An Independent Study on Offshoring IT? 642
vsprintf writes "What are the real effects of offshoring on the U.S. technology sector? Pick your economist on the subject. The Bush administration's Gregory Mankiw says it's all good, and exporting jobs is just a new way to do trade. In Congressional testimony, Ralph Gomory says a little bit is okay, but too much is bad, while Herman Daly says it's just plain bad. The ITAA's paid mouthpiece, Harris Miller, says it must be good because IT workers in India wear Nike tennis shoes. At last, it appears the IEEE-USA has persuaded Congress to pay for an independent study to determine how offshoring really affects U.S. IT."
The race for the bottom (Score:5, Insightful)
The rest of us will be left with nothing to do and it won't matter if goods and services are cheaper if you don't have a wage to pay for them.
Meanwhile the Indians etc. will be undercut by the Chinese and they'll be undercut by someone else.
Where does it end?
Re:Nike shoes (Score:4, Insightful)
Re:Nike shoes (Score:3, Insightful)
I'm confused (Score:1, Insightful)
Either I'm missing something (I hope I am) or this is the most blatant bit of double-speak I've seen in awhile. The sick part is he'll probably still be re-elected anyway. Le sigh.
Re:The race for the bottom (Score:2, Insightful)
Re:Nike shoes (Score:4, Insightful)
If this is at all true, then clearly there must be some way in which Indians purchasing shoes made in Indonesia is beneficial to the average US citizen. The question is, outside of the vanishlingly small minority of the population who are either Nike execs or large Nike shareholders, how does the US (taken here to mean the majority of citizens thereof) benefit?
Re:Nike shoes (Score:1, Insightful)
there's also the fact that industry prices go down in general, allowing joe sixpack to buy more stuff and live the good life. (nike is an exception as they don't sell shoes so much as 'swoosh' symbols)
Re:I'm confused (Score:3, Insightful)
Though maybe Clinton is unique in being able to accomplish this... he always seems to be able to get away with breaking the rules.
How's that? (Score:4, Insightful)
Re:Nike shoes (Score:2, Insightful)
hypocritical (Score:5, Insightful)
Then, when they actually do, and start reaping some rewards from it, you start acting like it's the second coming of antichrist.
So what do you suggest? Stop outsourcing, stop manufacturing abroad? Are you also then prepared to accept the trade retaliations from the rest of the world? Some people applauded your steel tariffs as something good. Of course, the US ended up losing a lot more money - and more jobs - total than it saved in that particular sector by postponing an inevitable restructuring.
Re: The race for the bottom (Score:2, Insightful)
> Yes, it'd be better if companies just wait to go out of business rather than try to remain competitive.
It's a Tragedy of the Commons problem. If one company outsources, it's business savvy; if they all do, it's economic collapse.
Notice that consumerism accounts for ~2/3 of the US economy. When consumers don't have any money, that prop of corporate megabucks will fall.
Of course, the USA has surely been living an unsustainable dream for the past century or so. Maybe all this is just the first phase of reality catching up with us.
Re:Nike shoes (Score:3, Insightful)
Re:Easy answer (Score:2, Insightful)
Not so simple, I suspect. Who do you stop from outsourcing? Specific industries or govt. departments only? By amount? Since the bulk of IT growth in the last couple of years in the UK has been from govt. IT contracts, I can't see the govt. deciding to pay extra by preventing companies from outsourcing. Restricting by amount would simply be worked around by splitting projects.
Another problem with outsourcing is that it does not send a positive signal to new recruits. Later, if and when an IT boom starts, wage inflation then rockets because there's not enough 'spare' resource left. Companies are then forced to outsource from a resource and cost point of view. The initial costs of setting up outsourcing can be high, so once the cost benefits accrue, companies will not eagerly drop the process.
But don't ask me what the solution might be. Perhaps this report might give us some answers.
Outsource "IT"? Obvious Answer.... (Score:2, Insightful)
If the question or design is simple then it is simply begs for a commodity-based result -- an answer or drawing. This is not to say that the people working on these problems are simple, it's just an issue of language, culture, and time-zone barriers.
America and the UK have proven themselves to be at the forefront of technology -- constantly improving on older developments; driving in directions yet unforseen. This happens daily, and in every sector of the market -- it is continual. Sure, some of our problems can be outsourced because they are simple to convey. However, much of our software and systems are more dynamic than we often admit. These "little" changes and enhancements are what I believe will be the demarcation point between offshore and traditional IT environments.
I don't think many jobs will be lost to foreign markets, because they will remain needed here. However, I think more jobs will be created in these offshored markets because of increased demand.
Re:I'm confused (Score:3, Insightful)
I'm sure he did promise jobs.. what the government here does is promise jobs too. Except the jobs that ended were high paying middle class jobs, and the jobs that are arriving are $8-12/hr callcenter positions.
Now, I don't know about you, but I don't know too many little kids that go around saying they want to work in a callcenter when they grow up. Erosion of the middle class isn't a good thing.
The fallacy (Score:5, Insightful)
The big fallacy in all the economists' arguments for offshoring is right here: "US GDP increases, so that must be good for the US."
But what's really happening is this: incomes of a few CEOs go up from (say) $1M to $2M, while incomes of 10 times as many engineers go down from (say) $100k to $20k. That's a gain in money terms, but it's very bad for 90% of the people affected. So, it's bad for the USA.
Comment removed (Score:3, Insightful)
There is an entire world out there (Score:5, Insightful)
Re:I'm confused (Score:4, Insightful)
Bush's REAL consitutancy is the corporate class. Look at his decisions over the past 3 1/2 years and almost ALL of them directly benifit the corporate class. The rest of them benift pals in the radical religious right.
Re:I wonder if they are considering the worst part (Score:3, Insightful)
And you just hit upon the cause of 95% of the problems in the U.S. today.
The U.S. essentially has a ruling class. Elections won't change a thing because the U.S. Corps. have bought off both sides.
The only way to fix it is to throw the Corporate influence out of government... good luck trying to do it.
Re:Nike shoes (Score:4, Insightful)
If you declare a six figure income, the government will take 40-50% of it. But most people earning that sort of money can afford the services of an accountant who can give them advice on how to make six figures look like five.
Re:Globalization only works... (Score:3, Insightful)
2. Movement of employees - First off, it's very easy in the EU. There's almost no additional paperwork as compared to hiring a national. There are some problems with recognition of qualifications and social security but these can generally be sorted out. Companies REALLY want freedom of movement because it allows cheap laborers to move to domestic factories and qualified management to move abroad to run new factories/outlets.
3. Patents and copyright - patents are open and share knowledge. All the information necessary to replicate the technology or process must be included in the patent. When it expires or you buy a license, you can use the knowledge. One of the key aspects of patents is that you give up obscurity and secrecy for exclusive rights, the patent system was set up to encourage innovation and the spread of knowledge. Patents can be abused (for instance stupid extension for a different application after original expiry) but they're not inherently bad. Without patents, companies would keep their inventions secret and the invention might never enter the public domain.
Same applies to copyright - to gain it, you have to create a work. Once its created, its in the open.
Re:Nike shoes (Score:5, Insightful)
For a low range in the six figures this is true, but as you progress towards the richer and then the wealthy, the actual percentage of assets paid in taxes drops dramatically. And let's face it, the people making money from off-shoring aren't in the low range of 6 figures. This is because most of the money the federal government gets from the rich and the wealthy comes from capital gains tax (the sale of shares) or dividends tax. The bush tax cuts have dramatically reduced [turbotax.com] these. Also, you have to actually sell your shares or get dividends for this to kick in. If, like Bill Gates, you keep your fortune in paper, then you are not taxed at all.
Also, lately there has been a wave of corporate off-shoring (also known as inversion), where you reincorporate in a tax shelter (like the tax-free bermuda), so that you pay dramatically less taxes. It's part of the reason why 60 percent of US corporations didn't pay any taxes between 1996 and 2000 (microsoft being one of those 60 percent).
But it is dumb to say that the average Joe in the US gets no benefit if some rich honcho makes a few billion bucks from some folks in India.
Objectively true, some of that money does flow back to regular people. But more is lost by off-shoring than comes back in corporate profits, since only a percentage of the profits gets spent or reinvested inside the US.
Re:The race for the bottom (Score:2, Insightful)
But the have nots will always outnumber the haves by a huge margin right?
When too few people have too much, it is time for a riovolution!
Oh but we will (Score:5, Insightful)
Problem...not everyone can live like the US...if they do...then we all die. There aren't enough resources to go around. 6 billion plus people all can't drive cadilacs. Not that we shouldn't raise the standard of living...but we need population control before that becomes a universal option.
Some people live in the desert and complain that there's no rain
Re:Roger, you should change your password (Score:3, Insightful)
you CAN'T pay into insurance of a 401K when you don't have them.
If you paid any attention to the news, you'd know that less and less people have insurance and less and less people have 401ks. Less people can afford insurance (esp health insurance) and companies offer less perks. The "benefits" you are touting are already going to fewer and fewer people.
It's nice to read the whole fucking message before you go off on your little tirades. If you did you would of realize THAT is how your argument makes no sense.
Re:Nike shoes (Score:3, Insightful)
Look at a wider perspective (Score:2, Insightful)
This is certainly true, and it's an important injustice.
But the extreme cruelties and conflicts of desperation are not from lack of cadillacs. It's from fundamental issues like lack of food, water, medicine, and basic comforts.
As for getting luxuries and additional comfort without destroying our planet, technology may offer solutions, as more and more people put their minds to these problems. Today only the privileged few in rich countries can contribute to this development (I'm exaggerating, but I suppose you understand what I mean). As economy improves in more and more countries, just imagine the potential, when billions of people can contribute, inventing, developing and buying environmentally sound technology.
Re:There is an entire world out there (Score:1, Insightful)
Protectionism (Score:3, Insightful)
Actually the west is moving away from free markets, just as the rest of the world has been perusaded to move towards them, so this is no surprise (examples patent and copyright laws deisgned to protet existing industry stuctures for fear of job losses, high regulatory burdens which criplle start-ups and small firms, heavy government subsidies for certain industries)
More wealth - for whom? (Score:5, Insightful)
You are correct to remind us that capitalism is not a zero-sum game; wealth is created. It is unevenly distributed, but still, most people have gained in the past. If your boss increases his own income by $100k and increases yours by $5k, well, the bottom line for you is a gain of $5k.
Now, that is changing. Today's CEO is greedier than Carnegie or Rockefeller or J. P. Morgan were. To increase his personal income by $1M, today's CEO will destroy the careers of dozens of engineers. They are not being replaced by automation, which increases the productivity of other American workers. They are being replaced by Indians and Chinese. To economists, it's a gain if one man gains $1M while 10 others lose $80K each. In the real world, it's a disaster for our society.
One possible way to attack the problem, without unduly restricting the economic freedom which helps the whole world to progress, would be to recognize what these CEO's are doing. They determine their own salaries, in reality. A CEO who takes home more than 40 times the median salary of employees in his company is basically a thief. "Compensation" in excess of 40 times the median salary in the same company should be regarded as prima facie evidence of theft.
Let's get real here (Score:2, Insightful)
Companies win bids for state contracts by massively underbidding small local companies, and send the labor offshore. They do not pass the savings they get by employing cheaper labor back to the state, the companies pocket those as profits. Only one group of people wins here, and it the companies.
It does matter where people are located. It isn't right that entire towns in the US die because the company headquartered there is allowed to up and move to a place where the labor is cheaper, and where they do not have to abide by stricter labor and environmental laws.
In the US, companies are allowed to exist by the will of the people (they must get incorporation papers from the government, the government [supposedly] is for, by, and of the people. That means that in the US, corporations have a responsibility to the communities that allow them to exist.
Re:The race for the bottom (Score:5, Insightful)
That would be true if the other factors were globalized at the same time, the way they are in the US. Education, labour rights, workplace environment, worker protection, social development, freedom of movement, etc.
For the moment, it's hardly as if people can move to a place where there's a lot lower cost of living and follow the jobs. Instead they have to wait for equilibrium to be reached, and those other countries to evolve, until they lose the jobs in question, whereupon another labour pool gets exploited for a certain period.
Wealth everywhere does not increase from that. Wealth gets concentrated to the abusers of the situation, and a miniscule amount (as small as is possible to maximize profits) gets redistributed to the exploited labour pool.
The problem with globalization is that it's not going far enough. Opening markets should be accompanied with freedom of movement and balancing social systems.
Otherwise we end up with the current exploitation system that ultimately will benefit only a few individuals.
Re:More wealth - for whom? (Score:4, Insightful)
That one person's work can be worth more than another's is obvious, IMHO. That it is worth THAT MUCH more (your example is 40X, I'm not going to quibble about numbers) indicates to me that the CEO is grabbing money. I would argue that the CEOs have formed a sort of club, and in that club they can all raise their own pay, and that they have done so completely out of line with what they're producing.
Even failing companies have highly paid CEOs with golden parachutes. If the CEO were worth THAT much, the company wouldn't be failing. Even when a CEO gets dumped, he gets a severance package that exceeds my life's earnings.
The disparity is not the issue, the magnitude is.
Coming full circle or selling tomorrow ?. (Score:5, Insightful)
What I'm personally seeing is that the US/EU companies are firing the junior programmers and keeping the senior architects due to outsourcing to India. The effect of this is to essentially cut out the entire next generation of software architects because they do not get enough experience (and often quit IT totally).
If you were a selfish nationalist , they are selling tomorrow for today. But if you were a Capitalist nation , it makes perfect senseDon't dish it out , if you can't take it applies for Capitalism as well. (think of this as payback for all the agent orange and napalam used in name of Capitali^H^H^HDemocracy)
The real sad part is that actual losers in this nothing to do with the past events which built up to this (and neither will those of the future).-- 250 USD per month and 70 hour weeks does not a sweatshop make.
Re:The race for the bottom (Score:5, Insightful)
The previous post by jsebrech was much closer to what actually happens: corporate execs and shareholders benefit from outsourcing, the average American does not. There is some benefit to a person holding a retirement plan, sure, but do you really think that a 2% rise in your well-diversified , oh, say, $70,000 stock portfolio due to outsourcing will offset the $90K job you just lost because they outsourced you? And I'm not even getting into externalities here, such as unemployment insurance to be paid, broken marriages because of increased stress, lost tax revenue for the government, etc. etc.
Losing lots of jobs is, I'm sorry to say, a big deal. Especially when no new jobs are being created to replace them, at the same general salary level. The only way for outsourcing to not be a zero-sum game is for them to be able to move to India to keep their same jobs. That's classical economic theory. In order for labor and capital to balance, they must be allowed to seek equilibrium. But while capital is allowed to move freely, labor is not. If your annual income is less than seven figures, outsourcing is most likely a zero-sum game for you at this point.
Part of a greater trend (Score:2, Insightful)
Because you like most geeks don't know shit. (Score:5, Insightful)
The primary job creation engine of the economy is the small businessman (or woman). Big corporations get the headlines because they usually affect people in larger numbers at one time. However their numbers are really not that meaningful when you look at the number of people employed in this country. There are 138 MILLION people working in the US.
How many jobs were outsourced? Now, looking back on history shouldn't we consider the 70s the age of outsourcing automobile workers? The 80s textile workers?
As for the job creation. The capital gains tax cuts and similar equalizing of the percentage of income tax benefit the small business greatly. I know, I have four relatives with small businesses who have grosses from as low as 500k to nearly 5 million. Guess what, they have more money and they did exactly what was expected, they hired to grow even bigger.
Now what will stop this? Simple, raising the taxes on the "evil rich". Sorry, the proposed plans will smack down more small businesses than anyone. The ones with the millions and billions have relatively no income and have the means to dodge nearly most forms of taxes.
In the end the only proper way to deal with taxation is by consumption. The rich consume in a very big fashion and the fairtax will accomplish that. http://www.fairtax.org
Re:The race for the bottom (Score:4, Insightful)
That's the risk you run being in a footloose sector. There are no physical requirements for the IT work being offshored, so there are no reasons for it to stay anywhere. The person who offers the best deal (note: not necessarily the cheapest) gets the business. It's not just charging a low price that gets these companies the IT work, but a certain guarantee of quality. If the US can't compete financially, then it must add some value that can't be added somewhere else.
It's the free market at work. Something the US has been pushing on everyone for a long time. Something about cakes and eating springs to mind ;)
Re:Roger, you should change your password (Score:2, Insightful)
Outsourcing will fail or succeed where it should (Score:3, Insightful)
Programmers who are handed a function spec and expected to return with a function can be outsourced.
Creativity cannot be outsourced effectively. It lives where it lives. There may be creativity in the other country, but that's not outsourcing.
Most outsourced IT fails not due to the failure of the outsource employees, but due to the failure of the inside company project managers. As any consultant can tell you, the vast majority of people who think they know how to manage a project clearly do not. As a result, what gets sent overseas are poorly thought out specifications that don't properly describe the process the project manager intended, which itself never matached the user's need.
When I sit in a meeting with a project manager and an end-user constituency representative, 90% of the time I spend is reconcilliation of the ideas from both -- when they are quite sure they'd already done this "in the spec"
As long as there are bad specs and bad managers to watch over them, there will be jobs for local people with the chops to turn those into functional code.
-AP
Re:Diversity compomising free exchange of ideas (Score:2, Insightful)
Slashdot is one the most subtetly racist sites on the internet.
Re:Nike shoes (Score:2, Insightful)
The day I can elect to "incorporate" myself in the Cayman Island and chose to pay taxes there instead of filing a 1040 here. That's the day I will agree that we ALL benefit. So far, we have a very skewed system that allows corporations all these "freedoms" while we, the regular folk are allowed nothing.
Not that you would want to, but just try packing your bags and landing in Bangalore (or anywhere on this planet for that matter) and start looking for a job. You would be "deported" so fast your head you spin. Free markets may be good, provided it applies to all involved.
Re:The race for the bottom (Score:2, Insightful)
Re:The fallacy (Score:2, Insightful)
it's not a free market (Score:2, Insightful)
Actually, I'm a little older than most folks here on slashdot and I started "noticing it" and lobbying against globalisation in the early 70's, all the way to face to faces with congress people. And everything myself and many others warned about has happened. And it will continue to get worse and the really big losers are the US middle class. Some folks are actually sophisticated enough to "notice" the difference between produced wealth and artifically produced credit, and we can point it out. Fort example,no matter how many times the shills call 30 year mortgages (or now interrst only mortgages) better than the ten year ones I remember, it's still a worse deal for the consumer long term. Same with big ticket items like cars. Some of us have noticed that day to day figures and realites don't jibe with what we were promised and told about 25-30 years ago. All we have seen is crappier products on the shelves, an artifically inflated dollar that gives people the illusion they have more but gets them less in the long run because of the higher credit that has been massively pushed on people, and a steady erosion of benefits and pensions, with the projections for them to continually keep getting worse. I've seen first hand and personal what happens to small communities when the largest local employer offshores (leaving upper management intact of course). No, they aren't "better off". I've also been effected by the currently illegal immigrant invasion which is tolerated and encouraged by the billionaires.
It's not a recent phenomenon or interest of mine, and I've been pretty consistent on it. Giving corporate tax breaks to companies to outsource is just wrong. Trading without a quid pro quo tariff structure is wrong. Imposing a million detailed laws and regulations on people, then telling them they have to compete with an area/government that has little or no such laws is wrong.
And besides that, I'm a patriot and nationalist, I think it's a function of government to look out for the most people in it's nation, not the top 1% wealthiest internationalists who happen to have a home and HQ inside the US but are really internationalists and loyal only to their own personal profits at the expense of their neighbors. That's a morals and ethics issue there, so if you disagree we'll have to leave it at that, it's not exactly quantifiable in terms of only dollars.
Re:The race for the bottom (Score:2, Insightful)
Cakes and eating it too? How about destroying the US middle class, creating an economy that imports practically all of its manufactured goods and is beginning to import its services? How will we eat our cake if we can't even cook it or pay for it?
Our jobs at $90k are not vastly overpaid, considering the enormous expenses that went into getting them. Consider the minimal $100k investment in tuition made for a BA - not even counting an additional $200k in foregone income whilst in college. Consider that Americans have a ridiculously low level of vacation compared to anywhere else in the world, higher productivity, and in fact paid for the development of the systems being used to outsource our jobs in the first place (the Internet was not developed in Bangalore.)
Furthermore, why should we sit back and watch our economy be destroyed? What possible good does the "free market" do for America if our Middle class is wiped out? Frankly, those 90k jobs pretty much define the American middle class - accountants, programmers, engineers - all the fields in danger of being outsourced.
Your correct - the best deal isn't always about the cheapest labor rates. Often it can involve ensuring that your workers won't complain about lousy labor conditions (i.e. Chinese factories), or even dare to strike (i.e. India, and pretty much all of Southeast Asia). Our corporate masters are happy to find workers who lack any fundamental liberties or rights.
American Citizens OWN America (Score:3, Insightful)
It is a government for the people and by the people, according to the constitution.
Re:Comin...selling tomorrow ?.- You sorry fuck (Score:1, Insightful)
You worthless pcs. of shit.
Some how I don't think that the Service Men/Women who died trying save South Veitnam where thinking about "Captialism" - esp. those who Volunteered.
Your guide to "The Churn" (Score:3, Insightful)
Re:The race for the bottom (Score:4, Insightful)
Salary = supply vs. demand. Double the supply..... (Score:2, Insightful)
War against Amerika (Score:3, Insightful)
Why should they want to invade, if all knowledge has left the USA because of heavy outsourcing and all that is left are a few hundred million people whose major skill is to ask if one want fries with the order?
Seriously, that is one of the most ridiculous arguments I heard against outsourcing. Brain-drain and loss of skill are serious problems, but before worrying about chinese supertanks and missiles, one should be concerned about being able to keep up with the industry, having jobs for people that aren't rocket scientists etc. first.
A Basic Fallacy (Score:1, Insightful)
The one place where I am affected by off-shoring every day is tech support. I maintain the computers for my company and I maintain the computers for a lot of small businesses on the side. It necessarily involves a lot of hardware installs and, thus, a lot of tech support calls. Did I say calls? When was the lat time you could actually call and get a real voice on the other end? Almost everyone has moved to e-mail based tech support. Many of the web-sites for computer hardware no longer list any phone numbers.
And here's my point. It is becoming increasingly obvious to me that those e-mails are all directed to someone with absolutely no knowledge of the English language. I have started collecting the e-mailed questions I submitted and the nonsensical responses I receive because some of them are hilarious.
A question about signal strength to the manufacturer of a Bluetooth USB adapter was answered with a discussion of the speed of the unit and culminated with: "As the unit is not powered the speed would be too high."
I have given up on all tech support. If I cannot get hardware running myself, in just a few minutes, I return it and try another product.
It really doesn't matter how much money companies save by off-shoring. Pretty soon they will be saving a whole lot more because they don't need any tech support at all when they go out of business!
Re:Comin...selling tomorrow ?.- You sorry fuck (Score:5, Insightful)
However I do think that this was exactly the thinking that led the senior brass in Washington to send them there. The Vietnam war (and the Korean war too) was prosecuted because the rise of communism was seen as a threat to the American way of life - in other words a threat to Capitalism.
Unfortunately America preaches capitalism and free market economics all the time but is very two-faced about this kind of stuff. Massive subsidies to domestic industries and sanctions against foreign industries is directly contrary to these ideals.
Interference in the affairs of other nations is rarely welcomed, whether that is done through economic means or with a gun. The US doesn't like it when other nations try to interfere with its own internal affairs. For some reason though they seem to think it's perfectly OK for them to interfere with the affairs of others.
When you behave like that payback is inevitable - another name for this concept is Karma.
Offshoring by definition can't be good (Score:5, Insightful)
These megacorps want to get away without paying US wages, while at the same time, being dependent on a US consumer-supported MARKET to sustain their product.
Dell and HP, for example, aren't selling their expensive services and products to India. They are selling them to the USA and Europe.
Therefore, outsourcers depend on EVERYONE ELSE NOT outsourcing middle-class jobs, or else their market will ultimately collapse.
It's not just the corps that are betraying the American worker. Corporations will do anything allowed by law to make a buck. I don't have a problem with that, if business didn't make money, NONE of us would have jobs.
The traitor here is our government which does NOTHING to stop this practice, nor to even discourage it. Both parties are responsible. Both parties are beholden to the corps.
John Kerry gave some lip service to stopping outsourcing, but when you look at where his fortune comes from (his wife), mainly from OFFSHORING Heinz plants, one must wonder how serious he is about it.
The problem of outsourcing, like the IP cartels (MPAA/RIAA) are enemies that we can't vote out of power because BOTH parties are under their spell.
My solution to outsourcing is very simple.
Give all American businesses a tax credit equal to the salaries of all American citizens they employ inside the USA, minus the salary of all non-US citizens employed outside the USA.
This will allow outsourcers to play by the existing rules, while giving businesses who employ Americans a tax advantage over them.
There really won't be a loss in tax revenue, as all corporate taxes are illusory (all taxes get passed on to the customer), and it will help it, as it will encourage employers to employ more people and to pay higher wages.
Re:The race for the bottom (Score:5, Insightful)
Your glossing over the fact that countries like China artificially manipulate their currencies and wage rates, and have a dramatically lower cost of living. It will simply be impossible for anyone living in a developed country with a free floating currency to complete against them in any field outside of the service sector. If you want to rant about free trade then China has to let their currency float. Until they do they are going to steal the rest of the world blind.
Amazingly enough the U.S. is evolving to nothing but service sector jobs for precisely this reason.
To put it another way, if a Chinese worker and an American worker are equally educated, equally qualified and equally hard working the Chinese worker will win everytime.
Now lets turn to an area where the U.S. did have an advantage. If a creative mind in the U.S. invents something and patents it, or a company invests a bunch of money developing a complex and innovative device. This is a one of a kind device that would insure the company financial success especially with the backing of a patent. You see patents are bad in software but they are priceless in the hardware world. What does China do. It buys the device, reverse engineers it for a fraction of what it cost to develop originally. They sell a knock off for half the price and the American company goes out of business.
Another path to the same demise, an American company has over the years developed a huge portfolio of intellectual property, a dumbass CEO decides he wants to exploit cheap labor and offshore the manufacturing of the products based on the IP. When he does his IP is quickly stolen by an employee and a competing company pops up owned and operated solely by the Chinese and they again bury the American company.
All in all I agree America has spent all its history singing praises of free markets so they should live and die by them, but if you are going to have them they have to be really free, which means freely floating currency and wages along with intellectual property protection. We don't have free trade today, we have trade completely stacked in favor of America's competitors. Unfortunately the Bush administration is to stupid to realize this is going to bury the U.S. in the end. All they see at the moment is cheap labor and improved profitability for corporations who are off shoring. Republicans are generally dumb enough to think thats all that matters.
It should also be noted that Bush's labor secretary is, I think second generation American. Her family is from China. Intestingly enough they make their family fortune in container shipping from China to the U.S. Isn't it interesting the Labor Secretary who should be looking out for the welfare of American workers actually has a personal conflict of interest in favor of off shoreing. Of course she isn't heading the Labor Department to look out for American workers, she is entirely there to drive down wages and improve corprate profitability, for example through the new overtime rules designed to deny overtime pay to millions of American workers.
I'll believe in the benifits when... (Score:2, Insightful)
Re:The race for the bottom (Score:4, Insightful)
And that, is our future less than a century from now, I'm afraid.
Eventually the corporate oligarchy will be overthrown by sheer weight, as we outnumber them.
The tech industry is the LAST (and pinnacle) wave of the industrial revolution. Lose those jobs and the middle class is gone forever.
Re:Because you like most geeks don't know shit. (Score:1, Insightful)
As for small businesses, not everyone can start a business. Aside from the business expertise and capital outlay needed to begin, 90% close in 5 years. (The author says they aren't "failures" because most of them close with all obligations paid, but that's hardly what someone trying to make a living would call it). [216.239.39.104]
This is aside from accounting skills, sales skills, and other entreprenurial skills needed to make a business get off the ground. And of course once you have a business, you've got to do something. And quick. Invent something! And soon, you've sunk your life savings into attourney fees and paperwork, and now you've got about a month left before you lose your house. What are you going to invent? What are you going to do?
In tax terms, it's bad. (Score:1, Insightful)
Re:The fallacy (Score:4, Insightful)
This is probably the most unintentionally funny thing I've read in this whole comment list. While it is true that other countries send their people here, are you not aware that due to the rising costs of US healthcare, upper-middle-class people in the US routinely leave the country for major elective surgeries (and some other non-critical surgeries where travelling half a day isn't a problem), to have them done by American-schooled foreign doctors in modern facilities (largely paid-for by these American patrons) in other countries where expenses are lower? How long before the rich people around the world realize that they're paying too much?
As for earning wealth, what exactly does a CEO do that merits their "vast" wealth? They don't create new products for their company to sell, they don't market these products to people, and as Enron has proven, they don't even take the fall when their corporation does something illegal. To me it seems that they play golf and find new people to trade board positions with, and to promise to vote each other big raises at the next board meeting.
Luxuries follow wealth. Pi "should" equal 3.0. (Score:1, Insightful)
We got those things in the US after we industrialized, because that's when we could afford them. If we'd insisted on having that stuff first, we never could have industrialized at all. This pattern has repeated itself again and again as nations have industrialized. The USSR may be an exception, but is Stalin an example anybody wants to follow?
You're all fools anyway for talking like there's any solution to this. It's like protesting against gravity. If somebody in India can sell an equivalent product for less money, the only thing US law can do is prevent them from selling it in the US. If we seal off the US and refuse to let anybody here buy software from third-world countries, how will that stop Europeans from buying it, or Asians? It won't. It can't. There is nothing you can do.
Opening markets should be accompanied with freedom of movement and balancing social systems.
Once again, how do you plan to enforce it? Anyhow, what do you mean, "should"? Did you hear this from God? From Buddha? Or what?
The thing that makes me nervous about you people is the way you start with "it might be nice", upgrade it to "should" and then to "must", and then decide that if something must be done, then it also must be possible -- and the next thing you know, we've got something like the Cultural Revolution on our hands and millions of dead bodies all over the landscape. When some fool announces that pi "should" be equal to 3.0, I can't even bring myself to laugh any more. It's just not funny.
Re:More wealth - for whom? (Score:2, Insightful)
But all of them? Even the ones of failing companies?
Plus we're not talking 40X here. Years back, I heard Eisner's "total annual compensation" placed in the $100,000,000 range. If we guess that the guy serving the mouse-eared ice cream bars made $50,000 per year, that's not 40X, that 2000X. Further, I suspect the $50k estimate is generous.
Bring that back to perspective, I don't know how Eisner's compensation is these days, but Disney is not considered to be doing well - they were a takeover target only a few months back. To bring Jobs back to the picture, the Disney/Pixar debacle is a black eye on the former, not the latter.
Yesterday's paper also mentioned that top-paying CEOs were the ones who outsourced the most. To give a $100,000,000 CEO a 3% raise, (and the CEOs on yesterdays "top" list averaged 46%, but they probably were "only" in the few million range.) you need to eliminate 60 of those $50,000 positions.
I still maintain that for most CEOs, outside of a few shining stars, they're in an overpay-ourselves club.
Re:it's not a free market (Score:2, Insightful)
Of course, I know some people who don't care either, as long as they get theirs, they could care less about other people. Our business headlines are freequetly filled with those types. I tend to not do business or associate with those sorts of people at any income level for very long if I find out they are like that.
Just what you want out of life I guess, and what your priorities are.
Re:Nike shoes (Score:4, Insightful)
Second, in EVERY wave of outsourcing in the past, both the government and the corporations have been there to provide retraining programs and a safety net for those between whole new careers. Low rate loans for returning to college, placement support for finding the displaced people new jobs. When textiles were lost long ago, these people who operated looms and presses were retrained to operate other machinery and moved into better paying jobs. When the manufacturing sector really started to bite the dust, you could open a paper on just about any given day and see articles about what the government was doing for you, and articles about how this company or that company was offering its laid off workers workshops in moving up to higher-paid white collar positions.
Each time, this was hailed as an advancement for the people being displaced. Sure, it sucked for them at the time, but they had something to look forward to, and help in getting from where they were to where they were going.
When the dotcom boom died, there was still the corporate placement efforts, but the government had largely quit caring. People lined up for unemployment, but damned if you could get a scholarship or a loan to learn a new profession. The dot com bust was a correction of an over-saturated sector of the economy. Now that its corrected though, we're asked to tolerate additional losses.
Are we given some light at the end of the tunnel? Are we moving up? No, instead we're told to smile when we say "would you like fries with that?" and that in the long term after we're all dead, things will be OK. Better paying jobs? Doing what? The best answer so far is that the cream of the crop will float to the top and hold onto jobs paying better than ever, the rest? Well, they can go pump out people's toilets. Assuming of course they can get retrained for that, given the apprenticeship and licensing barriers of entry into plumbing, carpentry, and electricial work in most states. The worst answer so far, which nearly everyone offers is "I don't know." What can Americans do to have a stable non-outsourceable income now that all production industries have left? "I don't know."
The difference really is in the hoping. Before, people could aspire to something better and were at least given a good show of it. Now, we're all bitter cynics without even hollow promises of a better future.
Re:The race for the bottom (Score:4, Insightful)
Well you are correct that Democrats are about as much to blame as the Republicans. They were integral to America's destroying its economic base through the WTO and NAFTA. The WTO might have worked if it had led to really free markets and fair trade but its resulted in American markets being nearly wide open while places like China are maintaining massive barriers and are engaging in wholesale cheating. They know they can get away with it as long as American CEO's are turning a profit. When China has achieved world economic dominion and they don't need American companies any more those CEO's are going to rue the day they sold out America to China, but of course they probably wont because by that time they will probably be rich and retired to a life of luxury so why should they care as long as the gate on their gated community works to keep out the starving people they sold down the river.
The only thing in the Democrats favor is they've realized now it was a mistake and are backtracking. The problem with the Bush administration is they are still singing praises of the current trends, and are encouraging it to accelerate in face of the obvious evidence its going to devestate the U.S. economy in the long run. It is a tribute to blind stupidity driven by short term greed.
They fail to realize that, in China's case in particular, this is warfare, economic warfare designed to defeat the U.S. and Old Europe, something that would have been difficult or impossible to do militarily, but is proving to be child's play to do economically. China has already started to try to dictate to the U.S. about policies and arms sales to Taiwan. In the not to distant future they will be able to blackmail the U.S. in to doing anything they want by the simple threat of stopping the container ship traffic from China to the U.S. Even more so if there is eventually armed conflict between the U.S. and China, the U.S. will realize it was a mistake to move all of its machine tools and steel mills to China. The U.S. wont be able to manufacture anything. It will wake up one day and realize the last machine tools were sent to China and it will take years to rebuild the U.S. industrial base, from scratch, in a time of crisis. Having machine tools and being able to build machine tools is pretty important to a manufacturing base.
"Also, given the fact that China is where U.S. companies are looking to move jobs wouldn't it make sense to have someone with some Chinese ties directing the American job market in hopes to maybe fight fire with fire?"
I could see you making this argument for Commerce Secretary. I don't see anyway you can rationalize it for Labor. Its just a basic indicator the people who appointed her are openly hostile to working people. Everyone knows they are, its not like its a secret. Your union comment is just classic Republican rhetoric. Fact is working people should have a shot at making a living and surviving, unions, CEO's and you be damned.