Thursday, February 19
Outsourcing - opinions, just like a$$holes, everybody's got one
Unfortunately, the Dispatch links are by subscription only. :(
From The Columbus Dispatch - Editorials
Shifting employment market inevitable but don’t tell Americans it’s a good thingI agree with this editorial. Unlike the next one from George Will
Thursday, February 19, 2004
FROMA HARROP
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 chief executive 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 confidence. 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 speculated 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 companies have already sent financialanalysis work to India. It can be easily done.
Thanks, 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 no longer can 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.
Froma Harrop writes for Creators Syndicate.
fharrop @ projo.com
From The Columbus Dispatch - Editorials
Few acknowledge upside of losing jobs to other nationsHere is the text of a letter I intend to send to the Dispatch (CC'ed to the above)
Thursday, February 19, 2004
GEORGE F. WILL
It is difficult to say something perfectly, precisely false. But House Speaker Dennis Hastert did when participating in the bipartisan piling-on against the president’s economic adviser who imprudently said something sensible.
Sens. John Kerry and John Edwards, who are not speaking under oath and who know that economic illiteracy has never been a disqualification for high office, have led the scrum against the chairman of the president’s Council of Economic Advisers, N. Gregory Mankiw, who said the arguments for free trade apply to trade in services as well as manufactured goods. But the prize for the pithiest nonsense went to Hastert, who said, "An economy suffers when jobs disappear."
So the economy suffered when automobiles caused the disappearance of the jobs of most blacksmiths, buggy makers, operators of livery stables, etc.? The economy did not seem to be suffering in 1999, when 33 million jobs were wiped out by an economic dynamism that created 35.7 million jobs. How many of the 4,500 U.S. jobs that IBM is planning to create this year will be made possible by sending 3,000 jobs overseas?
Hastert’s ideal economy, where jobs do not disappear, existed almost everywhere for almost everyone through almost all of human history. In, say, 12 th-century France, the ox behind which a man plowed a field changed, but otherwise the plowman was doing what generations of his ancestors had done and what generations of his descendants would do. Those were the good old days, before economic growth.
The disappearance of whole categories of jobs can be desirable for reasons other than economic rationality. The economist Irwin Stelzer recalls that John L. Lewis, the firebreathing leader of the United Mine Workers of America from 1920 to 1960, once said that he hoped to see the day when no man would make his living by going underground.
For the highly competent work force of this wealthy nation, the loss of jobs is not a zero-sum game; it is a trading up in social rewards. When the presidential candidates were recently in South Carolina, histrionically lamenting the loss of textile jobs, they surely noticed the huge BMW presence. It is the "offshoring" of German jobs because Germany’s irrational labor laws, among other things, give America a comparative advantage. Such economic calculation explains the manufacture of Mercedes-Benzes in Alabama, Hondas in Ohio, Toyotas in California.
As long as the American jobs going offshore were blue-collar jobs, the political issue did not attain the heat it has now that white-collar job losses frighten a more articulate, assertive social class. But an old lesson applies to this new situation.
The welfare state, beginning with unemployment relief, was pioneered in part by European conservatives, Benjamin Disraeli and especially Otto von Bismarck, to reconcile people to change — to the frictions and casualties of economic dynamism on which, such enlightened conservatives saw, national greatness would depend in the industrial age. It is sound social policy, and simple justice, that the party who benefits from free trade — the nation as a whole — should be taxed to ameliorate the discomforts of those who pay the short-term price of progress.
That is the case for education and job training for people needing to change their skills. Such assistance is especially imperative when the casualties of change bear no responsibility for their fate unlike, say, U.S. steelworkers, whose overreaching in collective bargaining deepened the problems of their industry.
Kerry says offshoring is done by "Benedict Arnold CEOs." But if he wants to improve the health of U.S. airlines, and the security of the jobs and pensions of most airline employees, should he not applaud Delta saving $25 million a year by sending some reservation services to India?
Does Kerry really want to restrain the rise of health-care costs? Does he oppose having X-rays analyzed in India at a fraction of the U.S. cost?
Recently, Indiana Gov. Joseph Kernan canceled a $15 million contract with a company in India for processing state unemployment claims. The contract was given to a U.S. company that will charge $23 million. Because of this 50 percent price increase, the state will have $8 million fewer dollars for schools, hospitals, law enforcement, etc. And the benefit to Indiana is . . . what?
When Kernan made this gesture, he probably was wearing something wholly or partly imported and that at one time, before "offshoring," would have been entirely made here. Such potential embarrassments are among the perils of making moral grandstanding into an economic policy.
George F. Will writes for the Washington Post Writers Group.
georgewill @ washpost.com
I am responding to the two opposiing editorials in the February 19th Dispatch that were published.Permanent link posted by bytehead @ 2/19/2004 04:14:00 PM
I applaud Froma Harrop with her outlook on the outsourcing of America's jobs. It's happening, it's going to continue to happen and there probably is very little we can actually do about without draconian measures.
George Will on the other hand seems to be overlooking some issues to make the outsource such a good thing.
His talk about automobiles has absolutely no bearing on the current situation. The blacksmiths, buggy makers and livery stable operators disappeared. Period. They weren't shipped off to another country to be done cheaper, and new jobs were created in their place such as steel workers and factory workers. In the current situation, programming still needs to be done, networks need to be administrated and X-rays need to be interpreted. And these jobs are being replaced with . . . what?
And as far as the Indiana situation goes, if it prevents $8 million from being spent on unemployment benefits, then I find the extra cost quite exceptable. It's unfortunate that being unprovable, we will never know.
It has been reported in the press that some companies, such as Dell are finding it "better" to move some of those jobs back to America instead of outsourcing them. Dell had too many complaints about their outsourcing of corporate support. And while outsourcing the support may have been cheaper, I believe that Dell has found that providing better support was probably a better goal to be shooting for.
The other problem I have with this editorial is that the main thrust isn't about trying to reduce anybody's fears about outsourcing, but about bashing the Democratic candidates for President. Mr. Will should have had more compelling arguments of why outsourcing is good, not something that tries and fails, and then complains about the people who do complain about outsourcing.
And Mr. Will, since you seem to be graciously equating cheap with better, I'm sure you are driving some stripped down economy car? After all, think of the thousands that you saved by doing that and spending them on something else?
I suggest that Mr. Will's column be outsourced. I'm sure that we can find somebody in India, or China or the Phillipines that loves baseball and has quite an understanding of its history, and is able to write just as well as Mr. Will, and perhaps will even follow his agenda.
Bryan Price
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