Newsweek column on outsourcing

Newsweek ^ | 8-07-2003 | Michael Rogers

[samuel_adams_us]

Aug. 7, 2003 / 5:32 PM ET Readers on outsourcing: I’ve been corresponding with readers this week about two Newsweek pieces, one on the “jobless recovery” phenomenon and the other on offshore outsourcing. It’s a major hot-button topic, particularly among IT workers, but the mail for the most part has been quite reasoned, if somewhat sorrowful and resigned. A few readers asked some pointed questions:

Name: Marc Hansen Hometown: Seattle When all the Microsoft, Oracle, and IBM software production has been outsourced offshore, and when all Intel factories are completely automated, and when all Home Depot stores have self-check-out lines. ... my question is: Who, in America, will be able to afford the food that the McDonald’s robots cook?

Name: EV Hometown: Annapolis, Md. Where do all of these upper level managers think they will be when everyone has been outsourced? Guess they better learn Hindi or one of the other 18 dialects. You are only a manager if there is someone left to manage.

Name: Daniel E. Platt Hometown: Putnam Valley, N.Y. Sixteenth century Spain was quite rich on gold from America. While they funded the industrial revolution in the rest of Europe, they were largely left behind in the end. Are we doomed to the same fate? Or should we purchase a future at the cost of lower profit margins now?

Rogers replies: All good questions. Here are some personal tales from the trenches:

Name: Toni Klinger Hometown: Massillon, Ohio I am so angry. My husband is 59 and lost his job to Canada four months ago. Yesterday, my sister-in-law was notified that her skip-tracing job was going to India. Hey, no problem, she’s only been with the company for 21 years! I have never been so frustrated in my life. People in their 50s just can’t start over. I hate life!

Name: G. Popsworth Hometown: Dallas, Texas I am struggling with what to suggest to my children for a course of study at college. It is becoming more and more difficult for college grads to find employment. Now with outsourcing rampant, they need something stable for their career opportunities. A small town dentist, doctor or lawyer might be appropriate.

Name: Thela Jinseet Hometown: Clinton, N.J. Here’s my story: I am a journalist for an online publication, and I’m bracing for impact. My employer’s entire technical staff is from India, making up nearly 50% of the employees here. The owners of the company are also Indian and they outsource to a team in India. Our Indian employees are a real bargain because they work ungodly hours: 10- to 12-hour days every day and on the weekends. They are also extremely bright. And it’s for low pay. But there’s more. My husband lost his electrical engineering job four days after 9-11 from a major Japanese company that closed its plant and moved its operations to France. Despite graduating with honors from a top university, it took more than a year for him to find work. And just in time: We had two weeks of unemployment benefits left, which was barely enough to pay for our mortgage. This time, he saw a substantial cut in pay. I am truly frightened after our experience. I am scared to buy another house. (We had to sell ours for his new job.) I am scared to have a baby. We can’t afford to save for retirement. Pensions are a thing of the past. My company doesn’t even have a 401(k) plan or even direct deposit for paychecks. I fear we will be poverty-stricken when we retire at 75. Why isn’t Congress listening?

Rogers replies: There were also some suggestions about what to do:

Name: Bill Hometown: Roswell, Ga. Outsourcing customer service jobs overseas is a double-edged sword. One side slashes the number of jobs that are available to U.S. employees and the other side slashes the income taxes that the federal government can collect. Uncle Sam ends up funding unemployment benefits for U.S. citizens who are denied jobs that have been sent overseas. One solution may be to penalize these outsourcing companies in the form of a negative subsidy so that they can help pay benefits for the unemployed.

Name: Mike K. Hometown: Aurora, Ill. Outsourcing makes for some really profitable companies, but fewer consumers have the money to buy that company’s products. That profit won’t last for long. Remember the big “Buy American” kick back in the 80s? I think we’re on the way to the “Hire American” craze. Find out who outsources and who doesn’t and support those who support America by hiring Americans.

[scottlang]

Name: Mike K. Hometown: Aurora, Ill. Outsourcing makes for some really profitable companies, but fewer consumers have the money to buy that company’s products. That profit won’t last for long. Remember the big “Buy American” kick back in the 80s? I think we’re on the way to the “Hire American” craze. Find out who outsources and who doesn’t and support those who support America by hiring Americans.

I already do this. Been doing it for a while now.

[chimera]

...but Joe Blow on the street is going to yell and scream when the price of his tv or radio or whatever shoots up.

But that's the real trick, isn't it? To be a consumer means you have to have disposable income. For most of us, that means we have to have a job. If Joe Blow loses his job to some offshoring scheme his company's CEO thought up to pad the profit margins by a fraction of a percent, it won't matter to Joe how cheap that foreign-made trinket is, he won't be able to buy it (eventually).

Other threads on these topics have made the important point that this latest pattern of job loss is hitting the middle class hard, not just the working class laborer like in the past, where the standard response was, "Tough luck. You should have gotten an education and you wouldn't be in this mess." Well, many folks have gotten educations and guess what, they're still in the mess. If foreign outsourcing eventually drives the middle class out of existence, those foreign firms better hope that their own employees at 69 cents and hour or less can start buying their products and services, because no one over here will if we don't have decent-paying jobs.

[DugwayDuke]

It was not my intent to insult, only to point out the similarities between subsidizing life styles through protective tarriffs and subsidizing life styles through welfare. Both should be considered anathma by a conservative.

There are indeed valid reasons for tarriffs, funding the government is one. There are also valid reasons to restrict certain imports or exports on national security grounds. However, that is not the argument commonly made in these threads. Nor are those arguments made in the article posted. Instead, the argument made by this article is that some one has lost a job and that the government should intervene to protect that job. That is not an argument to use tarriffs to fund the government nor is it a national security argument. It is, clear, plain and simple, an argument to protect, or enhance an individual lifestyle.

We've been over OPIC before. There website claims OPIC is a creator of jobs. I'm sure they overstate that, but there is really no credible way of verifying that they have either produced a net increase or decrease in jobs. But, I wouldn't be in favor of OPIC even if they were a net creator of jobs on constitutional grounds. The government should not be involved in creating or destroying jobs or increasing or decreasing lifestyles.

I can't agree with your logic on tarriffs and the civil war. If you want to argue that the South had an "immoral" advantage due to slave labor being lower cost than labor in the free states, then you'll also have to argue that the tarriffs were instituted to increase the cost of goods produced in the south. But, the tarriffs were not placed on southern exports, but on southern imports. Also, you would have to argue that the northern free states were in competion with the south to produce cotton, the principal export of the south. No, those arguments don't hold. The tarriffs were placed on goods imported from abroad, principally from France and England. Surely, you do not intend to argue that France and England were slave states?

Of course Congress has the power to regulate commerce. That power was reserved to Congress to preclude the states from using protective tarriffs to benefit their industries at the cost of industry in other states. That power was not given to Congress to protect some ones job, their wages, or their lifestyle.

[aegiscg47]

My comment was just that when faced with the prospects of saving millions of dollars in benefits costs, taxes, etc..., and a chance to earn a profit, most companies are going to outsource. I didn't remember saying that I thought it was right or not, just that it is a reality in today's business world.

[DugwayDuke]

"It's not my job to help india, last time I looked I lived in the United States. I guess some of us forget where we live?"

Nor is it my job to protect you, your job, or your lifestyle. It is my job to protect my family from those who would use the power of the federal government to transfer wealth from my family to yours.

[Bloody Sam Roberts]

Why isn’t Congress listening?

Because no matter how loud you yell or how many letters you write...They Don't Care.

They got theirs. They have their ticket on the Gravy Train. As long as they can keep getting elected...they're ok with just about anything. Who do you think all of these immigrants that they let into the country to take our jobs are gonna vote for?

[Dane]

I want GWB to be able to run for relection on a platform of stay the course or something similar. If we contiunue to have fewer people employed every month then such will not be possible and he will haver to run on Prosperity is just arround the corner. The two platforms are vastly different. Again this has been explained before. Perhaps we would not have been having this discussion if the full Bush tax cut had been implemented but it was not. Of course again IMO we would simply have deferred the date of this discussion

Unemployment is going down. Economic indicators are going up, and yet you are wailing that we are in another depression.

It ain't a depression, but a correction.

Face it IT workers in India can compete with us now. They keep us competitive.

Also from all the reports I have seen, at the most 10% of IT jobs are going overseas. That is much milder than the 50% contraction in employment the steel industry suffered in the late 70's and early 80's and the country survived and moved forward.

[Bloody Sam Roberts]

Find out who outsources and who doesn’t and support those who support America by hiring Americans.

Now there's an idea that I hope catches on! And it'll work.

[harpseal]

I can back up the "whiner" comment - I'm calling it as I see it. I can cite the name-calling by those on your side of the issue, including yourself.

As I can back up the traitor comment. Now you have been several ytimes invited to discuss the issues of thrade and jobs which is what this thread is about and your only response has been Whiner.

The truth hurts, doesn't it?Sometimes I presume that is why some object to the use of the term traitor. However a whiner does not invite discussion of issues.

The only difference between Paul Craig Roberts and Jesse Jackson are the groups they claim to act on behalf of in carrying out their shakedowns. I stand by that comment, too.

So you are clearly stating that you prefer Ameicans to be harmed economically to having other nationals harmed economically? Paul Craig Roberts and most of us who question teh current trade enviroprnment are merely for American economic development and susatinibng an American economy if you wish to equate that with Jesse Jackson that is of course your perogative but then it is my perogative to telkl you you are full of it andf misrtepresenting reality.

There is a major difference between the government of the United States of American picking winners and loserts in the United States of America or handing outr favors to specific groups based on some arbutray criteria and the United States of America providing a good economic envirornment for all its citizerns and for its free market to work.

Now why should i have anyt faith whatsoever in your impatiality as to calling tehm liek you see them when all you have done is call names. Perhapsa I should respond by staing that your attitude is more like Al Sharpton and Jesse Jackson's thatn anyone else all you do is repeat the slur without justification.

[StolarStorm]

Spoken like someone who has a full 401k from years of employment. For those of us, just starting out, we should be concerned. Your concern is clearly to keep your retirement investments doing well.

[harpseal]

Also from all the reports I have seen, at the most 10% of IT jobs are going overseas. That is much milder than the 50% contraction in employment the steel industry suffered in the late 70's and early 80's and the country survived and moved forward.

That projection was for the next 18 months and does not include those jobs sent overseas prior to July 1, 2003.

[mhking]

Did things change so much in the past 6 months? If so, what, how and why? These would be important questions then.

Overall? Nothing changed.

My guess is that the libs wizened up once a "critical mass" was achieved (much the way they do anything - reactionarily). They got clubbed over the head with it, and outsourcing became the new, hot buzzword in the national media.

From what I can see, the rate of growth of offshore outsourcing is advancing steadily, but because it is, it took some significant numbers before anyone noticed.

I'm sure some of it may have come from Dean's people, but no more or less so than from elsewhere. Folks are figuring out that the internet implosion is not totally a domestic issue - that the implosion is working in reverse in places like India and Singapore, as Western jobs migrate across the globe.

[hedgetrimmer]

This is a manufactured reality. Until the WTO and the globalists in our government made it so, there was quite a different reality in the world. Where borders and sovereignty meant something, where the Constitution was the supreme law of the land, and it was considered treason to do business with communist countries if it made them more powerful.

[clamper1797]

What is a WOsD?

War On some (non-government approved) Drugs

[cherry_bomb88]

PING.....

Big '88 & AdSimp, did we not have this conversation with our good friend at the ballgame last Sunday????

[dfwgator]

Since when is it your job or mine to support some aids infected indian?

You lose all credibility when you make statements like that. Here are some facts. More Capability Maturity Model Level 5 companies are based in India than any other country,and the US serious lags behind in this area. Now between you and me, all of this CMM stuff is a bunch of crap. But companies love that sh!t. Studies show that 50% of offshored projects fail. Guess what? 61% of in-house projects fail. It seems that one of the side effects of offshoring is that it actually forces companies to pay attention to doing up front analysis and detailed specs, things that are largely ignored for in-house projects. So the businesses are being sold that offshoring to India is not only cheaper, it is of better quality as well.

While I still believe that ultimately offshoring is vulnerable due to security issues, we have to face the fact that motivation for offshoring is more than just about cutting costs. We need to convince management that American IT workers are indeed better, because the fact is, they perceive that Indian workers are better, and perception is reality. The worse thing we can do is underestimate the forces that are working against us.

[LibertyAndJusticeForAll]

And in 1846 a new Corn Law was introduced that reduced the tariff on oats, barley and wheat to an insignificant amount.

All trade regulations must be done with fairness. And there is a lack of fairness in the current market. We have a huge Trade Deficit. The Yuan has been intentionally devalued by Red China. And, Americans cannot compete with the near slave-wages of Third World countries.

[William McKinley]

It strikes me as too coincidental that a "critical mass" was acheived right in time for the Democrat campaign.

I am not arguing against some policy changes here, by the way. I just suspect that a good portion of what is going to be coming out of the mainstream media on the matter in the coming weeks will need to be scrutinized carefully. There is bound to be some distortions in there-- and where there are distortions there is bound to be someone who's positions just happen to take care of the item being exaggerated.

[Alamo-Girl]

Thanks for the heads up!

[mhking]

Duke, I don't think most here have a desire to take from the guy next door or the guy down the street in order to provide for themselves.

I think that most here, myself included, would prefer if the government would stop providing incentives, in the form of the L1 & H1B programs, to entities seeking to transfer domestic jobs overseas.

If they want to move jobs overseas, that's their business, but there's no logical reason for the US Government to encourage them to do it.

That desire certainly is not akin to the "welfare"-based programs that you've alluded to.