Paul Samuelson Challenges Outsourcing 686
Noryungi writes "Paul A. Samuelson, Nobel Laureate in Economics, a professor at MIT challenges the outsourcing of jobs (retinal scan login required) to India and China. Choice quote: To put things in simplified terms, he explained in the interview, being able to purchase groceries 20 percent cheaper at Wal-Mart does not necessarily make up for the wage losses."
Reg Free Link - No Karma Whoring (Score:5, Informative)
In the future please use the NY Times Blog Link Generator [blogspace.com] when linking to the soul suckers.
Re:Reg Free Link - No Karma Whoring (Score:3, Interesting)
Bugmenot (Score:5, Informative)
Is this really necessary anymore? How many people DON'T know about bugmenot [bugmenot.com]? Hell, there is even a firefox extension to plop it straight into your browser!
Depressing trend (Score:4, Interesting)
What does America produce anymore? What does any other Western country produce? Food? Consumers? It is Very depressing watching this trend. It's more depressing watching my father-in-law, a damn hard working family man lose his job just because he's getting older to some unskilled person outside of my country.
I could go on, but I'm not trying to start a flame..
Re:Depressing trend (Score:4, Insightful)
This has been a long time coming, and outsourcing is a symptom, not a cause.
Re:Depressing trend (Score:4, Interesting)
It's interesting to note how many successful entrepreneurs in the US are immigrants, or first generation children of immigrants. As soon as they become assimilated into US culture, they lose the respect that their families and native culture had for education and hard work, and become average.
Re:Depressing trend (Score:5, Insightful)
Well, that's natural. Think about it -- immigrants are the people who were smart enough, active enough, entrepreneurial enough to leave their country and move to the US. Is it really surprising that they tend to do well?
Re:Depressing trend (Score:3, Insightful)
I unfortunately do live among them, and witness their uncivilized and barbaric ways on a daily basis, so spare me any response that suggests I am being anything less that completely honest.
OK, I can agree that many (most
Re:Depressing trend (Score:3, Insightful)
It's the generational g
Re:Depressing trend (Score:5, Insightful)
Oh yes. The US education system is just god awful. Worst in the world. Terrible even! Same with the rest of the wester world! Thats why everyone wants to come over here to go to Harvard or Yale or MIT or Oxford or Stanford or even our high schools. Oh and we haven't been trying hard either. God knows NOT A SINGLE PERSON in the US innovates or starts a new company or attempts to advance technology anymore. Pfft. Way to troll!
If outsourcing is a symptom of anything its corporate greed. They can save millions by paying unintelligable people to stumble along with english over the phone and have their customers take it up the arse. It has nothing to do with education. Its economics... which I belive is what the article is about...
Re:Depressing trend (Score:3, Informative)
Yes, our university system is one of the best in the world, and we have a couple of top-notch high-schools, but it's not the Harvard and Yale folks who are out of a job...
PS> Oxford isn't in the US.
Re:Depressing trend (Score:3, Informative)
110.327 million of people 15 years and older have _some_ college, at the very least. That's out of 225.25 million, which means the total percentage is 49%.
-Erwos
Re:Depressing trend (Score:4, Informative)
The actual report is here if you're interested.
In any case, that still means that that 3 out of 4 Americans do not have a college education, which means the criticisms about our K-12 system are valid.
Re:Depressing trend (Score:3, Funny)
Please tell me you know Oxford is not in the US.
Re:Depressing trend (Score:5, Insightful)
And it isn't just a US issue, it's occurred throughout history...because it is simply a matter of human nature.
When a culture has to struggle to survive, there is motivation to work hard and think hard, and this (combined with some good fortune) makes the culture thrive. Then, when the culture becomes wealthy and comfortable, they get lazy and greedy and sit on their asses, usually until disaster stikes and the culture collapses. This is the reason that the rise and fall of civilizations is cyclical.
The trick to having a long lasting "up" phase is to catch the early signs of the downswing and get your collective asses in gear before it's too late. For the US, whether that happens is still to be seen, but so far what I've observed is people sitting around complaining about "rights" and "entitlement" rather than doing anything.
Re:Depressing trend (Score:3, Interesting)
Every generation is faced with something that it considers a distraction to it's kids from good old fashioned education as it knew it.
Re:Depressing trend (Score:3)
Re:Depressing trend (Score:3, Interesting)
Re:Depressing trend (Score:3, Funny)
Which event, if it ever happens, is likely to lead to poverty and starvation for billions of people. I am glad you'll be comforted by it.
Perhaps then no one will profit when a tree is cut down
Perhaps then you'd better start learning how to live without such things as books or toilet paper right now...
Said it before, will say it again (Score:5, Insightful)
"No child left behind" means no child gets ahead. Sure there are exceptions, but my wife who is a teacher has to teach to the lowest common denominator. It frustrates her because due to "social promotion" she has 7th graders who can't read/write at a 4th grade level. Now imagine being an above average student in that class where the teacher has to talk "down" to and teach to the "slowest" kids. Due to budget cuts (hey, tax cuts don't come for free), after school clubs and honor level classes are being trimmed if not entirely cut so many of the "smart" kids are being taught at a 4th grade level/pace since there are no classes/teachers for them. No wonder they lose interest in school and just start reading
Re:Said it before, will say it again (Score:4, Insightful)
I think I must have lucked out when I was a child. I had a computer programming class back in the mid 80s. I'd already taught myself a lot prior to that. The teacher was able to see that when he'd assign a task for the week and I'd be done in 10 minutes. Instead of forcing me to continue doing the same classwork / homework as everyone else, he would "challenge" me to create programs to do various things like evaluate expressions typed in as strings, and so on. By the end of that year I had created an entire graphical "paint" style application with mouse control, and drop down menus that ran in DOS from 5.25 floppies. Nothing like it was available at the time for IBM computers, I had to use interrupts to get data from the mouse!
Now that this post has drifted off topic, I'll close with a thank you to Mr. Roberts for giving me that time to explore and grow instead of being beat down to the lowest common denominator level. It meant more to me than you'll ever know.
Depressing, or Encouraging? Get used to it. (Score:5, Insightful)
The only question is, how do we deal with this? Do we throw our hands up in the air, say we had a good run, and walk quietly off into the sunset? Do we impose artificial trade restrictions that turn us into hypocrites? (Yes, this is the current tactic. It's already being done. Free trade is great so long as you're more free than the rest.) Our best bet is probably to try to compete better by improving our education system and finding new ways to encourage research. (Read: Overhaul the cumbersome copyright/patent system so you don't need a team of 20 lawyers and a fat bankroll for bribes in order to invent something remotely useful.) So long as we're ahead on the tech curve we'll get business. Unfortunately, other countries can do this too and they just happen to have a lot more people than we do.
Yep. It sucks to be the West right now, but it does give one hope for all the backwards shitholes on the planet. How you feel about all this depends entirely on how selfish you are I suppose. Ask not for whom the bell tolls and all that.
A good trend (Score:3, Insightful)
Re:A good trend (Score:3, Insightful)
This is about turning the non-serfs in the USA into serfs. You can't be a feudal lord, if there is a large middle class, as have existed in the US for a long time now. Unfortunately, those causing all this are hiding in the obscurity.
Re:Depressing trend (Score:3, Insightful)
The US is an expensive country with great opportunities, but people see cheaper prices overseas and think "I should pay less too". So they do.
This has a knock-on effect. In order to compete, retailers have to lower prices, which means manufacturers have to lower prices. If an manufacturer doesn't lower prices, the retailer sources off-shore, because if they don't, the
Re:Depressing trend (Score:3, Insightful)
However, we're at a disadvantage. We have 150 years of unionization and improved working and environmental conditions, not to mention a respect for human rights. If the Chinese had to respect their workers and their rights and their environme
Make yourself worth your pay? (Score:2, Insightful)
Re:Make yourself worth your pay? (Score:2)
Re:Make yourself worth your pay? (Score:3, Insightful)
With outsourcing the education problem deepens because the of the dent in the taxes that support American schools.
I've been watching too much Lou Dobbs. I think I'll go get a hobby.
Re:Make yourself worth your pay? (Score:3, Insightful)
They're laying off some consumers of their own brands and then not passing on any benefits to the rest of the consumers.
Re:Make yourself worth your pay? (Score:4, Insightful)
What's worse is, while a small minority benefit from these policies, not only do they not pass the savings on to consumers, but society in general. The systems that were put in place after the turn of the century (and to a greater extent, FDR) to force beneficence from those who are lucky enough to fall into privilege is slowly being eroded by lower taxation on the wealthy and the elimination of the estate tax -- effectively, we're creating a hereditary oligarchy of extremely rich people that will only become more concentrated as the years progress.
And tho those who hold the erroneous notion that we live in a "fair" society, thus "If I make the money, I should keep the money," I ask you to consider the phrase "It takes money to make money." There is an inherit advantage to having money already, at the starting gate if you will. Lower interest rates on loans, (hell, loans in general), an easier supply of capital to pursue your dreams, better access to quality education -- the list goes on and on.
What cracks me up are Conservatives who think we should reduce programs aimed at all those "lazy poor people" because they haven't done anything to deserve them, yet see no contradiction in the "lazy rich people" who can survive on inherited wealth and never do a lick of work.
Re:Make yourself worth your pay? (Score:3, Insightful)
Except that they're not. I'm not concerned as much about the better access wealthy people have -- who you know and the benefits that incur is pretty arbitrary and the "bitch" part about "life". No, I'm more worried about perfectly legal policies that bend the rules for those with money to make it easier for them to make more money.
Take, for instance, the example I gave about loans. A person who has plenty of equity -- through no act of their own bu
Re:Make yourself worth your pay? (Score:3, Interesting)
Do you see how this works? Initially every improvement results in extra profits. In time, those profits get competed away in a free market. That
Re:Make yourself worth your pay? (Score:5, Insightful)
Paying someone from India one third of my pay would give them a very good standard of living in India.
Maybe we should pay the CEO's their equivalent wages of a small business owner in a third world country?
Better yet, lets go to New Delhi and choose the first ~535 (or so) people off of the street and replace Congress with them. I am sure they will work harder and cheaper!
No really. What is wrong with making a good wage for a good job in your own country? The money my boss pays me gets spent in this country (mostly - I dont drive imports). When I spend money in my own country, it iunvigorates the LOCAL economy, which in turn, give LOCAL people mnore income and eventually spurs demand for more products so my company's CEO can make more money.
This offshoring is the filthy rich big business executive's way of quickly lining their pockets with money so they can cash out quick and retire.
They don't give a damn about the long term.
I am done ranting now...
I live the greatest adventure anyone could want. - Tosk the Hunted
Re:Make yourself worth your pay? (Score:3, Insightful)
The money my boss pays me gets spent in this country...
The money your boss pays overseas workers gets spent in this country as well.
If the U.S. could just give foreign workers paper money and get foreign goods and labour in return, it would be laughing. However, at some point those paper dollars have to come back to the U.S. in exchange for U.S. goods and services. U.S. dollars have no other value than their ability to purchase U.S. goods.
What makes foreigner companies willing to accept U.S. dollars is
Re:Make yourself worth your pay? (Score:5, Insightful)
I agree that as Americans, we are being hypocrites by whining about our own problems if we don't at the same time address the problems of the 3rd world that we allow our corporations to exploit. Isolating ourselves, and focusing only on ourselves and our own needs is exactly what makes us so easy to exploit. There is another reason that we shouldn't allow corporations to take over 3rd world countries, it robs their citizens of the opportunities to control their own destiny. Further, the solution to this problem is not to write our congressman, and it's not inside any one country, the solutions lies in joining together with those who are being oppressed outside our country.
The problem of corporate globalization, as well as it's solution, lies outside the borders of any single nation state. It's time for us to realize this fact.
A deeper issue (Score:5, Interesting)
In 1969, my parents sold a nearly new 3 bedroom house in rural New York state and bought a new 4 bedroom house in a San Diego, CA, suburb for the same price. In both cases he could, as a high school graduate of no academic distinction who held a factory foreman's job, obtain a loan of about 2.5 times his gross pay. His commute to work was about 1/2 hour.
In 2002, in the Bay Area, with a tech masters degree, I'm limited in choice to a one bedroom condo with an 80 minute commute. Homes are available, but only to those with astonishing credit who are willing to live with the fear that comes with a 2% down payment and 'creative' financing.
Spiraling land values should be regarded as a crime, because they force startups to locate away from research universities.
Re:A deeper issue (Score:3, Interesting)
Capitalist defined... (Score:5, Insightful)
Outsourcing also inevitably results in skill erosion here in the US and skill development overseas. For example, if you outsource a software job by lobbing a requirements spec over the wall, just reading that requirements spec gives the vendor a better idea of the sorts of skills and ideas needed to do it themselves next time.
So, the split incentives of capitalism may result in general losses in economic value. That's why the economy is regulated. (Samuelson did not prescribe protectionism, and I don't think that's the right answer in low-skill areas, but perhaps educational subsidies and R&D credits, etc.)
Re:Make yourself worth your pay? (Score:3, Insightful)
Re:Make yourself worth your pay? (Score:3, Insightful)
Easy answer... (Score:5, Insightful)
The corporate mentality of cutting costs to increase revenue and profits is a reaction to the market's demand for lower prices, not the other way around. My $.02.
Re:Easy answer... (Score:2, Insightful)
Quality, Service, THEN price.
Re:Easy answer... (Score:3, Insightful)
You did say quality, service, then price.
Re:Easy answer... (Score:5, Funny)
Good comment but still too expensive.
Re:Easy answer... (Score:5, Insightful)
That's a blanket answer that doesn't hold up to detailed scrutiny. The priority of price, service, quality and support varies depending on what I'm purchasing and what my goals are. For low-cost commodity goods I care more about price than about service. Most people don't care that Wal*Mart have crappy service because they can save a few bucks on toilet paper. I don't want my loaf of bread to cost $20 because it comes with a "free" technical support phone service. But when I buy a computer for mission-critical work I care a great deal about the quality of the goods and the support services that come with it, and price is at the bottom of my list.
One size does not fit all in purchasing decisions. The great thing about a free market is I can choose what criteria to consider depending on my own circumstances and needs. I happen to shop at Whole Foods Market rather than Wal*Mart because that fits my income level and lifestyle, and I'm a fou-fou liberal eliteist. If I was earning minimum wage you can bet I'd be glad Wal*Mart was there to provide me with life's necessities at affordable prices and the quality of the service be damned.
Re:Easy answer... (Score:3, Insightful)
Wal - Mart (Score:5, Informative)
Walmart, by itself, can combat inflation. However, at what cost?
Yes, but money is the almighty metric (Score:3, Insightful)
But the general public will never pick up on this. They are the 5 year olds that are offered 1 oreo now or 2 in 30 minutes and they take the 1 oreo now. That's how the American public will function, and continue to function unless the media drills it into them that it's a Bad Thing and they see the tangible difference in their pocketbooks in a reasonable amount of time.
As usual (Score:3, Insightful)
This is always good to have someone say it is better for our own good to have as many jobs as we can in our own country (I'm from
So we have outsourcing of our running shoes in these paradise islands where the only escape is 6 months of hard unpaid labor. Who think that this will NOT be the case for everything else, including computers?
In Quebec, we have doctors and graduates quitting the place for bigger bucks elsewhere in the country. Everyone says it's best not to but who to blame them when you can get 400K US per year elsewhere and 100K CDN in here.
Same thing
I love thinkers.
Intersenting fact/idea (Score:5, Interesting)
I was reading the english translation of a Japanese business plan (Orient Watch Compant), and the Japanese word for 'outsourcing' was translated into English as "Hollowing-out."
It's an interesting viewpoint: The English word 'outsourcing' imploys that it's just a business transaction - while the Japanese translator used a phrase that has connotations of taking out the core of a business and discarding it.
Perhaps - there's some truth in that idea.
Re:Intersenting fact/idea (Score:3, Funny)
Symbolism from one country doesn't always work in another...a creative writing teacher from Mexico once told me a story about the phrase "Don't put all your eggs in one basket." In Mexico, the word for eggs (juevos) is also a slang term for a man's testicles...so when he heard that phrase for the first time as a boy, he replied "But that's where God put them!"
That has been my gut feeling for a while now... (Score:2, Interesting)
It seems outsourcing costs money and resources as well as saving some. Language, time zone, cultural differences and geographic distances all contribute to the costs. But the resources used to overcome such obstacles are seldom recorded separately, and so do not show up --- leaving the management believing that they have saved money that they have not, in fact, saved.
But it is just a gut feeling.
Misread that... (Score:3, Funny)
I read that as rectalscan. I didn't know they were sufficiently unique.
California agrees (Score:5, Interesting)
They've been saying this in California for awhile [sfgate.com]
It's all in 401k's (Score:5, Insightful)
Tomorrows economy will be servicing the baby boomers with income from their 401k's, and developing IP.
If you think their is trouble now, what happens when social security can't pay what's owed 20 years from now, and the 401k's are valueless.
outsourcing .. yeah, right .. (Score:2)
Some Results Are True (Score:2)
For less socialist countries this impact is lower. Everyone, however, uses government services (federal roads, police/fire officials), so these "fixed" costs need dealt with.
How well these are offset with population growth is the real factor of impact. If the population growth is in the lower
Offshoring still has failures (Score:5, Interesting)
Let's not forget that Dell brought back one of its call centers from India due to excessive customer complaints. I've also read that the lower cost of labor overseas is often outweighed by lack of individual action, time zone differences and culturally-caused communication problems. I've heard from several people in ATSI (a telecommunications association) that some clients came back after getting really poor results from offshoring.
Simply put, offshoring is not as clear-cut as everyone makes it out to be once you take in a lot of intangebles. I don't worry too much about it because, sooner or later, the inflation in wages will make offshoring too expensive to consider. It's already made India much less attractive as the one-time costs are taking longer to recoup.
It's exactly the free market economy.. (Score:3, Interesting)
So, like, maybe it's *not* the best way to run an country...
Re:Flying machine are wonderful in theory.... (Score:3, Insightful)
-russ
Obvious (Score:3, Interesting)
You can either have everybody equal, or "us" better off than "them." It should be obvious that you can't have it both ways!
Re:Obvious (Score:3, Interesting)
But the question is in HOW it evens out. Does it even out by bringing down the average living standard in the US, or by bringing (significantly) up the standard everywhere else? He states that there is no guarantee that such trade has a net advantage to the USA; by similar logic, there is no reason that the process of outsourcing has to drag down the average living standard in the US.
This is a fascin
decades of Propaganda created FreeTrade illusion (Score:3, Interesting)
Samuelson is a reminder that there are lots of economists who think free trade is a scam. But the average American rarely hears from them. Why?
After 3 decades, the Big Money media machine owns many of the ideas in your brain, and owns the public debate. They bought the public debate with 2 billion dollars of foundations and think tanks. See more about the Tentacles of Rage from Harpers magazine article this month. [mindfully.org]
Direct and indirect wage pressure (Score:5, Insightful)
"You have a lot of people, but that doesn't mean they are qualified. That sort of thinking is really generalizing based on the kind of Indian and Chinese people who manage to make it to Silicon Valley."
This may be true now, but Samuelson's argument is about whether the past benefits of global trade will inevitably continue. This has nothing to do with the current state of affairs. When you look at the structural issues, it does seem likely that outsourcing of high-value jobs is here to stay. There will probably be some slowing of the trend eventually -- it's easy for the Chinese economy to grow quickly, because it's "underutilized." But as their economy matures, it will slow down. Of course, by then, they will have taken many more American jobs.
The other issue is that even where there is no direct competition, the low cost of Chinese and Indian skilled labor can depress American wage growth indirectly. Even if your job cannot be outsourced, a general wage pressure is present, and employers will use the *threat* of outsourcing to press employees for more work.
Re:Direct and indirect wage pressure (Score:3, Insightful)
That's true, we have budget meetings, and wages are always the primary concern, never the fat pork projects, or CEO million dollar bonuses, or overpaid vendor accounts. (Which CEO's seem to take jobs at that vendor later...)
The big problem is outsourcing in another country also strips money from the local markets. If you buy all the resources loca
Fast Company article (Score:5, Informative)
The giant retailer's low prices often come with a high cost. Wal-Mart's relentless pressure can crush the companies it does business with and force them to send jobs overseas. Are we shopping our way straight to the unemployment line?" : http://www.fastcompany.com/magazine/77/walmart.ht
Here's what I don't get... (Score:5, Insightful)
Suddenly, globalization cheerleaders are saying that businesses HAVE to be allowed to ship jobs off to overseas countries because if they can manufacture their widgets for pennies on the dollar, that results in lower product prices and more consumer spending, etc etc.
And nevermind all the people that get laid off in the process.
So why the assumption that suddenly companies have to be able to shaft their workers if they want to stay competitive? Virtually all the history of manufacturing in the world is the history of innovative PROCESSES. From the printing press, to Henry Ford's assembly line, to Wal-Mart's inventory tracking. One company comes up with a really great new way of doing business, other companies in other fields pick up on it, and everybody REALLY wins.
It seems to me that allowing companies to outsource and offshore and cut wages whenever they please is a cheat. It's a bandage. No one learns anything, no new processes are invented, there is no ACTUAL progress.
There's just a competition to see who can stream the most money into the most poor countries, often, at the same time, propping up repressive governments *cough*china*cough* that are responsible for the huge poverty (and ergo, low manufacturing costs) in the first place.
For this reason, I have no problem with so-called "protectionist" policies at all. Instead of allowing business to take the quick, easy, and ultimately destructive path, they have to actually INNOVATE - as they have so many times in the past - and come up with new ways of doing business. THAT, to my mind, is putting your faith in business.
Otherwise it's just allowing them to find creative new ways to reinvent feudalism.
Re:Here's what I don't get... (Score:3, Insightful)
In the case of offshoring the benefits are distributed more widely than ever before, so it's not surprising that some jingoists aren't seeing them (they only look at their home country anyhow). But even the jingoists have to admit that having
Re:Here's what I don't get... (Score:3, Insightful)
-russ
Other Advantages of Outsourcing (Score:3, Interesting)
1) Why is an American job better than an Indian (or other foreign country job). From a global perspective, the best outcome is a maximization of jobs and real wages. Sure Indian programmers get paid $10/hr (well I do too and I work in the US in IT but that's beside the point), but $10 buys more in India.
2) Trade is bi-directional If we were to restrict outsourcing of labor, other countries will may complain to the WTO resulting in sanctions. Even thinking as a completely selfish nation, I do not think the sanctions would be worth the slight boost to productivity.
3) Some companies need outsourcing to survive Numerous company CEOs have reported that without being able to outsource some of their IT section, their company would've gone under. In essense, the company outsources maybe 300 lower skill IT jobs to save 1000 higher skill IT jobs in the US.
The problem can be fixed (Score:5, Insightful)
Re:The problem can be fixed (Score:3, Interesting)
Listen, I'm pro-outsourcing, pro-globalization, and very anti-Bush. Why? Here's a quote from the article:
DUUUHHHHH! (Score:3, Interesting)
DEAR GOD! What will we do about an economy now?!?
The outsourcing of high-paying jobs (heck, even low-paying jobs) does nothing but "appear" to help the economy in the short term because people still have savings to purchase goods at "reduced prices." But once that money dries up, it doesn't matter if that laptop is $4000 or $40 because people will be spending their money on catfood to survive.
Ugh... really... we need to move AWAY from a consumer-driven economy.
The Next Big Thing (Score:3, Insightful)
Screaming bloody murder about outsourcing is just saying you want progress to stop. You don't want the rest of the world to catch up, you want to stay in your sweet spot and not have to learn any new skills. I for one don't want our current state of technology to be the end of all progress. Think. Invent. Expand. Let the other countries do the repetitive programming and design jobs.
I believe this in spite of having been unable to find a permanent engineering job for two years. It just that no good thing lasts forever, so you start looking for the next good thing.
Waltmarting America (Score:5, Insightful)
Today the globalization hounds must beat the drum that globalization is good. Innovaton is lost and companies cannot figure out how to make a product or service more valuable so they make the cost of providing it cheaper.
In 1820 transitions occurred over time. To become a "global player" it took literally decades to move an industry to that level. During that time the industry workers transitioned. In current examples, the transition will occur in less than a decade. With Y2k,and the internet we built the infrastructure to make transition nearly immediate.
Now, add countries that would like the US work, but do not share US values. For example, India while more than outsourcing jobs, runs one of the most protectionist regimes in the world. Try, as a non-Indian to start a business and you will be kept out at the government, economic, and even social level.
The idea that we should not protect ourselves against such countries is ludicrous. This is like saying we should not stop terrorists because, by us not being terrorists they can see the benefits and will become outstanding citizens. (What drugs are these people taking?)
In the end, we are replacing 65K+ jobs with 30k+ jobs. Samuelson is correct ""If you don't believe that changes the average wages in America, then you believe in the tooth fairy," It does not take an economist to figure out that with only half the wages, the impact is on the entire economy. Two income families that bought two cars, can only afford one, or certainly not two new cars. Home buyers that had combined incomes of 130k, now have 70k to use as their financial base.
Unqualified foreign workers (Score:5, Interesting)
The problem is that management doesn't seem to care if they're qualified or not. If they can save a buck (or many bucks in this case) they seem to overlook the qualifications.
Some of the jobs being offshored would have lots of requirements stated in explicit detail if advertised here in the US (such that it would be virtually impossible to find anyone who has all of the required skills) , but when they're sent to India those requirements tend to get overlooked... "You've got a BSCS from Bangalore Uni - you're hired!"
The thinking on management's part seems to be that they can make up for lack of technical skills by throwing more (cheap by US standards) bodies at the problem.
Eventually they'll realize that this doesn't work (and anecdotal evidence suggests that this is already beginning to happen).
How surprising... (Score:3, Funny)
My unemployed IT friends; Mr. Smith, Mr. Schultz, and Mrs. Mackey; do not share in their optimism.
Thoughts on internationalization over coffee. (Score:4, Insightful)
-- Greg
Economic theory/Political reality (Score:4, Interesting)
The political reality is that companies use their clout with the government to create firewalls between countries so they can price their goods differentially in each country. Witness the FDA getting hot and bothered by people importing their drugs from Canada, and of course our long time favorite here, DMCA and DVD regionalization. The result is some people get the benefits of globalization and the benefits of protectionism combined; others get the costs of each combined.
It's just goes to prove what my old uncle Ivan, who was a cynic first and radical second, used to say. "Kid, nobody believes in capitalism. Nobody believes in socialism. It's socialism for me, capitalism for you!"
A healthy (large) society must support diversity (Score:3, Insightful)
Human beings have diverse sets of abilities, let alone inclinations, that support our complex social structures. Not everyone can do everything themselves, especially as society has grown more complex, and so we've developed individual specializations that allow complex social structures to be supported, with all the benefits these supply. Doctors can be such good doctors because they don't have to tailor all their own clothes, let alone grow and harvest the cotton, sheep, and oil wells they come from.
And this is not just reflected in the "elite" we all envy. There are extroverts who want to be face to face 24/7, and introverts who would like a private office, or to work by themselves out in a field. There are those who are extremely verbal, and those who are extremely visual. Those who are a whiz with a contract, and those who can keep even the most decrepit machine "alive" almost by intuition.
As we shift jobs over national boundaries and overseas, we disrupt the balance of work within a society. The jobs move, but the people are not free to follow them. Further, we essentially sell out the rights of people performing those jobs by moving them to locations where those rights don't exist. We've all heard about the labor practices in China and many other countries where manufacturing has grown. Even if a U.S. manufacturing working could move there, there would be strong disincentives.
With all this talk of "retraining", I become frustrated. Even were it to be effectively supported, not everyone is cut out to be the banker or lawyer that some think this country should become full of. 30 years ago, we needed a lot of manufacturing capability here, and people who enjoyed doing that. 50 years ago, the family farm was still a mainstay of society.
These aren't just a matter of training. They are also a matter of basic personality (whatever the details of defining such). And such things don't just change overnight, or in the span of one generation. There are people of a different mindset borne into this society who, by our very laws, deserve a place within it.
It's on the collective backs of all of us that the "elite" have become the elite. Some of them may be very gifted, in ways that are ostentatiously rewarded. But they didn't achieve this glory on their own.
And yet, we divorce ourselves of much of the infrastructure supporting those less "glorious". And we expect this to have no serious repercussions? It is a breach of social contract.
And before you say "who cares", laissez faire, or Darwin, see how long you survive when the garbage piles up into a health hazard. Or when those with no future decide that yours has been achieved at their cost. With nothing to lose, things can get very ugly. As they have in the past.
Or, see how long it is until the rest of the world realizes they don't need American bankers and American lawyers. As their social structures solidify, especially their legal codifications, ours will become superfluous.
A healthy society is one that is sustainable. What we are creating is not.
The world will get by, in the long run, but this country may become, in the meantime, a far different place, and one far less reflective of the ideals too often used as a blind in selling this shortsightedness.
Redistribution of poverty (Score:3, Interesting)
If the base is high, say between the US and Canada (not Mexico yet,) or across most of the EU the changes mean that "A rising tide lifts all boats." Economies progress to a higher level by building on what came before.
If the base is low, say between India and the US, the flow is the same, (economics as thermodynamics) but the changes means that you get burnt by the __rate__ of the transfer.
In effect, you have a redistribution of poverty, not one of wealth.
The current immigration policies of the US (and Canada and the EU for that matter,) albeit prejudicial, flawed and exclusionary means that the __rate__ of the transfer is occuring at a tolerable pace.
The current phenomenon of __foreign__ out-sourcing (out-sourcing ''per se'' is not is a major problem since the expense base is directly comparable and commensurate,) is the cause of all the arguments.
The comparative advantage of some labour costs is __too__ great because you're comparing Apple to oranges.
The annual GDP PER CAPITA of Malaisia or India is so much lower than the US (or Caqnada or EU,) GDP PER CAPITA that instead of conferring an advantage, (which it ''does'' do in absolute dollar terms,) it leads to a reverse flow.
The wealthy get poorer instead or the poor getting richer.
I find it amusing that our politicians, who are so concerned with competing on ''a level playng field,'' are more interested in squeezing the money to be made from the difference between the poor and the rich.
Outsourcing labor is a technological advance (Score:3, Interesting)
I was looking forward to reading his explanation (especially since I disagree) but it isn't there. The article /. linked to is just a tease. It's an article about an article, with the meat apparently appearing in something "Journal of Economic Perspectives". Bah. Come back when you're ready to play.
So without any new input, I'll just jump into the flamefest, and say that as an economic "problem", outsourcing is identical to technological advancement. If a computer takes someone job, most Slashdotters would cheer. But if that replacement's name is Apu instead of Bender, suddenly people are screaming. I ask: WTF is the difference?
And outsourcing labor is not only equivalent to a tech advance -- it actually is one. Before you had comm technology so that an Indian could take a tech support call from an American, before you had transportation infrastructure that could move goods at high speed over vast distances, service and manufacturing couldn't be outsourced. But now it's possible. The tech advance is that somebody looked at a spreadsheet and said, "holy crap, we can actually do this now."
Protectionism is ludditism. Yummm.. now that's some good flamebait. :-)
Re:globalized economy. (Score:5, Insightful)
Re:globalized economy. (Score:5, Informative)
Are you kidding? So far, my exposure to outsourced crap has been just that, crap. Not worth the beans we paid for it.
We could hire bums off the street ( fresh out from giving blood and buying booze ) to code better than some of the stuff flowing out of india right now.
Re:globalized economy. (Score:5, Informative)
His statement is quite a bit mroe subtle than you can put in "simplified terms." Basically, his point is that while the traditional theories of comparative advantage hold, it is possible that certain types of trade can cause you to loose your comparative advantage.
Makes sense, but I'll reserve judgement until the majority of economists have had a chance to weigh in on it.
Re:globalized economy. (Score:3, Insightful)
Re:globalized economy. (Score:3, Insightful)
Now, you are attacking me, do you realize that? I am suggesting that there are scenarios where waiting to understand things fully are dangerous. I don't go as far as saying "we can't wait" which I don't really believe myself. But it is a worry, all the same. So, your entire argument hinges on this obviously being a situation where waiting could never be harmful (the only situation where my argument cou
Re:globalized economy. (Score:3, Insightful)
Re:globalized economy. (Score:3, Insightful)
Re:globalized economy. (Score:3, Insightful)
Umm... no. That would be a stupid thing and Samuelson isn't stupid.
What he actually says is that under certain conditions outsourcing can lead to a net economic loss for the USA. This net economic loss could come about through the US losing its innovation edge as information and know-how spreads around the globe.
Note that this is a very close relative of one of standard arguments against open source: free software, often dev
Re:globalized economy. (Score:4, Insightful)
My Best analogy for true globalization is osmosis or diffusion. Currently America has an extremely high concentration of money. Without some way to keep that money in the states, the money will diffuse out across the world to the point where we are at a more equal distribution.
There simply isn't the need for highly skilled workers across the entire world to make the impending situation possible. If every country across the world had the same distribution of labor jobs, and highly skilled jobs as is the case in the united states, then things might work out so that an even distribution of money would be positive for all. Currently, we are simply over saturating the markets with labor. Everyone is competing for the jobs that make products for the United States. Everyone is trying to get our money. We have the biggest pot of money and so thats where the market is. If current trends continue then there will be true diffusion.
This is only mildly good for everyone else. They will all have slightly more money, but there will come a poitn where everyone is equal and there will no longer be this enormous pot to draw from. Whats worse is recession. Currently, everything in the United States is horribly inflated. What costs a dollar here costs significantly less in the countries that want our business. To be globalized and competitive we nee dto change that. We will never be able to inflate the rest of the world to be equal with us, instead, we must completely deflate the US economy to be equal with the rest of the world. It wouldn't work, and hence, recessions happen. The amusing part is that the economies of the rest of the world would go down with a US economy collapse. Its all rather amusing, and its bound to topple. I don't think there is much anyone can do to stop it short of a world-wide effort to equalify the global system, which will also never happen. So, everyone sit back and watch the show, and hope it holds off long enough for you to be out of the mix.
Re:globalized economy. (Score:5, Interesting)
Is the idea of a person even a concept in your theory of economics? Or, in your theory, are people invisible, with the focus on profits, raw materials in one end, and manufactured goods on the other side? It's something to think about, when a theory allows for certain things to remain invisible, it tells you a lot about what the creator of that theory thinks is important. That's why our economy is said to be in a "recovery" while most people continue to do worse. Our economists don't have a concept for people in their theory, the measurement is of profits. So, if profits are up, but lots of people are starving, then it's still a recovery. This should give you insight into what classical economics is all about. It's a theory designed to decrease one's understanding of what is really going on.
Take a look at how they view corporate workplaces. According to them, raw materials go in, and consumable goods come out. They fail to notice that people go in, and people come out. People come in energized, they go out, exhausted. They might come in with two arms, and come out, perhaps with one. Economies transform people, and mold and shape them. They might come in humble, and ready to help the world, and go out the other side, a jaded, arrogant CEO. The problem is, if our concept of economic institutions doesn't measure the effects of those institutions on people, the air, the envionrment, etc., then our theory will hide all of the negative effects of corporations. Not to mention, that if we fail to take into account all of the effects of our production institutions, then prices will be grossly distored.
What exactly does a globalized economy mean, when people aren't allowed to usurp barriers that corporations can pass through like thin air? Can we call that a globalized economy?
Re:fnord! (Score:5, Interesting)
I know you aren't being serious. But, setting that aside for a moment, if I really were effective, more would be happening than merely getting flamed on slashdot. There's plenty of history that shows what happens to people when they are too effective, as in Martin Luther King, Malcom X, etc. Part of the solution to this is of course realizing that we need to avoid the cult of personality that gives one leader all the power. That's why people like Chomsky can't stand being given all the credit when he gives a lecture. The only reason people like Noam can do what he does, is because large groups of people support his work, and he has repeated that fact over and over. Understanding this is part of how we fight the illusion that we need great leaders (or the US military for that matter) to come save us.
Also, the majority of people are already discontent. There's a reason you get slow service at your local McDonald's. They know they're getting screwed. They just haven't figured out what to do about it, yet.
Re:globalized economy. (Score:5, Insightful)
The man is in his late 80s. He's been a professor at MIT for ~60 years. He's written the book (now in it's 100000th edition) that is the standard for economics.
Of course the man is biased.
Re:globalized economy. (Score:4, Insightful)
Soviet socialism was unable to sustain its unbalanced military economy on top of a giant energy hungry populace filled with ethnic and other divisions, and millions of political deaths. Other socialisms, like Germany, Canada, France, England, and most other industrialized countries, have fared quite well. Growth, citizen satisfaction and stability are all high. It's not quite the crock you'd like it to be.
Re:globalized economy. (Score:5, Insightful)
I'm still wrestling with how it actually does compare.
Re:globalized economy. (Score:4, Insightful)
Basically the argument comes down to that of altruism. If you think that helping everyone helps you, then globalization is good, if you think you will be better off by hoarding or protecting your assets from others, then it is a threat.
IANAE(conomist), so I may have missed some of Samuelson's nuances. But he is just seeming to point out to some of the rah-rah outsourcers that there may be some negative consequnces to the one doing the outsourcing.
Re:globalized economy. (Score:5, Insightful)
US workers unemployed by offshoring make 0, lowering the average wage.
US workers finding new employment find the glut of unemployed workers (low supply + high demand) and the low wages in India devaluing their wages. Again, the average wage is also lowered.
US workers with existing employment find their wages frozen, their benefits cut, their hours longer and more stressful (to both compensate for the extra work of downsizing, and for goofs from offshore workers), and their job security nonexistent.
The only "winners" are the CEO and his cronies whose salaries go up, their benefits go up, and laughing is heard in the vicinity of the bank. Note that few if any of these people are US IT workers, or do much work at all.
As for as cost of living goes, that depends on inflation. With high gas prices, that will be going up, up, up, and the cost of living will tag along.
So US IT workers will "win" high cost of living, low wages, debt (to make ends meet), savings and credit consumed by the unemployed, and bankruptcy.
But if it makes you feel any better, those CEOs won't make off like quite the bandits they want to be. You see, offshore workers have done a great job learning the business of offshoring US companies. So good in fact, that IBM consulting, for instance, is now having to compete for business with their own offshore workers who have formed a nice little consultant company of their own. The fun thing is, the Indian consulting company can of course, under bid IBM. Gotcha!
Unfortunately, for us IT workers in the US, that is only going to drive wages lower as companies like IBM are forced to compete with Indian consultant companies on their way to the bottom.
The only way off this nightmare escalator? Stop treating employees like costs to cut, and start treating them like your company's most valuable resource (remember Human Resources?). Then you can hire quality people, pay them what they are worth, and compete on quality. Then everyone is a "winner"!
Don't think quality works? Who survived the fall 2000 PC crash the best, with the fewest layoffs, a quick return to profitability, and billions in the bank? Apple! Apple kept their prices up, focused on quality instead of the sub $500 PC, and worked feverishly to bring out OS X to build a future. The rest of the companies slashed workers by the tens of thousands, and huddled in their storm shelters. When they came out, the only thing left standing and thriving was the Apple tree, laden with fresh, high quality, fruit.
"No one's going to die, mister. Mothra's going to come and save us."
Taiki Goto, "Mothra", December 14, 1996
(Released in Japan six days before Apple's surprise announcement of the return of Steve Jobs.)
Re:He was wrong before, and he's probably wrong no (Score:3, Interesting)