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The Full Outsourcing Discussion 1097

GileadGreene writes "Thomas Friedman of the New York Times recently did an interesting Op-Ed piece about the "silver lining of overseas outsourcing": the growth that it generates in the US job market as Indian companies outsource work that US workers are better at. Apparently total exports from US companies to India have grown from $2.5 billion in 1990 to $4.1 billion in 2002 as well. So maybe this outsourcing thing isn't so bad after all." Ultimately, free trade works out well; I think one of the issues is that white collar jobs are just beginning to feel the pinch, and are acting like manufacturers did in the 1970s and 1980s.
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The Full Outsourcing Discussion

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  • by grub ( 11606 ) <> on Monday March 01, 2004 @12:02PM (#8429437) Homepage Journal

    Hemos adds: Ultimately, free trade works out well

    then I read this in the article:

    "look around this office." All the computers are from Compaq. The basic software is from Microsoft. The phones are from Lucent. The air-conditioning is by Carrier, and even the bottled water is by Coke, because when it comes to drinking water in India, people want a trusted brand. On top of all this, Nagarajan said, 90 percent of the shares in 24/7 are owned by U.S. investors.

    OK, so that's how Free Trade works out well: domestic workers are put out of jobs but the big multinationals reap the benefits. Where are the phones from Lucent and the the Carrier air conditioners manufacturered? Where does Coke bottle the water? They don't ship it over from the US. They probably have a filtering and bottling plant down the street.

    The 90% of the shares owned by US investors aren't owned by your next door neighbours, they're owned by multimillionaire investment traders. They don't give a shit about the people making them the money, they're just cogs in their money-machine.

    Saying Free Trade works out well because faceless corporation make billions is just plain wrong.
    • by Anonymous Coward on Monday March 01, 2004 @12:09PM (#8429535)
      >The 90% of the shares owned by US investors aren't
      >owned by your next door neighbours, they're owned
      >by multimillionaire investment traders.

      Wrong! Most of the shares are owned by individuals through:
      1. pension funds
      2. 401k plans
      3. mutual funds

      Institutional investors, such as those university endowments, own a much much smaller amount of stock than you think.

      Most stock owners are way way below the millionaire level.

      Get some facts and quit parroting democrat liberal mantra bs lines.

      I really wonder if Harvard's endowment managers worry about whether or not the companies that they invest in send jobs overseas.
      • by fnj ( 64210 ) on Monday March 01, 2004 @12:24PM (#8429738)
        "Most of the shares are owned by individuals through: 1. pension funds, 2. 401k plans, 3. mutual funds."

        Think about it. If the entire employment of the US is outsourced (other than politicians, lawyers, doctors, nurses, hair dressers, and food preparation workers), there isn't going to be much of a market for stocks among the peons. Not only that, but the lawyers will sue the doctors, the doctors will malpractice the lawyers, and the politicians will have no constituents, only a rebellion.

        And don't bother accusing me of parroting "democrat liberal mantra bs lines" because it won't wash. I bucked the trend by backing Barry Goldwater in high school in 1964, and have always favored conservatives.

        UNTIL NOW. Until this issue opened my eyes.

        Face it, this isn't a liberal/conservative issue anyway. The US is staring at its onrushing demise just like the USSR was a few years ago. In both cases it will be due to corruption and selfishness.

        In the USSR, the State owned industry, and corrupted its house to death.

        In the US, industry owns the State, and is corrupting its house to death.

        When you travel 180 degrees on a circle either to the Right or the Left, you end up in the same place.
        • by Shisha ( 145964 ) on Monday March 01, 2004 @01:13PM (#8430438) Homepage
          Think about it. If the entire employment of the US is outsourced (other than politicians, lawyers, doctors, nurses, hair dressers, and food preparation workers), there isn't going to be much of a market for stocks among the peons.

          Yes, do as you say _think_ about it! But try to take it a step further. The scenario you've described is not that likely to happen, for a simple reason and that is: India won't be cheap forever! The Indian programmers will eventually start demanding better healthcare, education for the kids etc. Whether they pay for it themselves or the government taxes their income more does not really matter. The point is that it will evolve in some stable state, where the Indians will be as expensive as Americans. Want an example: Check out what's happening in Eastern Europe skilled workforce used to be dirt cheap there and is still probably cheaper than most Europe and e.g. in Prague the difference is becoming rather negligible.

          Of course this might involve loss of income in America. But given the current situation, where couple of hundred million Americans consume rather bug share of worlds wealth, now that can't last forever can it?

          The problem you're facing is to decide between being selfish and saying "all high paid jobs belong to us". Or being reasonable and saying, well acually the Indians deserve their share as well. Look up older Slashdot coverage of the topic to see that they're not working in sweatshops and that it's the Indians who benefit in the first place.

          Of course you can resort to protectionism like you have with US and EU agricultural industry. Thirld world farmers can't export their cheap goods, because ours are far too subsidised. Furthermore EU and US dumps their produce in their market, below the production value, thus driving locals out of bussiness. See to get an idea of the outcome of protectionism.
          • by MAXOMENOS ( 9802 ) <maxomai&gmail,com> on Monday March 01, 2004 @01:32PM (#8430698) Homepage
            The scenario you've described is not that likely to happen, for a simple reason and that is: India won't be cheap forever!

            India is already starting to hemmorage jobs to China and Malaysia, which are cheaper.

            Any way you cut it, the data all point to a race to the bottom.

          • by Rob Y. ( 110975 ) on Monday March 01, 2004 @03:28PM (#8432454)
            > The scenario you've described is not that likely to happen, for a simple reason and that is: India won't be cheap forever! The Indian programmers will eventually start demanding better healthcare, education for the kids etc.

            Yes, but India may well be cheap for a very long time. And then there's China. The point is that the potential pool of underemployed labor in the 3rd world is huge,. This pain's going to go on for quite some time before any equilibrium is reached.

            >The problem you're facing is to decide between being selfish and saying "all high paid jobs belong to us".

            Who said those jobs are "high paid"? Maybe they were reasonably high paid in the US, but these jobs are going to India specifically because they are not high paid there. Just because they're better for Indians than the alternatives doesn't make them high paid. And if Indian pay gets too high, that's when the jobs go to China.

            It would seem reasonable to at least attempt to establish a minimum global standard of living to mitigate the race to the bottom. Otherwise, outsourcing becomes slave labor by another name (no health benefits, no job security, no wage leverage). How much difference does it make that the slaves' choices are so limited that they are willing slaves.
        • by Mr. Underbridge ( 666784 ) on Monday March 01, 2004 @01:14PM (#8430450)
          Think about it. If the entire employment of the US is outsourced (other than politicians, lawyers, doctors, nurses, hair dressers, and food preparation workers), there isn't going to be much of a market for stocks among the peons. Not only that, but the lawyers will sue the doctors, the doctors will malpractice the lawyers, and the politicians will have no constituents, only a rebellion.

          If you really are old enough to have remembered Goldwater, then you're old enough to have heard these tired arguments every five years every time ANY industry goes overseas. You're also old enough to (supposedly) have some historical context on this. Will all jobs go overseas? Well, over 50 years, almost ALL tech jobs will. I guarantee it. Hell, all the "tech" jobs from 1950 have. Is there anything wrong with that? No, because they're replaced by whatever becomes high tech.

          Looked at another way, if the US maintains a static labor market, we will become irrelevant and reduced to 2nd-world status quickly. Would you want to have the same sort of jobs available to Americans now that existed 50 years ago? Of course not, because bolt-turning jobs don't pay well, because anyone in the world can do that now. Unless the US keeps innovating, there's nothing to sustain the high salaries commanded by US labor. Unfortunately, we haven't figured out a totally painless way of getting rid of jobs that become less-needed as we innovate, but getting rid of certain jobs has to happen. Don't worry, assuming the US economy stays healthy over the long term, they WILL be replaced. This has occurred in a healthy manner for 100 years. Note that the total loss of manufacturing jobs that has occurred over the last 50 years has had NO ill effect upon the US economy or unemployment. Do you have any reason to suspect this one is different as you claim? Or is it just because the white collar nature of these jobs hits too close to home?

          Face it, this isn't a liberal/conservative issue anyway. The US is staring at its onrushing demise just like the USSR was a few years ago. In both cases it will be due to corruption and selfishness.

          That's too ridiculous to even be speculative. The USSR collapsed because its centralized economy fundamentally didn't work, and because Reagan tricked them into a military spending spree - which gave us a bunch of debt but killed them. Put it this way - if you're so certain, how about a rough year for the US's USSR-style demise?

          • by buffer-overflowed ( 588867 ) on Monday March 01, 2004 @01:51PM (#8430976) Journal
            There's a difference between manufacturing outsourcing and the current trend.

            That difference is the level of education required and the cost of reeducation.

            A manufactoring worker loses his job, he needs to retrain himself in another field, but he's not out previously spent education dollars for his high school diploma.

            A computer programmer, electrical engineer, or another white-collar worker loses his job and he's out 30,000+ in sunk education costs(counting room and board, and even more for lost wages over a 4 year degree).

            Both people are now in the same boat, but one has just wasted a vastly greater sum of money to reach that point.
        • by Kanagawa ( 191142 ) on Monday March 01, 2004 @01:20PM (#8430538) Homepage
          The Cato Institute thinks the following:

          "The large majority of America's nonfarm workers, about 85 percent, are employed in service-providing industries, construction, and government--sectors where import competition is minimal. To those workers, imports are an unambiguous blessing that spurs innovation, expands consumer choice, and raises real wages." Full Paper Here []

          Moreover, this breifing goes on to argue employment grows in proportion to imports . There's a fairly rational reason for this, if we can all stop foaming at the mouth long enough to actually think rationally: when employment grows we (consumers) have more cash to spend on goods and services. Since imports are a relatively fixed percentage of the overall economy, whenever the overall economy grows, so must imports. Why am I discussing imports if the argument is over services? Well, services are imported and exported just like goods. So, let's understand the real numbers, here:

          The United States had a $64.8 billion trade (BEG ITAL) surplus in services in 2002, despite economic stagnation in Europe and Japan. Services accounted for 30 percent of all U.S. exports and 43 percent ($3.1 billion) of U.S. exports to India. Full Article Here []

          But, if half of our exports to India are in the form of services why are so many technical jobs going to India? Actually, there's no real evidence that's happening at all. There are two basic erroneous arguments made by the media today supporting the assumptions in this question. First, is the post hoc [] mistake: because the US economy is losing jobs and because after that happened India started gaining technology jobs, then India must be responsible for losses in American technology jobs. Actually, poor investments by venture capitalists and fund managers caused the loss in US jobs. The fact those losses occured coincidentally with India's technology boom is completely irrelevant.

          Second, is the hasty generalization [] mistake: Bob Smith has just lost his job because his company opened a software development office in India, therefore all American technology jobs must be moving overseas. There just isn't enough evidence to support the generalization made by reporters. We may suspect that India is taking some portion of American jobs, but news reports by well-intentioned NPR and New York Times reporters aren't evidence that its hurting our economy.

          All this panic and paranoia about jobs moving overseas doesn't even make sense when we consider the real economics of it. The "entire employment of the US" can't possibly be outsourced. Even if your argument wasn't a textbook example of the slippery slope fallacy [], you'd still be wrong on an economic basis. If the USA loses a sufficient number of jobs, i.e. unemployment rises, the consumers will have less capital with which to buy foreign-made products. Domestic workers who are out of work will be willing to work for less, thus driving down the cost of locally made goods. When the cost of local goods and services drops below the cost of foreign made goods and services, then jobs will start to flow back into the USA. Adam Smith's invisible hand at work.

          During the Clinton Administration monetary policy for the dollar kept our currency strong, which helped keep prices for foreign made consumer goods low. This was a good thing during that time because Asia and Europe were both in the midst of deep recessions and American consumer spending helped to bolster those economies through that trying time. The Bush Administration has since let the US Dollar sag in relation to other currencies. This has helped decrease the price of American goods and services abroad
          • by taumeson ( 240940 ) * on Monday March 01, 2004 @02:58PM (#8432049)
            you're also forgetting about the ratchet effect. prices are ratchetted up because of an increase in costs...but when costs go down, prices don't go down unless they are forced to go down.

            cars don't get cheaper. they will always be more expensive. even in years when there is very little innovation, cars are still more expensive. why? even when costs go down, multinats would rather profit margins be up than pass any savings onto the consumer.

            okay, cars might not be the best example...but you get what i mean. i have little faith that the price of local goods and services will drop below the cost of foreign made goods for quite some time...if ever. we started the PC craze, but we can't make cheaper PCs here... the only way that's going to happen is if lawyers disappear along with our quality of life.
      • Look sparky, (Score:4, Insightful)

        by big-giant-head ( 148077 ) on Monday March 01, 2004 @12:29PM (#8429813)
        What you are saying is correct, but unless you own enough stock to live off dividends, that doesn't do 90% of the people any good. Who cares if the stock I own is doing great, IF I DON'T HAVE A FRICKIN JOB AND CAN'T PAY MY BILLS............... That is the boat that increasing numbers of Americans find themselves in. It's great if my investment is doing well because all the big multinationals have shipped jobs and manufacturing and accounting overseas, but my investment alone won't provide me a living....

        This is a concept the young replublican, right wing, econ-nazis' need to learn to deal with, or as Dlyan said these times will be a changin'
      • by agslashdot ( 574098 ) <`sundararaman.krishnan' `at' `'> on Monday March 01, 2004 @12:29PM (#8429816)
        >Wrong! Most of the shares are owned by individuals through:
        >1. pension funds
        >2. 401k plans
        >3. mutual funds

        And when I don't have a job, who is going to be putting money aside in my 401K ? You ??

      • by fiannaFailMan ( 702447 ) on Monday March 01, 2004 @12:30PM (#8429817) Journal
        You actually have some good points to make, but you let yourself down with confrontational comments like:
        Get some facts and quit parroting democrat liberal mantra bs lines.
        I really wish that political discourse in the USA would calm down and grow up. It would help people to find the middle ground and actually understand the issues if we had fewer Rush Limbaughs and Al Frankens shouting abuse at each other.
      • by Alice Springs ( 752282 ) on Monday March 01, 2004 @12:31PM (#8429836)
        The complexities of the issue are not simple reflected in the idea of equity holds by 'workers'. They are much better understood in terms of household balance sheets. Most households balance sheets are, by and large, debtor balance sheets: the car, the home, credit cards, etc. As it stands, people have been able to carry this debt but it is becoming increasingly difficult to do so ... evidenced by record bankruptcy filings despite the increased difficulty in filing bankruptcy. No, we are looking at naive capital vs. labor here. Naive capital looks for a return using simple world models. These models systematically fail because they do not capture the complexities of the real world. For example, if all jobs are shipped overseas because labor is cheaper in india/mexico/china then no one has a job in the US. If no one has a job in the US then no one in the US can be a buyer of products and services. So, the aggregation of seemingly rational choices result in an irrational conclusion. Sophisticated capitalists exist: George Soros and Blair Hull to name two. The US is a kind of democracy. The intent of the Founding Fathers was that jobs be shipped overseas because (a simple world model) suggests is cost efficient to do so. From the preamble of the US Constitution: "We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America." Oddly, this is something so-called 'conservatives' sometimes forget.
    • by ichimunki ( 194887 ) on Monday March 01, 2004 @12:13PM (#8429591)
      Insourcing (the opposite of outsourcing) is actually increasing more quickly than outsourcing is []. Over half of all Americans own equities (i.e. stocks or mutual funds) []. So either you have a better source for your facts than I do, or you don't. But the information I have flatly contradicts your concerns.
      • by __aanebg9627 ( 695892 ) on Monday March 01, 2004 @01:20PM (#8430530)
        Many Americans own equities, but actual wealth is increasingly concentrated in the top couple of percent. The comparitively few equities that most Americans own are not likely to make up for the loss of wages they'll face from outsourcing.

        It's much more likely that the real beneficiaries will be that top couple percent who hold the bulk of the wealth. And the half that doesn't hold equities will not benefit, they will be harmed.

        Free trade benefits the 'factors of production' that are relatively plentiful: in the U.S., it's land and capital. Until recently, I would have said educated workers too, but the outsourcing craze shows that my uninformed gut feeling on that was incorrect. The shortages in India and China are land and capital.

        If India and China were small or medium-sized countries like Mexico or the Philippines, I would not worry a whole lot -- the U.S. economy and population would be large enough to absorb the shocks from free trade without huge changes in living standards. But the populations of India and China are huge relative to America's, and their economies significant. It's entirely possible that when the dust settles, America ends up changing more than they do.
    • by Moderation abuser ( 184013 ) on Monday March 01, 2004 @12:16PM (#8429636)
      "The 90% of the shares owned by US investors aren't owned by your next door neighbours"

      Guess who are the people driving the relentless spread and tyrannical globalisation of free markets?

      Little old grannies. No kidding.

      See all that money their now deceased men folk paid into pension schemes for decades? They want it back... With interest...

    • by wfberg ( 24378 ) on Monday March 01, 2004 @12:19PM (#8429664)
      Where does Coke bottle the water? They don't ship it over from the US. They probably have a filtering and bottling plant down the street.

      True, but the local bottlers must license the secret formula for water from Coca-Cola headquarters in Atlanta, GA.
    • by nodwick ( 716348 ) on Monday March 01, 2004 @12:23PM (#8429721)
      The 90% of the shares owned by US investors aren't owned by your next door neighbours, they're owned by multimillionaire investment traders. They don't give a shit about the people making them the money, they're just cogs in their money-machine.
      Not true. For example, Coke (KO []) has a market cap of over $121 billion. Even Bill Gates, currently the world's richest man [] at $46.6 billion net worth, can barely afford a third of Coke even if he liquidated all his holdings in everything else.

      You're right in that major shareholders are institutions - Coke's float is 67% held by them. However, that's because "institutions" are usually just investing the public's money. Coke in particular happens to be one of the S&P 500 companies [] -- know all those people invested in mutual and S&P index funds? Chances are most of them, including a few of your "next-door neighbors", own at least a few shares, and what profits Coke profits them too.

      Ultimately, if you think that big multinationals are the ones that are going to be making the money, there's nothing that's stopping you from hitching your money to their wagon. There's nothing stopping you from being one of those investors that's profiting from their returns. Especially in this day with low-cost online brokerages, it's a fallacy to think that only rich people can afford to be investors.

      • by Aceticon ( 140883 ) on Monday March 01, 2004 @01:38PM (#8430779)
        How much does one (in average) need to have invested in order to make as much money per year as if having a job?

        Assume the following:
        • Average yearly growth trend on a properly diversified portfolio of stocks is 6% (i believe the NYSE 5 average year growth trend is about 5.4%)
        • Once a year, enough stocks are sold to get in cash the yearly profits
        • Sales taxes on stocks are not taken in account

        If one aims at a bruto salary of $60000 year, that's 60000 / 0.6 = $1000000 (1 Million bucks )

        If the taxes are the same on income and over selling of shares, it results in the same netto income.

        So, you have to be a millionair already in order to earn from you stock portfolio the equivalent to a $60000 year salary.

        And that's not even taking the higher risk in the stock portfolio into account (let's just say that you would party during half of the 90s and starve during half of the 00s)
    • by fiannaFailMan ( 702447 ) on Monday March 01, 2004 @12:45PM (#8430040) Journal
      The Economist had a well-argued case in favour of globalisation and free trade last week in which it claimed that "Contrary to what John Edwards, John Kerry and George Bush seem to think, outsourcing actually sustains American jobs."
      EARLIER this month the president's chief economic adviser, Gregory Mankiw, once Harvard's youngest tenured professor, attracted a storm of abuse. He told Congress that if a thing or a service could be produced more cheaply abroad, then Americans were better off importing it than producing it at home. As an example, Mr Mankiw uses the case of radiologists in India analysing the X-rays, sent via the internet, of American patients.

      Mr Mankiw's proposition, in essence, is the law of comparative advantage, first postulated by David Ricardo two centuries ago and demonstrated to astonishing effect since. Yet the Republican speaker of the House of Representatives, Dennis Hastert, joined Democrats in their rebuke of Mr Mankiw for approving of jobs going overseas; another Republican called for his resignation. The White House gave Mr Mankiw only lukewarm support--unsurprisingly, since George Bush recently signed a bill forbidding the outsourcing of federal contracts overseas. And the Democratic presidential contenders? Mr Mankiw had just written their attack ads.

      The article goes on to make three points about what is going on:
      • The vast majority of job losses since the start of the decade are cyclical in nature, not structural
      • Higher productivity is the only way to lower prices and increase wealth across the whole economy. Outsourcing helps companies to lower prices and improve the standard of living across the board. In any case, outsourcing's contribution to the overall jobless figures is overstated. Over 2 million jobs a month are in a state of flux in the US economy, with jobs being created as others disappear.
      • Although IT jobs are currently undergoing what manufacturing went through in the 1990s, many more jobs will be created in the US as a result of the lower costs associated with outsourcing IT work. The jobs created at home will be higher paid too.
      I think of this in the same way as the metaphor of the digger. Two men are walking past a building site where a house is being constructed and see a man working with a mechanical digger. One says to the other, "If it weren't for that machine you could have ten men out with shovels doing that work." The other says, "If it weren't for your shovels, you could have a hundred men out there with teaspoons doing it." What would be the point? All that would result would be the house being too expensive for anyone to buy.

      Bottom line: If you make stuff cheaper, society as a whole benefits. Yes there are painful individual cases where people lose their jobs, but because the house is so much cheaper, they don't have to work huge hours to buy a house when they do get a new job.

      One final point of my own. I'm a bit worried by the rising tide of protectionism in the US. It was protectionism and xenophobia that ultimately set up the economic conditions for two world wars.

  • works out? (Score:5, Insightful)

    by aconn ( 709312 ) * on Monday March 01, 2004 @12:03PM (#8429444)
    Ultimately free trade works out well. As far as I know we have yet to see how free trade really works out. We've seen it's short term results, that's all.

    The idea that America has an advantage in certain areas always comes up. But what jobs are Americans better at when the definition of doing a job well is increasingly based solely on the cost of labor?

    • Re:works out? (Score:4, Insightful)

      by squaretorus ( 459130 ) on Monday March 01, 2004 @12:09PM (#8429531) Homepage Journal
      Ultimately free trade works out well.

      Not only short term, but not even free trade. There are so many trade agreements, barriers to trade, direct illegal embargoes and other 'not-at-all-free' elements to trade in and with USA, EU, ANY big market that to call it Free Trade is misleading.

      Like calling McDonalds burgers beef - it might have come from a cow - but it aint beef! just look at the shape!
      • Re:works out? (Score:5, Insightful)

        by Frymaster ( 171343 ) on Monday March 01, 2004 @12:20PM (#8429679) Homepage Journal
        There are so many... barriers to trade,

        hooray! more "barriers to trade" please!

        when the ftaa was being signed there was a lot of talk about subsidies to industries and regulations on producers as being "barriers to trade". i can only presume they were talking about things like:

        • public healthcare. a public system means corporations don't have to provide health insurance for employees. that's a "subsidy" to the industries in the country with public health.
        • safety regulations. if my country has higher worker safety standards than another country my domestic industry can claim that local safety standards are a barrier to export and take the government to the wto.
        • environmental standards. there are a lot of exceptions on this in the wto and ftaa agreements, but the bottom line is that any new environmental legislation can be construed as trade barrier. just look at the kerfuffle over mmt []. is mmt bad? probably not. but sovereign nations should have the power to decide to ban it if they want, without having to get the approval of exporting nations' corporations.

        so, more barriers to trade please!

    • Re:works out? (Score:5, Insightful)

      by dubl-u ( 51156 ) * <> on Monday March 01, 2004 @12:32PM (#8429843)
      Ultimately free trade works out well. As far as I know we have yet to see how free trade really works out. We've seen it's short term results, that's all.

      Global trade volume has been increasing for centuries. So has wealth and employment, both globally and in the US. If trade is bad for us, it's taking an awfully long time to show it.

      Trade, whether international or domestic, is made up of lots of little trades. And in every trade, the person on both sides makes the trade because they think they'll be better off. When you buy a computer, you'd rather have the computer than the money; the seller would rather have the money and lose the computer. On average, both sides win. Otherwise we'd stop trading.

      Of course, although we win on average, not everybody in specific wins. Government tax revenues on the increased wealth should be used to help support and retrain those whose jobs are lost to trade.

      But what jobs are Americans better at when the definition of doing a job well is increasingly based solely on the cost of labor?

      Smart consumers and smart bosses never by on cost alone; what they buy on is value, which is benefit divided by cost. American workers may cost more, but they're also very productive compared to many countries.

      If you're worried about your job being outsourced, put your energies into making sure you're giving your boss the best value he can get, and make sure he knows it. Continuing professional education is one good way, and I'm sure people here can suggest others.

      We should also make full use of a big advantage: proximity. Old-style development methods that rely on requirements documents are vulnerable to outsourcing; you can just ship that requirements document to Elbonia. But Agile methods like Extreme Programming make better use of proximity. XP, for example, requires that instead of writing documents, the product manager must sit in the same room as the developers. This increases software quality and productivity in ways that an outsourcer, be they in Buffalo or Bangalore, will have a hard time matching.
      • Re:works out? (Score:4, Insightful)

        by avdp ( 22065 ) * on Monday March 01, 2004 @01:10PM (#8430408)
        If you're worried about your job being outsourced, put your energies into making sure you're giving your boss the best value he can get, and make sure he knows it. Continuing professional education is one good way, and I'm sure people here can suggest others.

        That's nice, but from experience outsourcing is not done on a job by job basis, they are usually done for a whole organization (possibly in waves). And these kinds of decisions are made well above my boss' level (or my boss's boss for that matter). These decisions are made in the board room and numbers is the ONLY thing they take into consideration. How productive we are in irrelevant when they can have an army of Indians possibly less productive individually, but more productive as a whole (or so they hope anyway).

        Even if you are twice as good as they are, they are 10 times cheaper. Remember that.
        • Re:works out? (Score:4, Insightful)

          by leviramsey ( 248057 ) * on Monday March 01, 2004 @01:40PM (#8430805) Journal

          Indeed, the outsourcing is one of those fads in business. It's the latest snake oil being sold to business by MBAs.

          You know what the last such snake oil was? It was IT. For around 25 years, the mantra was that it didn't matter how much you spent on IT, any investment in IT would pay off tenfold. As a result of this IT mania, we had the dot-com boom and bust.

          Lo and behold, businesses discovered that some IT investments were paying off massively. But many of the investments ended up being disastrous losers.

          The same will happen with outsourcing. Businesses will realize that it's not a panacea. In two or three years, we'll see a front-cover story in Forbes reporting just that. And with that, the shareholders will stop clamoring for management to outsource. It will become a case of, "what are the specific costs and benefits of outsourcing this project?"

  • sure.. (Score:5, Insightful)

    by freerecords ( 750663 ) <slashdot @ f r e e r e c o r> on Monday March 01, 2004 @12:03PM (#8429452) Homepage Journal
    sure.. it's good for the fat cats, but when is life not going to be? the points brought up in the article - All the computers are from Compaq. The basic software is from Microsoft. The phones are from Lucent. The air-conditioning is by Carrier, and even the bottled water is by Coke - wherever the offices are in the world these things will be provided by these companies or such like. The only people whose pockets are getting lined are the Fat Cat's, not Joe Geek who just got pushed out of a job.
    • Re:sure.. (Score:4, Insightful)

      by be-fan ( 61476 ) on Monday March 01, 2004 @12:23PM (#8429724)
      Such is the nature of a capitalist economy. The more money you have, the easier it is to make more money. If you don't want that kind of disparity, the solution is not to prevent people from making money, but to vote for higher taxes and thus greater income redistribution.
    • Re:sure.. (Score:5, Insightful)

      by Crispy Critters ( 226798 ) on Monday March 01, 2004 @12:25PM (#8429753)
      "wherever the offices are in the world these things will be provided by these companies or such like."

      You caught TF's glaring mistake. A Compaq computer bought for a tech-support desk in India does no more for the American economy than the same computer bought for a tech-support desk in the US.

      The fallacy that whatever makes more money for a US company must be good for US workers and consumers is subtle in comparison. (It may be true in many or most cases, but it is not a priori true.)

  • Satisfaction Issue (Score:5, Insightful)

    by SynKKnyS ( 534257 ) on Monday March 01, 2004 @12:06PM (#8429502)
    I think customer satisfaction is a major issue in outsourcing. I remember a friend complaining non-stop about Dell's customer service being incomprehensible after Dell switched to outsourced call centers.
  • by sabat ( 23293 ) on Monday March 01, 2004 @12:07PM (#8429512) Journal

    Ultimately, free trade works out well; I think one of the issues is that white collar jobs are just beginning to feel the pinch, and are acting like manufacturers did in the 1970s and 1980s.

    It's easy enough for Hemos to say that -- until his job at ./ gets outsourced to India or the Philippines. You know, it'd be pretty easy to do that for all the ./ editors ... hmmmm ...

  • This must be some new economic theory. That a $1.6 billion dollar trade increase is somehow more beneficial than tens of thousands of good paying jobs.

    Very interesting.
  • by ClubStew ( 113954 ) on Monday March 01, 2004 @12:09PM (#8429541)
    I think one of the issues is that white collar jobs are just beginning to feel the pinch...

    With blue and white collar jobs fleeting, what's left? Pin-stripe lapels? The money gained from exportation primarily helps out those at the top, and most people can't be at the top. So while that's great for people with far too much money anyway, where does that leave the majority of people who need money to survive?

  • "American" companies (Score:5, Informative)

    by ashultz ( 141393 ) on Monday March 01, 2004 @12:11PM (#8429558)
    It certainly works out for the American companies selling the products.

    Except whoops, they aren't American, turns out their headquartered in the Caymans for tax reasons. And their products are manufactured in China or Malaysia, and their customer support is in India.

    But it does boost their executives, who live in the U.S. Though not legally, they also legally live offshore for tax reasons.

    There are lots of good arguments for free trade, but Friedman doesn't know them.
  • by sphealey ( 2855 ) on Monday March 01, 2004 @12:11PM (#8429566)
    OK Tom (and others of similar ilk): we have all taken Micro/Macro 101/102. We know what the theory of comparative advantage is, and how it is supposed to work in theory (of course, the difference between theory and practice is...).

    Now, could you please answer just one question? We in the US were told when we shipped all our manufacturing jobs, and most of our dirty work, to the Third World, that all would be OK, because we would retrain to do the work of the mind. Which supposedly has a higher value.

    Now that all the work of the hands is gone, we are starting to ship the work of the mind elsewhere. When the work of the hands and the work of the mind is gone, what exactly is left?

    Please be precise, specific, and complete in your answer. Thanks.


    • by agslashdot ( 574098 ) <`sundararaman.krishnan' `at' `'> on Monday March 01, 2004 @12:24PM (#8429734)
      what exactly is left?

      That's precisely what NY Senator Chuck Schumer asked. America is becoming a nation of high-paid lawyers & doctors & ballplayers, serviced by low-paid walmart workers & sanitary workers & handymen. What about the middle class, constantly squeezed out of existence by these Benedict Arnold CEOs ? Gosh, I sound like John Kerry & I don't even like that guy that much.
    • by dabadab ( 126782 ) on Monday March 01, 2004 @12:45PM (#8430028)
      First, not all the "work of hands" has been taken out of the USA - or at least I suppose (since I don't live there) that there are still people collecting trash, flipping burgers, driving trucks, etc. So, there are still blue collar jobs that are still in the USA - because it did not make sense to move it to elsewhere for whatever reason.

      Second, what I see in big multinationals is that it is the lower tier of the work that gets "outsourced" (done in branches in poorer countries) - high level design, project managment, etc tends to stay where it is.

      Third, outsourcing is not that cheap. Chances are that once cheap programmers will demand more and more and you have to move to another country and thus lose much of the accumulated knowledge and experience. Witness it in Europe: rates in the Czech Republic, Slovakia, Hungary, etc are getting more and more closer to the German level so new branches are founded in Roumania, Ukraine, etc - but there is only so much you can move to the East: sooner or later you'll find yourself on the West Coast ;)

      Your create a problem by taking a trend to the extremes - but if history teaches us anything, it is that trends DO change.
  • by yagu ( 721525 ) <> on Monday March 01, 2004 @12:12PM (#8429574) Journal
    I'm a little confused by the article... It states that this is a plus for U.S because all of these outsource sites buy Compaq computers, drink Coca Cola, etc. So, are we to believe those same centers here would not?
  • Exports? (Score:5, Insightful)

    by nycsubway ( 79012 ) on Monday March 01, 2004 @12:12PM (#8429581) Homepage
    It seems that $4.1 billion is not quite as much money as is lost by the people in the US not being able to buy things HERE because they dont have jobs. All that money goes directly to the corporations, and their CEOs when they sell any product. Eventually they'll simply start producing the products in the countries they're selling them to. They can make compaq computers in India if they need to.

    In the long run, outsourcing will create some jobs, but it will be a fraction of the jobs that we currently have. Sure, people can retrain and new industries will develop, but the rapid loss of jobs puts a damper on the economy, one which can be tough to bounce back from.

    The corporations are not worried about this, because they can still export products to other countries. Everyone else will have trouble.

  • by GoofyBoy ( 44399 ) on Monday March 01, 2004 @12:13PM (#8429586) Journal
    > I think one of the issues is that white collar jobs are just beginning to feel the pinch,

    Ask anyone who has lost their job if it felt like a "pinch".
  • by Puls4r ( 724907 ) on Monday March 01, 2004 @12:14PM (#8429598)
    Oh really?

    I'd wager that the person who submitted that article is probably about 25 years old, and not a student of history. Let me explain.

    We were pushed out of the consumer electronics industry by the Japanese before the end of the 80's. 10's of thousands of white collar jobs were lost. Likewise, we were pushed out of textiles, steel, and many many other goods.

    In the early 70's all the way up till now we've seen a steady decline of the auto industry, and the ONE THIRD of the country's economy that the auto industry directly or indirectly touches.

    There are many other examples. Read your history and learn about it. Or you'll be certain to repeat it.
    • Do you really not understand what "white-collar" means? y'know, doctors, lawyers, bankers, and such? The guys who specifically DON'T work in any of the fields you mentioned?

      Nobody's debating that blue-collar jobs in many industries have been shipped overseas since at least the early '70s. But that's not what the post is referring to. I don't know anyone who would consider a job in textiles, steel, or auto or consumer electronics manufacturing a white-collar job. But coding is considered by many folks to be intellectual rather than manual labor (i.e., white-collar) and for the first time America is outsourcing those types of jobs.

      (Disclaimer: I'm 22, a student of history in my spare time, and didn't submit the article)
    • by Savage-Rabbit ( 308260 ) on Monday March 01, 2004 @12:45PM (#8430036)
      There are many other examples. Read your history...
      Lets investigate one lesson of history....

      If the Roman empire is anything to go by the USA will end up as a country of the jobless and destitute, ruled by the super rich, who hire the dispossessed citizen masses as what amounts to mercenaries in a state army who's cheif role it is secure resources and to make sure the overseas possessions that secure the good life of the super rich do not get taken over by the restless local natives of said overseas territories. But of course we will learn from history won't we?
  • by lavalyn ( 649886 ) on Monday March 01, 2004 @12:15PM (#8429610) Homepage Journal
    (start -1 Flamebait rant now)

    - Manufacturing in the US (save automotives) is all but dead as those get outsourced to other nations where labor is cheaper
    - Information management (programming) is outsourced off to India
    - Cultural production is stifled and held in the hands of the Hollywood few
    - Creativity production is stifled and bound by the overworked USPTO and overbearing DMCA

    When the nation is nothing but accountants, lawyers, and doctors, whose primary role is to redistribute, rather than create, wealth, don't go crying when suddenly people realize you add nothing to the table.

    (Well, this explains an awful lot of why US laws are like that. When you create woefully little, you must defend that little with all your might. Think: if the US can actually compete despite their higher costs because they add more value, what'd be the point of the tight-fisted IP laws?)
    • by michael_cain ( 66650 ) on Monday March 01, 2004 @02:27PM (#8431525) Journal
      Manufacturing in the US (save automotives) is all but dead as those get outsourced to other nations where labor is cheaper

      The total real value of goods manufactured in the US is higner now than it was 20 years ago -- hardly a sign of a "dead" business. It's true that we let China manufacture DVD players and stuffed animals for us, but that doesn't mean domestic manufacturing has died. It's also true that manufacturing employs fewer people while producing more goods -- productivity increases have eliminated far more manufacturing jobs than offshoring. By your argument, farming is a "dead" industry because it employs so few -- but that dead industry still feeds us all.

      Information management (programming) is outsourced off to India

      Jobs in IT are suffering from a two-way whammy just now. Yes, some jobs are being shipped to other countries. However, in the late 1990s, hundreds of billions of dollars were "misallocated" in the dot-com and telecom bubbles. Some of that misallocation was spent on thousands of miles of interstate fiber that may never be lit. Some of it was spent on $80K annual salaries for people to design and implement worthless Web sites. Correction of those misallocations has eliminated far more IT positions than offshoring has. Improvements in productivity continue as well -- when two banks merge, and one Web site is eliminated, one set of Web site maintenance jobs is also eliminated.

  • by millia ( 35740 ) on Monday March 01, 2004 @12:16PM (#8429632) Homepage
    the thing that he doesn't mention in the article is that those microsoft and compaq products he mentions are increasingly being produced by foreign workers.
    microsoft is outsourcing.
    i would be flabbergasted if those compaqs are made in america.
    i realize that things are changing. it is inevitable. perhaps, if customer service improves due to actual customer support being economically feasible, that is a good thing.
    however, what is the end game here? first, the manufacturing jobs left- but don't worry, there are going to be plenty of high-tech and knowledge worker jobs available.
    now, those jobs are disappearing- both tech and knowledge. there are only going to be a limited number of those creative positions that he mentions that are available. if you don't believe that, try getting a director's job in hollywood.
    i thought that maybe certain things would be immune- like washing machines, etc., that are too large to be shipped from asia- but mexico just got another manufacturing plant from maytag the other day.
    and now that manufacturing barriers for media (tv, films) are declining, i don't see america maintaining its dominance there indefinitely.
    what is the end game, again? what are we going to do to survive? what will pay enough to enable a family to own a house and a car?
    competition is good. trade is good. but the next twenty years in america are going to be rough if we don't start thinking about these things, to avoid having a nation of burger flippers or anointed creative types and ceo's. and if the numbers get more skewed, we may yet wind up with a democracy instead of a republic.
  • by D-Cypell ( 446534 ) on Monday March 01, 2004 @12:17PM (#8429639)
    * Server implementation in latest tech - We'll do that

    * XSLT internationalized web gui - We'll do that too

    * SOAP and XML-RPC interface - Us again

    * Integration with legacy COBOL system - Give it back to the yanks
  • by Zergwyn ( 514693 ) on Monday March 01, 2004 @12:17PM (#8429651)
    The ideal of free trade, the idea that competition helps to spur innovation, increase efficiency, and generate jobs, clearly has significant truth. As Americans, we already have an example that should be obvious: the states themselves. Between each state there exists free trade, something that wasn't the case under the Articles of the Confederation. It was specifically changed so that there would be a single source of currency, no tariffs, etc. In many ways, it is just like free trade between countries, and it has obviously been tremendously successful. With some exceptions, the United States is certain very strong economically and technologically, and the states all do well.

    However, this example also illustrates a very important caveat to this whole situation: the competition can only be productive if there is an equal baseline established. As a country, we have decided that certain qualities are important to us, such as a clean environment, worker's rights, education, health care, etc. These are national policies, enshrined in institutions from the EPA to the FDA, and thus every state is subject to the same requirements. And it is here that the comparison with international Free Trade breaks down. If companies in India are not subject to the same requirements, if they are not required to care about the environment etc., then it is not really free trade. American companies can't ever hope to compete, burdened by costs they can't control. Instead, we merely subsidize a temporary exploitation of a less developed country. Once India and other countries develop to a similar level, they will likely begin to care about more of the same things, and at that point competition can begin to truly flourish without a need for restrictions. But in the mean time, I don't see how true Free Trade can exist without unfairly undermining important values we hold.

  • by dr2chase ( 653338 ) on Monday March 01, 2004 @12:20PM (#8429691) Homepage
    Apparently fewer students are pursuing EE/CS as a career. Supposedly down 33% over the last two years at MIT, 23% in the country as a whole this year. Potential gradual students are opting for Wall Street instead. See an article in today's NYT []
  • by Petronius ( 515525 ) on Monday March 01, 2004 @12:22PM (#8429706)
    All the computers are from Compaq. The basic software is from Microsoft. The phones are from Lucent. The air-conditioning is by Carrier, and even the bottled water is by Coke
    Right, the problem with this 'argument' is: 95% of the computer is made in Taiwan or China, the MS sofware is outsourced in India, the Coke is bottled right in India, the AC units are probably made in Japan, etc.
    This article offers no proof of any kind that outsourcing is good for the US economy. It just uses a random collection of impressions ('oh my, they use Compaq here too', 'man, good thing they drink Coke, they don't get malaria') and then jumps to the conclusion: 'outsourcing is GREAT, it creates jobs in the USA!'.
    Thomas Friedman has been the choir boy of the Bush administration at the NYT for quite some time now. So much for the 'liberal' media. I can't believe they keep him on staff.
  • by Morganth ( 137341 ) on Monday March 01, 2004 @12:24PM (#8429748) Journal
    Sure, let's all just pretend Free Trade Works No Matter What. Once upon time, people used to emphasize Communism Works No Matter What, and the results were excellent. Such is how idealogy works, except in America we don't look at "Free Trade" as an ideology because all its proponents have convinced of the wonderful brainwashing trick called TINA--"There Is No Alternative."

    Capital is free to move, but laborers are not. If a corporation sees a market that has cheaper labor, it is free to move its capital into that market (read: country) and start up factories there, reaping the benefits. Meanwhile, if I, as a poor suffering laborer, want to move into another market, things are not quite so easy.

    "Free Trade" is a misnomer. It's "Free" for corporations and concentrations of wealth to do what they want, while it's chains and shackles for the rest of us, the laborers. We're stuck exactly where we are, stuck with whatever hand the prevailing corporations of the day deal to us.

    I want to remind everyone that the reason corporations exist is because at some point we granted corporate charters (that's We, The People, granted corporate charters) which could be revoked if the corporations did not serve our economic interests. During many years of judicial distortion, corporations gained rights of personhood, and, through further distortion, became not just people, but people who get the rights of being a person but do not have any of the responsibilities (if a corporation steals, it is not prosecuted as a person who steals, but as an entity with thieves within).

    What a distortion it is to think that we, the people, want corporations whose leaders can enjoy the benefits of the US but not give anythink back the country that allowed it to exist. What do I mean by this? They don't give us taxes, because they base their corporation in the Caymans, or whatever. They don't give us jobs, because the outsource. But the upper crust of the corporation benefits from the American lifestyle, and the corporation itself benefits from the captive American market.

    If this were a different day, any corporation that could be described in this way would not be allowed to exist. But nowadays, we have schmucks like Friedman telling us it's just the matter of course, that Free Trade will prevail. That people accept this as anything other than a heavy pile of bullshit blows my mind.

    This is not about us American laborers being able to compete with those cheap Indians. It's about us not jumping headlong into a world where we allow corporations the rights to do whatever they want, include exploit our market and our laws, without serving the public's economic interest in the slightest.

    I hope this becomes and STAYS a national issue. If we have politicians worth a damn, they'll understand that this may be the single most important issue in the coming years. We cannot be manipulated into buying into an idealogy that does serve us. And this is an idealogy, like any other.

  • by jjo ( 62046 ) on Monday March 01, 2004 @12:25PM (#8429756) Homepage
    Free trade does work out well, but the problem is that it does involve both winners and losers, in the short term. The short-term losers know exactly what to blame: free trade. The winners, by and large, are diffused through the entire economy and over the course of many years: they benefit enormously from free trade, but they don't know it.

    For centuries, protectionists have traded on this asymmetry. They point to the real, obvious, and acute problems caused by trade, and deny any theoretical 'ivory-tower' benefits because they are in the unknown future. This is the thinking that resulted in the Smoot-Hawley Act in the US, and similar measures throughout the world, contributing to the profound and lasting slump through all of the 1930's.

    Today's protectionists, of course, say that they aren't like that, and that they only want to stop 'bad' trade. But what is 'bad' trade? In the end it still boils down to what it has always been: 'bad' trade is trade that adversely impacts politically powerful groups (such as farmers, steelworkers, perhaps now programmers), regardless of the damage such trade restrictions cause to the economy as a whole.

    What was true 200 years ago is still true today: protectionism ends up leaving us all poorer.
  • by sphealey ( 2855 ) on Monday March 01, 2004 @12:26PM (#8429762)
    Pournelle has had some good discussions on this. Here is one: turday [] and scroll down a bit into the Saturday letters. He has also written several interesting essays on the topic.


  • It isn't as though the number of manufacturing jobs in the US has shrunk, or real manufacturing wages have fallen, since the 1980s. No, that has not happened at-all.

    I don't doubt that free trade will generate a great deal of wealth. The question is - who will get it? In the example of the Coca Cola-brand bottled water sold in the Indian corporate park - how much of that wealth ends up in the hands of white collar workers?

    Obviously - those who have power will use it to secure for themselves a share of that wealth. Duh.

    This is not even about workers in India and the United States "competing" with eachother.

    Let's take an instructive look at the case of caterpillar. Caterpillar (they make tractors) maintains factories both in the United States, and in Germany, and in third world countries. They have, in fact, more factories than they need to build enough tractors to meet demand.

    So, when American workers went on strike, they simply increased production in their German (and Mexican, IIRC) factories. The German workers make slightly more than their american counterparts would-have but that doesn't enter into it. With the additional power provided by their international organization, caterpillar was able to break the strike.

    So, yes, free trade does generate wealth. But, as with other aspects of trade and commerce (slashdotters are most familiar with the effects of intellectual property law) it will also tend to concentrate existing wealth in the hands of those with the power to take advantage of it.

    Pretending, in the case of so-called "free trade" for which ample data is now available, that this is a net benefit for the relatively powerless general population is utterly facetious.

    To put it another way - there are all sorts of events, dependent on free trade, might generate wealth for the general population. However, that has no input into the process by which events are made to occur. Events are made to occur because they benefit a particular group of individuals, powerful enough to actualize them. This may or may not have some benefits (lower commodity prices, in this case) for the general population which may or may not outweigh the costs (lower wages, lower employment level) to the general population. Theory can take us this far and from here we should rely on the evidenciary record.

    I think it is abundantly clear from the past ten years that the movement of jobs overseas harms the general population more that it benefits the general population.
  • by Zwack ( 27039 ) on Monday March 01, 2004 @12:34PM (#8429881) Homepage Journal

    Check Out This Modern World [] for some more commentary on this...

    Part of the issue hinges on whether the US jobs of the companies mentioned are being affected.

    One person has family who work in one of the US Carrier plants. That plant is closing and the work is being transferred to three other US based Carrier plants, and one in Mexico. The one that is closing is a Union plant. The other ones... aren't.

    So, the company is doing its best to screw the US workers for as much as it can. Carrier also have (who'd have thought) non US plants. just because the brand name is American, it doesn't mean that any of the workers who made/packed that product are in the US.


  • More of the same... (Score:4, Informative)

    by pangian ( 703684 ) on Monday March 01, 2004 @12:38PM (#8429941)
    For similar arguements, check out a recent op-ed by economist Paul Krugman [] and a recent article on outsourcing in the Economist [].

    Yes, I referenced an article from the Economist. I realize that makes me a f#$%'n prick.
  • What Silver Linning? (Score:4, Interesting)

    by NetNinja ( 469346 ) on Monday March 01, 2004 @12:39PM (#8429949)
    The article points nothing out about how the average worker is going to benefit.

    I read Thomas Friedman but this little snipet has nothing to do about a Silver lining.

    WOW an indian anmimation company outsources to the US for animators and writers to put a Hollywood finishing touch on an Indian Folk tale.

    I think Thomas Friedman is spot on about Arab/Israeli issues but he is way off in the America outsourcing jobs issue.

    Probably the solution is for American workers to move to India and teach the Indians that they need to unionize and create medical insurance, workers Comp and stock benefits.

    What this really comes down to is that US companies are finding it harder to find Slave labor to create mega profits for themselves.

    The US was built on Slave Labor.
    The RailRoads, Textiles, the industrial revolution.
    Hell they put Henry Ford on trial because he wanted to pay his workers $5.00 a day!!!
  • by SmilingMonk ( 583609 ) on Monday March 01, 2004 @12:41PM (#8429987) Homepage
    Apparently total exports from US companies to India have grown from $2.5 billion in 1990 to $4.1 billion in 2002 as well. So maybe this outsourcing thing isn't so bad after all...

    I read Tom's comments on how he saw Pepsi and other companies expanding into South Asian markets and I think he missed at least one important point. How can he compare Pepsi's (and other low-tech companies and functions) expansion into South Asia to technology jobs outsourcing? It seems a little under-educated. Here's what I mean.

    For Pepsi to move into India probably required the construction of new manufacturing and distribution facilities. Production continued in Pepsi's traditional markets and probably had little impact on peoples jobs in places such as the US. There was probably little or no job "outsourcing" required to add carmel coloring and sugar to filtered water and CO2. Pepsi's overall headcount probably increased and the net effect on the US economy was job stability (unless or until the colored fizzy sugar water is imported from overseas).

    Now let's take a look at our favorite industry, computer technology. IBM, Microsoft, HP, Motorola, municipal governments, and many other groups are moving (notice I did not say expanding) jobs to India. The jobs here in the US are replaced by (perhaps several) jobs in South Asia. The net effect on the US economy is job loss.

    I think this gets to the nub of why Tom is wrong. Just like with textile, steel, glass, and automobile manufacturing, jobs lost to overseas labor remain jobs lost. BushCo likes to talk about the "freeing up" of the US economy to "do other things". Nice theory. In practice the gap between the have's and the have-not's (investors/boardmembers/managers and labor) in this country is ever widening.

  • We keep talking about how a crisis came in the 1970s and 1980s as manufacturing jobs were destroyed in the United States, as if it were in the past tense.

    But, last time I checked, all the previous centers of manufacturing that were once booming cities are still teetering impoverished ghost towns.

    A small list of the casualties of the last big free trade expansion:

    Detr oit
    New York City

    Shall we add to the list these IT cities?

    San Diego

    Maybe we should just trash all of our cities?
  • by LilMikey ( 615759 ) on Monday March 01, 2004 @12:59PM (#8430246) Homepage
    The problem isn't outsourcing per-se. We all know free trade is Good Thing(tm) and putting up trade barriers will only make things worse in the long run but crap man, could you at least give the programmers a second to find a new vocation.

    That's what's got us all pissed off. We spent thousands, often tens of thousands of dollars on a top notch education in a field that everyone said was the wave of the future only to lose our jobs a few years later. At least when manufacturing and textile jobs started to slide America bucked up and tried ebb the flow. Now there's a 'well, it's happened before and it turned out ok... so fuck off' attitude.

    I'm not so worried about myself. I'm stable and satisified enough in my career but there are still a ton of college kids that got into the field either because it was still decently hot a few years ago or because of *gasp* a sincere interest in computers who are going to be quite screwed come graduation day. It would be nice for those fellas to have something to look forward to and hopefully the generation below them won't be stupid enough to go into something as unimportant to America as technology.

  • by EricTheGreen ( 223110 ) on Monday March 01, 2004 @01:09PM (#8430396) Homepage
    Absolutely agree with the long-term benefits and even a few of the short-term ones.

    That said, no one on either side of the issue seems to have a plan for how to ease the displacement and transition those affected people into these new "better" jobs.

    Pro-multinationals expound benefits and the broad horizon of "better" jobs for Americans. Great, and I'm all for that--but what are those jobs? Not a whole lot of speculation or identification of these. If this isn't dealt with, these are going to turn into the economic equivalents of Iraq WMD--everyone knows they're there, but no one seems to be able to find them when it would most benefit them. Worse still, absolutely no one promoting multi-national work has any sort of plan for how to deal with the real disruption of real lives, with real consequences. C'mon folks, someone tell me something about training, support during displacement, the things those affected by this need to hear.

    The anti-multinationals are even worse--blind, reflexive resistance to an economic force that, better or worse, is going to run it's course regardless of whether we like it or not. What are these people doing to lobby and advocate for the training, support and assistance the displaced are going to need?

    Hey, I'm all for better, sustainable work and a career that builds on what I've already done, rather than locking me into a single competency. So somebody start defining what that is, how I get there, and, if the cost is my immediate employment, what support I have to get there.

    Right now the answer to the above seems to be: "You're on your own, because no one has a clue." If that's the best the pro-multinationals can come up with, is it any wonder so many people are knee-jerk opposed to this?

  • by Simon Hibbs ( 74836 ) on Monday March 01, 2004 @01:22PM (#8430560)
    Since when were 3rd world counties banned from having economies?

    America has done astoundingly well through free trade. The fact is that, like Britain a few hundred years ago, you're very good at it. Opening up free trade with Japan (which you did at gun point, I might add) is a great example of free trade's win-win effects. Sure your car makers got a cick up the butt in the 70s, but they deserved it, and you've still got a vibrant car indurstry. Sure most toys are now made in China, but who wants to pack card board boxes with floppy bunnies every day anyway? Your economy and technology has always advanced fast enough to more than compensate.

    Your economy, and therefore every enfranchised citizen, has benefited enormously from your access to other countries resources, markets, and even labour force. It was only a matter of time before the newest industry - IT - matured to the point that it became more internationaly integrated.

    For a country that prides itself on it's own freedoms, and despite the overwhelmingly positive record of the US on the international stage, I'm afraid many Americans still seem very unwilling to allow that other human beings have any right to fair treatment at all.

    Simon Hibbs, London.
  • by Vaystrem ( 761 ) on Monday March 01, 2004 @01:29PM (#8430650)
    Transnational corporations will destroy their own markets. Perhaps this seems apocalyptic but allow me to clarify.

    There is the historical "fordist" model of development. No when Ford started out - very few people could afford to purchase his products - so he paid a very good wage to his employees which granted them sufficient buying power to purchase his product. The spinoff benefits from this increase in buying power spread through the economy and the buying power of many increased. (This is of course over simplified)

    Many people believe that:
    "Ultimately, free trade works out well; I think one of the issues is that white collar jobs are just beginning to feel the pinch, and are acting like manufacturers did in the 1970s and 1980s."

    The real problem is this. Transnational corporations (this term is interchangable with multinational corporations but it is a more effective term in that it accurately demonstrates that such corporations exist among many nations and also supersede the boundaries and perhaps legal jurisdiction of nation states) are moving jobs out of the country to areas where workers have the necessary skills but not the same level of income requirements as workers within developed nations. Therefore Company X may move its software development efforts to India. Great, these people are now receiving a wage they might not otherwise have had - BUT they do not have the same purchasing power as the now fired employee in the developed nation had.

    This is key. Transnational corporations WILL NOT lower their prices because their costs of production are lower - simply because their costs of production are lower (such a move would be dictated by external competition or another initiative) so the prices of these products remain relatively constant. But the buying power of the United States, Canada, and Europe etc. is decreased. They will be producing a product at a price their traditional markets cannot afford - and they won't pay their new markets enough to improve their buying power to the point where they can consume the produced goods.

    This is how transnational corporations are slowly destroying their own market. A revisitation of the Fordist perspective or an understanding of the importance of the strength of key domestic markets would be helpful.

    Susan Strange has written two books that would be an excellent primer regarding many of these issues and other issues surrounding globalization and financial capital. Mad Money - and Casino Capitalism are very much worth the read.
  • by evan1l38 ( 73680 ) on Monday March 01, 2004 @01:37PM (#8430764)
    He says that indian companies are buying computers and that this is a net gain of sales.

    However, if the call center was in the US, the US company handling it would still have to buy computers, software, drinks, etc. I don't see how an Indian company buying these instead of an American company really makes any difference to the bottom line of the selling companies. He is claiming that these sales would not have been made, but the call center would HAVE to buy what it needs to run no matter if it's American or Indian. So his entire basic premise seems to be wrong.
  • by foniksonik ( 573572 ) on Monday March 01, 2004 @02:04PM (#8431166) Homepage Journal
    It's not enough to know that jobs are moving over seas, you need to know why.

    The simplest answer is that it is cheaper to hire people in (India), labor cost less. Materials cost nearly the same, transportation costs nearly the same, time runs at the same speed. Labor.

    Why is labor cheaper in 2nd-3rd tier economies? Cost of living is cheaper. Why is cost of living cheaper? Imports cost the same, travel, utilities, products cost nearly the same barring local production costs being cheaper. What is the biggest expense month to month and year to year for anyone in the world?

    Housing. Rent, Mortgage, Real Estate, Property. What can't be exported or imported? Housing and Land.

    Home prices and in parallel rental expenses have been going up 12% - 24% year over year in all regions of the USA for at least a decade. What is the annual cost of living inflation rate or even the average annual wage increase? More along the lines of 3% - 8% annually. Compound this over ten years and you can see that housing expenses have become the number one increase in cost of living throughout this America.

    How is this possible? People still 'buy' homes right? People still rent apartments? Yes and No. More people are renting than ever before. Homes are being mortgaged using 30 to 60 year payment plans. Nobody who has 'bought' a home in the last ten years, excepting the very wealthy, will even come close to owning their home in the next ten years. As mortgage rates go up cost of living goes up, as mortgage rates go up, comparable rental rates go up... they are directly manipulated to equal local mortgage rates.

    We are a nation of debtors whose income barely equals our expenses and often does not meet it. Out of control real estate values are bankrupting our nation. The average home where I live is priced at $420,000... average, meaning 3 bedrooms, 2 baths, small yard, 1.5 car garage, built in the 1980s over 20 years old. It is worth barely half of that, most likely less.

    People are still buying because the banks and credit companies let them... which encourages the value of real estate to continue increasing well beyond any reasonable expectations of anyone to pay for it and still save for retirement or for the childrens college funds. This means they have to borrow even more to pay for the 'cheap' imported products so they can save their cash for old age. Insanity.

    Now real estate isn't to blame... they are simply following market forces, "what the market will bear". The problem is that the market can't really bear it without creating enormous amounts of debt to finance everything. We are spending money which won't be realized as real value for 30 to 60 years. This is billions if not trillions of dollars I'm talking about. The federal deficit is nothing compared with the amount of consumer debt which is building up quietly behind the scenes with no one watching or assuming accountability.

    The worst part is that we can no longer afford to compete with the rest of the world because property holders and credit companies are holding our paychecks hostage for the rest of our lives. We are paying so much for the right to have our basic housing needs met that we can't afford to take a pay cut. Not if we want to live where there is work to be done.

    Look into this. It's much scarier than I've let on.

    c ya. Got to go pay the rent.
  • Stop the madness!!! (Score:4, Interesting)

    by Anonymous Coward on Monday March 01, 2004 @02:35PM (#8431678)
    I'm personally disturbed by the outsourcing trend currently occuring since I am an employee in the US IT field. However, I have to respond to the whining that I see going on with regards to this subject.

    It seems naive when an employee is upset that someone else won't take responsibility for maintaining their standard of living.

    It's been a very very long time since businesses felt responsible for the financial security of their workers. Legally, companies are only required to pay their employees the minimum wage for work delivered. Anything outside of this has been offered strictly because companies want to acquire and retain those workers that provide better services than the norm.

    People that work for a living are deluding themselves into thinking that they are more secure than if they started their own business. If you really want to beat downsizing, outsourcing and whatever the next big business buzzword is, stop working 80 hour weeks for someone that has no interest in your financial future and spend that time building your own software package, service or product.

    I know that's what I'll be doing.
  • People are always threatened by free trade, since the benefits are diffuse, but the pain concentrated.

    So, here's a thought experiment:

    Explain why you think outsourcing to India is bad, or evil, or should be illegal.

    And then explain why the same isn't true of outsourcing to say, South Carolina.

    South Carolina has lower environmental and labor standards that the rest of the us. Lower wages.

    You really want every state to make their own cars? Furniture? Grow their own oranges? Wouldn't that make more jobs everywhere.

    In fact, couldn't we cure suburban blight by preventing cities from importing products from their suburbs?

    Now, how is that a better alternative?

    And how's that meaningfully different than what's happening in India.

    And yes, I am a liberal Democrat who works in the technology industry. The job that might get exported is my own. But I've also worked on a job where engineering was in India, and product management was in the US. That particular product was something that wouldn't have been worth doing at US labor rates. In many cases, this isn't a matter of exporting jobs, but creating jobs that didn't exist before, or couldn't have had as much labor behind them.

    Another way to think of it: How much extra are you willing to spend on products in order to have them done in the USA. Are you willing to have your support contracts 4x higher to have an American answer them. Are you willing to pay 4x more for clothes? $400 Nikes?

    Me neither.

    Moreso, I'd rather have Africa get richer exporting food, Pakistan richer exporting clothes, and then get to pay even less for those goods. Ever wonder how much each of us is paying in tax dollars per American farmer?

    Note that, if your income stays still, and you pay twice as much for everything, you just had a 50% pay cut. Anyone think outsourcing would get as bad as that? Nope.

    As David Ricardo proved a couple of centuries ago, the strongest economy is one where everyone does what they're best at. Trying to pick winners and losers just drags everyone down.

    The problem with our economy today isn't outsourcing and free trade. It's the most bolluxed up, politicized, fundamentally ignorant economics team in the history of the country. I would have been hard pressed to find a way to have spent MORE money with LESS economic stimulus than the the Bush economic "plan."

God helps them that themselves. -- Benjamin Franklin, "Poor Richard's Almanac"