want to hire unless absolutely necessary, which translates into double digit unemployment.

Re:Morally?

[Mateito]

> The moral thing to do is for management is to
> uphold their DUTY to the shareholders.

Thats not moral, thats a legal requirement.

Its the same requirement that requires Exxon to minimalize the public relations disaster caused by a rupturing oil tanker, rather than the moral one which says "clean it up".

Its the same requirement that requires Enron's auditors to change their company name and logo, rather than admitting they overlooked one of the biggest corporate collapses in history.

Its the same one that causes Ford to through the blame for their un-balaced top-heavy vehicles onto a tyre manufacturer.

There is nothing moral about protecting shareholder interests.. and that it needs to be done every three months is one of the reasons that corporations are so screwed.

Re:The Bottom Line

[Draknor]

Yeah, you've pretty much hit the issue - Americans want cheap shit.

It's our consumeristic, throw-away society. When it becomes cheaper to throw away a broken piece of equipment and buy new (TV / VCR / computer / microwave / etc) than to repair it, we've got a self-perpetuating problem:

1. People buy cheap stuff
2. Companies that have the lowest prices get more business
3. These companies cut costs even more by integrating everything and greatly reducing the possibility of repair
4. People's cheap stuff breaks
5. Goto line 1.

Regarding NoseSocks' suggestions, I think we need to do a little of both - get rid of the screwy tax system and replace it with something simple that has fewer ways to game the system (so the tax burden is spread more evenly), and then reign in the massive healthcare insurance industry.

That gives more money to the people, but then we also need some kind of a fundamental cultural shift to say, "Hey - maybe if I saved and invested a little more, and spent less on frivolous goods, then I might actually have a solid financial future!"

Morally?

[Nemi]

This is not a moral issue. They are not morally obligated to employ you. I guess I don't understand some peoples attitude that companies are obligated to give them a job?

Now if you want to argue this from an ethical standpoint you may have an argument. What they are doing may be unethical, in certain circumstances. However, I think it would benefit us all to remember that they are doing us a favor by employing us and if the situation changes, hey, that's hard luck.

Note: I am not even a manager where I work. Just someone with the right attitude.

Re:One must remember

[HungWeiLo]

It all goes back to the whole "Nobody ever got fired for buying IBM before." It's a sheepherd mentality amongst the upper management. The writing's all over the wall in regards to cost-savings benefits offered by outsourcing. It's in all the industry rags. It's all that's being talked about at the business cons.

At the day of judgment, I guess none of them wants to be singled out because they "lost" the company millions by not doing what the others have done. It's fair to say that not all of them have investigated the balance sheets carefully enough to understand all the benefits and/or ramifications of outsourcing, but rather have done this simply because others have.

Re:Buy American

[dave420]

You're right on the money, mate. Seriously - people who are bitching about needing legislation to stop this flow of jobs are barking up the wrong tree. All America has to do is compete with India. If they offer more, the jobs will come flooding back to US soil.

The rules of the game haven't changed, just some players are playing better than others. Unfortunately, America is one of the not-so-good players at the moment, and India has all the good cards.

Re:sure.

[YanceyAI]

That's circular reasoning. The company would be able to keep personnel costs down if all the companies stayed at home because it would be comptetive for here.

It's simple economics, consumer prices would be higher, but the population would be employed and making more money, allowing them to afford the higher costs, and reinvest in stock options.

The free market works on a small scale, but not a global scale.

Re:Morally?

[Anonymous Coward]

But in all reality, what would be considered an immoral wage in our country, would be considered two or three times the normal wage in another country. You can't base morality of wage on US standards. Or put another way, it costs a helluva lot cheaper to live in India, so yeah, they should get paid less, especially since that's the market rate.

Re:Morally?

[meringuoid]

Because they don't contribute their hard-earned money back into our* economy. The money doesn't flow in a circular fashion. Its a one-way flow outbound.

That's not immoral, that's unpatriotic. A very different thing. Personally I think outsourcing to India is the moral thing to do: they need it more. Suppose the wage bill for one American could support five Indians. Assuming for a moment that all men are created equal with the same inalienable rights, which is the better option? Morally speaking?

Save Capitalism- OPEN THE BORDERS

[Mark_in_Brazil]

It's a dirty little secret of modern Capitalism that it basically can't work the way it's "supposed" to, given the current conditions. I'm not trolling, and I'll be specific.
The Classical theories on which Capitalism is based were written in the 19th Century. At that time, capital was basically land, and labor was much more free to move about than it is today. Before anyone objects that transportation is more advanced today, let me explain what I mean: in those days, workers were not locked into compartments from which they could not escape, and could basically go where the work was without having to worry about passports and work visas. Anyway, because of the conditions that obtained in the 19th Century, the Classical theories are based on assumptions of immobile capital and highly mobile labor.
The conclusions of the Classical theories are nice, especially "mutual advantage." Unfortunately, those theories have about as much to do with our current reality as the "spherical cow" of every physics nerd's favorite joke. In today's world, capital moves at a high fraction of the speed of light through wires, or even at the speed of light as radio signals in the air or visible pulses in fiber optic cables. Meanwhile, because of the fortified borders between countries and the need for passports and work visas and such, labor is basically locked into little compartments. As a result, the situation of today is almost exactly the opposite of the situation assumed by the Classical theories.
Because of this, the conclusions, like "mutual advantage," are utter bunk in today's world. In fact, there is basically nothing now preventing capital (a term I also use to refer to those who control large amounts of capital) taking total advantage of labor. So when American workers want adequate safety conditions at work, capital dumps them and goes to Mexico. When the Mexican workers get uppity and want a decent working wage and don't want pollutants dumped in their rivers, capital takes the jobs to Vietnam... etc., etc.
More relevant to this discussion, when computer programmers in Silicon Valley start getting six-figure salaries, capital starts by importing Indian programmers. When the imported Indians get wise and jump ship to higher-paying companies, capital gets smart and takes the work to India. In general terms, capital (the "2%" mentioned in the parent post) can play the labor forces in different countries against each other and pick and choose which countries' laborers will get work.
Is all lost? Maybe not. It might be possible to restore something more closely resembling the "mutual advantage" ideal of the Classical theories (though I'm sure there are some who don't see "mutual advantage" as a positive ideal and prefer the current situation...). All we have to do is restore the mobility of labor. Make the borders as open to people as they are to capital. Yes, in the short term, there would be disruptions, like a huge mass of people whose knowledge of the USA comes from Hollywood, who would flood the USA temporarily looking for that streets-paved-with-gold-and-everything-works paradise, but eventually, things would settle down again, only with better conditions for workers (read: people).
For those who worry a lot about the short-term consequences, consider that that worry is part of the "playing labor forces in different countries against each other" I mentioned above. You want to preserve the apparent advantage workers in your country currently appear to have, and capital plays on that to make you oppose the kinds of changes that could actually make Capitalism work for many people, instead of horribly failing the great majority, as it has been for quite some time.

--Mark

Inventive corporate excuses

[morelife]

With all due respect to Mr. B and Collabnet, "we saved the SF jobs" sounds like a well thought out rationalization, for a much larger problem which is ultimately destroying IT, research, and technical innovation in America.

The first excuse from companies from two or three weeks ago, was, "American colleges are not producing graduates with strong enough skills in CS, math, science, and engineering, so we are forced to outsource"..

Now we're hearing, and I bet other corporations (of Collabnet's size and position) will pick up on this, that in order to save a few jobs and the company there was a "moral" directive to go get cheaper labor.

Nobody says American companies are required to create jobs - but by outsourcing everything they're destroying the next generation of technological innovation - you saw the last wave of hackers in the dot com boom. The next wave you see is going to be a mix of MBAs and sanitation engineers - the new U.S. demographic mix.

The technical industries are far more important to preserve than say, the automotive industry, ever was. Cars burning petroleum were never going to be the final answer for the planet - we knew that since the 50s.. technological innovation is going to save the planet. Too bad it won't be coming from the U.S.

Re:Morally?

[EnderWiggnz]

which country has supplied the infrastructure to grow the company?

Re:sure.

[dave420]

Your argument is very patriotic, but completely missing the point.

For decades, the US has taken great pleasure in participating in the global market. It's always done well, thanks to an abundance of raw materials and manpower, and technology ahead of most of the world. Unfortunately, now the rest of the world has that technology, more people and more raw materials. Now, the US is the underdog, where things cost far more to produce (and "skilled" staff demand far higher wages). Just those two points mean people will go elsewhere. There's no moral or legal justification to stay. There's no difference between an Indian dude and an American guy - they both get hungry when they don't have a job. If you want something or someone to blame for this, blame your government. By not keeping prices down, it's caused this to happen. Any "Keep our jobs!" legislation passed will be borderline racist and not address the problem at all.

Re:Morally?

[mi]

It's

immoral to lay off a head of household to hire someone outside the country just to increase profits.

So long as you don't try to make it illegal I don't really care, but I'll say something anyway...

It is MY business. It does not belong to YOU nor to the employees I am planning to fire. It belongs to ME. So I can do, what I please with it -- fire everyone and close, relocate to Antarctica, India, or Madagascar, give it away to charity, or burn it (as long as I don't hurt neighbor's buildings and don't file insurance claims). If you don't like it -- you are welcome to start your own company and hire whoever you please.

Re:Morally?

[meringuoid]

I think if a UK or US company is going to employ people from abroad they should still have to pay tax/ni at UK/US (if the US has an equivalent to NI) rates.

Very well: I'm an Indian programmer who's signed up with Atlantisoft, a company which has hitherto employed Americans and Europeans. Due to the new laws you propose, they must pay their Indian employees in India the same as what they pay their Americans.

I now earn what is, in India, a vast fortune. An idea springs to mind: rather than do my job, I'll hire someone to do it for me at Indian market rates. I'll subcontract. Since I'm an Indian the law you propose doesn't apply: I'm an Indian employer paying an Indian wage to an Indian.

The result being that the person who does the work gets the same low Indian wage, and I'm happy as a clam being a useless middleman skimming a huge sum off the amount the company pays.

You think Indians can't be conniving, exploitative bastards too?

OH REALLY.

[xeeno]

If outsourcing to india saves jobs in the US, just think of how many jobs could be saved if we stopped criticizing sweatshops.

I mean, cheap labor = good, right?

If you want to save jobs stop paying management absurd amounts of money and start giving a shit about the health and well-being of your employees. That way maybe they'll feel good about the company and start doing work instead of spending time on the net looking for a new job because your company fucking sucks. This saves jobs because maybe then your company will actually prosper.

Or you can outsource your tech support to india and just piss off your customers.

'Sup EA.

The whole thing is nonsense

[argStyopa]

The whole "outsourcing is destroying our job market" is a political red herring ANYWAY, tossed out by a Democratic Party that cannot seem to find an issue where they can get any traction against the Republicans, notably George Bush.

Since NAFTA was enacted, something like 600,000 jobs have gone overseas where NAFTA was a factor, while the US economy created 18 MILLION jobs over the same timeframe. I recall recently hearing on NPR that the economy has continuously created roughly double the number of jobs outsourced, even in the last 2-3 years.

Besides that, the shrill keening by IT professionals who are remarkably OVERPAID* (typical contract computer service work is at LEAST $90/hour, more frequently $120), losing their jobs to people who can do the work just as well for cheaper, well, it rings about as hollow as Longshoreman whining that they can't manage to afford to kick in for their medical insurance on 'only' $90,000 per year.

Personally, it sounds very much like people started thinking they were 'entitled' to dot.com fat bonuses, big paychecks, and the high life.

From 1992-2000 we went through a period of ridiculously inflated job and concomitant salary growth, fuelled by a soap-bubble economy. I watched a lot of tech friends of mine parlay their salaries into multiples of my own. I was pretty darn jealous, I'll tell you, being in the relatively static paper industry. But now- they're scrambling to make their house payments and I'm helping them as much as I can. But even they say: when a bubble bursts, the economy corrects. They lived through the high times, now they have to suffer the lows.

* I realize this is really going to ignite /.'ers :)

Re:Morally?

[EvilTwinSkippy]

Why draw the lines along National Borders? Simple, the people with pitchforks and torches are in this country.

Question.

[DAldredge]

Retrain to do what? Please name some fields that we can retrain to do that can not be offshored. And factor into your response the fact that education in Inida is FAR cheaper than in the US and that most indian grads do not near the level of student loans to payoff.

Re:Morally?

[orin]

Those would be those heavily subsidized agricultural workers wouldn't they? Because of protectionism - Sugar costs 3 times as much in the US as it does in the rest of the world. In the recent FTA negotiated by Australia and the USA, both countries that heavily promote free trade, a bucketload of agricultural subsidies were kept (no doubt to the bemusement of the EU trade people who keep being pestered by Australia and the US to drop their subsidies).

Industry protection seems to be a matter more of political convenience than economic necessity. The US and European farm sectors are subsidised out the wazoo. Why are the politicians that are pushing this stuff willing to have IT and Manufacturing outsourced, but unwilling to stop paying Bob the Corn Farmer a proportion of your taxes so that he can sell his uncompetitive goods.

Why isn't IT as deserving of protection as the sugar industry?

Re:Morally?

[senatorpjt]

And who, exactly, is being immoral under your judgement? The executive who makes the decision, or the buying public, who continuously sends strong signals to companies that lowering prices is the most important thing they can do to increase sales? People vote with their buying power every day, and you've seen the results in the rise of discount chains like Wal-Mart and Best Buy.

You may also notice that companies that have plans to send work to India, or are in the process, or in fact do have work there, are usually very secretive about it. It's hard to "vote with your buying power" when you don't even know what you're voting for.

Financial parity

[richardoz]

You cannot become competitive with people who make less than minimum wage.
What is needed is "financial parity". The US dollar needs to drop in value (or foreign currency needs to gain value) until it is no longer a cost advantage for companies to outsource.

Re:Morally?

[senatorpjt]

If you don't like it -- you are welcome to start your own company and hire whoever you please.

Yeah, but I wouldn't be able to compete with you. But, hey, that's just how capitalism works - whoever is the most vicious bastard wins.

Re:Morally?

[GreyPoopon]

Why is the person outside of your country - probably also the head of a household - less deserving than the person in your country?

Sorry, that's not a moral argument.

The argument was perfectly valid and moral. You just didn't actually read what was written. Michaelmalak's argument centers on the wrongness of laying off someone already holding a job and feeding a family just to hire someone else at a lower cost. As I recall, that was what was happening about 15 years ago in the United States without outsourcing, and it met with the same outrage then. The argument doesn't make any implication that people in another country are any less deserving. In fact, it goes so far as to make the critical distinction between laying off to outsource and diverting new job opportunities to other countries.

It's ok for you to have a positive opinion of outsourcing, but you really need to open your eyes to the pain felt by families who are impacted by it. If the US government decided to provide some sort of monster tax incentive for companies to move jobs back into the local market, there would be all kinds of banter about how those American bastards were ripping jobs away from Indian and Chinese families. And such opinions would be just as right as opposing the current loss of jobs in the US.

Re:Morally?

[EvilTwinSkippy]

Since when is 70 hours/week, paying off school loans, and sucking it up every year as your health insurance rates skyrocket "fat and happy."

Look at American productivity numbers. The amount of work we do per capita exceed that of the Japanese, who we used to stereotype for working too hard. These companies were built on the work and sweat of the employees, and rather than share in the profit we are being sent off to the glue factory.

I don't know whether you are trolling, but you really struck a nerve.

Re:Morally?

[Anonymous Coward]

Everything that Behlendorf guy says in the article is self-serving crapola. Let me translate for the hard of reading: "We would hire in America if we could get away with that kind of sweatshop wage. But we can't, so screw you. Oh, by the way, you owe us one for not pissing on you on your way out the door. Thanks!"

Re:Morally?

[Anonymous Coward]

Would someone please fire this guy and send his job over to india... wait wait... let him train some outsourced help.... and then fire him.

The wage bill you are discussing is probably the same wage bill that DOES support 5 Americans.. some of these developers have families.

How can a country afford to privde items for their citizens if all of the money flows out and not back into the country? If the money that is being pumped into these outsourced counties is less than the money that is collected from them these outsourced items are a liability to the country and everyone that lives in the country. Morally speaking....

Transitions in Capitalism

[Roxton]

Simplistic model.

The economy operates on satisfying the demands of others, and in turn getting your own demands satisfied.

Jim makes red beads for 6 demand units, 2 of which he spends on glass, 3 of which he spends on red dye.
Joe makes red dye for 3 demand units.
John makes cotton candy for 2 demand units.

Jim and Joe use their demand units to buy John's cotton candy.

Indian Sandeep enters the market and produces red dye for 2 demand units. Jim buys his red dye from Sandeep instead of Joe.

Jim now buys his red dye from Sandeep and has one additional demand unit to buy cotton candy from John.

If Sandeep bought cotton candy from John, then the market would have two new demand units for cotton candy. Joe could get a job as a cotton candy maker.

But Sandeep doesn't buy goods from the US, so Joe is screwed.

Do you see? Off-shoring is acceptable for the US if the off-shored workers create a market for US goods.

The free market is in transition. When the free market stabilizes, Indian IT workers will have the same demands as American IT workers, and the system will stop screwing over US workers. But while the market is in transition, Indian IT workers will be less demanding, due to the rapidly growing pool of educated Indian workers.

And it's going to get worse. The improved Indian economy will result in more money for education which will result in an expanding educated labor pool, which will result in sophisticated jobs moving to India until the free market corrects itself.

A lot of people are saying, "We'll just have to move people in the US to higher skilled jobs." Not good enough! Indian workers will eventually get all the education they need to be competitive even in the financial markets.

It's not India's fault. You need to have a global free market from the get-go in order to avoid problems like this. The free-market is self-correcting, but the self-correction will prove painful to US workers. We're talking about 1 billion people the market needs to correct for, for Christ sake.

I don't know what the answer is, but it may very well be a measured amount of protectionism. Protectionism is only good if it still permits the free market correction to occur, but just makes it gentler. An obvious and effective example is unemployment pay. Maybe we need to slow off-shoring by requiring a restricted reverse Visa... and perhaps some not-too-harsh tariffs on buying goods and services from India.

Comments?

Re:Morally?

[TopShelf]

You're almost on the right track here, but you're seeing things in far too polarized a view. True, US labor laws, environmental standards, and other factors (like the cost of health care) have a large influence on the cost of doing business here. It's a tradeoff between quality of life (clean air, kids not having to work, world-class medical care) and full employment that every country makes through their own legislative process. Some countries aren't to the point yet where they can afford something akin to the Clean Air Act, for example - but history has shown that as countries become wealthier, those kinds of social standards become more important.

In my eyes, I see 3 major factors that could contribute to American labor competitiveness in the global marketplace. First, the continued decline in the US dollar relative to European and Asian currencies. Second, subsidies (gasp!) to encourage worker training and education while they are still employed, rather than trying to retrain a laid-off worker in some new field. And lastly, the issue of health care costs needs to be aggressively attacked. It seems like there's a built-in expectation that health care costs are going to continue to rise at double-digit rates, which simply shouldn't be acceptable.

Re:The real question

[sybert]

The real answer is that we are more competitive. [townhall.com]

A new report from the Commerce Department shows that the U.S. runs a large trade surplus in information technology (IT) services. This is precisely the area where most of the job loss from outsourcing is supposed to be taking place. In 2002, the U.S. exported $3 billion worth of computer and data processing services and $2.4 billion in database and other information services, while importing just $1 billion of the former and $200 million of the latter.

We are insourcing (service exports) far more than we are outsourcing (service imports) in IT. And all the money that gets saved from outsourcing gets spent and creates jobs elsewhere.

Open source software is nothing but massively outsourced labor. And remember from the open source debate that most of the money is made from using software, not writing software. Both outsourcing and open source makes software cheaper so that more people can make more money using software. This adds significantly to both the US and the world economy.

Re:Morally?

[sowellfan]

The same argument was made against allowing blacks into the unions not too long ago. White factory workers saw blacks as a threat to their livelihoods, since they (blacks) were generally willing to work for less.

In fact, the same general situation happened in South Africa, from what I understand, even under apartheid. Even with that society being generally racist, there was still a big part of the white business community that worked hard to flout laws against hiring blacks. Whether they thought less of the black man or not, it just made good economic sense to hire him if he was cheaper than a white worker. So the government had to actually work to enforce apartheid, even when the business owners they were influencing were racists in their own right.

It's immoral to tell someone that they aren't allowed to compete with me, just because I was lucky enough to be born a white man in America, and they weren't. Another thought that comes to mind is that, as Americans, we have an awesome opportunity. We're given an opportunity for a free decent education (obviously depending upon the location, but still better than most folks in the world), we're given economic freedom, along with all the other freedoms to develop ourselves that come with being Americans. If we, as Americans, can't compete with people from second and third world countries, there is a problem with us, not with them.

Re:Morally?

[rhandir]

Heh. I don't mind this answer.
I totally agree...the management does have an obligation to watch out for the shareholders. (Of course...being one does taint my point of view.)

Let me rephrase my intial thought: Any individual, no matter what organization they are embedded in, is caught in a web of loyalties. The manager is in the middle; they have an obligation to look out for their employees, as well as an obligation to faithfully serve their shareholders. My thought is that the concern over the real, tangible, personal effects on people that you know and personally trust you, trumps concerns over the abstract, distant, and nonpersonal entity that is the collective shareholders. (Naturally it gets a bit more sticky if you are working for one or a few people that you know, personally trust you, etc.) I will note that historically, people have been willing to behave quite badly for the sake of impersonal entities, despite the real, near term, acute suffering of their peers. I think the question here might be how much profit are the shareholders entitled to at what personal cost, and which person should pay that cost? I think I also would cite the potential to hidden personal costs to the manager making the decisions; that you risk damaging your ability to care for others.

Of course real life is even more complex than that...a theoretical savings of some unknown amount offset by training costs, security concerns etc., is a bit different than "if we don't do this, there won't BE a company!" And if we want to make it really complicated, we could examine questions like does it serve the shareholders more to focus on the longevity of the company, or growth, or short term profits, or long term profits, or market share, etc.

Thanks.
Rhandir

You don't need to take a pay cut

[Moderation abuser]

Well not compared to other Americans anyway. What happens is that value of the Almighty Dollar falls as the economy weakens, becoming worth less on the global market. *That* effectively reduces your wages compared to the rest of the world, making you cheaper to employ and your products cheaper. Your pay remains at a similar level compared to other Americans. e.g. A Harley now only costs 5200GBP. That same Harley cost nearly 9,000GBP a couple of years ago.

I don't know if you've noticed but the Dollar has been falling for the last couple of years. In 2002 1 dollar would have bought you 0.7 pounds sterling (GBP) or 50 Indian Rupees (INR). Now, 1 dollar will only buy you 0.55 pounds sterling or 44 Indian Ruppees (INR). That's more than a 10% reduction in all American's wages right there.

Another example is the Japanese Yen. It halved in value during the 90s while their economy was contracting, effectively halving the wage bill compared to the rest of the world. Harder times for everyone in that economy.

Re:Morally?

[mi]

Yeah, but I wouldn't be able to compete with you.

Why not?

whoever is the most vicious bastard wins.

No. Whoever is the most efficient wins. Newspapers tend to report on efficient bastards disproportionally, though -- while some of the inefficient bastards try to bribe lawmakers to make the efficiency illegal...

Any ideas?

[Biotech9]

Sweden again, as an example |(I'm not Swedish, but i do think this country is the most advanced culture in the world).
A whirlpool/electrolux factory was here making microwaves, but 1 person working in the factory cost the company the same amount of money as 40 people working in a Chinese plant. So, they moved. Swedens old paper/textile industries are largely run by robots, as is thier automotive industry. All the old unskilled labouring jobs are gone, So what did they do?

They have responded as a country by doing what cannot be done in India or China. They have specialised in extreme high tech areas of work, and do shit loads of research. Biacore systems were INVENTED here for fucks sake. [biacore.com]You can't get more high tech and shit cool than shining light at some gold to find out how much cocaine is in the blood on the other side of the fucking gold! The guy who came up with the premise of surface plasmonic resonance lives down the road from me here! This is hardcore research that isn't done in developing countries.

Or, in Ireland, they responded by making taxes on Industry a miniscule little number. So loads of companys set up in Ireland. they make a component (any component) and price it to themselves as a very expensive commodity, and pay very little tax on it. In all other countries where this company works, they pay high taxes but can pretend they make cheap components and then as a global company they save a lot of money. And Ireland gets lots of jobs and tax money. The US is a big country and it can handle itself, I'm sure it will be bouncing back in no time at all.

Fucking sick of all this navel-gazing belly-aching

[sydbarrett74]

You know, I'm so fucking sick of hearing people bitch and complain about all of the jobs flowing overseas. You know what? Get over it! The United States encompasses less than FIVE PERCENT of the world's population. Do we have a God-given entitlement to jobs? Fuck no! Why should 80% of the world live in squalour whilst we drive around in our two-mile-per-gallon Humvees and gorge ourselves on Mickey D's supersized value meals? Short answer: they shouldn't. If offshoring means raising the standard of living for the 4/5 of humanity who have to worry about an empty belly at the end of the day, I say let it happen. I will survive.

Re:Morally?

[mdfst13]

"Because they don't contribute their hard-earned money back into our* economy. The money doesn't flow in a circular fashion. Its a one-way flow outbound."

Really? If so, that would be great...for us. You see, we can make more money. If they are stupid enough to give us goods and services for *nothing* (except electronic representations of paper that can be used to get goods and services from us...which you say they aren't doing) in return, that is a net gain for us.

If the problem is a shortage of money, the answer is simple: print more.

Note: to those who point out that printing money is inflationary, the assumption here is that the problem is a shortage of money. The parent post suggests that we stop importing and spend those dollars (or whatever) here to solve this shortage. My point is that if such a shortage exists (I'm not convinced that it does), then we would be better off just printing more money. That way, we would have the goods and services from foreign imports *and* the money. Further note: it is just as inflationary to stop importing as it is to print the same amount of money. Either increases the domestic money supply, which is what counts in inflation.

Re:Buy American

[Xzzy]

> If they offer more, the jobs will come flooding back to US soil.

Eh, no. It's about "accepting less": less pay, less benefits, less freedoms. A US programmer is just as capable as an Indian one, he just needs to be paid more.

Companies outsource because they can pay a fraction of the salary, a salary that in america would put you below the poverty line.

What you're basically saying is that in order to get jobs back in the US, computer-related jobs have to drop to a level equal to flipping burgers at mcdonald's.

Re:The Sky is Always Falling

[theLOUDroom]

You know, there's a similar situation going on in the farming industry. It's been declining since the 70s - THE 1770s. Back then I think 90% of people were farmers, and thanks to *progress*, we don't need that many people working to feed the country.

The thing here is that you don't understand the key difference in the two situations.

In the case of farming, those jobs were no longer needed.
In the case of off-shoring, those jobs still exist, just elsewhere.

It's also shame that we weren't willing to learn anything from the great depression. Sometimes government intervention in the economy is absolutely necessary.

"Americans seemed to be more concerned with taking their own lifestyles from 10 to 11 than to help others bring theirs from 0 to 1."

But the idea that sending subsistence-level jobs to those countries is a good thing is blatantly ignorant.
It amazes me how many people don't understand the concept of "the race to the bottom": (I posted this explanation earlier as well.)

It's basically the concept that, if there's someone else willing to work cheaper, you have to work cheaper too. And that guy has to work cheaper than the guy who's willing to work cheaper than him. And on and on.
What you end up with in the end is a situation where workers are earning subsistence-level wages. This results in no one having the money to actually BUY anything and further economic collapse.

Ask yourself this question:
If everyone in America quit buying anything but food what would happen to the economy? How many people are actually employed producing that food?

The result is that everyone who can't get a job making subsistence-level wages providing goods necessary to provide that subsistence will have no job at all.

In short, you get to be your own real-live character in "the Grapes of Wrath".


You have lots of competition, and right now you can't compete. Or can you?

Sure we can compete. All we need to do is give up our standard of living and economy.
The point is: that would be a stupid thing to do.

Sometimes it makes sense to compete, and sometimes it makes sense not to play the game.
Those familiar with economic theory will recognize the following example as "The prisoner's dilemma"
Two guys are in jail. The committed a crime together. If neither one confesses they both get two years. If one confesses, he gets one year and the other guy gets ten. If both confess, the both get seven years.

What happens is that each prisoner confesses and they both end up worse off than if neither had confessed.

What's the point of this example?
Companies are doing things that they think benefit them, but don't look at the big picture. Their decisions are hurting the US economy as a whole, not helping it.

This is the point where the gov't should step in and stop them because EVERYONE (including the companies themselves) will be better off.

If the gov't does nothing, all it takes is one company to make the shortsighted decision and everyone else must do it to compete on price.

Re:Morally?

[mirko]

But why draw the line along national borders?
because you pay taxes and solidarity fees within such borders.

And, more poignantly, this saying seems to chime very well with the actions of company owners, don't you think?
well, seems like they should act more as production-vectors than as selfish sharks...

Re:Morally?

[cdunworth]

Just because a single wage could support five Indians doesn't mean it's going to. If the needs of the project are ONE peson, they will hire ONE Indian at 1/5 the cost, and someone with an ownership deed will pocket the other 4/5 as profit. So the tally sheet is: one person loses a job, one person gains a job, and ownership keeps more of the fruits of labor for themselves. That seems a more reasonable assumption than thinking more people will get jobs out of this.

Re:Morally?

[hugzz]

Even though one American programmer's wage may be equivilant to 5 Indian's wages, outsoursing the work will not bring prosperity to 5 indians. They'll take that one american programmer's wage, give one fifth of it to the Indian programmer, and pocket the other four fifths. That's why outsourcing works for companies

Re:Morally?

[Golias]

How can a country afford to privde items for their citizens if all of the money flows out and not back into the country?

Okay, clearly something about international trade needs to be explained to you: Money never flows out and not back into a country, unless they are your colony.

When nation $FOOnia sells a product or service to nation $BARistan, they get $BARistan money in exchange. Since the only place you can spend $BARistan money is $BARistan, the people of $FOOnia really have no choice but to turn around and buy something from $BARistan.

This is why the Japanese were buying so much US real estate in the 80s and 90s. The "trade deficit" between us had grown to the point that the Japanese found themselves sitting on more US money than they really knew what to do with, so they invested in chunks of downtown New York.

Employing people in other countries is simply an element of free trade between nations, and is a Good Thing, in the macro-economic sense, even if it means that you can no longer get a crappy consumer tech support job in the US.

Re:Morally?

[EvilTwinSkippy]

One man's "Macroecononic Machinations" is another man's deflation. If prices go into a downward spiral than things will cost less over time. That's all well and good, the American consumer has muttled through inflation, deflation is surviable too.

Except of course that a lot of people have money sunk into their "nest egg", their house. They expect to sell it for more than they paid for it. Deflation is going to be a disaster for real-estate, which is about the only shining spot in the economy right now.

What, you thought downward pressure of prices only affected consumer goods?

And don't forget about the stock market. That whole house of cards was built on people dumping money in. People with less cash on hand have less to invest, which leads to less churn, which leads to everyone who has money in the market being stuck with what they have. Unless they are willing to sell it for less.

Deflation will be an unmitigated disaster for our economy.

Re:Morally?

[prell]

A lot of questions! Good to see some skepticism.

First off: globalization is pretty inevitable. In the long run, it's good for everyone (and how many things can be characterized that way?). In the short run, however, there are growing pains:

• For the people in other countries: Their lower standard of living and (sometimes) lax labor laws allow American corporations to pay very low wages and offer little benefits or health considerations. Obviously you see this in countries with, for example, sweatshop textile factories: there are many questionable human rights situations and very low wages, but still it is a step up for many of these workers!
• For the out of work American: Americans are used to their standard of living. Our laws enforce it, in fact. How can we compete with an unapproachably slim (relatively) standard of living, and freer-reined corporations?

I should point out again that the goal of a corporation is to make money. They will not follow "moral" guidelines unless they are enforced by law. The only thing I would ask for in this period of globalization is that corporations that leave America be held to our human rights/workers' rights standards and laws. They should also be held to fair-wage laws (based on whatever the dollar fares against their currency, I guess).

I wouldn't accuse anyone of nepotism: these are tough times for some people, and nothing is black-and-white. The struggle seems to bring the worst out of some people though, on all sides.

Re:Capitalism Sux

[Bearpaw]

Karl Marx called.. he wants his failed idea back.

The message you got must've been garbled. Probably what Marx wants is someone to actually try his ideas, rather than use them to whitewash a power grab.

Who's that on the other line? Oh, it's Adam Smith, hoping that someone would really try his ideas, rather than use them to whitewash a power grab.

(It's interesting that "Wealth of Nations" is actually quite critical of even the weaker form of corporation that existed at the time. I'm guessing that's not in the Cliffnotes(tm).)

Re:Spiralling down

[MrIrwin]

"history shows that countries we've built up in the past have a tendency to end up hating us "

That's a general problem with patronization. I seem to remember that the old Testament has quite a lot to say about it.

BTW. Whilst I could agrre with your viewpoint (countries we help end up hating us) in some countries, in other cases such as Afghanistan and Iraq it is more a case of "Behold the monster I have created".

Re:Morally?

[composer777]

I didn't get that implication at all. The absence of morality doesn't mean that something is immoral, it means that it is amoral. For example, my computer lacks morals, that does not mean it is immoral, it is AMORAL, meaning that it is a system that does not concern or address the issue of morals. I think it is safe to say, with all of the cases of immoral behavior that we have seen from CEOs, that capitalism is not a system that concerns itself with morality. In fact, capitalism does quite a bit to hide immoral practices among the participants. So, I could go and buy a shirt, and have no idea that it is being made in some 3rd world sweatshop without putting out a considerable effort at research the particular company. On the other side, I might have gotten my money by robbing a bank, and a store that takes my money would have to put out a considerable effort to find this out. Capitalism in fact hides quite a bit of immoral behavior, and aruably encourages it. So, for someone to say that free trade encourages moral decision-making is ludicrous. Arguably, by moving labor to the other side of the planet, it does a great deal to hide the conditions under which those laborers toil. If a CEO is working people to death in some 3rd world country, one could buy his company's product and be none-the-wiser. Of course, he's just doing his job, it's the existnce of the job itself(in this case, CEO) , and the supporting institutions (otherwise known as corporations) that should be questioned.

Re:We Need to Compete on Quality and Efficiency

[EvilTwinSkippy]

A prophet is never recognized in his own town.

The United States is a third world country that hit the lottery. We were the last man standing after WWII. People bought our stuff because most of the rest of the manufacturing base in the world was bombed flat. Rather than invest that money into improving education, we squandered it as profit, has a moon shot or 4, and built a really big road system.

We are now sliding back into a largely agrarian economy. About the only thing we produce that the rest of the world wants is food. For a while it was computers, but in our absolute lust for profit we sold the production capacity to Asia for cheap.

We have a first rate University system, but increasingly our own students aren't educated enough to use them. We can spend 600 billion dollars protecting ourselves from missiles that don't exist, but we can't spend 6 cents on education without some regulatory string attached to it.

We have fine hospitals that none can afford. When my wife delivered our baby, we were surrounded on all sides by women with no insurance, who often had no pre-natal care. And that stuff is cheap at twice the price.

We have sports fields that are subsidized by taxpayers that few citizens could afford tickets to. Our schools are scraping change, but we can cut massive tax breaks for a couple of billionaires to build a new ballpark.

And hey, I am an American. Born here. Educated here. Live here. But this place is a playground for the rich. There is the resort, but outside the resort is abject poverty.

Re:Great...

[Kevin Stevens]

Well I will agree with you that tax cuts almost always help the rich out more than the poor. However, it should be noted that the wealthiest 10% in this country pay 50% of the taxes. The top 1% alone in 2000 paid 27% of the taxes. Look at the tax bracket system, the poor pay almost nothing.

Now lets look at where this money goes. 33-41% (depending on who you believe), thats at least 1 out of every three of your tax dollars, goes to transfer payments- Welfare, Social Security, Medicare, etc. These clearly do not benefit the rich in any significant way. About another 40% goes to defense, another 8 to paying off interest on our debt, and only about and another 15 to general government functions. Clearly, on the spending side, the middle and lower classes win, though thats generally not an argument made against the gov't.
So yeah, we hear alot about people evading taxes this way and that, buy when you have a barrage of bullets coming at you, aren't you going to dodge them? The rich still shell out. A 1995 figure says that the top 1% held about 35% of the wealth. In that respect, the rich fall short by about 8% in their "share", which is not the outrageous figure most people make it out to be.

What is the solution? a flat tax? A flat tax would skin the poor alot more than the rich. Meeting halfway at a 27% tax (or whatever) for everyone would hurt the poor alot, and actually provide relief for the rich.

Just to let you know, I am purely middle class, and at the moment would even be considered lower middle class based on net worth and income (admittedly because I am young). However, I do think our tax system is fair enough, though I do NOT support the many tax breaks the republicans hand out to the rich, especially when they put them under the banner of helping the elderly. I do not feel that the top 2% is really screwing anyone over though.

Re:Morally?

[gabbarsingh]

oh really. So India has now earned millions of US dollars. What do you think India buys with US dollars? Hint: American products.

Unbalance

[silverhalide]

The main reason for the outsourcing to India is quite basic at heart, their hi-tech sector is maturing later than ours did. Wages in India are rapidly rising, and once that tech sector reaches the maturity of the US, a balance will be struck between the two and some jobs will come back over here as the wage savings won't be enough to cover the other expenses of outsourcing (time zone difference, communication barriers, etc).

Re:Capitalism is survival of the fittest.

[Adolph_Hitler]

You are making assumptions. First anyone can educate themselves, get certified and do your job.

Second, they do have good universities in India.

Third India has a billion people, there are just as many geniuses in India as there are in the USA? No there are more due to the fact that theres greater numbers of Indians. To assume you have the benefit of being upper class which allows you to be lazy is a big mistake. Just because you from birth may have more money and better schools does not mean someone cannot out work you and reach the same point. We have kids finishing college at 14-15 years old who are minorities and in the USA. Competition is going to be fierce and thats good.

Re:Morally?

[JawFunk]

Its a one-way flow outbound.

Actually, this is very wrong. American companies that "survive" or get rich contribute to the American economy while at the same time cutting proportionally small paycheck to Indian workers, whom also benefit by becoming a growing economy. A wealthy American company can - and most likely will, if they plan to be around for some time - reinvest in something called R&D, expansion, growth - all depens on what business you're in. General Motors would reinest in itself to produce more innovative technologies for the world, creating better products (cars) for Americans (primarily). Although there is a job-loss situation for a period of time, it is temporary and will swing the other way once companies are able to begin growing again. This does not mean that the same jobs that were shipped overseas will come back. No. More likely, it will create jobs that lie on the frontier of the industry.

Re:Morally?

[LinuxHam]

Outsourcing has allowed margins on wholesale goods and such to drop lower. If goods and services can be purchased for less it stimulates the economy and helps it grow

But when jobs are lost, the economy that suffers the job losses grinds to a halt. The cheaper goods you mention still need to be sold to someone, and unless the domestic landscape turns into factories and warehouses that only ship overseas, they aren't being sold to anyone. I don't care if a PC drops from $2,400 to $1,200 -- if I don't have a job, I'm not buying it!

Re:Morally?

[DAldredge]

Yea, freetrade kicks ASS!!! As long as it is used to lower wages. If FT is used to reduce the cost of prescription drugs or reduce the profits of American companies because Americans buy cheaper products from overseas it is BAD BAD BAD and must be stopped!!!!!!

The Flip Side of Outsourcing

[Anonymous Coward]

Why not analyze the flip side of outsourcing. I am a software developer who is about to be "bangalored". Fine. I am not going to pout about it. The media writes that we are in a "global economy" so deal with it. OK I will. But we should take the global economy one step further. If US corps. can offshore their labor, allow US consumers to offshore their consumption. For example, if Pfizer Pharm. can offshore its IT staff to save money, then I should be able to purchase my drugs from Canada or Mexico to save money. I would like to see how IBM would react if I could buy an imitation Thinkpad laptop from Singapore for $300. US corporations are lobbying for the right to offshore yet also lobby for protection for their products. I say make it fair. If you want free trade, you should feel the sting a free trade. Allow US citizens to buy goods directly from countries with lower costs of living. I guarantee that offshoring consumption will make the big US corps. whine and pout and hopefully, the outsourcing proponents will deliver the same message that you are delivering to the US IT workers that are getting laid off. Free trade is good for you. It's a global economy. Deal with it. The threat of duty free imports will make CEOs rethink their offshoring strategies.

Re:Morally?

[Lord Kano]

Isn't that immoral?

It's neither inherantly moral nor immoral.

Re:Morally?

[black mariah]

Industry protection seems to be a matter more of political convenience than economic necessity.

Well, not shit. Why do you think most subsidies are to farmers in the frickin' midwest? SWING VOTES.

Re:Morally?

[skrysakj]

Somebody mod this up, I'm all out of points.
It's full of great points no one seems to talk about when the outsourcing topic comes up.

- Americans have to pay for college, we don't get it for "free" like other countries provide.
- We get two weeks of paid vacation per year, unlike other countries.
- Medical care? Same thing.....

The same joblessness in the USA is happening in Europe (esp. Germany) but over there they get 4 weeks of vacation, have better services and health care, etc... yet ask a German citizen and they'll tell you it's not as nice as it sounds, our jobs are going away each day, etc...

I think a larger issue in this whole Outsourcing trend has to do with "throw away society".
My grandparents had the same telephone for decades. Now, we buy a new one every few months or years. (900 Mhz?! Bah! Go and get a 2.8 Ghz cordless. Wait... now it's 5.X ghz?) or (1G->2G->3G cellphones, CDMA versus GSM, smaller, lighter, cheaper) etc....
What's the moral? Before, companies and products were built to last. Now is the age of Enrons, job hopping, shorter product lifespans, and speed of change.

Breeding a society of future employees is no longer the best option, it takes too long! Outsource to other countries, that's much faster. Invest in your own country, your own people?
Too costly, can't wait for that to happen, need to take care of business right now, not years from now.

Decades from now it may even out, India will eventually have higher income levels, higher costs of living, and it won't be as econonomically "nice", so companies will find cheaper workers elsewhere. But, that's a price India will pay when the realize:

It's all a temporary advantage. Throw-away, not permanent.

Never forget the famous engineering phrase:
"Faster, cheaper, better: pick two"

Right now we're choosing "cheaper and faster". The "better" is being left out, things are throw-away, not meant to last or endure.

Re:Morally?

[Anonymous Coward]

You are the one who chooses to live in a country where the cost of living is five times as high, so don't blame the company if they want to hire somebody who can live well on a lower salary.

It's easier for an Indian to come to America then an American to go to India.

Re:Morally?

[cayenne8]

"So people can still spend money buying toys for their kids because they are less expensive while still having a good quality level, so people can still spend."

Except, if people here have no jobs to earn money...who is going to be able to buy those less expensive, good quality 'toys'?

Re:Save Capitalism- OPEN THE BORDERS

[mdfst13]

No, capitalism is working just fine. In the 90s, there was a shortage of trained computer programmers in the US. As a result, countries like India and China started training programmers (some of whom went to US colleges; my CS graduate program had more foreigners than US members). In the 90s, this greatly increased the number of programming jobs in China and India but did not affect the US (at least not much, programmers were experiencing full employment in the US; otoh, it did provide an excuse for work visas and enabled some Indians/Chinese to move to the US to work).

The problem is that the programming boom ended. As a result, companies cut back. This (and the continuing educational push) created a large number of well-educated but unemployed Indians and Chinese. It is so bad over there that people with doctorates are manning help desks (and unable to actually help people, because outsourced help desks are all about minimizing call length; not to mention that a doctorate in programming is of little use in helping someone figure out that Word Perfect won't work during a power outage). As a result, a company can save money by switching to Indian/Chinese programmers and is under cost pressure to do so.

This is not a failure of capitalism; it's just a characteristic of business cycles. The big question is if the demand for programmers will return to its previous level or if it will be permanently lower. If the first, we techies should just ride it out. If the latter, many techies should switch careers.

Ah yes - Capitalism runs rampant again

[SubtleNuance]

So, considering the Caste system still exploits nearly 200 Million people - called Untouchables [nationalgeographic.com] -- treated as virtual slaves by their caste superiors, its nice to see American Capitalists praising India for its Capialist Victories.

The trouble is simple, there are many many poor in India. They are many educated intellectuals, and a growing upper class. YET they still have teaming masses of poor. I can gaurantee you that India's poor will not tolerate the this -- India is a Secular Democracy -- and its people can see the "promise" of Capialism for what it is: Extending the domination of the Upper Class.

In a global context, the USA is the Upper Class. The rest of the world is being (via propaganda like this, WTO treaties and open Warfare(justified time and again by self-serving lies, but still never comes close to excusing the Imperial Warmongering Aggressors to anyone with perspective, a lack of jingoism, a bit of history and a mote of objectiveness) taught a lesson (and sold a noble lie) either continue to serve our economy or face conequences. The DOMESTIC US middle and lower classes had better wake the heck up -- only you will prevent the US plutocrats from extending their Empire over the world. If you dont, these (cluefull) foreign masses *will* eventually kick off their yokes. Inspite of all this flower-y "India as proof of Capitalism" propaganda. The only thing it is proof of, is that YET AGAIN, USA's Plutocrats will make league with ANY CORRUPT system that will butress their status... Saddam, Shah of Iran, Gen. Zia ul-Haq of Pakistan in the 1980's (who helped nurture what later became Al Qaeda), Gen. Suharto in Indonesia, Mobutu Sese Seko in Zaire, Ferdinand Marcos, and and and. Obviously the American people DO NOT CARE about justice and democracy in the world as long as they Can Get Rich.

So when you middle and lower classes in the USA finally realize that "Free Trade" really means "Tolerate sinking living conditions at home, so we can finance the extension of our empire and underclass-serfs, so we may get stinking rich or else be hungry today." than we can discuss what the implications of Free Trade with India's wonderfull New Capitalists.

Re:Rationalizations begin

[sybert]

Kerry's tax plan will have no impact on India outsourcing since the corporate tax rates are about the same. India has a 42% effective tax on foreign companies, California has 35% US + 9.3% CA (deductible).

The Kerry plan just penalizes US companies in low tax nations. Native companies pay the native low tax rate while US companies will have to pay the higher US tax rate whether they keep their profits there or bring them back to the US. Most other countries do not tax the foreign profits of their companies. This just hurts US companies abroad and will cost American jobs at home. This may be just what Kerry wants, since his loyalty seems to not be with America. Kerry's tax plan will only encourage more US companies to re-incorporate in offshore tax havens.

How Ironic

[gabbarsingh]

It is ironic that India that succumbed to a single British corporation - The East India Trading Company - should be seen as savior of capitalism. Here is the classic example. Indian weavers and cotton and silk was some of the best on the planet. The Egyptians mummies were wrapped in Indian muslin (ends in an 'n'). The British at the onset of their Industrial Revolution had no consumers for the crap their power looms produced. So the East India company kills Indian cottage industry, takes away Indian cotton to England, processes fabric and sells it back to India. Some percentage of that fine industrial age English middle class must have immigrated to the United States.

It is not much different today. The iron ore produced in India gets shipped to Japan to come back as automobile engines, the GSM chip designed/QA'd locally comes back as Motorola cell phone etc.

Morality? Gimme a break.

Re:No, Patriots believe Americans are better

[Bull999999]

It's the "Ant and the Grasshopper" story. During the boom, many people with high paying jobs purchased expensive house, SUVs, boats, and various other toys and got into even more debt. When the bust happend and their last their jobs, they blamed everyone except themselves. Meanwhile, the "Grasshoppers" saved their money and bought stocks at dirty cheap prices during the bust.

Re:Morally?

[l-ascorbic]

I don't think its about net gains. Its more about those that have and those that have not. The people who have the money and own the companies make a profit by hiring them.

Do you have a pension plan? A 401(k)? You do realise that the owners of the companies are not just fat men with cigars?

the haves are taking decent paying jobs away from the have nots

Wouldn't you consider Indian workers to be have nots?

On the flip side it seems thoguh that these haves are exploiting the Indian workers.

The Indian workers are earning what are considered very good wages in their country. The average wages have risen strongly as demand rises. I doubt they would consider that they're being exploited.

Re:Morally?

[Milo77]

Don't we all just feel like a bunch of peasants fighting over table scraps? I know I sure do. My problem with offshoring isn't the Indians getting the job, its that I see the divide between the rich and middle class becoming ever greater. We're heading toward a world where a few rich and powerful people manipulate the world's governments for their own benefit, while the majority of the worlds population is left out in the cold. Yes, in the short term, a few Indians lives are being made better (until the jobs go to China, etc), but in the long term all we've done is lessened the value of the middle class (gobally) while making the rich, richer (and more powerful).

Re:Morally?

[cubicledrone]

Not only that, but a large chuck of people living in the bottom "quintile" of income are living better than the middle class did 50 years ago.

Until they get fired.

Re:The Sky is Always Falling

[Fulcrum of Evil]

There are people all over the midwest complaining that their way of life is going to disappear, and we all pay extra taxes to subsidize their plight -- the plight of people unwilling to change jobs when the market disappears.

Goody, farmers can't move on to the next thing. This begs the question: why don't techies do that? Answer: what's the next thing? Why should I spend money I don't have to retrain for something that's going to India in 3-5 years?

I think it was Bill Maher who said (and I'm paraphrasing), "Americans seemed to be more concerned with taking their own lifestyles from 10 to 11 than to help others bring theirs from 0 to 1." And that's the absolute truth. No one reading this is starving. Even if you did nothing but collect welfare, your lifestyle would still be better than 90% of the world.

Are you implying that I should give up my low-crime apartment and clean water because there are starving children in China? I bitch about American corps selling me out and you call me insensitive to the plight of poor 3rd world countries (with an assumed racial bias). Fact is, if I lose my job, I may well be starving - welfare is going away because people like Bill Maher are opposed to any social safety net.

So, you're a programmer. Someone else can do your job for 1/4 of the price with the same quality.

Actually, nobody seems to care about the quality of my work, only the price on the balance sheet.

Lower cost of living

[Anonymous Coward]

Maybe we should consider lowering our cost of living first if we want to compete globally.

We use alot of energy per person here and those resources are going to become more expensive as economies like Chine and India start demanding more.

Start by pressuring polititians to build better mass transportation so every man, woman and teenager in America doesn't need a car. Even the cheapest car costs alot.
Lowering our ridicuous housing costs and building energy efficient communities.
Lower the cost of medical care and elimate bs lawsuits.
We have to start working together as a nation to make our lifestyles cheaper.

HEY! All taxes are a tax on the poor

[argoff]

Speaking of India. I hear there's a remote village there where if one person in the village gets something special - everyone gangs up on him and takes away whatever they can for themselves. Needless to say, instead of everybody striving to get alittle something, everybody ends up with nothing.

Unfortunately many have that problem here in the USA too - and isn't it ironic that of all the poor people who have migrated to the USA, the demogaphics that want to tax the rich the most are the ones that consistently end up remaining the most poor.

The worst part is that people are so green with envy that they don't realise that our tax system doesn't even tax wealth - it taxes income. That means the guy sitting on a billion worth in assets will barely even notice a tax increase while the small business person who busts his ass to earn his first 300K will get his teeth and nuts kicked in. Not only that, but the billionaire will get more tax deductions to boot - WTF do you think the Kennedys want to "tax the rich" for the sake of the little guy?

Taxes don't hurt the rich, they hurt the little people who are trying to become rich.

Re:How Ironic

[Bull999999]

Many people how are supposedly "moral" are infact quite selfish. For example, lets suppose that all businesses stops outsourcing. There is a chance that it could create more jobs for the slashdotters but it also means that others will end up losing their job (such as people working at Japanise auto plants in the US). So I guess morality on slashdot means looking out for the Number One.

Re:Morally?

[cubicledrone]

Share the misery.

a car,

With a five year loan

a nice apartment,

where four figures are wasted every month: no equity, no tax benefits. No possibility of a mortgage or house, of course

heat, electricity, a dvd player, a decent size tv w/ cable, to go out to eat when you want, etc... and im sure you work in a comfortable air conditioned office

... five figures of debt, 28% interest, no savings, no raises, no wage growth, no promotions, few benefits, no ownership, no voice in running the company, and, the company can outsource the job any time they feel like it.

Would you rather work in a shoe factory for 70 hours a week and still hardly be able to afford food?

False dilemma.

Oh but the common argument is that our parents were SOOO much better off.

They were. My parents average time at their job was over 28 years.

The good ol' days were never as good as they seemed.

Were people in previous generations fired four times in ten months? No. 'nuff said.

Re:Morally?

[workindev]

Because they don't contribute their hard-earned money back into our* economy. The money doesn't flow in a circular fashion. Its a one-way flow outbound.

What do they spend their money on then? If Apu in India gets a brand new outsourced job, he might go out and pick up a new Ford, a new Dell computer, a new Motorola Cell Phone, a pair of new Gap jeans, a Maytag washer, or any one of the hundreds of thousands of American products that are available in the Global market.

He most certainly contributes his hard-earned money back into our economy because his economy is our economy, and when he prospers, we also prosper.

Re:Morally?

[Catbeller]

"In reality, the "savings" are passed on the the consumer. In many cases, the project would not be feasible if not for the low cost labor, because no one, or not enough, could afford to buy the end product. Take a pair of Nike's, make them in the US, and instead of $100 a pair, consumers might have to pay $200. Not only does Nike sell more shoes, but the end consumer gets what they want at half the price. "

Half of what price? It's like those signs in the windows of BS stores that scream "EVERYTHING 50% OFF!!". Meaningless.

I disagree. I've been buying shoes for thirty years, and the price are going up, UP. Even adjusting for inflation.

I doubt much that a 10 dollar an hour worker in the U.S. would take 20 hours to make a shoe, to yield that $200 pair of shoes. It'd probably take two hours, if he did it all by himself. A labor cost of $20, in the horrifically overpaid U.S. labor department. The hundred dollar pair of shoes would have a distribution cost/retail markup of $80.

Made in Vietnam, the labor cost would be about $3/day per worker, or about .30/hour, let's say. Let's say the worker also takes two hours to make a shoe. That's a $0.60 labor cost.

So the difference between the U.S. and Vietnamese labor per shoe in the hand-made shoe market would be $19.40.

Because of that 19.40, if the shoe was made in Arkansas, the retail cost of the shoes would double from $100 to $200?

You see how silly this is?

1. Consumer prices have risen, not dropped.
2. Labor cost differences are insignificant in determining the price of the shoes. It's almost all distribution, marketing, and retail markup.
3. The companies have NOT kept the prices down by offshoring labor. They have instead increased profits. The "savings" for the consumer never happened. It was a lie.
4. The U.S. has lost its maufacturing base because of this lie. We don't even build our own defense electronics anymore, for the most part.
5. The lower middle class is disappearing. No real paying jobs for those not at the top of the academic chain anymore.
6. Once the housing bubble bursts, the lowest paid workers won't even dream of buying a home. Rents will also explode, so even more income will drain from those not working at real jobs.
7. If one can't get a decent job, who will buy all these products that are INCREASING or standing pat in price: meat, poultry, fruit, vegetables, homes, clothes, milk, gasoline -- all the staples. Ans: wealthy people and upper middle class people won't care, but everyone else will suffer.

And it boils down to this:

The offshoring of labor did not keep prices down. Prices stayed where they were, or increased. PROFITS increased spectularly. We've lost manufacturing capability, a national security nightmare. We're losing the ability to provide a living for anyone not on the top of the employment pyramid.

And we did it because businesses wanted to make a LOT MORE money than before. We've traded our country's economy in for a pyramid scheme for corporate stockholders and the men who run the executive suites.

The business of America's government is not business. We should have learned this lesson in the robber baron years of the late 19th and early 20th centuries, but apparently ideological religion dies hard, especially when trillions of dollars in profits are to be made. We'll have to become economic secularists again -- the hard way. By learning what is and is not real, by watching the next decade's slow slide into an unstable world economy.

Re:Morally?

[Anonymous Coward]

Unfortunately your economic model is flawed. It's not like the only person you have to hire is the actual person who makes the shoes. You also need support personel i.e managers, cleaners, mechanics, etc. So yes, labour costs would actually be quite much higher if the shoes were manufactured in the USA.

if you wear Nike shoes or

[ViVeLaMe]

mostly any american clothing, you have no moral right to whine about outsourcing.
Oh wait, outsourcing is good when it isn't YOUR kind of job being outsourced, is that what you're really saying? tough luck.

Re:Morally?

[kerrbear]

I'm not going to go so far as to say that this is immoral, but surely you can concede that morality has nothing to do with capitalism (as your question, does, in effect, relate to morality).

I don't think Capitalism and morality are perpendicular, but instead are loosely coupled. Immoral behavior by Capitalists will hurt Captitalism (witness the Enron and Tyco scandles), and morally based Capitalim will positively effect Capitalism.

I believe Henry Ford paid his workers a living wage because he relized that if he did not, then nobody would be able to buy his cars. If we continue to send labor overseas in the race to the bottom then we will depress our own wages, and who will then buy the products manufactured overseas? Answer: fewer and fewer, which means lower profits. Thus, immoral Capitalism hurts the goal of Capitalism.

Re:Morally?

[comedian23]

Ummm, why not? We are the ones who allow them to create companies, allow them to incorporate and save themselves from prosecution if the company goes belly up, allow them to sell their products in our market which is one of the best on earth. Why should we allow them all of these benefits and expect nothing in return. You act as if companies get nothing from the US.

If they want their immigrant workers so badly let them move their corporate headquarters to India, or Vietnam, or wherever and face trade restrictions when selling to the US, like the rest of the world does.

Re:Great...

[Anonymous Coward]

"10% in this country pay 50% of the taxes"

This annoys me every time I see it. Your logic is flawed. The riches 10% of americans have 90% of the money, they should be paying 90% of the taxes. See the book "How to lie with statistics" available here:
http://www.amazon.com/exec/obidos/tg/detail /-/0393 310728/103-3832444-1218235?v=glance

The Bottom Line

[rcgrant]

Labor is no different from any other good. Americans happily reap the benefits of cheap imported products, yet are outraged when firms do the same with jobs. This is not to say that firms have license to act amorally and disregard the impact of their decisions on real people; in fact, people--American or otherwise--will benefit most in the long run from open borders and free trade of all goods, including labor. At the very worst, offshoring is merely a short-term "growing pain" of the global economy. Realistically, it is a desirable step in that direction.

Re:Morally?

[bob dobalina]

We've tried unfettered capitalism. It failed, and led to the Great Depression.

Actually, what led to the Black Monday crash was the newly created FEDERAL RESERVE trying to manage interest rates and keeping them artificially deflated to try to spur an "eternal boom cycle". That, coupled with the speculative loans the Fed had created, caused a massive market correction. Think of a casino lending you tons of chips to play with, on little more than your say-so, and then finally saying "ok, you have to pay us now". And you've got maybe a tenth of what you actually owe them. This is called fractional-reserve banking. It's what the Fed did (and still does, but with slightly better results), and it's their fault.

Now, to extend that analogy, consider half the casino's patrons doing this. What happens when the casino can't take the income it expected from these people? It can't pay its workers, its mortgage, its debts. And this is the "callous pocketstuffing" everyone laments; in reality, it's the Fed simply being too stupid to manage the economy.

But you can't blame them. For years and years and years, governments have tried to do exactly that, and met anywhere from mediocre to disastrous results.

Unfettered capitalism? No, not now, not anywhere, ever. We've never had a truly free market in the history of the world.

Re:Ah yes - Capitalism runs rampant again

[aussersterne]

The DOMESTIC US middle and lower classes had better wake the heck up -- only you will prevent the US plutocrats from extending their Empire over the world. If you dont, these (cluefull) foreign masses *will* eventually kick off their yokes.

As predicted by Marx.

What do you think the chances are that Americans will suddenly abandon Wal-Mart in droves to pay twice as much at the mom-and-pop shop while offering to take a pay cut and funnel the extra to those making less at their firm and going home on public transportation to a smaller apartment so as to increase the amount of space available for housing?

The chances are zero. March of history, here we come.

Re:Morally?

[Greyfox]

Every development job I've had in my 15 year IT career has rolling in-house code for a company because COTS software didn't cut it for them. They'd have used COTS if they could because that's cheaper and faster than hiring a team of programmers to work for months to make a computer do what you want it to.

Sure you can slap a bunch of Linux boxes down in your company for just the cost of the hardware, but unless the usual packages that come with the OS completely meet your needs, you'll still end up needing to hire some programmers to make the computers do what you need them to. Whether that's routing workers through your inventory floor, keeping track of free tables at a resturant or taking configuration data from your systems and slapping it all into a searchable database, you will probably not find free software that meets your needs.

To use your analogy, Open Source code is the plumbing that came with your house. If you want it fixed you can do it yourself or you can ask the guys who originally built it to fix it for you (And maybe they'll get around to it if nothing more interesting is going on.) If you want a radical change, you'll probably need to call a $150 an hour plumber.

Re:Morally?

[zdv]

I wouldn't pay you anything. I would send you an email and ask for you to implement this feature I've really been looking for..

Profits (i.e. MONEY) *IS* the root of all evil.

[aussersterne]

Companies for profit are morally a bad thing. These are not states of nature, they are socially constructed concepts.

Commodification of labor is fundamentally unethical and the real term, alienation, should be used whenever possible.

Farmers should farm to feed people, programmers should code to produce software, and automakers should assemble to produce cars, all of the above for people to use. Instead, each of famers farm for money (and the crops are merely another irritating step, much less the consumer), programmers code for money (and the code is merely a laborious inconvenience, much less the consumer), and automakers assemble cars for money (and the building a quality automobile is merely another tiresome stage in the process of acquiring money...)

You say "money is the root of all evil" and people treat you like you are saying something quaint and simple, but in reality, it's not far from the truth. Consider this analysis from one of the most preeminent social theorists of our era:

"Political economy, this science of wealth, is therefore simultaneously the science of denial, of want, of thrift, of saving -- and it actually reaches the point where it spares man the need of either fresh air or exercise. This science of marvellous industry is simultaneously the science of asceticism, and its true ideal is the ascetic but extortionate miser and the ascetic but productive slave. Its moral ideal is the worker who takes part of his wages to the savings-bank... Self-denial, the denial of life and of all human needs, is its cardinal doctrine. The less you eat, drink and read books; the less you go to the theatre, the dance hall, the public-house; the less you think, love, theorize, sing, paint, fence, etc., the more you save -- the greater becomes your treasure which neither moths nor dust will devour -- your capital. The less you are, the more you have; the less you express your own life, the greater is your alienated life -- the greater is the store of your estranged being. Everything which the political economist takes from you in life and in humanity, he replaces for you in money and in wealth; and all the things which you cannot do, your money can do. It can eat and drink, go to the dance hall and the theatre; it can travel, it can appropriate art, learning, the treasures of the past, political power... All passions and all activity must therefore be submerged in avarice."

No, THAT was the stupidest thing I've ever heard.

[MattGWU]

The problem isn't that Indian coding droids are getting jobs. The problem is that American workers are losing jobs to overseas labour simply because they cost less. It's not that the Indian droids are any more skilled (The article quotes somebody as saying they are indeed less skilled), it's just that they work for next to nothing.

You imply that there is some sort of entitlement issue here. If this were indeed the case, why don't you hear more about the native Indian IT industry? Why can't they compete with products, rather than simply the ability to fill a job for less money? (Yes, it is conceded that there IS a native IT industry in India, but that's not at issue here)

This, of course, is what the company profiled in the article seems to be driving at. Great, kick off a native industry in-country. Launch Indian-made software products to compete in the market. Great, more power to them, and good luck! That's how it should work.

Re:The Flip Side of Outsourcing

[andy1307]

say make it fair. If you want free trade, you should feel the sting a free trade. Allow US citizens to buy goods directly from countries with lower costs of living.

You can buy a product in Singapore and get it shipped. What's stopping you from doing that right now? It's exactly what wal-mart is doing, isn't it?

Uh huh.

[Fantastic Lad]

Riddle me this. . .

Unless I am mistaken, all of this can be reduced to an imbalance between living standards and consumption in the East and the West. Because the West has higher living standards, (ie, more expensive), it will always be less expensive to hire labor in countries like India and China.

Only when everybody has approximately the same cost of living and consumption standards, will labor cost the same across the globe.

The problem is that there isn't physical space or resource for the few BILLION people in India and China to industrialize out of their mud huts up to the same standards Americans have grown to expect. And guess what? The result will not be one of everybody being pulled up by the bootstraps in cheaper, overpopulated nations, but rather a natural decline in the American standard of living.

This (of course!) is unacceptable. And so you suggest that we here in the West stay ahead of the game through "Hard Work and American Industry" (Who wants to live in a mud hut, after all?)

The only problem is. . .

This isn't going to happen. Unless somebody invents a really kick-ass widget which nobody can produce off-shore, the American dream is in for a rude awakening. Heck, we reached peak oil production a few years back. What do you think will happen when every Indian decides to buy an air conditioner and a refrigerator? The petri dish is getting tight and we're nearly out of nutrient agar. And THAT is one of the big aspects of what this latest world war is all about; consolidating resources.

Conservative economic dogma is fine for a planet with infinite growth curves and resources, but this ain't SIMS, my friend. Unless you're in with Bush and the other Bunker Boys, you're going to hurt along with everybody else.

-FL

Re:The Sky is Always Falling

[copponex]

Goody, farmers can't move on to the next thing. This begs the question: why don't techies do that? Answer: what's the next thing? Why should I spend money I don't have to retrain for something that's going to India in 3-5 years?

Tell me that 100% of your income goes towards needs, and I'll tell you that you're a liar. If you don't invest in your own education, or if you can't justify your wage, then you deserve to be paid less.

Are you implying that I should give up my low-crime apartment and clean water because there are starving children in China? I bitch about American corps selling me out and you call me insensitive to the plight of poor 3rd world countries (with an assumed racial bias).

Let's assume that the US Government bans the offshoring of tech work. Would the company you work for change internally? No, the CEO would still give himself (and anyone on the board) fat raises, and abuse corporate spending privileges. The product your company makes continues to go up in price, and then someone who simply formed an entirely new corporation in India starts selling a similar product for half the price. After the company stock falls, you still get fired in "cost-cutting" layoffs. American companies are simply adapting to the market now to get ready for new competition before it really gets rolling. And believe me, as soon as eastern Europe and Russia get their brain pool on the same playing field, you'd better be really good at what you do, or have found a job that can't be moved overseas.

No matter what rules the US governement makes, a resource (in this case, tech talent) is available in greater quantity at a cheaper price, so the worth of your talent has been greatly reduced. Slap tarriffs on all related work, and your next copy of Windows will cost $900.

Fact is, if I lose my job, I may well be starving - welfare is going away because people like Bill Maher are opposed to any social safety net.

So, if you lose your current job, no other job will be available? That's hard to believe. Or perhaps you meant to say, "If I lose my current job, I might trouble finding another in this saturated market." Well, sorry. Grab a broom. Wait tables. And if your lifestyle is really that important to you, you'll work enough doing something else to get the same pay.

Re:sure.

[Bloodbath]

You can't just look at this in a company by company basis. Capitalism works of the principle of supply and demand. There will only be a demand for products when there is money to buy them. There will only be money to buy them if people have jobs.

This is a common economic fallacy. People seem to think that if businesses are "too greedy", there won't be any money left for customers to spend. The reality is that money is never (legally) destroyed; it is simply spent in different ways. If one group of customers becomes too poor, businesses merely need to move to a market where demand is high. Money will always be spent, no matter if "people have jobs" or not. The key to a successful economy is not circulation; it is production.

Re:Morally?

[spun]

Never comes true? Have you looked outside your window lately? Look at the numbers, the poor are getting poorer. Middle class families are slipping into poverty in record numbers. The top 10% of owners control 90% of the wealth. This has been goign on for the last 30 years, it's just been getting worse recently, thanks to the 'cheap-labor' conservatives.

That's right, nearly every policy put out by the right in the last 30 years has been aimed at making labor cheaper. It's been working, or haven't you noticed. This means more profits for the few that have the most, and less and less for the rest of us.

Two choices: Whine, or Organize

[Anonymous Coward]

If the readers of Slashdot organized into a Pac we could buy a number of US Congresscritters and start making demands of corporations.

As long as we are not organized, we have no say. Organize or die.

Re:Save Capitalism- OPEN THE BORDERS

[RalphSlate]

All we have to do is restore the mobility of labor. Make the borders as open to people as they are to capital.

Think of the social ramifications of this. Families would be splintered. You wouldn't get to see your kids or grandkids because they'd be halfway across the world chasing the jobs.

Kids wouldn't attend the same school from one year to the next. There are plenty of studies done at how screwed up kids are who move around a lot (like every time their deadbeat parents stop paying the rent). I can't even imagine what a completly mobile workforce would do to them.

Histories would be lost -- you wouldn't have the old guy who grew up in the town and lived there all his life. There would be no "community memory" because there would no longer be lasting communities.

Your idea works well if we have the ability to live and work in vastly different places, with instantaneous transport between the two, but that probably brings up other problems too, like everyone wanting to live in Hawaii and work in India.

Free movement of people has its downsides too.

Word to the wise

[Anonymous Coward]

When some one starts telling me to my face how they saved me or are doing me a favor. That can mean only 1 thing. They are screwing me in the a$$.

Isnt anyone amazed at the flood of articles on how great offshoring is. Makes ya wonder who is behind the media blitz. And also makes ya wonder whos dumb enuff to believe it.

nuff said.....

Re:Morally?

[Anonymous Coward]

Why are you comparing prices of "Brand Name" shoes? You could go to payless and get shoes for a hell of a lot cheaper than $200. The shoes that do cost $200 are not the shoes that you could have purchased 5 or 10 years ago. The technology in making shoes has improved. The R&D costs have also risen. Ask any runner who travels 30-50 miles a week on his/her feet if the shoes have improved. They are lighter with better cushioning and more breath ability. There are also developments being made so that the shoes one buys will be custom made for one's feet. Are these advances not worth the extra money? I could go out and buy a pair of shoes at payless for $20, but are they going to be the same as the $200 pair of shoes? You deiced.

Now, on to the idea of you buying shoes for $200 that are produced in Vietnam. What particular type of shoe are you talking about? "Shoes" that typically cost more than $180 are made by hand in Italy, with Italian leather, not Vietnam. How many Nikes sell for $200 Dollars? What particular brand of shoes are you talking about? The reason these jobs moved out of the country is because it takes UNSKILLED labor to make them. Making clothes and shoes in modern ways does not take someone with an education, why could these jobs not move to where the best prices can be found. We, the consumers, demand low prices, the large Evil corporations are catering to our needs. Corporations need to make money or they will not exist. What again is wrong with making money, and being good at it?