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.

[edeal]

The economic experiment is the test as to whether exporting our strategic workforce (i.e. skilled jobs) to countries who are in reality our enemies for the benefit of raising share holder equity is a sound economic principle.

Certainly Bush can do something about it. Perhaps he can begin by not having his administration make what amount to policy statements giving full support of exporting labor. Not all things require a law to be written or an exectutive order to be signed in order to have an effect. Simply pointing out that this is is bad for our country can at least stem the tide.

Big business is one of the worst inventions in the history of mankind. 3 Global competitors are NOT a free market. Free markets require multiple independent actors to function in a healthy way. Its like cutting down the population to the strongest 2 males and 2 females and letting them repopulate the earth, and thinking that will make us all better in the long run. There is something to be said about genetic diversity.

Congress has the power to regulate insterstate commerce. It is getting to the point that the best thing to do is to make interstate corporation ilegal to limit the size and scale individual companies. Perhpas make businesses under 100 employees completely laissez-faire, to encourage small business.

Also, it might make sense to revoke the concept of the corporation. The corporation isolates people from personal responsibility, which alwasy leads to a bad outcome. Whether it is welfare, public facilities, or the business world, when individuals are not held accountable personally for thier actions things go into the toilet fast. With risk usually comes the chance of higher reward. However, risk without possible sanction leads to an ever increasing spiral of bad behaviors. This is the world we have today.

[Luis Gonzalez]

"Simply pointing out that this is is bad for our country can at least stem the tide."

I'm not convinced that it is.

"Big business is one of the worst inventions in the history of mankind."

"Congress has the power to regulate insterstate commerce."

Dude, you're a liberal.

[Revolting cat!]

Good post, but then you're to be dismissed, because, after all "you're a liberal". End of discussion, isn't it?

[henderson field]

"If it assembled the mouse here the company would have to charge $70 for it. And then they would go out of business" (or something close to that!)
This assumes that they would go out of business because another Chinese company would undercut their price (say, with a $40 mouse).
This would not happen if, for example, a 90% duty were applied to the Chinese product. Or, if need be to sustain American jobs and the American market, a 140% duty.
America First.

[The Duke]

Also, it might make sense to revoke the concept of the corporation.

This statement is similar to what I have pondered lately. The problem I have with the concept of public corporations is that the revenues they generate through stock offerings aren't linked to the needs associated with their business plan. It seems to result in some gross distortions of reality.

[Luis Gonzalez]

"America First"?

Or do you mean "my job first, screw America"?

"No nation has ever gotten rich by forcing its citizens to pay more for domestic goods and services that could have been procured more cheaply abroad." -- Bruce Bartlett

[LowCountryJoe]

Don't you think that "the market" - whether it be a market for goods, services, labor, and even elected representation - accounts for all of these consequences. There are market mechanisms that automatically bring the wants of the "market" participants into equilibrium. Any attempt to alter the "market", for short-term stability, only just triggers mechanisms to bring about more severe responses later. The best thing to do it let a market take care of itself, because a "market" is the best way to allocate resources. Although I have to concede that the very art of trying to alter a market is, by definition, participating in it.

Just remember that the short-term stability gained by "alteration participation" may have a very nasty and undesirable trade-off.

[edeal]

How can you conclude that I am a liberal? Liberals love big business. Big business and big government go hand in hand. Big business gets big government to intervene on its behalf to disadvantage its rivals in such a way as to eliminate normal economic competetive pressures.

Small business is where the the strength of this nation lies, and should be as close to laissez-faire as possible. This is hardly liberal.

Our government, you know the one currently controlled by Republicans at all levels, is at war with the small busines owner. The compliance costs of regulations for a small business are obscene. This only serves to reduce the number of small business owners out of heartache and frustration. This will lead our country to ruin.

[edeal]

Thanks. I think it's the first time anyone has said a post of mine was good.

[Luis Gonzalez]

"How can you conclude that I am a liberal?"

You mean other than your whole Marxist "big business is the root of all evil" rant?

Call it a wild guess.

P.S. That, and the double speak about government having more direct oversight over industry translating into smaller government.

[Luis Gonzalez]

"I think it's the first time anyone has said a post of mine was good."

That should tell you something.

[neutrino]

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.

Exactly! Why not get a better deal for the taxpayers by offshoring the job to some good Chinese economists? They'd work for less...and, given the robust growth of the Chinese economy, one might argue that the Chinese economists are (ahem) better, more effective workers than our domestic economists.

Still, I suppose our domestic economists could retrain. Perhaps they could go for doctorates in nanotechnology. Now there's a field for them to go into!

[Ciexyz]

Terminate the economists. Let 'em eat cake!

[Ciexyz]

Re: Post #16: I'm sorry to hear that you're still having trouble finding a job in today's market. Here's wishing you better fortune in the future.

[edeal]

You are absolutely correct that market forces are at work. But, the market forces are influenced by everything that transpires around the world. This includes the environment and tone set by the President as he and his agents state their support of economic decisions harmful to the national security and stability of the nation.

What effect does a careless statement made by an economic advisor have on consumer confidence? What effect is there when the President fails to correct that statement immediately? People are already concerned about thier jobs and have been for years. Making statements that amount to admission that the adminstration will do noting to abate the giant sucking sound of jobs going to China make workers more jittery. Jittery consumers mean less consumer spending. Less consumer spending means less economic activity. Less economic activity mean more job cuts, causing more jittery consumers.

An interesting fact is that outsourcing is not new. My original career was in Chemical Engineering. The concept of using Indian engineers to design and size presure valves and pumps pre-dated my entry into the field. This is one of the issues that encouraged me to switch to the computer industry.

Now the concept follows me. High tech professional jobs are not unskilled assembly jobs. You cannot be "retrained" in a matter of weeks to perform a new function. A technical professional cannot take a 2 week siminar on lawyering and suddenly represent people in court. An engineer cannot go to the little college in the strip mall and walk out with a medical license a month later. A degree means a specialty, which means years of study. This outsourcing phenomina makes it unwise to spend up to $100,000 or more to get a degree only to be told later you can be "retrained" to be a Wal-Mart greeter.

If corporations were so concerned about saving money, there is no reason why the officers and upper management need to be Americans. Why not ship all the professional non sales labor to India? The companies can simply set up outlet stores where a few thousand American workers can sell the products manufactored, designed and assembled by millions of Indians and Chinese.

Then just think, all of us can have as much vacation as we desire. The best way to test if an action is wrong, take it to its logical conclusion. Just ask yourself, what if all jobs that can be performed more cheaply in Indian were sent to India?

[FITZ]

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

NAFTA was supposed to do that -- but the minute it was signed was when Mexicans began coming over by the millions --- before NAFTA it was a trickle, after NAFTA it was a deluge.

[edeal]

Thanks for the well-wishing.

I have been a very fortunate investor, getting a 1000% return on investment of my stocks in the last 4 years. But extended underemployment has a way of draining that. The problem is not finding a job, its finding one commiserate with my skill level.

The high tech jobs matching my skills are bone dry, and the less skillful, lower paying career positions are closed because they suspect I will leave the second I get a better oportunity.

[FITZ]

Why not get a better deal for the taxpayers by offshoring the job to some good Chinese economists? They'd work for less...and, given the robust growth of the Chinese economy, one might argue that the Chinese economists are (ahem) better, more effective workers than our domestic economists.

And being Communist, they'd be no different from our own ---- they'll believe in cheap Communist government controlled labor --- just the same as the Americans.

[edeal]

"I think it's the first time anyone has said a post of mine was good."

That should tell you something.

Resorting to borderline personal attacks only diminishes you, so why do it? Maybe as a new tactic, one could try debating with reasoned argument?

[RockyMtnMan]

Consumers see a growing threat to their jobs and may be thinking twice about spending more money.

Unfortunately economic models do not account for sociological issues which are sometimes more relevant than pure market economics. Consumer confidence is directly tied to current and future earnings potential and any threat, perceived or factual, causes consumers to pull back on the purse strings.