I thought about adding on to the "Goodbye Jobs" thread, but it has grown to long to keep up with. The following are not my words, but I think this guy makes a strong case. It is a post from the ZDNET talkback in response to the new story that 3COM is outsourcing off of its remaining manufacturing. The article and all talkback responses are here:
Name: Erik Ohrnberger
Why are American jobs being off shored?
Complicated problem, really.
The corporations are being forced by the investors to cut costs and make their quarterly earnings numbers each and every quarter. This quarterly, short term focus has been the hallmark of American businesses for at least the last 20 years. Faced with this demand by the investors, corporations found that reducing labor costs between 50% and 90% is very attractive. It makes it much easier to make the quarterly earnings numbers.
So who are those investors?
Basically you and me, and everyone else that has invested in a 401K retirement program, or mutual funds, or any other thing in the stock market.
Another reason is that actual work content of the middle class is much more portable than the manufacturing jobs. In manufacturing, you need to have all kinds of heavy equipment, specially constructed factories that have the concrete flooring that can hold the heavy machines loads as well as a heavy duty structure to handle the overhead cranes that life the heavy equipment and put it into place. Middle class work is more focused on knowledge, understanding, and interpersonal skills. These are much easier to transplant into other countries, as all you really have to do is provide a long distance voice phone line as well as high speed data access.
So how come haven't these middle class knowledge jobs moved earlier?
Well, it's only been recently that the cost of the international communication lines has fallen to the point where their cost did not eat up the cost saving of moving the jobs overseas. With the advent of the Internet, focusing the communications companies to become global entities and providing global high speed communication services, made all of the international communications lines much more affordable.
The business process optimization efforts that corporate American have gone through in the last 10 years has greatly reduced the costs already by increasing efficiency, again to make the quarterly earnings numbers, and now that the business processes are fully documented, clearly defined, it's easy to move the tasks off shore to save even more money. Some corporations have also made the American workers whose jobs were being off shored actually train their off shore counterparts in how to perform their jobs effectively. This shortly before these Americans were being dismissed.
So how come the manufacturing jobs were moved overseas first?
All I can think of is that the cost of shipping the manufactured goods being back to the US markets is less than the difference in the compensation rates to create those goods. I was amazed to learn how large the international container shipping fleet had become, and how many shipping containers arrive in US ports daily. There must be some really good business in doing this, as all of these ships and ports must be fairly expensive to create, maintain, and operate.
If US businesses is saving all of this money, where is it going?
As the jobs and money disappear, and the newly created profits from paying Indians $2.50 an hour for a $12 an hour job, or $10,000 a year for a $60,000 a year job disappear into the pockets of obscenely compensated top executives. This effect will probably be short term, as unemplyed people can't buy as much goods and services as employed ones. Eventually the top executives will be sitting on the top of a crumbling empire, as they continue to off shore jobs until there is nothing left of the corporation as they have no market anymore, and they go bankrupt as well.
What are the economic impacts of all of this off shoring?
As American jobs drift offshore, municipalities lose income tax from those workers, the federal government loses payroll taxes, and the economy loses money that would have been spent on goods and services, many times over what the US corporations will save.
Are there any other threats beside economic with Information Technology jobs being out sourced overseas?
Yes. As software development and database system operations are heading to other countries much of the data that these systems store, manage, and manipulate has to also move over seas. Much of this data ends up in India and Pakistan - two hot beds in terms of on-going conflict. What do you think a terrorist can do with the Name, address, SSN, checking account number, bank routing number, personal income information, family information (i.e. how many children a family has for instance)? This seems to be a real threat to national security, but does the government even appear to be aware of this? I think not. I think that the government is listening to the big corporations that are off shoring their IT functions, and they keep telling the government that it's safe and secure, when it's not.
So why are off shore workers so greatly less expensive than American workers? I always thought that the American worker was one of the most productive workers in the world.
This is the simple part. Standard of living. Americans have one of the highest standards of living. That is also one of the reasons that there are so many people that want to live and work in this country. The countries to where these jobs are going don't have such a high standard of living, and therefore their compensation is much lower. And yes. The American worker is the most productive in the world. He's also one of the most expensive worker in the world. I'd like to know how the Germans are dealing with, or have dealt with the out sourcing issue and yet still maintain their high standard of living.
So why is it bad that the middle class are being unemployed?
The middle class is the class that makes the economy work. The middle class as a whole are providing the most value exchange to the economy with their aggregate value contribution, or labor, and the middle class as a whole out spend all other sectors of the economy combined by a large multiple. Without the middle class, the economic spectrum start looking more like the ones in the third world. In the third world, you have a fabulously wealthy upper class that has all the control and money, and you have an impoverished lower class that is basically eating dirt. These types of societies are marked by violence and instability, either perpetrated by the government police forces trying to keep a lid on things and keep the wealthy in power, or by rebel groups that are fighting either amongst themselves or against the police forces with the lower class being caught in the crossfire.
Is there anything that can be done to stop this off shoring?
Well, not really. If the government passes laws that prevent off shoring, the corporations will move out entirely by incorporating off shore. Besides, making a law like that is not in our capitalistic free market nature is it?
Will these jobs ever come back?
As the American standard of living declines, and the standards of living in the off shore countries raises, the standards of living and compensation will even out. The only thing is that this will probably take around 20 years to complete, and American will have lost it's position as a world super power, as you can't be a world super power without all those expensive high-tech weapons, and you can't afford those without a vibrant and strong economy, and you can't have that without a strong middle class. So yes, the jobs will eventually come back, but it will be a very long time.
What if we project into the future? Will it get any better?
Probably not. If the majority of the manufacturing jobs leave, and now all the middle class knowledge worker jobs leave what's left? Not much. Certainly not enough to have a strong and vibrant economy.
Are there any jobs that can't be off shored?
Sure there are.
Defense industries will never be out sourced. It's a direct threat to national security. However, much of the parts that these systems are build from are already being obtained from over seas, there there is already an indirect threat. What if an overseas supplier designs in an easily exploitable, yet hidden feature in their part or subsystem. At a critical time, this part or subsystem could be made to fail remotely, and impact the effectiveness in the field of our military units. Perhaps even more sinister would be a part or subsystem that regularly reports it's GPS location to a foreign power. Suddenly, they know the exact location of some of our troops. This is not a good situation at all.
Nursing and health care workers cannot be off-shored but to combat the shortage we are importing these workers from India and the Philippines. However, this assumes that there are people with health care to demand their services, and pay for their wages. If everyone is unemployed and without health care benefits, where is the demand going to come from? Where is the money to pay these people going to come from?
Building trades are still doing well (carpenters, masons, plumbers, electricians etc.), but again, the implicit assumption is that there is a demand for these services, and capital to pay for the rendering of these services, and again, if everyone is unemployed, whose going to build a new house?
Education can't easily be out sourced. I say easily as there have been significant strides in distance learning, but the teachers union is very strong and I'm sure wouldn't allow this. However, Teachers are educating children with the attitude that college education is a requirement for a decent paying job, yet the demand for these middle class jobs is already significantly falling. If this keeps up we'll be educating our children but leaving them with nowhere to go.
Personal sales jobs should be safe as long as there is a sufficient market and demand for what you are selling. Of course, with the over all contraction of the US economy due to off shoring job loss, this will increasingly become a smaller and smaller jog market segment as fewer and fewer people are employed and can afford the goods and services that you are selling.
Wouldn't government jobs be safe from out sourcing?
Some are, many are not. The government typically retains a contractor to perform the work that they need to have done. This contractor is free to use out sourcing to perform that work. Granted, much of the work physically needs to be performed in the US, and those are probably safe, but the governments Information Technology services is not. Some of those functions have already been out sourced. For government administration jobs it's different. Those jobs have to physically remain in the US.
I don't know the answer, and I don't have any answers. But I do know that we are in really deep trouble here, and since the government is the only entity that could possibly do something to slow down the off shoring and decimation of the American future. You would think that the government would be strongly motivated to do something to manage the situation. Only problem is that the government is been bought and paid for by big business, the same ones that are off shoring so many US jobs, so there is really no chance that the government will address this issue and jeopardize their big fat campaign contributions. Clearly, campaign and political contributions and special interest group influence on the government regulations need to be modified to make the good of the people more preeminent on the elected official's radar. But that has been tried a number of times, and each time has failed.
What should we do about the government and business that are exploiting us much to our detriment?
Well, that's a really hard question. If we look at history and how similar exploitations were dealt with in the past, I think of two examples: The French Revolution and the Russian experimenting Communism. In the French Revolution, the lower and middle class latterly executed nearly all of the nobility. In Russia, which is actually another example of the privileged few and downtrodden masses economic spectrum, there were purges of millions of people. I'm not sure that I like either one of those scenarios, and I hope that they never come to pass. The chaos that this would inflict would be worse than the problem.
I guess the real question is how bad does it have to get before something is done to address the issue. The longer it goes unaddressed, the more severe the corrective action will end up being. If it gets bad enough, I'm sure that there will be a revolt by the populace and it's ensuing chaos. You have to remember that the unemployment statistics, presently reporting 6.2% unemployment rate, are only counting the people that are collecting unemployment benefits. Those people that have already expended all of their unemployment benefits are not counted, even if they don't have a job, so the true unemployment rate is probably worse than what the government statistics may lead you to believe.
Take too much from the US people, will they give up and commit suicide? Or will they pick up their guns and start shooting? Or will they start voting? Who knows. I know that I don't. But I could see either of these things happening. My preference, of course, is that they start educating themselves about the issues, making their points of view known, and start voting, but that's just me.
Is unionizing the workforce a possible means to address the issue?
Perhaps in the short term. In the long term I fear that US businesses that have to deal with a union will reduce their presence in the US, re-incorporate off shore, and migrate from being a US business to being a global multi-national business. When they arrive at this point, why have more than a limited presence in the US where you have to deal with a strong union? The EU community has strong unions. Have these unions prevented off shoring their jobs? I don't think so.
What really should be done to address this issue?
Well, a means of pricing products fairly in the international market needs to be implemented. This system needs to take into account the fact that the western countries have a high standard of living and expensive labor rates as well as the fact that the present out sourcing countries have a lower standard of living and inexpensive labor rates, yet make it fair to both to compete. There is a notion of a fair living wage. This wage would take into account these differences in the labor rates and standards of living. This needs to also include the benefits package, as in western nations this is a significant part of the compensation expense. I could imagine a Federal import tariff on all goods and services that are imported from countries that have a lower standard of living than we do. Something like 75% of the difference in total compensation rate. This would take some of difference between compensation rates out of the price difference and allow the US workforce to come closer to competing. Note that I don't say protect our jobs, I say allow us to complete on a closer to level playing field. Given a closer to level playing field, I say bring them on. I have faith in the innovation of the American system and the American worker to be able to compete and thrive, as long as the playing field is more towards being level and fair than not.
Of course, this would have a significant impact on cost of those low cost goods that are being shipped in from China and other already off shored manufacturing. Such actions by nations are not new. The Japanese have protected their local markets for years now, and continue to do so, while still being a major exporter to the world markets. Perhaps it's time that we take care of our own. Perhaps a grassroots 'buy American' campaign would have a positive impact.
For example: The job you save by not buying that cheap imported car may be your own. Notice that I say imported car. There are a lot of foreign automobile corporations that are building cars here in the US, and employing US workforce. Only problem is that the bulk of the profits from those automotive sales are being shipped back to that foreign country. So if you buy a non-US automobile, at least make sure that it's build in the US, or perhaps built by a US corporation overseas where at least more of the profits come back to the US.
What about the World Trade Organization and the G8 members. Could this help?
The WTO is a toothless tiger. The G8 members and the WTO members are far more motivated in taking advantage of the situation for their own countries advantage rather than caring about what's fair or about us. Never mind that the world connected economy would suffer when the US economy is down, and never mind that if the US economy is suffering significant unemployment that it's down by definition. All of that will catch up with them in a few years, but for now, they can take advantage of the situation and gain the immediate economic upper hand.
Name: Erik Ohrnberger
Why are American jobs being off shored?
Complicated problem, really.
The corporations are being forced by the investors to cut costs and make their quarterly earnings numbers each and every quarter. This quarterly, short term focus has been the hallmark of American businesses for at least the last 20 years. Faced with this demand by the investors, corporations found that reducing labor costs between 50% and 90% is very attractive. It makes it much easier to make the quarterly earnings numbers.
So who are those investors?
Basically you and me, and everyone else that has invested in a 401K retirement program, or mutual funds, or any other thing in the stock market.
Another reason is that actual work content of the middle class is much more portable than the manufacturing jobs. In manufacturing, you need to have all kinds of heavy equipment, specially constructed factories that have the concrete flooring that can hold the heavy machines loads as well as a heavy duty structure to handle the overhead cranes that life the heavy equipment and put it into place. Middle class work is more focused on knowledge, understanding, and interpersonal skills. These are much easier to transplant into other countries, as all you really have to do is provide a long distance voice phone line as well as high speed data access.
So how come haven't these middle class knowledge jobs moved earlier?
Well, it's only been recently that the cost of the international communication lines has fallen to the point where their cost did not eat up the cost saving of moving the jobs overseas. With the advent of the Internet, focusing the communications companies to become global entities and providing global high speed communication services, made all of the international communications lines much more affordable.
The business process optimization efforts that corporate American have gone through in the last 10 years has greatly reduced the costs already by increasing efficiency, again to make the quarterly earnings numbers, and now that the business processes are fully documented, clearly defined, it's easy to move the tasks off shore to save even more money. Some corporations have also made the American workers whose jobs were being off shored actually train their off shore counterparts in how to perform their jobs effectively. This shortly before these Americans were being dismissed.
So how come the manufacturing jobs were moved overseas first?
All I can think of is that the cost of shipping the manufactured goods being back to the US markets is less than the difference in the compensation rates to create those goods. I was amazed to learn how large the international container shipping fleet had become, and how many shipping containers arrive in US ports daily. There must be some really good business in doing this, as all of these ships and ports must be fairly expensive to create, maintain, and operate.
If US businesses is saving all of this money, where is it going?
As the jobs and money disappear, and the newly created profits from paying Indians $2.50 an hour for a $12 an hour job, or $10,000 a year for a $60,000 a year job disappear into the pockets of obscenely compensated top executives. This effect will probably be short term, as unemplyed people can't buy as much goods and services as employed ones. Eventually the top executives will be sitting on the top of a crumbling empire, as they continue to off shore jobs until there is nothing left of the corporation as they have no market anymore, and they go bankrupt as well.
What are the economic impacts of all of this off shoring?
As American jobs drift offshore, municipalities lose income tax from those workers, the federal government loses payroll taxes, and the economy loses money that would have been spent on goods and services, many times over what the US corporations will save.
Are there any other threats beside economic with Information Technology jobs being out sourced overseas?
Yes. As software development and database system operations are heading to other countries much of the data that these systems store, manage, and manipulate has to also move over seas. Much of this data ends up in India and Pakistan - two hot beds in terms of on-going conflict. What do you think a terrorist can do with the Name, address, SSN, checking account number, bank routing number, personal income information, family information (i.e. how many children a family has for instance)? This seems to be a real threat to national security, but does the government even appear to be aware of this? I think not. I think that the government is listening to the big corporations that are off shoring their IT functions, and they keep telling the government that it's safe and secure, when it's not.
So why are off shore workers so greatly less expensive than American workers? I always thought that the American worker was one of the most productive workers in the world.
This is the simple part. Standard of living. Americans have one of the highest standards of living. That is also one of the reasons that there are so many people that want to live and work in this country. The countries to where these jobs are going don't have such a high standard of living, and therefore their compensation is much lower. And yes. The American worker is the most productive in the world. He's also one of the most expensive worker in the world. I'd like to know how the Germans are dealing with, or have dealt with the out sourcing issue and yet still maintain their high standard of living.
So why is it bad that the middle class are being unemployed?
The middle class is the class that makes the economy work. The middle class as a whole are providing the most value exchange to the economy with their aggregate value contribution, or labor, and the middle class as a whole out spend all other sectors of the economy combined by a large multiple. Without the middle class, the economic spectrum start looking more like the ones in the third world. In the third world, you have a fabulously wealthy upper class that has all the control and money, and you have an impoverished lower class that is basically eating dirt. These types of societies are marked by violence and instability, either perpetrated by the government police forces trying to keep a lid on things and keep the wealthy in power, or by rebel groups that are fighting either amongst themselves or against the police forces with the lower class being caught in the crossfire.
Is there anything that can be done to stop this off shoring?
Well, not really. If the government passes laws that prevent off shoring, the corporations will move out entirely by incorporating off shore. Besides, making a law like that is not in our capitalistic free market nature is it?
Will these jobs ever come back?
As the American standard of living declines, and the standards of living in the off shore countries raises, the standards of living and compensation will even out. The only thing is that this will probably take around 20 years to complete, and American will have lost it's position as a world super power, as you can't be a world super power without all those expensive high-tech weapons, and you can't afford those without a vibrant and strong economy, and you can't have that without a strong middle class. So yes, the jobs will eventually come back, but it will be a very long time.
What if we project into the future? Will it get any better?
Probably not. If the majority of the manufacturing jobs leave, and now all the middle class knowledge worker jobs leave what's left? Not much. Certainly not enough to have a strong and vibrant economy.
Are there any jobs that can't be off shored?
Sure there are.
Defense industries will never be out sourced. It's a direct threat to national security. However, much of the parts that these systems are build from are already being obtained from over seas, there there is already an indirect threat. What if an overseas supplier designs in an easily exploitable, yet hidden feature in their part or subsystem. At a critical time, this part or subsystem could be made to fail remotely, and impact the effectiveness in the field of our military units. Perhaps even more sinister would be a part or subsystem that regularly reports it's GPS location to a foreign power. Suddenly, they know the exact location of some of our troops. This is not a good situation at all.
Nursing and health care workers cannot be off-shored but to combat the shortage we are importing these workers from India and the Philippines. However, this assumes that there are people with health care to demand their services, and pay for their wages. If everyone is unemployed and without health care benefits, where is the demand going to come from? Where is the money to pay these people going to come from?
Building trades are still doing well (carpenters, masons, plumbers, electricians etc.), but again, the implicit assumption is that there is a demand for these services, and capital to pay for the rendering of these services, and again, if everyone is unemployed, whose going to build a new house?
Education can't easily be out sourced. I say easily as there have been significant strides in distance learning, but the teachers union is very strong and I'm sure wouldn't allow this. However, Teachers are educating children with the attitude that college education is a requirement for a decent paying job, yet the demand for these middle class jobs is already significantly falling. If this keeps up we'll be educating our children but leaving them with nowhere to go.
Personal sales jobs should be safe as long as there is a sufficient market and demand for what you are selling. Of course, with the over all contraction of the US economy due to off shoring job loss, this will increasingly become a smaller and smaller jog market segment as fewer and fewer people are employed and can afford the goods and services that you are selling.
Wouldn't government jobs be safe from out sourcing?
Some are, many are not. The government typically retains a contractor to perform the work that they need to have done. This contractor is free to use out sourcing to perform that work. Granted, much of the work physically needs to be performed in the US, and those are probably safe, but the governments Information Technology services is not. Some of those functions have already been out sourced. For government administration jobs it's different. Those jobs have to physically remain in the US.
I don't know the answer, and I don't have any answers. But I do know that we are in really deep trouble here, and since the government is the only entity that could possibly do something to slow down the off shoring and decimation of the American future. You would think that the government would be strongly motivated to do something to manage the situation. Only problem is that the government is been bought and paid for by big business, the same ones that are off shoring so many US jobs, so there is really no chance that the government will address this issue and jeopardize their big fat campaign contributions. Clearly, campaign and political contributions and special interest group influence on the government regulations need to be modified to make the good of the people more preeminent on the elected official's radar. But that has been tried a number of times, and each time has failed.
What should we do about the government and business that are exploiting us much to our detriment?
Well, that's a really hard question. If we look at history and how similar exploitations were dealt with in the past, I think of two examples: The French Revolution and the Russian experimenting Communism. In the French Revolution, the lower and middle class latterly executed nearly all of the nobility. In Russia, which is actually another example of the privileged few and downtrodden masses economic spectrum, there were purges of millions of people. I'm not sure that I like either one of those scenarios, and I hope that they never come to pass. The chaos that this would inflict would be worse than the problem.
I guess the real question is how bad does it have to get before something is done to address the issue. The longer it goes unaddressed, the more severe the corrective action will end up being. If it gets bad enough, I'm sure that there will be a revolt by the populace and it's ensuing chaos. You have to remember that the unemployment statistics, presently reporting 6.2% unemployment rate, are only counting the people that are collecting unemployment benefits. Those people that have already expended all of their unemployment benefits are not counted, even if they don't have a job, so the true unemployment rate is probably worse than what the government statistics may lead you to believe.
Take too much from the US people, will they give up and commit suicide? Or will they pick up their guns and start shooting? Or will they start voting? Who knows. I know that I don't. But I could see either of these things happening. My preference, of course, is that they start educating themselves about the issues, making their points of view known, and start voting, but that's just me.
Is unionizing the workforce a possible means to address the issue?
Perhaps in the short term. In the long term I fear that US businesses that have to deal with a union will reduce their presence in the US, re-incorporate off shore, and migrate from being a US business to being a global multi-national business. When they arrive at this point, why have more than a limited presence in the US where you have to deal with a strong union? The EU community has strong unions. Have these unions prevented off shoring their jobs? I don't think so.
What really should be done to address this issue?
Well, a means of pricing products fairly in the international market needs to be implemented. This system needs to take into account the fact that the western countries have a high standard of living and expensive labor rates as well as the fact that the present out sourcing countries have a lower standard of living and inexpensive labor rates, yet make it fair to both to compete. There is a notion of a fair living wage. This wage would take into account these differences in the labor rates and standards of living. This needs to also include the benefits package, as in western nations this is a significant part of the compensation expense. I could imagine a Federal import tariff on all goods and services that are imported from countries that have a lower standard of living than we do. Something like 75% of the difference in total compensation rate. This would take some of difference between compensation rates out of the price difference and allow the US workforce to come closer to competing. Note that I don't say protect our jobs, I say allow us to complete on a closer to level playing field. Given a closer to level playing field, I say bring them on. I have faith in the innovation of the American system and the American worker to be able to compete and thrive, as long as the playing field is more towards being level and fair than not.
Of course, this would have a significant impact on cost of those low cost goods that are being shipped in from China and other already off shored manufacturing. Such actions by nations are not new. The Japanese have protected their local markets for years now, and continue to do so, while still being a major exporter to the world markets. Perhaps it's time that we take care of our own. Perhaps a grassroots 'buy American' campaign would have a positive impact.
For example: The job you save by not buying that cheap imported car may be your own. Notice that I say imported car. There are a lot of foreign automobile corporations that are building cars here in the US, and employing US workforce. Only problem is that the bulk of the profits from those automotive sales are being shipped back to that foreign country. So if you buy a non-US automobile, at least make sure that it's build in the US, or perhaps built by a US corporation overseas where at least more of the profits come back to the US.
What about the World Trade Organization and the G8 members. Could this help?
The WTO is a toothless tiger. The G8 members and the WTO members are far more motivated in taking advantage of the situation for their own countries advantage rather than caring about what's fair or about us. Never mind that the world connected economy would suffer when the US economy is down, and never mind that if the US economy is suffering significant unemployment that it's down by definition. All of that will catch up with them in a few years, but for now, they can take advantage of the situation and gain the immediate economic upper hand.
![[mad]](/data/assets/smilies/mad.gif "[mad] [mad]")
Can this "additional value" be taxed in a manner similar to the taxation of the wages of all the workers being displaced? ![[flame]](/data/assets/smilies/flame.gif "[flame] [flame]")
