Outsource the work of our economic advisers

seattle times ^ | February 19, 2004 | Froma Harrop

[dennisw]

Outsource the work of our economic advisers

I read that my first job after college is being outsourced to India. Reuters Ltd., the wire service, is hiring workers halfway around the world to report on American companies' earnings, dividends, oil discoveries — anything that could move a company's stock price. Reuters will now pay Indians a fraction of what it was spending to employ Americans doing my old job.

That's the wave of the future, we are told. Skilled jobs are pulling up anchor and sailing off. Computer-programming jobs have already left by the thousands. Radiologists on other continents are reading our X-rays and CAT scans.

Intel CEO Craig Barnett says that approximately 300 million educated people in India, China and Russia can "do effectively any job that can be done in the United States." Bear in mind, there are only 144 million jobs in America.

I offer no easy plan for slowing the trend. But I'll darn well not celebrate it.

Last week, N. Gregory Mankiw, chairman of the president's Council of Economic Advisers, stated that outsourcing American jobs was good for the country in the long run. A chorus of economists and financial pundits sang hymns to his wisdom.

A noble exception was Barron's columnist Alan Abelson. He noted that Mankiw's comment nearly coincided with a University of Michigan survey showing a sharp drop in consumer sentiment. Consumers see a growing threat to their jobs and may be thinking twice about spending more money. And Mankiw's sunny view of outsourcing only confirms their suspicions that the federal government will do little to ease the pains of globalization.

Abelson then speculates on how outsourcing might apply to the Council of Economic Advisers itself. First off, the three dozen economists who work there earn far more than the $10 an hour paid to their Asian counterparts. Secondly, the Americans don't do a great job. The council had predicted a net gain of 1.7 million jobs for 2003, when, in fact, the United States lost jobs. And the council's estimate of 2.6 million new jobs this year is "ludicrously" optimistic. Why not send the council's research work to Bangalore? After all, Abelson writes, "our putative Indian economists couldn't have done — or possibly do — any worse."

And what would the out-of-work economists do? They could "simply follow their chief's advice and find new jobs ostensibly immune to outsourcing," Abelson says. "Peddling real estate, perhaps, or waiting on tables."

Let me add that some Wall Street firms have already sent financial-analysis work to India. It can be easily done.

Thanks, Alan Abelson, for lampooning those cheerful predictions of an outsourced world. The peppy defenses of outsourcing were getting me down. The worst ones contend that it will free us from the scourge of dull work. Janet Yellen, who headed the council in the Clinton administration, says that outsourcing may hurt "the more standardized part of high tech" work, but Americans will keep the high-end tech jobs.

Daniel Pink, author of an article on outsourcing in Wired magazine, echoes her optimism. Pink was recently on C-Span blowing a lot of Silicon bubble talk about American "dynamism," "big-picture thinking" and "high concept" employment. He noted that only "routine, relatively standardized white-collar work is going overseas."

Well, that would describe about 99 percent of all white-collar jobs. Not to worry. Pink thinks Americans will be left with the fun work. They'll be "software experts who can manage international 24-7 work teams." Yep. We'll all be sitting right there at the controls overseeing global armies of programmers. How Americans get to be the managers goes unexplained.

The problem is, there is no limit to the jobs that can go elsewhere. We can no longer pretend that laid-off factory workers need only take some computer classes and they'll be economically secure. Their skills, it turns out, are shared by about 300 million Indians, Chinese and Russians.

My job at Reuters was crummy in many ways — stressful, deskbound, often boring. But it taught me things. I had arrived knowing nothing about business and left knowing something. "Standardized" white-collar jobs represent more than paychecks. They offer training, as well.

If outsourcing is the future, so be it. But let's not play American workers for the fool. Their future doesn't look good at all.

[oceanview]

momentum is clearly building on this issue, Bush will have to address it at some point. Mankiw should have been fired right away.

[Mini-14]

Outsource the economists.

[Paul C. Jesup]

Outsource the economists.

Let's just outsource this country's government and start over.

[RussianConservative]

Consumers see a growing threat to their jobs and may be thinking twice about spending more money. And Mankiw's sunny view of outsourcing only confirms their suspicions that the federal government will do little to ease the pains of globalization.

You mean actually connection? Russia find that out quick in early 90's, now take protectionist route. It work. Here lesson for US that Russia self learn from 80's US...who was US president? :0) Good man.

[dennisw]

Outsource a whole bunch of Congressional staff jobs. The squealing of fired bureaucrats will be deafening.

[cripplecreek]

You might be closer to right than you know. I believe theres a constitutional restriction on our federal govt.
I'm a bit fuzzy on the exact reason but a little research on why Washington is in the "district of columbia" might suprise you.

[A. Pole]

Abelson then speculates on how outsourcing might apply to the Council of Economic Advisers itself. First off, the three dozen economists who work there earn far more than the $10 an hour paid to their Asian counterparts. Secondly, the Americans don't do a great job. The council had predicted a net gain of 1.7 million jobs for 2003, when, in fact, the United States lost jobs. And the council's estimate of 2.6 million new jobs this year is "ludicrously" optimistic. Why not send the council's research work to Bangalore? After all, Abelson writes, "our putative Indian economists couldn't have done — or possibly do — any worse."

And what would the out-of-work economists do?

They will find new jobs in new emerging fields. If needed they will pick up the new skills. No problem, they will not miss their old buggy whips occupation.

[LowCountryJoe]

This is a topic constantly brings out the struggles between two different economic philosophies. If you're absolutely sure about where you stand on this topic and you've completely shut the other side out on the subject than you probably wont check it out anyway. But for the person who is willing to engage "new" thought, they [hopefully you] might want to look toward two historical figures on opposite sides of this issue: Jean Baptiste Colbert (France) and David Ricardo (Great Britain).

For the record, I support Mankiw!

[cripplecreek]

I dont like outsourcing, but if we must do it I would be happiest if we outsourced to places that would benifit us most immediately. Mexico, and south america.

[Luis Gonzalez]

"...if we must do it I would be happiest if we outsourced to places that would benifit us most immediately. Mexico, and south america."

Them's fightin' words.

[cripplecreek]

I'm just looking at a way of keeping mexicans in thier own country.

[oceanview]

after we cede Texas, NM, Arizona, and southern california back to them, they will be.

[Luis Gonzalez]

I just read a couple of articles on outsourcing jobs.

One article made the case of a company that sells computer mouses (mice?).

This California-based company sends parts to China, where the mouses (mice) are assembled, then brings the finished product back into the US, selling it at $40.00.

If it assembled the product here, it would have to sell the same mouse for $70.

The company would then be unable to compete, and all employees would lose their jobs.

It also explained that most outsourcing to India is done by transmitting data over a phone line to India, and receiving data back over a phone line. The author wanted to know what kinds of laws we would have to pass restricting the transfer of information over a phone line from one country to another, and how those laws would be enforced.

Intersting stuff.

Let's Talk About "Your Jobs"

[Luis Gonzalez]

I completelty agree with you.

Ants

[edeal]

I am not a single issue voter, but on this I will make an exception. Today after a year of not being able to find a career job to replace the one I lost to down-sizing, I gave up on Bush.

This is not a recovery. How long are American workers going to be under constant fear of losing thier jobs because the economic experiment being conducted by this administration?

This is not free trade. India and China are basically composed of serfs. Imagine a private business competing against a dollar a day prison labor. It can't be done.

This threatens not only our economy, but our national security as well as out long term stability as a nation. How long will we survive as a nation of real estate agents, dish washers and baby sitters? Who exactly is going to pay for these services?

[Luis Gonzalez]

What economic experiment being conducted by this administration?

Are you an advocate of government controlled industry?

The truth of the matter is that we are seeing an unemployment rate that BELOW the average rate for the decade of the 1990's, and most certainly below the 1980's.

Bush had nothing to do with your being unable to find a suitable job.

[Revolting cat!]

Outsourcing would gain some credibility and many more adherents if the jobs of its proponents (economists, CEOs, corporate MBAs, etc) were outsourced on the same large scale as the jobs of IT professionals, software engineers and customer center personnel. As it is now, it is nothing more than a pie in the sky "theory", which promises a radiant future like all the bloody utopias of the past century, while cynically acknowledging the reality of "short term pains" as Mr Mankiw and Ms Fiorina did. It's clever rhetoric: establish your credibility by recognizing the negative present, and then forge ahead with wild positive predictions that are unproveable and that you know nobody can or will hold you responsible for. Unproven fantasies, like much economics.

[Paul C. Jesup]

D.C. was created so that no one state would have a more direct influence on the Federal Government.

It was a good in theory, the problem was they did not take into account of the lobbiests or the whorehouses that sprang up there for that matter.

[LowCountryJoe]

...if the jobs of its proponents (economists, CEOs, corporate MBAs, etc) were outsourced on the same large scale as the jobs of IT professionals, software engineers and customer center personnel....

Dare I say it? Yes, I dare. [rhetorical] Just why is the economist (and etc.) always in demand?

...As it is now, it is nothing more than a pie in the sky "theory", which promises a radiant future like all the bloody utopias of the past century, while cynically acknowledging the reality of "short term pains" as Mr Mankiw and Ms Fiorina did...

I hear what your saying [even though you've actually written it instead]. The last 40 years, with all of the trade that's taken place during that time, has made for some severe "pain" and "pie in the face" economic times.

In fact, we could take the history of trade and the economic "misery" that it has brought and analyze it back to the colonial period if you'd like to.