President Defends Global Outsourcing

mytrip wrote to mention a New York Times article discussing President Bush's trip to the Indian subcontinent. There, he urged Americans to welcome global competition for their jobs. From the article: "Mr. Bush, reiterating a theme of his trip, strongly defended the outsourcing of American jobs to India as the reality of a global economy, and said that the United States should instead focus on India as a vital new market for American goods ... 'The classic opportunity for our American farmers and entrepreneurs and small businesses to understand is there is a 300 million-person market of middle class citizens here in India, and that if we can make a product they want, that it becomes viable,'"

Re:Bush Whacked.

[guacamole]

Based on this, you're not telling us the whole story. Yes, a relatively small number of people will lose their jobs. At the same time, the vast majority of Americans are benefiting from a higher standard of living due to lover priced consumer goods. Also millions of Chinese and other East Asian poor are benefiting from the jobs created in their export oriented economist. It's a tough world. Can you give me a reason why a textile worker in USA should have a job when there is someone else willing to do this work for 10 times less?

Bush just doesn't get it

[pammon]

I remember during one of the Bush / Kerry debates, the question was posed "What do you say to someone who lost his job due to offshoring?" Bush's answer was "We're going to give you a scholarship to send you to a community college, so you can get an education." What a terrible answer - as if the problem with these people is that they don't have enough education! That really drove home the point for me. Bush doesn't understand this problem at all.

(Kerry, FWIW, talked about eliminating some of the tax incentives that encourage companies to offshore. At least he understood the problem and had an appropriate, if timid, response.)

Re:Editors Shouldn't Bitch, Their Own Company Does

[PygmySurfer]

Because everyone agrees 100% with everything their employer says and does, right?

Re:Bush Whacked.

[Johnboi Waltune]

It's a tough world. Can you give me a reason why a textile worker in USA should have a job when there is someone else willing to do this work for 10 times less?

"Doing the work for 10 times less" is a fallacy if the cost of living in the other country is also 10 times less. The only people who come out ahead in your scenario are the textile factory owners.

Re:Bush Whacked.

[Vicissidude]

Please keep in mind that the Democrats are, much like the Republicans, funded by the very corporations and wealthy individuals who gain the most from outsourcing. Voting for them is basically a vote for the status quo.

That's a rather deceptive statement. Certainly, Democrats get a good chunk of the corporate funding. However, the vast majority of that funding goes to Republicans.

This form isn't part of a proper global economy.

[ShyGuy91284]

I agree jobs being done overseas is part of a global economy. But the current state of outsourcing is fundamentally no different to a company in the US then clothing makers having their clothes made in sweatshops overseas. Moral issues aside, that's ok, because we have moved from being a manufacturing based economy to an information based economy. But with them starting to move information based jobs overseas, what can we do now other then find jobs that might be under our ability? For outsourcing to be ok as part of a global economy, it would be done on the basis of skills. Country foo has better programmers then us? They should get our jobs then. It's as simple as that for a global economy. I have no idea about the quality India's IT skills, but I'm assuming they are no different then those of someone in America who worked hard to get their skills. And at least in the area of tech support, outsourcing is clearly hurting the quality of service. It seems that if I call tech support for anything, I can clearly tell if it has been outsourced due to poor email grammar or not being able to understand them. True, some may have been outsourced and I haven't noticed, but if someone can't effectively communicate with customers, someone else should have the job. And I have had no problem understanding professors with accents when others have complained, so you know it must be bad.

Re:the reality is...

[HardCase]

You're singing the same tired refrain that we've been hearing for the past 30 years.

Year Real GDP (billions of 2000 dollars)
1970 $3771.9
1971 $3898.6
1972 $4105.0
1973 $4341.5
1974 $4319.6
1975 $4311.2
1976 $4540.9
1977 $4750.5
1978 $5015.0
1979 $5173.4
1980 $5161.7
1981 $5291.7
1982 $5189.3
1983 $5423.8
1984 $5813.6
1985 $6053.7
1986 $6263.6
1987 $6475.1
1988 $6742.7
1989 $6981.4
1990 $7112.5
1991 $7100.5
1992 $7336.6
1993 $7532.7
1994 $7835.5
1995 $8031.7
1996 $8328.9
1997 $8703.5
1998 $9066.9
1999 $9470.3
2000 $9817.0
2001 $9890.7
2002 $10048.8
2003 $10320.6
2004 $10755.7


Detect a trend?

Re:Good.

[qwijibo]

If you couldn't make money from the labors of others, there would be no employees. The only reason to have employees is that they provide more benefit than the expenses incurred. Outsourcing occurs because it's possible to get the same benefit and lower the expenses.

United States Of Feudalism: +1, Helpful

[Anonymous Coward]

It will be interesting to see much the machinations of the BushCo crime syndicate will be revealed to the 'Merican People.

BushCo is
Al-Qaeda [wnymedia.net].

News video clips reveal Bush dynasty connections to United Arab Emirates

WNY Media Network has a recent news video clip compilation that reveals the close connections between the Bush family and the United Arab Emirates. No wonder Bush is turning a deaf ear to the concerns expressed by Democrats and Repulicans.
President Bush's family and members of the Bush administration have long-standing business connections with the UAE... Bush defying his very own party leadership and his party in defending the Dubai port deal... The oil-rich United Arab Emirates is a major investor in The Carlyle Group, the private equity investment group where the President's father once served as senior advisor, and is a who's who of former high level government officials... Just last year, Dubai International Capital, a government buyout firm, invested in an 8 billion dollar Carlyle fund. Another family connection, the president's brother, Neil Bush, has reportedly received funding for his education software company from UAE investors. Then there is the cabinet connection: Treasury Secretary John Snow was chairman of railroad company CSX. After he left the company for the White House, CSX sold its international operations to Dubai Ports World for more than a billion dollars.

Hunger in the US

[spun]

Here's a link to a USDA report on hunger in the US. [usda.gov] Unfortunatly, it is on the rise. 11.9% of US households suffer from food insecurity, while 3.9% suffer from hunger. That's about 11 million people. But go on thinking everyone here is fat and happy, if that helps you sleep easier at night.

Iam in India

[Anonymous Coward]

and I am the head of an outsourcing firm. Its not my firm, Iam just another employee. Prior to my present assignment I used to work for a large multinational corp. My dilemma is this, I ve been conducting interviews for trainees in this firm. There is complete realization amongst top management that the salaries we are offering these trainees are worth duck's feathers. I ve been stuck here in this firm for about 2 years now looking for ways to escape and let my conscience be lighter. The money is coming indeals from all over the world, and Iam responsible for some of these deals. What I am amazed at is how far the greed goes. I don't see an end to this greed. There will always be a smaller margin that can be squeezed. When does the milking for profits stop and humanity begin?
I completely empathize with people in the US who are at the receiving end. But somewhere most of us (even the better paid ones like me) need to realize that its humans we are dealing with and put an end to absolute exploitation. Iam tired looking for jobs and praying. I'll take a salary cut than see these kids go through this shit so early in their careers. Despite what they might tell you, most Indian workers go through hell with their employers.

I agree with him on this issue

[jocknerd]

I think the man should be impeached for all his lies, but at least on this issue, I agree with him. Globalization is a reality. Adapt or get left behind. Read Tom Friedman's book, http://www.amazon.com/gp/product/0374292884/qid=11 41416047/sr=2-1/ref=pd_bbs_b_2_1/102-0508254-23673 29?s=books&v=glance&n=283155 [amazon.com]The World is Flat: A Brief History of the Twenty-First Century

Re:the reality is...

[bstarrfield]

GDP is a pretty damn poor measure of economic peformance. GDP is a measure of aggregate economic activity, with no description of how that economic activity (income) is spread out amongst the population. Not to mention that it doesn't show how income is produced - is a service job at Wal-Mart as good for our economy as a job at GM producing cares? There are far more problems with using GDP as your golden measure.

What has effectively happened in our economy- and you probably know this considering you spat out a trend from 1970 to 2004 is that real income per person has remained fairly flat. In other words, the economy has grown but the normal worker has not seen the benefits. Go read Krugman over at the NY Times. Or better yet, read the source material Where did the productivity go? [nber.org] which describes what's happened to our economy.

You should damn well listen to the refrain and understand the numbers - something is going seriously wrong in America. The middle class is falling apart under increasing costs (college, health care, no pensions) while the absolute top has received nearly all of the benefits of outsourcing, increased productivity, and the last thirty years of economic growth.

Lyndon Johnson and Brown and Root

[maynard]

Brown and Root was a small construction company in southeast Texas formed in 1914 by Herman Brown with his brother-in-law Dan Root. Mr. Brown was a conservative and staunch opponent of the New Deal when he befriended a congressional staffer by the name of Lyndon Johnson in the early thirties. Johnson was ambition and wanted up the ladder from a staff position to an elected official. Herman Brown made that happen. With a lot of money. In exchange, once Lyndon won a seat in congress, he arranged for Brown and Root to build a number of public projects such as the Marshall Ford Dam, and the Naval Air Station at Corpus Christi.

Lyndon wasn't much for house debate, nor was he a skilled lawyer, so writing and pushing through legislation was particularly difficult for him. Which for a congressman is a pretty serious drawback. But Lyndon was a big - physically imposing - man. And he had access to a lot of money through his connections at Brown and Root. So pretty soon Lyndon was passing contributions around to various Democratic congressmen in threatened races throughout the country. Because of this Lyndon grew very powerful in a very short time - powerful enough to attempt a run for Senate only two years after having won election as a congressman. He lost that first bid, but within a few election cycles large numbers of congressmen owed their seats to his arranged donations. Lyndon had the choice of committee seats at his disposal, and quickly became close friends with then congressional leader Sam Rayburn.

But Lyndon still wasn't satisfied. He wanted to be a Senator. So off to his friends at Brown and Root asking to finance a new election bid for Senate. This time he won, but only because he cheated. Didn't matter. Once again he climbed the ladder from junior Senator from Texas in 1948 to minority leader in a single six year term (the Democrats lost the senate majority during the election of '52). He did this through funneling corporate contributions, much of which came from Brown and Root.

Of course, we all know how Lyndon Johnson wound up as President. He was chosen to be JFKs vice presidential nominee in order to shore up the southern vote. Nobody expected him to have any power in that position. But JFK was assassinated in Dallas Texas on Nov 22nd, 1963 and soon thereafter Johnson assumed the Presidency.

Who was there right behind him scoring military contracts left and right? Brown and Root. Soon to be named Kellog, Brown and Root. And then soon thereafter to be purchased by Halliburton.

We all know who Halliburton is, don't we? History sure is a strange thing...

See the works of Robert Caro [robertcaro.com] for a detailed history of Johnson and his connection with corporate financing. He was arguably one of the founders of this whole cross state campaign financing fiasco.

Re:Bush Whacked.

[cartman]

You've obviously never looked at the label on the CPUs (I've got both Intel and AMD chips that have "Made in Taiwan" or "Made in China" stamped on them). You also apparently don't know that Boeing has a plant in Bejing that makes wings, tail sections, cockpits, and seats. You don't seem to understand that most of our fabrication equipment now comes from China, that IBM is now owned by Lenovo (a Chinese company), that HP has moved its manufacturing overseas, or that Microsoft now does most of it's coding in Hydrabad. You also apparently missed the news story last week that the United States now exports so much food that we only have a two week supply for our own people. NONE of this is profitable anymore.

I realize this conversation has already gotten silly, but I feel compelled to respond...

Nothing you said was correct. AMD has two fabs--one in Texas and one in Germany. Intel has >20 fabs all around the world but a large number of its fabs are in the US, the vast majority of its employees are in the US, and most of its high-paying jobs are in the US. The vast majority of Boeing manufacturing takes place in the Northwestern United States. HP has moved only a portion of its manufacturing abroad, and almost all of its employees are in the U.S. Microsoft has <10 percent of its programmers abroad. Lenovo bought IBM? BWAHAHAHA apparently you know nothing about those two companies--IBM is vastly larger than Lenovo and is probably larger than any company in China. Lenovo bought the laptop & desktop divisions (not even x86 servers) which was ~2% of IBM's business, and IBM sold it because it was the least profitable part.

You also apparently missed the news story last week that the United States now exports so much food that we only have a two week supply for our own people. NONE of this is profitable anymore.

The US has never stockpiled food for its own people. It has nothing to do with exports--food is perishable and stockpiling it is expensive.

YES all this trade profitable--do you think companies outsource because they anticipate taking a loss from it?

Not as long as OPEC still sells it's oil in dollars or as long as the New York Stock Exchange is still willing to sell American businesses to foreigners- there's plenty they want to buy.

You mean foreigners are willing to export things to us, while importing nothing from us, in order to make use of our paper currency to trade between themselves? If so we should print dollars for export. Apparently, foreigners are willing to give us products for free ("flood our markets") with cars and computers in exchange for little slips of paper that they apparently never intend to redeem...

And what exports would those be? All of your examples except for food are made in China and India.

The United States exports ~$1 trillion in products anually, including (but not limited to) the products I listed. For comparison, all of the countries in the European Union combined (population 460 million) have exports of about ~$1.4 trillion.

Re:Comparative advantage, not surplus.

[cartman]

Median income has nothing to do with minimum wage for basic industrial tasks. Also, PPP is a very tainted figure for this. The cost of a company to make something does not depend on the purchasing power of the wages they pay. The non-PPP figures are the only ones that matter for someone that wishes to determine the cost of doing business. PPP only matters when they want to buy something, not make something.

My original quote claimed that the 100x figure is incorrect both for PPP and non-PPP adjusted figures.

And the non-PPP numbers for median are about 40,000 vs 1300 (I'll let you guess which is which). That's over 30 times. It may not be exactly 100 times, but it is only 1/3 the 100, but is 5 times your difference, so he's more right than your PPP numbers.

No. The raw median wage in China is almost $2,000 and the figure for the U.S. is ~$33,000. That's ~16x. None of his figures were closer, since the figures he cited were completely incorrect and the figure I cited was correct (whether it was PPP-adjusted or not).

True, the unadjusted wage is used to determine whether outsourcing will be profitable. But it's the unadjusted wage of the potential workers in that foreign-owned factory, and not the median wage for the country, which matters. In fact, the PPP-adjusted figure probably understates the case.

Bear in mind that the median wage you cited was for China as a whole, which is very deceptive since there are tremendous wage differentials between different regions in China. Almost all of the the factories producing goods for export are along the coastline where Chinese wages are almost 3x higher than in the mainland (regulations in China prevent labor mobility). It's those workers, the coastal workers in the industrialized areas, that Americans are competing against--not peasants on collectivized farms.

Note that Chinese laborers in foreign-owned factories typically make >$1/hour (NON-PPP adjusted) which is nowhere near 100x as much as an equivalent American unskilled laborer.

Furthermore, programmers in India often make the equivalent of >$20,000/yr (NON-PPP adjusted) which is nowhere near 1/100th what an American programmer makes--more like 1/4th.

Again, we must compare American wages to the wages of those Indians he'll be competing against. Obviously a programmer isn't going to have his job outsourced to an Indian gravel-maker who works by hand, or an Indian farmer who uses a hand-plow. The American programmer won't have his job outsourced to the 99.9% of Indians who can't even program a computer, to say nothing of the >40% of Indians who aren't even literate.

Equivalent laborers in China or India earn more than 1/15th what their American counterparts earn, in raw (unadjusted) terms.

Actually, as I think about it, the US has a much greater percentage of wealth distributed through investments and other non-work activities. It could very well creep up to the 100x figure mentioned, just using the globally published and accepted figures, though I don't have enough time to run through them all and first glance shows you to be way off from the reality of the free labor in China.

No. I'm quoting median wage statistics and not per-capita GDP, therefore no adjustment is required for investments. (Not to mention, median income wouldn't much be affected by investments anyway). The median wage for a Chinese laborer along the coast who works in foreign-owned companies is closer to 1/10th what an equivalent worker makes in the U.S.

though I don't have enough time to run through them all and first glance shows you to be way off from the reality of the free labor in China.

No. Labor is not free anywhere, even in Bangladesh. Even if a laberor were property (i.e. a slave), still his labor wouldn't be free insofar as the slaveowner would have to pay for his sustenance and the sustenance of his pro

Not entirely true

[willisbueller]

Lamborghini - Owned by Audi (not American)
Maserati - Owned fully by Fiat (not American)
Just thought I'd point it out. The American Big 2 (as the 'third' is now owned by Germans) are also dying a slow painful death.

/Anyone else seen the 2006 Challenger concept? moly. Go Germans!

Back to the rest of your post. There hasn't been a massive capital flight from Europe (or anywhere for that matter) to the States, in fact it has been quite the opposite, hence the dollar dropping against everyone else so rapidly. I'm not sure how anyone can justify this deficit as ok. It is short-sighted suicide. Unless of course this Iraq war seriously pays off and keeps up swimming in oil for longer than the rest of the world. But from how pissed off the locals are (in Iraq) I don't think it's going to provide us with much.