randomWalks

Wow, what a list!

Did you guys see this story about E-Loan's voluntary offshoring program? Turns out, when given a choice, individual customers opted for the quicker turnaround closing time gained by using the Indian loan center versus domestic processing 85% of the time.

Didn't see that. But thanks for adding it.

What I'm trying to do with this post is sort of create a prolonged snapshot. Offshoring really shot up bigtime as a story after the whole Bush advisor debacle. And who knows how it's going to sort out?

But I wanted to mark what the perception was at this point before this develops into something else.

I feel like it's on the verge of becoming a Very Big Issue, namely if the anti-globalization crowd AND labor both start agitating around it.

Long live free trade. This kind of issue will of course become a "Very Big Issue" but probably in the sense that people will think it is destroying America more than destroying the world.

Hi,

You may want to check out http://offshoreupdate.com -- it tracks offshoring stories from a ton of blogs and news web sites.

Regards,

Ed

Whoever said "long live free trade" I hope is being facetious. 'Free trade' is nothing but a misnomer invented by rich guys to snow the common man into thinking that by taking their jobs they're actually helping them, the poor suckas. The middle class is evaporating in America, and without that, democracy is not possible. But more than hurting the worker in America--first the blue-collar, now the white-collar, too (oh, but we have service jobs! More fries, massuh!?)--to argue that 'free trade' is good for the world is also misleading. While it may have some temportary benefits, even the third world country with the new factory is not subject to stability--for the transnationals will hop from one third world country to the other to maximize profits, often while leaving rampant evironmental damage behind.

What this turns out to be, as they move from one cheaper country to another, is a continual "race to the bottom," as what makes the labor cheaper is lower or no labor or environmental regulations. The people of the world need to declare no less than a (nonviolent) war on this behavior--and proffer a new humanitarian globalization, this time from the bottom up.

Oops, sorry about that, got an error message a couple times when I tried to post. Also check out this blog which I made progressive blog of the week over at Menlo from Space, SLA and AmSam:

Outsourced America

Race to the bottom? All I can say is so be it. The bottom rungs of the third world are in dire need of an influx of money. Demanding a certain level of regulation from our trading partners will only keep the bottom rungs out of bounds. Sure, there are improvements that should be made to working conditions. But engagement is the best way to do that, not bitter name-calling.

Why this wave of globalization would end up any worse for American workers than previous waves is unclear to me. Dr. Menlo's rhetoric about a disappearing middle class rings as hollow scaremongering to me. I've yet to see any real evidence of such a shift. America as a nation is grossly rich compared to the rest of the world. Sharing the wealth seems like the best thing we can do to increase living standards around the world. We may not see 40-hour work weeks, college educations, a teenage leisure class, and two cell phones in every pocket in the next 10 or 20 or 50 years, but it'll take that much longer if we shift into protectionist mode. Meanwhile our economy will suffer as well.

I prefer free trade.

It's a completely American-centric and western-centric bit of worrying to decry free trade.

Keep squeaking your cushy chucks, dr menlo.

In all seriousness, isolationism is the ruination of nation states, and it's just a pretty trap one can fall into to start ramping up criticism of outsourcing so conveniently close to the American elections.

Thanks for those two great Off-shoring links.

I'm gonna preface this by saying that I'm not an isolationist nor a protectionist.

But to call what's going on a "free market" is a massive misnomer.

"Open markets" allow corporations and capital to flow freely, but not people. Jobs can be moved, but people's movements are restricted. Free markets? Free for whom? Free markets are about allowing corporations from rich nations to set up shop in poor ones.

All that serves to do is divide workers within the U.S. and between the U.S. and other nations. U.S. workers should be angling for the rights of workers elsewhere to have the same protections, not scapegoating them for taking their jobs.

Now a couple of other things:

The bottom rungs of the third world are in dire need of an influx of money.

So are the bottom rungs of U.S. society. Check out the flux post I did late last week, for example. Basically 1 out of 2 black men in New York City is unemployed right now. Something like 1 in 4 children in the U.S. goes to bed hungry every night.

My point? The U.S. is the richest country on earth, but it's not like there's ~300M people living it up. There's like 3 million people living up, tens of millions more doing pretty well and then the bulk of people scraping by or living in poverty. The level of personal savings is negative for the first time in U.S. history. The number of people forced into bankruptcy by medical bills is at an all-time high. 40M+ have no health insurance. 30M+ live under the "official" poverty line, which is set anemically low to keep the numbers down.

The last 30 years have seen a systematic lowering of the standard of living for the majority of Americans. America has the worst disparity between rich and poor of any industrialized nation. And the poorest here are in the same boat as people in third-world nations.

There needs to be the influx of money both here and there rather than pooling into a handful of people's bank accounts.

Moreover, much of the third world is demonstrably worse off than it was 50 years ago, before the advent the IMF/World Bank. You've got nations paying HUGE chunks of their GDP to pay back loans they didn't need. And what have been cut are health, education, social services in addition to the destruction of indigenous industries. This has been covered to death by a lot of people.

Demanding a certain level of regulation from our trading partners will only keep the bottom rungs out of bounds. Sure, there are improvements that should be made to working conditions.

You just contradicted yourself. You can't have it both ways. Where do you draw the line? Demanding a 6-day work-week is ok, but if you want 5 we'll take our business elsewhere? $0.30 cents an hour is ok, but if you want $0.50 fuck off?

The problem is that we're negotiating with entities that exist solely for their own benefit (corporations). If we let them dictate the rules, everything else--worker's rights, environmental protections, indigenous environments--suffer while we placate institutions that are driven solely by the need to deliver profit.

And the flip side is that within the U.S. the fact that the corporation can move your job without your say serves as a threat hanging over head.

"Shut up and take it or you'll be out of work. We're gonna raise your health care, keep your salary low, etc. But there's nothing you can do because there's hundreds of millions of people elsewhere who'd love to do what you do for 1/3 the cost."

I agree with boy that it's a major problem/weakness that the easy response to this is to point fingers and talk of other people "stealing" jobs. I think we should be talking about what I laid out in the beginning-- corporations enjoy rights that people don't. And that's fucked up.

Why this wave of globalization would end up any worse for American workers than previous waves is unclear to me.

I think the only difference is that they are coming after a different set of people's jobs. But the first wave of moving manufacturing jobs was bad for U.S. workers and bad for the places where the plants moved. (And to top it off, a lot of the places those manufacturing facilities moved are in turn losing those factories to other places).

I hate to say it, but I think in the early 1990s because 1) it was happening with a Democrat in office and 2) it was happening to blue collar workers, there was a sort of elitism in the way it was talked about. A lot of the people who are getting screwed now didn't see the move of manufacturing jobs as having an impact on them or being able to happen to them.

Whoops.

Well said, Zagg. "Free Market" is a misnomer. Anyone who believes in it as sold by this administration needs to find a news source other than CNN. As Eric Schlosser points out, if the invisible hand solves all economic woes, why is marijuana illegal? America does not support 'free markets'--and anyone who thinks so is simply naive. 'Free Market' is just a product line sold to simpleton suckers who remouth it's talking points while remaining blissfully ignorant of what 'free market' actually refers to--the globalization of exploitation and more profits for the already-rich, and nothing else. When you start to believe that the current captains of capital are moving jobs from one country with no labor or environmental standards to another with less such standards because they care about making the world a better place in the name of 'free trade' and 'globalization', then I got this architectural structure to sell ya which spans a waterway. Chump.

Basically 1 out of 2 black men in New York City is unemployed right now.

The numbers in that article seem very fishy to me. (A little investigating showed that the author of the article was just fantastically sloppy in his writing.) In any case, the employment situation for black men in urban areas is indeed atrocious. There are a lot of domestic policies and situations that have brought us to this sad state, but free trade is not one of them.

And the poorest here are in the same boat as people in third-world nations.

I don't believe that for a second. I'll give you the benefit of the doubt that it was just a bit of poorly worded hyperbole. Even the worst life in the US is miles beyond an average existence in many third world countries.

There's like 3 million people living up, tens of millions more doing pretty well and then the bulk of people scraping by or living in poverty. The level of personal savings is negative for the first time in U.S. history.

Again, I think you are exaggerating. There are lots of sad stories out there, but overall the situation is not so dire. Consumer debt is worrisome, but the problem there is with the consumers themselves. There are many people who need help, but again, this has nothing to do with free trade and everything to do with domestic policy. In fact, I daresay free trade and the race to the bottom it exemplifies has been good for those living below the poverty line. Wal-Mart, for all the bad it does, is the savior of every family living on a tight budget.

A particular domestic policy with which I have a tremendous beef is the payroll tax. 15% of every poor worker's entire wages goes to pay for social security and medicare. That's a disgrace. Ending that thievery immediately would go a long way towards improving the quality of life for low-income earners in America.

If health care for the elderly and retirement welfare are priorities for our country, we should pay for them fairly out of general revenues, assessed on a progressive (or a flat tax would be good too) income tax that covers all sources of income (capital gains, investor dividends) equally, and exempts all wages below the poverty line (or whatever line we decide should be drawn).

You just contradicted yourself. You can't have it both ways.

I was definitely unclear but it does not seem to me to be a contradiction. The distinction I mean is between what our government does (re trade policies, tariffs, etc) and what we as consumers and third-world laborers do. I think it's up to the people of these "exploited" nations and consumers of products made in those places to insist on certain worker standards. I would wish for better situations, but for our government to *require* them of other nations before allowing trade is counterproductive.

And the flip side is that within the U.S. the fact that the corporation can move your job without your say serves as a threat hanging over head.

Kind of like the threat that if I slack off too much, hang out on the Internet all day, or just don't meet the standards of my job, I get fired? That's hanging over my head all day, too. Why do I have more of a right to the job than the Malaysian or Cambodian or Lilliputian who can do the work, wants to do the work, is willing to work longer and harder, and needs the money much much more?

Moreover, much of the third world is demonstrably worse off than it was 50 years ago, before the advent the IMF/World Bank. You've got nations paying HUGE chunks of their GDP to pay back loans they didn't need. And what have been cut are health, education, social services in addition to the destruction of indigenous industries.

I totally agree that these huge loans which were rarely put to proper use and are now strangling these countries' economies are very bad things. I think the best thing rich governments such as ours could do would be to forgive the debts, start from scratch, and do what we can to help build more reasonable economic development programs for these countries. Education and entrepreneurship are two essential pieces, and we should do what we can to encourage them around the world.

Chump.

Dr. Menlo, your patronizing tone and simplistic arguments aren't likely to win you many converts. When you are willing to do more than paint those who disagree with you as shills or idiots, I'll get back to you.

But for everyone else reading, please be aware that I for one am no naif who thinks the US economy is the perfect model of a utopian nirvana of the "free market". Nor that the "free market" is the silver bullet for all social problems. And I certainly don't believe the current administration, or any powerful political groups for that matter, are at all interested in harnessing the power of markets to help people. The GOP has proven time and again it's just as bent on manipulating the rules to get the results it wants as any other political group.

I do think, however, that from a pragmatic point of view, harnessing human nature, corporations' greedy profit-motives, and the capital-based economy the entire world operates on is the best way (not the perfect way, nor the unstrewn-with-horrors way, nor the everyone-everywhere-will-benefit-in-every-way way) to improve the economic condition, and thus the political strength, of individuals and communities around the world. And further that the best way to right the wrongs we see in this system is to understand it and work within it (through voluntary systems like "Fair Trade" that give consumers a choice, while opening up new markets for enriching even more people), because as hampered as the market may be by regulations and overpowerful corporations and ridiculous goverment subsidies and restrictions, the fact is that it's the best (not the ideal, but the best) mechanism for dealing with these issues.

Zagg, I think that when you make the point that we should be helping the Cambodian worker to obtain what those in the US have, you're missing the fine ponit that this is all dependent on free trade.

What do you propose the Cambodian to do? Retreat from international trade agreements, and then develop some finely tuned economic machine without resources fromt he rest of the world?

As anyone can tell you, things look vastly different on the other side of the globe, and while I agree that the worker the world over needs proactive elements to secure a better livelihood, you cannnot do that without going global. otherwise, it's a farce.

i don't agree with the republican idea of free trade, i rather like to think that i practice the libertarian idea of free trade.

i didn't take anyone's job coming over here. i created jobs for more people that didn't have jobs. that kind of idea.

What do you propose the Cambodian to do? Retreat from international trade agreements, and then develop some finely tuned economic machine without resources fromt he rest of the world?

But what we have now is NOT free trade. It is trade agreements negotiated at the barrel of a gun. The U.S. and the West call the shots because they have the guns to back up their demands.

The best we can do is stand up to our government here.

can anyone help me, chosen offshoring as part of my assignment, have to talk about changes over the past few decades, obviously the amount of offshoring has increased, any comments

Zagg, I won't even comment about the gun thing, because I think you're being silly.

US makes more money from jobs outsourced to the United States than it does from jobs outsourced to countries like India.

you should click this one, too, if that doesn't work

Zagg, I won't even comment about the gun thing, because I think you're being silly.

Are you kidding, Doug? Is there a country on Earth to which we don't supply arms either to it or to one of it's adversaries?

While I don't disagree with adam, that's not what my point was.

I think Thomas Friedman (as much as I despise him) put it about as well as can be put:

"The hidden hand of the market will never work without a hidden fist. McDonald's cannot flourish without McDonnell Douglas, the designer of the U.S. Air Force F-15. And the hidden fist that keeps the world safe for Silicon Valley's technologies to flourish is called the U.S. Army, Air Force, Navy and Marine Corps."

The U.S. doesn't LITERALLY negotiate these treaties at gunpoint. But the fact that we've got, what, 700 military bases, a $400B annual budget, yadda, yadda, yadda, sure as hell serves as leverage and as a major influence in "free trade" deals.

That was my point, Adam. I highly doubt that when Coke wants to put itself in the market in, say, India, the Secretary of Defense answers his phone and says, "What's that? Are you kidding me? Send in the Apache battle group!"

The way Zagg phrased that, and now is skillfully applying more thought to it now reminds me that the argument is stretching outside of the original point, which was that American outsourcing is ruining our economy.

The problem, folks, is that a lot of American industry, number one, was highly protected by Bush before this utopian market opened up in INdia and China. Industry wouldn't change, it had no incentive to change. Your tax dollars was paying for keeping it inefficient and immobile. And then, suddenly bush agrees to lift steel tariffs. Why? Because China is stripping the world of steel. Okay, separate point, conceded.

But what happened was that once industry like the steel trade was no longer protected, it had to change. Companies began doing work overseas, and once that happened companies overseas, who no longer were prohibited from finding jobs in the US for their contract work and labor, could find it in the American economy.

So, the jobs that were lost, in some ways needed to be lost. Now those forces should be equalling out, and that takes time. But it also takes design, new thought and plenty of work.

My original point is that it wasn't till this point in the political race for president that outsourcing got so much attention, and that's because it's a what do you call it, a red herring or something. it's the thing that is somewhat anti-world and extremely American-centric. It assumes that China and India are wrecking the US economy. And it works in most people's m inds.

They only see short term problems, and they can't see India and China, so they assume, well, then, they are stealing our jobs.

It's like, you're falling into the Republican mindset, though you aren't in support of the Republicans.

Evil! Evil! Shame! (I kid, but that's what's happening.)

My point to Zagg was that we can't go off on this outsourcing thing and then reach a isolationist pitch because the brothers in Cambodia are all getting more money these days, and better working conditions.

The problems that make Cambodian life hard (and I will be there April 12-17 to study them and interview people about them) are political.

Did you k now that in Cambodia the government pays reporters to pitch stories putting favorable spin on the gamesmanship and insidiously hidden civil wars brewing in the regions? Or that landmines still cover Cambodian landscape, making it akin to walking around Shea stadium and getting the leg of one in three of your buddies blown off?

Without global attention, brought on by free trade and economic expansion, noone would be massively against this stuff.

And another thing, I am well aware that westernization is a way to get people to buy western things. A colleague and I were talking about this on the MTR when I told her that Hong Kong was confusing because all these people were wearing chuck taylors and speaking cantonese and having confucian value systems. she said, it's the way that the West rules the world.

I said, "But these shoes are made in China, and they are sold for a double profit by Chinese importers."

Makes you think whose really Western. If Western is a state of mind. Kind of like, what, Kentucky? What state has that as their ad campaign, i forget.

Steel industry giant finally posts a reasonable profit, after wallowing in a decrepit industry.

Thanks to China, their growth is outstripping most of the world resources. But don't worry.

Here's what will happen. In a little while--because China's productivity is so so so bad and extremely bad--that huge surge you're seeing, which you are also tempted to show as a cause for unemployment in the US, will gradually run down and do one of two things:

Either:

1. China is going to drop the biggest debt bomb you've ever seen in the history of the world, their banks will crash and the worldwide economy will dip further than it did after 911.

or

2. China's bubble will pop, and the US, because it protected itself and received this tradeoff of outsourching with other countries nad kept interest rates low, will bounce back, supplying more jobs at home and all will be rosy.

Let's see what happens.

But what happened was that once industry like the steel trade was no longer protected, it had to change.

I don't think that's exactly accurate.

Bush only protected steel for a couple of years. And U.S. Steel was going down before, during and after that period.

Bush's protections did little to protect the steel industry. I think what happened there, while impacted by Chinese steel, is a somewhat different story.

So, the jobs that were lost, in some ways needed to be lost.

I'd debate this too since during this time of 3 million job losses, the rich, as usual, have gotten richer and corporate profits have gotten much bigger. As has been the story for the past 30 years, the profits have been created by the rest of us having to make do with less so that corporations can get more.

My original point is that it wasn't till this point in the political race for president that outsourcing got so much attention, and that's because it's a what do you call it, a red herring or something.

Now this I agree with.

Off-shoring was this bubbling story for a while, but it really got blown out in February when the Bush advisor made his comments and Kerry started talking about "Benedict Arnold" CEOs (as if he's not just as much in their pockets). So the whole thing has become this massive hot button issue. And as a result I think it's become impossible to find any truth about what's going on.

The Democrats have come out as anti-offshoring (whatever) and the Republicans and the corporations have tried to bury the story. The thing boy linked is a classic example. Suddenly there's a report saying the U.S. is gaining from off-shoring. (That's partly true as the cost-savings for the companies surely is helping their bottom lines). There's also been a lot of stories suddenly about companies bringing jobs back and that off-shoring isn't working. Those are way overblown.

Regardless, both sides have boiled the issue down to really simplistic terms and the media is telling both stories. I don't think we'll get an accurate picture again until the election is over and the level of politicization on the issue decreases a bit.

For another take on the topic:

http://www.wired.com/wired/archive/12.07/view.html?pg=2

In the US, the debate about outsourcing often focuses on large companies laying off employees. News stories typically focus on the plight of people whose jobs have been eliminated by pitiless corporations. But there is another side to outsourcing. By tapping foreign markets, startups are creating jobs in the US that otherwise would not exist.