Posted on 01/02/2010 6:03:32 AM PST by Son House
While not all of those jobs will be lost overseas, those workers will face wage pressures. -- Hewlett-Packard has asked many of its EDS employees to take 50% pay cuts.
Even the most pro-offshoring report, written by McKinsey Global Institute's Diana Farrell, which asserted that the U.S. will be better off with offshoring, concedes that American workers will experience major losses in wages and jobs.
Offshoring is a major structural shift in the way the economy works. Alan Blinder has called it a shift equivalent to the industrial revolution. Ponder that!
What needs to change so that companies reject outsourcing options that make economic sense for them? This is a very important observation, one that is lost on most politicians.
When John Kerry was running for president, he called the CEOs who outsource "Benedict Arnolds." They act rationally in their self-interest, and there's nothing wrong with that.
Unfortunately, President Obama named Farrell, who is the leading offshoring evangelist, to the No. 2 post in his National Economic Council. Farrell has done more than anyone else to spread the gospel of offshoring, so it's hard to believe that Obama takes his own rhetoric about Buffalo vs. Bangalore seriously.
The Obama administration has been worse than disappointing on the issue of offshoring, practicing a bait-and-switch approach.
By using the issue for political advantage, Obama has given a false sense to the public that he is taking action on offshoring. His only policy action to date is to try to close the tax loophole that encourages offshoring. It is highly unlikely he will have the political support to close the loophole, even though it should be a no-brainer.
And of course, the Obama administration has done nothing to close the loopholes in the H-1B and L-1 visa programs that spur offshoring.
(Excerpt) Read more at computerworld.com ...
Macroeconomics is the Democrats worst subject, and why McCain and the Republicans didn't get that early on will haunt us all.
Lower the taxes, lower the regulation, companies will prefer America to "Offshoring"
I never understood why companies don’t get it...if you ‘offshore’ your jobs to other countries, thereby causing massive unemployment here, how are we supposed to be able to buy your products?
Another insightful article from February 3, 2009, “either ignorant or naive”;
H-1B, offshoring supporters get key Obama Administration posts
http://www.computerworld.com/s/article/345850/Career_Watch?taxonomyId=
It is like a vicious circle. The more jobs move overseas, the more Government will make up the difference by hiring more people, the more taxes will go up, the more companies will offshore to maintain their profit margins.
At this point, I think we’ve screwed the pooch anyway. Most rational CEOs see America (and the West in general) as a dead man walking. We have made too many promises that we can’t fulfill. Before the politicians own up to that, they will put the squeeze on business to the breaking point.
As bad as it seems now, this is just the beginning.
The only thing you need to know, is that Barack Obama Hates America. All decisions descend from there. This has nothing to do with economics, free markets or anything other than him doing everything he can get away with that hollows us out. Does offshoring jobs make America weaker? If the answer is yes, that will then be the policy.
I believe that a major revamping of labor law is necessary to stop offshoring. The rats have dropped some major labor bombs on the economy, most notably the Lily Ledbetter law. This terrible law will highly constrain hiring practices especially for talent with highly demanded skills. Beyond this law, I believe that the rats have issued many executive orders encouraging collective bargaining and providing ammunition for EEOC type of lawsuits.
Even if the rats had not changed labor laws, I think that major revamp of employee-employer relationships would be necessary to stem offshoring. The IRS has very tight restrictions on employee-employer contracts. The IRS wants tax withholding. In the 80s, one could become an independent contractor easily. Although many may prefer to work as employees, working as a contractor is much better than not working. With the current arrangments, the only way to work as a contractor is to work for a temp agency. For many, it is advantageous to eliminate the temp agence and work directly as a contractor. Over time, independent contractors can develop a diverse set of clients.
Foreign outsourcing is bad for the economy....it just redistributes wealth out of America to some foreign country....many times to a nation friendly to communists and/or terrorists.
If a company cannot survive in America by hiring Americans....it probably should not be in business in the first place.
As for Obama...he is just another Liberal Globalist.....thinks foreigners are better than Americans. Obama just another of those Economic Anti-Americans
Unfortunately the IT company I work for is in the midst of moving many jobs to India (and possibly China). The math is very easy. An American engineer costs the company over $60/hr. Someone in India costs $20/hr. If you’re a CEO selling IT services, you are very apt to take the option that allows you to sell services at a very low rate. Therefore you offshore.
And if you’re a CEO buying services, patriotism usually isn’t a good enough reason to pay extra and have to explain that to Wall St. The only viable solution, other than protectionism, is to wait until the cost of resources offshore don’t offer the 3:1 advantage they do now.
if you ‘offshore’ your jobs to other countries
“they will put the squeeze on business to the breaking point”
^
And that’s where we’re going fast, it starts with profits and risk, but ends with macroeconomic catastrophe as Democrats run business out of America and other countries welcome them by realizing Democrat tax and regulate mistakes
Agreed on contracting.
“Foreign outsourcing is bad for the economy....it just redistributes wealth out of America to some foreign country....many times to a nation friendly to communists and/or terrorists.If a company cannot survive in America by hiring Americans....it probably should not be in business in the first place”.
Preposterous. Outsourcing is GOOD for the economy.
Example: Apple makes products overseas which has caused their company to grow tremendously in the US thus hiring more people here
I never understood why companies don’t get it...if you ‘offshore’ your jobs to other countries, thereby causing massive unemployment here, how are we supposed to be able to buy your products?
Not only companies do not understand....there are still quite a few here on FR that do not get it. If Americans are not employed...they cannot buy those foreign made products....or those products outsourced
Eventually, these companies that outsource will have nowhere to go....they will eventually lower prices, reduce services, or go out of business. The current Liberal Globalist mentality of Free Trade and Outsourcing eventually will collapse
As for Obama...he pretty much is doing what George Soros wants him too....Free Trade, Globalism, Outsourcing...and scary is that a lot of GOP support this nonsense
You forgot the additional $60/hr. the boss has to pay you top fix the crap that Apu coded so that the original business purpose for the program is achieved.
Virtually my first year at my current company (2006) was rewriting tons of SAP programs and interfaces that were so screwed up by our SAP implement or’s outsourcing company in India, that my company tried to get most if not all of their money back for this part of the project.
My friend who worked for Philips and is now a contractor for IBM says that IBM's main staff is in overseas and that the quality of work is below that of dog crap. He says Philips now regrets laying off their entire IT staff and go with IBM consulting.
Preposterous. Outsourcing is GOOD for the economy.
Example: Apple makes products overseas which has caused their company to grow tremendously in the US thus hiring more people here
If Apple was making those products in America....they would be creating more jobs in America. That is a no-brainer.
That is why a third party will loom over the horizon in 2012. Dems do not understand that taxes and regs are killing businesses, and the GOP put too much faith in Wall Street/Bankers (more schemes/financial bubbles) and CEO’s to do what is right for the country. Net result is a diseaster for Main Street and opportunity to have a decent life and future in America.
Oh, they ‘get it’.....but you have to understand the corporate mindset that is dictated by the Street: quarterly performance. It’s ALL about the latest quarter and how investors/financial analysts respond. Lower costs by off-shoring? You get rewarded by the Street; your stock takes a bump, you keep your cushy jobs in Mahogany Row.
American business is doing this to themselves with such idiotic, short-term thinking.
That is why a third party will loom over the horizon in 2012. Dems do not understand that taxes and regs are killing businesses, and the GOP put too much faith in Wall Street/Bankers (more schemes/financial bubbles) and CEO’s to do what is right for the country. Net result is a diseaster for Main Street and opportunity to have a decent life and future in America.
So absolutely correct....
Neither the GOP or DNC understand what it really takes to fix the economy. High taxes and foreign outsourcing just redistribute wealth....they create zero jobs.
A candidate running on a low tax/no free trade platform will have a good chance of winning in 2010 or 2012....regardless of party affiliation.
Few argue that small businesses do most of the hiring...and....consumers drive the economy. High taxes and outsourcing hurt the two main cogs of the economy....small businesses lose revenue thru taxation...and consumers lose money from high taxes, and the loss of jobs.
I agree with your assessment. Revising our labor laws would reduce the cost of employment here so I think the changes would have an impact on offshoring. However, CEOs react to the overall costs so I still think offshoring will be attractive in many situations. I believe that CEOs are reacting to political risk here. The pro labor and pro litigation bias of the rats frightens CEOs so they factor political risks into their cost models. No CEO wants to deal with unions, trial lawyers, and populist politicians.
I have never purchased any crap made by Apple and I never will. It is junk.
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