Be Creative, Not Protectionist

The Wall Street Journal ^ | Friday, February 13, 2004 | CARLY FIORINA

[presidio9]

Nineteen years ago, a group of leaders from American business, labor, government and academia issued a report that raised alarm bells in Washington. The report argued that America's ability to compete in world markets was eroding in the face of emerging industries and low-wage workers in Japan and other Pacific Rim nations.

[Iscool]

work to keep our country in the lead, by making it the most competitive and creative of all nations.

What a moronic statement for the sheeple to feed on...The only way we can compete enough to keep jobs here is to work for the wages and benefits they work for in China and Somalia...

[presidio9]

People were saying the same things about Japan 15 and 25 years ago.

[Iscool]

Japn has nothing in the way of natural resources...They have to import most everything they need...We don...Not apples and oranges...

[DustyMoment]

"That's why the eight member-companies of the IT industry's think tank, the Computer Systems Policy Project, have invested $80 billion in R&D, capital expenditures, education and employee training here the past three years alone. We're betting on -- and investing in -- America."

Carly is going to burn in a very HOT place for this outrageous lie. As an out-of-work technical trainer in the IT industry, I can assure you that NO money is being spent on additional technical training in the emerging technical fields she is talking about. All she is doing is trying to justify the huge number of jobs that HP has outsourced overseas.

[Snuffington]

It takes a little more than just innovation. I think we have plenty of know-how for competing with low-wage offshore developers. But those strategies are still in the "early adopter" phase.

I'm becoming increasingly worried we have reached a point where over-regulation and out of control tort-law have raised the barrier for entry for startup companies too high. Much higher than it was in the 80's or even the 90's. And I don't see either side in the offshoring debate putting either of those issues very high on their agenda.

[Deliberator]

I don't see either side in the offshoring debate putting either of those issues very high on their agenda.

When the offshoring opponents are clearly aiming for new government restrictions, the pro-freedom side will of course be reactive. Maybe instead of bawling about those evil Indians, offshoring opponents should direct their fire at the politicians (who the offshoring opponents probably helped elect) who have hobbled domestic business with taxes and regulation.

[americanSoul]

I'm becoming increasingly worried we have reached a point where over-regulation and out of control tort-law have raised the barrier for entry for startup companies too high. Much higher than it was in the 80's or even the 90's.

Very true. Once a Govmnt reg is enacted, it is rarely ever rescinded.

[Orbiting_Rosie's_Head]

Ping

[CMAC51]

What a moronic statement for the sheeple to feed on...The only way we can compete enough to keep jobs here is to work for the wages and benefits they work for in China and Somalia...

That is the very attitude that corporate management feeds on. They don't even bother challenging their employees to find creative gains in productivity, they compare the current situation in their US workforce and what the offshore offers and decide based on that.

Contrary to what your attitude expresses, most US workers are willing to respond to the challenge when presented.

[hchutch]

Well, the ones who are outsourcing are doing so because they cannot get the over-regulation and the lawsuit culture fixed. Extrenched special interests have protected it for far too long, I'm afraid.

On the other side of the issue, solutions to the problems that lead businesses to outsource/offshore will not be welcomed. Why? It will put the complainers like Lou Dobbs and Paul Craig Roberts out of business.

[thedugal]

Glad I got in on this thread before it hit 100s of posts. I very much want to be on the side of free trade, but I have a logical problem for which I have yet to receive an answer.

The most common argument from the free trade side is the cliched "buggy whip maker". However, I find the analogy false. When buggy whip makers lost their jobs it was because the automobile had been invented and there were new jobs in the automotive industry. Now that IT and other professional and service sector jobs are being offshored, what is the new technology that replaces the IT "buggy whip".

I do not know of any such technology. But it's worse than that. I cannot foresee of technology that cannot be done by educated persons in foreign countries. Anything that can be digitized can be sent from any country to any other country in a matter of seconds. Can we possibly have a nation of 100 million inventors and small businessmen each selling one another products manufactured in foreign countries? I don't think it is possible.

I listened to Greenspan's latest House Committee hearing and he kept repeating the same theme as nearly every member pounded him on the jobs issue. The jobs must return because there is no data to show that there has ever been a cycle when jobs didn't return. Only one problem with that theory. There never was an internet.

p.s. I am an American who has just started a software company in Japan (from where I now type these words) and I will be outsourcing most of my work to India. I see the writing on the wall. I simply refuse to equate precedent with law. That is, I understand that the precedent is that the jobs will return, but I don't believe that they MUST, just because, well, they Must. They may not, and someone damn well needs to start considering the consequences.

[LibertarianInExile]

But...you're BUILDING AMERICA! You're BUILDING CREATIVITY!

Aren't you supposed to act like you feel happy about it? I mean, c'mon, the Wall Street Journal says it's okay to offshore because it helps build 'creativity' in America! It must be what America needs! All these people whining about jobs lost overseas are just avoiding the necessary hard work and retraining they'll need to compete in the global marketplace!

[sarcasm off]

[LibertarianInExile]

Well, their readers were getting tired of that 'GET A JOB, YOU WHINING SLACKERS!' article...they needed to add something to the rotation!

[upcountryhorseman]

Yes, we do have the resources but the enviro's won't let
us develop them.

[Thisiswhoweare]

Super post and I heartily agree with you!

The problem lies at the decades long war we have fought with socialism in the heart of our government. Jobs are being outsourced, insourced (H1Bs,L1s, etc.), and workers imported wholesale under non-enforced immigation laws for one reason: to circumvent the regulatory and financial burden of paying an American citizen under American corporate laws.


"They may not, and someone damn well needs to start considering the consequences."

What disgust me the most is that rather than fixing while we have *alledgedly* conservative Republican conrol, this administration and it intractable supporters would rather ignore it or tell us the problem doesn't exist. They are getting as good at spin as the Clintons. This is positively Orwellian.

Now we have President Bush trying to push through this new immigration reform that will expand this nonsense and give it legitimacy.

Instead of circumventing the regulatory and financial burden of paying an American citizen under American regulatory law - they need to take a meat cleaver to the excesses of government.

The elephant hiding in the corner here is the massive overhead incurred by jacking up the cost of everything through unfunded mandates, and indirect as well as direct taxation. I doubt if even the best taxpayer action group could adequately calculate the real level of taxation since it is inherently recursive in nature. It keeps propagating itself at every level from raw materials and labor to administration, corporate taxes, legal defense, accounting requirements, cost of transportation, sales and use taxes and more.

I believe they have considered the consequences. Unfortunately, many of the so called conservative Republicans would rather continue and extend these circumventions to the benefit of a few rather than to thwart the den of thieves to the benefit of all. They have found willing accomplices in the demorats. They know precisely what they are doing, and it is destroying what little remains of America.

[Iscool]

The solution is called "fair" trade...However, that's not the agenda of corporations or the President and his minions who work for them...

[Iscool]

Well, the ones who are outsourcing are doing so because they cannot get the over-regulation and the lawsuit culture fixed. Extrenched special interests have protected it for far too long, I'm afraid.

Who goes out of business due to over regulation??? No one I know of...Is OSHA good??? Not if you work at home...But if you work in a factory, it is well appreciated that the company is required to make sure the brakes work on lift trucks...It's nice to know the company has to provide gloves when you are working with toxic chemicals...It's also not a bad idea that companies can not dump acid into the ground...Sure we have regulations and maybe a few too many, but we have (had) the highest standard of living of any other country in the world...

Corporations aren't moving out and outsourcing due to regulation...Everyone knows that...It's the greed...And everyone knows that...And if someone agrees with this operation, it's because they see a potential buck in it by screwing the rest of the Americans and America...

[hchutch]

So, in other words, you are saying you are ENTITLED to a job, and if I were to outsource or offshore because it is a better bargain for MY business, then I am being greedy?

I see little difference between Jesse Jackson and Lou Dobbs on this matter. Both are trying to tell me who I should hire and that I should hire who THEY say I should hire REGARDLESS of whether it is good or not for my business.

I would tell Jesse Jackson to go to hell if he tried that shakedown on me. I'll tell Lou Dobbs and Paul Craig Roberts the same thing.

[chimera]

...offshoring opponents should direct their fire at the politicians (who the offshoring opponents probably helped elect) who have hobbled domestic business with taxes and regulation.

Good idea. So good, in fact, that I've been there, done that, got the tee shirt. Results so far: zero. We'll keep trying, but there are a lot more people and special-interest groups out there trying to make businesses pay more than there are who want them to pay less.

The business climate is so bad in my state (Ohio) that I won't even consider trying to set up another company here now, from scratch. Too many taxes, too much bureaucracy, workmen's comp is a killer. I understand the need for some level of those things, but it has reached the point where it's counterproductive. Small businesses simply can't manage them, so they either close up permanently, relocate, or never get started. Then the RINO governor complains about the lack of economic growth, and comes up with the bright idea of a state-issued bond program to help businesses get started (with the usual strings attached, preferences and incentives for minority-owned, woman-owned, foreign-born citizen-owned), funded by, guess who, taxpayers (business and individuals), Sheeesh! Why bother with that crap if its simpler just to make it a more business-friendly place?

[Iscool]

Contrary to what your attitude expresses, most US workers are willing to respond to the challenge when presented.

Company I work for has a galvanizing line...One operator runs it...Was built in Belgium so although the whole thing is computorized, the quality is at the bottom of the scale...

The plant manager, trying to intimidate the operator told him that for what he makes per hour, the company could hire 47 employees in China...This company already has factories in China and are building more...

I find your comments relating to this issue nothing short of ignorant...You going to compete with a country where for the same amount of cash outlay, the company can increase productivity by, what is it, 4,700%??? Get real...

[mhking]

I see little difference between Jesse Jackson and Lou Dobbs on this matter.

Why, because Dobbs uses his bully pulpit to inform the masses as to the companies that are taking jobs away from Americans and shipping them overseas in the name of greed?

He's not making threats; he's not extorting anything from anyone. He is, however, informing his viewers as to who doesn't give a snit about their employees.

[Iscool]

then I am being greedy?

When you could hire Americans and make a profit but instead hire foreigners in another country to build and then sell your products to Americans for just a fraction of what they would be sold for in America, I'd say calling you greedy would be very generous on my part...

[hchutch]

Both are saying to me, "Hire who *I* say you should hire, or I drag your name through the mud."

I see no difference there, and were I a corporate CEO, my response to the Lou Dobbs shakedown therefore would be no different than how I would respond if Jesse Jackson came by with his shakedown. Slight variations in their motheds and professed motives, but both are profiting.

Jackson gets dollars directly. Dobbs gets ratings, which means CNN still employs him, and so he makes his money.

[Iscool]

or just a fraction of what they would be sold for in America

That should have been, or just a fraction LESS of what they would be sold for in America,

[hchutch]

And my response to you is the same I'd give if Jesse Jackson called me a racist if I did not hire who HE says I should hire:

"Go to hell."

What ENTITLES you to a job from me?

[Iscool]

What ENTITLES you to a job from me?

I think the bigger question is what gives you the right to put the screws to Americans for greed's sake...My personal feeling is that it falls under liberty...You may do anything you want as long as you don't suppress our American liberty...

You may feel you are just an individual and whatever you do will have a very small impact on just a few Americans...But collectively, your ideas have already put over 2 million out of work...They weren't shifted...The jobs are gone...And if this trend continues, which it will if George B has his way, there are many millions more jobs to leave...Houses to be lost...Auto's repossesed...I'd say that affects the Liberty of millions of Americans not to mention the destruction of the middle class as well as numerous other problems...So since the future of America depends on the ability of Americans to seek and find work to raise their families and keep America sovereign, I'd say you don't have a leg to stand on...The love of money will do this to a person, won't it???

[mhking]

Both are saying to me, "Hire who *I* say you should hire, or I drag your name through the mud."

Nope -- Jesse says, "give me money AND hire who I say."

Dobbs says, "If you take advantage of Americans, you're gonna get your hand bit."

Vast bit of difference.

Companies do not have a constitutional right to exploit.

[Poohbah]

Companies do not have a constitutional right to exploit.

Who's exploiting who?

America has priced itself out of the market in these areas. (And a cheerful "F*** you very much" to the trial lawyers, ecofreaks, expansionist judges, and underemployed bureaucrats who made it happen.)

Bottom line: in the Year of Our Lord 2004, only a fool starts a capital-intensive business in this country.

[GraniteStateConservative]

I do not know of any such technology. But it's worse than that. I cannot foresee of technology that cannot be done by educated persons in foreign countries.

Probably robots like Asimo and nano-tech. And, I don't think we'll be the leaders in that arena. Maybe bio-tech. I think we may have an advantage there.

[LowCountryJoe]

...Now that IT and other professional and service sector jobs are being offshored, what is the new technology that replaces the IT "buggy whip".

I do not know of any such technology. But it's worse than that. I cannot foresee of technology that cannot be done by educated persons in foreign countries...

I know that you've heard the expression "think outside the box". Well, why don't you start doing that! Let's get creative and think about the jobs of tomorrow. Let's first look at demographics of America. An aging population [I know, it sounds like a commercial] will be creating a demand for more nursing, medicines, and goods & services that are typically consumed by older Americans.

Next, we have a problem with foreign oil dependence and oil scarcity that will drive technology to create motors/engines that can be powered by renewable or non-scarce resources.

What about the distribution of potable water? The need to get ample water supply to growing metropolitan areas will spur some kind of advanced distribution means. And, the need for potable water will cause someone to work on inexpensive methods to desalinize ocean water and bring it to supply.

You may not see it, but the major modes of transportation, minus air transport, are pretty outdated and could use some advancing - though how to do this is beyond my scope of creativity.

There will always be employment in the shipping industry so that goods can be brought to different markets. The competition between the shippers will spur some advancements that are designed to distribute these goods in more volume both faster and more cheaply. There will always be innovations that make routine tasks easier, freeing one to attend to other tasks [such as posting on an Internet message board]; for cripes sakes they now have a self propelling vacuum cleaner that "smartly" does your carpet and you don't even have to operate the damn thing.

I could go on and on, but why bother? It sounds as though you people have made up your minds and you're not happy with what's happening because it's too painful [how about some gut checks, people]. I'm also going to quit now because I'm a painfully slow typist. I should get one of those voice recognition programs that allows me to speak and have my words just show up on the monitor. You know the ones right? They've been out for nearly five years now but just ten years ago were some "pipe dream" in someones head.

I only hope that I've whipped that buggy example those damn "free traitors" always speak of.

[LowCountryJoe]

ping

[Rightwing Conspiratr1]

The elephant hiding in the corner here is the massive overhead incurred by jacking up the cost of everything through unfunded mandates, and indirect as well as direct taxation. I doubt if even the best taxpayer action group could adequately calculate the real level of taxation since it is inherently recursive in nature. It keeps propagating itself at every level from raw materials and labor to administration, corporate taxes, legal defense, accounting requirements, cost of transportation, sales and use taxes and more.

Layers and layers of laws and regulations piling up year in year out. What's needed in this country is a revolution every 50 years or so that repeals all the laws and cleans the Federal slate.

[Redcloak]

The trick is not to try to do work that someone else can do for a vastly lower cost. I build high-end fiberoptic sensor systems. (Whitelight interferometry, if anyone's curious... Or if anyone's in the mood to spend some money. : ) At the moment, there aren't rooms full of sweaty Bangladeshis cranking out the same parts. When there are rooms full of sweaty Bangladeshis doing the same thing I'm doing now, I'd be a fool to try to compete with them. A better idea would be to sell them the tools they need to "steal" my job. (And sell the same tools to their competitors while I'm at it!) Or I could sell their cheaper parts to my customers and pocket the difference between my old labor rate and theirs. Or I could incorporate their cheap parts into a more complicated assembly than they're capable of making. Or...

"A wise man can hear profit in the wind" -The 22nd Rule of Acquisition

[chimera]

Instead, we must focus on developing next-generation industries and next-generation talent -- in fields like biotechnology, nanotechnology and digital media distribution; around issues like IT security, mobility and manageability -- that will create long-term growth and jobs here at home, while raising all of our living standards in the process.

Who is this "we", white woman? I just saw the class roster for the preliminary enrollment in one of the courses I am to help teach next quarter (measurement instrumentation). Not a single American student enrolled. Why? Well, could it be because they see those engineering jobs being offshored, and decide, to hell with this crap, I'm going to law school instead?

Not to worry, though. Those jobs "will be developed", like magic, appearing out of no where. And I'm sure Carly's standard of living won't suffer too much. She's made tens of millions running Lucent into the ground and is now doing the same with H-P. But, hey, those $20 million annual bonuses for "cost cutting" keep rolling in. Helps the stock price, you see.

[hchutch]

What gives you the right to extort employment from me?

Why do you wish to avoid that question? Because the answer would leave YOU without a leg to stand on.

[hchutch]

No, it isn't. Both are trying to tell me who I can and cannot hire. Yeah, Jackson also demands money, but Lou Dobbs makes HIS money by trashing folks live on CNN.

I don't see any difference between `em.

[irgbar-man]

Bump for later, with popcorn.

[LowCountryJoe]

...I build high-end fiberoptic sensor systems...

What does these sensors do: sense that there's data on the glass, interpret the data, or strengthen the signal and repeat the data? Is there any "end user" equipment out there yet that has ports for a direct fiber plug in?

[Redcloak]

I build interferometers using fiber optics. An interferometer is a device that splits light into two paths and then recombines the light later. Any phase difference between the two paths causes interference between the light waves. By using light sources, infrared in this case, where this coherence effect is seen only over short distances, I can measure light reflections from very closely spaced points; between layers of skin, for example. The technique is an optical analog to ultrasound; but, because the wavelength of the light is shorter than the wavelengths used in ultrasound, the resolution is much higher. We can produce resolutions of just a few microns. There are industrial, process control, material science, and medical applications to these systems.

[LowCountryJoe]

Wow! You mentioned process control. Would you be able to use this technology to - I don't know - diagnose the internal components of an engine to see where any wear & tear and potential failures may occur.

Does the fiber strand come to an abrupt end, spread light waves, and have a similar strand to collect the light on the "back end" or are there multiple continuous strands that - for the lack of a better understanding and terminology - "induct" the outlying images?

[Redcloak]

What I do is a little pricey for in situ monitoring of automotive parts, but it would certainly be useful in an automotive lab for measuring wear and tear on a prototype. The type of system I build uses a single fiber to both deliver the probe light and re-collect it for analysis. To develop an image, the light must be scanned across the target. This is also what an ultrasound head does, but with sound. (In fact, we tend to use some of the same terminology as the ultrasound geeks do.) We don't do the "B-scan" part of the image. We only do the "A-scan" part where we look along a line into the target.

[thedugal]

When you could hire Americans and make a profit

This is where your argument falls apart. You cannot profit if you hire Americans because you cannot compete with companies which already outsource. They can bid below your cost. There is no profit, you'd have to lose money to get work. This is not a simple issue. Calling businessmen greedy is just silly. Without "greedy" businessmen we'd still be living in caves.

Nonetheless, I sympathize with your point of view. Pro-free-trade conservatives are going to have to get their heads out of their collective arses on this issue. Low job growth=high dem vote=(liberal judges+higher taxes+nanny state)-freedom-security.

[x]

Low job growth=high dem vote=(liberal judges+higher taxes+nanny state)-freedom-security.

True. Even if there is going to be some movement of jobs overseas under any administration it doesn't pay to be complacent about it. I heard on McLaughlin that an administration official had called outsourcing a good thing. If true, we won't hear the end of it in this election year.

It's funny about the WSJ editorial page. You could always count on it to provide an alternative to the standard liberal line. But now, on issues like immigration or outsourcing, it has the same sort of unanimity and predictability and resistance to unconvenient facts that the Boston Globe or Pravda have long had.

[GOPcapitalist]

Pro-free-trade conservatives are going to have to get their heads out of their collective arses on this issue.

The free traders are not the problem. The real cause of the trade problem at present is the deficit spenders who are doing everything remotely possible that they can to ensure a trade deficit, and unwittingly so at that. Putting up protectionist barriers is not the solution because it addresses only false symptoms and normally ends up hurting more than it helps. The real solution is to (1) eliminate the deficit and (2) make the tax code friendly to at least a modest ammount of private savings.

Want to know how and why the deficit spenders are the problem? Take a look:

(1) GDP, or Y, = output for the US economy

(2) Y = C + I + G + (EX-IM) where C is consumption, I is investment, G is government spending, EX is exports, and IM is imports

(3) Since savings, or S, is all that which is left over after consumption by definition, S = Y - (C+G) = Y - C - G

(4) Rearranging equation 2 by simple mathematical operations, when get Y – C – G = I + (EX - IM)

(5) Substitute equation 3 into equation 4 and we get S = I + (EX - IM), which rearranges to S - I = EX - IM

Thus, as long as national savings are exceeded by investment, S - I will be a negative number, which in turn means only one thing: a trade deficit. Since the federal government is not only negligent of but also completely oblivious to the concept of savings in its own account, every year of deficit accumulation means the US is automatically disadvantaged in the S - I side of things.

[thedugal]

(1) eliminate the deficit and (2) make the tax code friendly

I agree wholeheartedly. But doing this will not fix the problem. I honestly don't think non-technical people can comprehend the seriousness of this problem. Indian programmers work for less than American programmers pay in rent. You CANNOT live on Indian pay in the U.S. That means you can NOT compete with them. Regardless of how low taxes go, rent for a 2 bedroom apartment will not drop below $100 anywhere in the US.

When I say non-technical people may not understand the seriousness I mean the scope of the problem. ANYTHING that can be digitized can be done in India, China, Russia. Some recent examples are U.S. tax forms being completed by Indian accountants is taking jobs from U.S. accountants. Another example, U.S. xray technicians take an xray and send the digital picture to India where Indian doctors analyze it and send their analysis back to the U.S. hospital in a matter of minutes.

This is serious not series. This new digital trend is changing everything, and the old economic formulas must be revised in order to figure out how the U.S. can maintain a high standard of living without a middle class workforce. I do not believe in protectionism, however, this is not an either or situation.

[GOPcapitalist]

I agree wholeheartedly. But doing this will not fix the problem.

It will fix, or at least go substantially in the direction towards fixing, the trade balance problem. What you speak of is a corrollary and related labor liquidity problem. I do think you overstate the labor liquidity problem somewhat in the sense that there are still substantial non-wage reasons why companies will still, in many cases, prefer the U.S. Proficiency in the English language is one of them. Another is political stability (i.e. governments don't get overthrown or attacked every couple of months). A third is infrastructure stability (there are many places in India, China, and Russia where blackouts happen on a daily basis for example). A fourth is a relatively sturdy legal system that, for the most part, applies uniformly to the business environment. A fifth is simply cultural, that is the United States is not impaired by historical cultural barriers such as the caste system or former or existing communism and authoritarianism. That said, I will grant you that there is a problem with labor liquidity as things stand right now. It's just not as severe as many make it out to be.

I'll also note that several things may be done to mitigate against this problem, among them formenting a business-friendly market environment within the United States itself. That means less government regulation, less government taxation of businesses and people in general, less OSHA, less EPA, and a less litigious society in the realm of tort law. By adopting these policies the country will add counterincentives for businesses to stay here or even come here through other benefits that offset the wage disadvantage we have against the third world. And, of course, having a more balanced trade inflow/outflow situation will help as well.