Posted on 12/12/2003 5:58:12 AM PST by redgolum
© 2003 WorldNetDaily.com
It's hard to tell who does a more energetic St. Vitus' dance when the "outsourcing" of high-tech jobs is mentioned: economic protectionists or free traders.
St. Vitus was the patron saint of those with nervous disorders. The dance dedicated by the afflicted to his martyred memory was, as you can imagine, somewhat disjointed. There is, however, a similarity in the mad twitching that the outsourcing topic engenders in the opposing factions.
Protectionists look only at the affected industry. They refuse to trace the counterproductive, even destructive, consequences to all consumers of government intervention to stop what has been controversially dubbed the "exportation of jobs."
Most free traders, on the other hand, utterly deny that something is amiss. Others among their ranks quibble over economically correct terminology. Technically, it is indeed incorrect to speak about importing or exporting a job. Economist William Anderson corrects the mistake in the "Myth of Exporting Jobs," pointing out that "a job is not a good," but "a formal designation we give to action associated with the creation of goods."
There is, however, a disconnect between academic theorizing about the market, and working it. When an American engineer is laid off, when the project he was working on is "cancelled," and when, instead, a team based in China is hired by the same company to complete the identical endeavor – the man can be forgiven for calling the process "job exportation."
Inasmuch as the wording dovetails with reality, it has validity, and shouldn't be dismissed by scholastic pedants eager to ferret out proponents of the erroneous Marxist labor theory of value.
Still other free traders, myself among them, dare to depart from our colleagues and say that there's a problem when innovation moves offshore. Free trade think tanks can rhapsodize over the glory of locating the manufacturing of TV sets to China. But TV sets have not been made in the United States since the 1970s. It's semiconductors now! The innards of your cell phones are the things being designed abroad.
When you consider that investment in the U.S. was spurred in part because of our immense capacity to innovate, this must give pause. More fundamentally, it is well worth pondering the changes to a society that is no longer as innovative.
Cato's Daniel T. Griswold refuses to consider that what we are witnessing is very possibly "a shift in fundamentals." This is just "the passing pain of recession," he claims.
But the recession doesn't fully explain the accelerated "exportation" of high-income jobs like design engineers. Neither do the reported productivity gains paint a full picture. We're supposed to be doing more with less, and China is allegedly helping us – doing the low-end stuff, and freeing Americans to reach for the stars.
This paternalistic and romantic theory, however, is dated. China is not a technological backwater, performing only our low-skill jobs. Production and design facilities in China are modern. Careening down the Chinese educational pike are as many engineers as there are members in the American Institute of Electrical and Electronics Engineers (over 235,000). Like Indians, Chinese are also well represented in the academic literature of the applied sciences. This is no hinterland waiting to relieve us only of low-skill work.
If, moreover, productivity were the sole deciding factor in employment, then it would make sense to employ Americans in the high-tech endeavors now using Chinese workers. An American worker will generally still perform the task faster and better than his foreign equivalent. But the price of wages and the cost of living in China and India are so very low that a team of Chinese can be hired for the price of one American.
There's no doubt that the best and the brightest Americans will remain employed in their fields of expertise in the United States. But if American engineers were being freed up to perform ever more fantastic feats, then the IEEE-USA would not be reporting that, while the unemployment rate for all workers has fallen slightly in the third quarter, it has continued to move in the opposite direction for U.S. electrical and electronics engineers. Moreover, there has been a sharp decline in the demand for these professionals. The Bureau of Labor Statistics confirms the trend, reporting that 230,000 U.S. workers in 12 engineering and computer job classifications were unemployed in the second quarter.
Economist Arnold Kling of Tech Central Station sees no significance other than economic in the hemorrhaging of scientific and engineering talent to the restaurant, day care and private tutoring industries.
In addition to the above occupations, he recommends a string of other intellectually unchallenging work for "techies" – sex therapist (I'm not joking) and chef are among them. He also mentions that facility with (evidently very basic) statistics is an asset in this economy.
But Dr. Kling gets a fail on his multiple regression analysis. What unites all his job suggestions – the underlying variable, if you will – is their immovability: If you want to stay employed in the U.S., choose a job, preferably service oriented, that can't be relocated. Got the aptitude to probe the field of fiber optics? Don't. Instead, become a gym instructor to the multiplying population of menopausal gym-bunnies.
That's what Kling is essentially advocating, and he is absolutely right, except that he is not concerned with the impact of the New Reality on the social and cultural landscape. At least he doesn't deny that "a 30 mile-per-hour wind is taking jobs offshore to India or Russia."
Like Kling, I too don't doubt that jobs can be found. An engineer friend is doing carpenter work in the harbor. But here's something to mull over: Professions that require the greatest degree of mathematical precocity like physics and engineering are usually dominated by men. Men, on average, are better at mathematical reasoning. What impact will a steep decline in the demand for applied scientists have on the position of men in a society already tending toward misandry?
Canada and England – both nations of shopkeepers – may have some answers.
How long before the Chinese realize this? What happens then?
I recall an extended TV interview with David Rockefeller last year. He's of course a huge fan of globalization and unfettered free trade, esp. with China.
I don't have the exact quote, but when posed with the possibility of China learning how to market its products directly to U.S. consumers, without the American middlemen and wholesalers who now make that possible (e.g. Wal-Mart), Rockefeller began hemming and hawing and very uncomfortably admitted "that would be a big problem" for the American economy.
It was very clear that Rockefeller is happy with the current situation vis a vis China, but that he could also envision something far less sanguine coming down the pike.
While this could be considered a problem, I suspect IBM rightly sees it as an opportunity for its semiconductor manufacturing to escape to more friendly clims...perhaps China.
It's clear we don't want them to remain in the USA.
BINGO!!!!
Yeah, the buggy whip guys used to say the same thing, yet here we are the economic powerhouse of the world. Go figure.
I wasn't aware the buggy whip manufacturers were concerned with U.S. corporate offshoring of buggy whip manufacturing to China and India. I'd like to see the supporting cite.
I see. So when your employer offered you a salary figure, did you ask him to scale it back to the prevailing wage for your profession in China?
That's absolute rubbish, and exposes only your naive jealousy.
If techies bear any blame, it's for creating a global network infrastructure (aka The Internet) which allows Voice Over IP, fast international code transfer, and all the other technologies which make outsourcing possible.
And though I plead guilty to assisting in the above, I have zero regrets about my personal role in providing a developing country with Internet connectivity. They needed it, I helped them get it.
My "outrageous wages" were almost half what I was paid in the U.S., because that's what they had to pay.
The service I deployed has kept 10 local people directly employed for many years, has enabled the creation of local computer service providers throughout that country, and has been instrumental in many health and educational programs there.
In millions of direct and indirect examples, that's what those "outrageous wages" accomplished.
When a commodity is offered on the market at too high a price, and alternative means of obtaining that commodity can be had, a rational actor will seek to use the alternative means, at a cost savings.
And labor is a commodity like anything else.
In addition to the above occupations, he recommends a string of other intellectually unchallenging work for "techies" – sex therapist (I'm not joking) and chef are among them.
Ah, the free traitor's version of "let them eat cake". "Let those who's inventions and applications ushered us into the 21st century become prostitutes or flip burgers."
Arnold Kling - another POS.
There's really very little difference between product obsolescence and worker obsolescence. Of course though, the worker has a choice to either whine or retrain. The choice is theirs.
You make a great point. The bottom line is the high-tech employees were paid a market wage. The blue collar union thugs extort wages from their employers and force them to look for alternative options.
Hi tech workers don't or didn't have the full force of antiquated government labor laws on their side which allowed them to extort money from their employers.
You may be a realist but you're not thinking very clearly.
What I explained to you - perhaps it was too subtle - is that techies enabled the very infrastructure that makes outsourcing possible.
The economic value of that infrastructure - constructed using the "outrageous wages" you claim - is currently being realized in, for example, outsourcing. Not to mention the intangible benefits (e.g., health care and education) that are now accruing to less-developed countries and to the actual human beings in those countries.
It is more than a little ironic that some of the people who participated in building that infrastructure might now be seeing their wages drop, simply because that infrastructure has permitted low-cost competitors to approach new markets (e.g., U.S. companies).
If anything, it could be argued that those "outrageous wages" were in fact too low, since the economic benefit is now being realized globally by more and more people, including consumers and companies in the U.S. itself.
You're a poet and you didn't even know it. ;)
Nah. Sorry. Go out and build a few toll booths.
When a person's initial training was 4 or 6 years of full-time post-secondary education, "retraining" is absurd. It's like hearing that someone has been laid off, and suggesting that they buy a second house.
Nonsense. Only to the unmotivated. What's the choice? Sit here and complain on a computer bulletin board?
I never said anything about further renumeration. Did I?
My point is simply to attack your term "outrageous wages" and to counterpoint that the economic return on those "outrageous wages" is being realized to this day. I think you've done a great job evading that truth.
Your swing into charges of Marxism is a very nice red herring but impertinent to that central point.
Oh, have you ever heard of "a resume"? That's how techies obtain renumeration beyond the prior contract of employment. Did Marx address that as well?
I was feeling a little, um, Jesse Jackson-ish.
I have a cousin that's an electrician. He wanted to go back to school to get his EE degree. As an EE myself, I told him he was better off as an electrician because they can't move the buildings he wires offshore.
Irrational exuberance didn't end. It just refocused. That's what's behind the tremendous pace of offshoring.
Guess what? To a large extent the free traders are right. The markets drive wages. Has anyone stopped to consider what that means when you fire your 80k American IT worker to hire 3 Indian workers for roughly the same amount? (A brief aside: Don't be fooled by just comparing salaries. The overall cost for an American company to carry an Indian worker is much higher than salary alone suggests)
It means they're hiring people whom the market is telling them are vastly inferior. "Ah, but I'll make that up by hiring more of them," thinks the exuberant executive, as if engineering problems are solved by throwing more bodies on an assembly line.
Is this just a brief interlude, during which American IT salaries will fall like a rock to meet their offshore equivalent? Early experience is already saying otherwise. Comparitive studies are finding that most companies who are going offshore are finding little to no overall savings, but are finding themselves strapped with new problems they didn't have before.
Offshore labor first came around to address the problem of a skilled labor shortage in the U. S. Anyone who thinks China, India, Russia, the Phillipines, etc. have already caught up to the U. S. to the point where they can do this work as well as us is hallucinating. Outside of their top talent (which isn't at all the same as counting university degrees), offshore workers are paid less because they're worth less. Companies who think the market is wrong and they're getting a great bargain by firing skilled Americans in favor of their third world equivalents are setting themselves up for a rude awakening in the near future.
That's merely learning WITHIN a field. We are talking about people being told to leave programming altogether and the "retraining" is to be HVAC techs or school teachers.
True, but more importantly because their management and business methodologies are worth less.
If they were even close to parity (they're not), they'd be paid the same as Americans, live in a similar economic melieu, and they'd be too busy serving their domestic markets to be fixated on offshoring.
But they're not, so they ain't. Take a walk around the streets of Bangalore, if you dare.
There is one thing that bothers me a little. There seems to be a class of people who no longer consider themselves Americans, but rather 'citizens of the world'. As long as they get theirs, they don't really care what other country benefits or loses. The U.S. is just where they happen to reside at the moment.
The Reds have been aware of this for some time. They are getting into a position where they will be able to impose their will wherever they want with no reason to fear the USA.
But I think he was relieved that - because of his age - it'll be someone else's problem and not his.
I'm a software guy and have been thinking the same way. Even though I work for a small company, and unlikely to be outsourced in the near-future, my long-term job prospects are shrinking by the day.
And to think I switched careers to do this. Looks like I'll have to learn how to fix BMWs or something.
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