Outsourcing steals American jobs

“Yeah, HPM. I know the #'s are bigger. But, the article was of local interest because of the proposed legislation. But, it could have national significance if it gets passed. Maybe a model fro other states to try. Iknow some have been unsuccessful as of yet. But, maybe a little credibility can be shed on the idea...”

“I'm not sure how those laws would actually work. Big companies frequently spin off smaller companies as shells to get past similar restrictions.

Well, whatever the case as of this week we are now officially booming with work here at Seventhman.

Some really big stuff too. Now I just have to make it happen.”

“Best of luck to you, HPM. I think this is simply that, if a company receives a state subsidy, it must provide the jobs to the locals. That's pretty much the thrust of it. If they don't, they pay back the subsidies...”

“I don't see an issue with requiring accountability at all. The whole point of providing advantagous breaks to a company is that said company stays in the community and creates jobs thereby increasing tax revenues.

I don't necessarily have an issue with providing those breaks to companies as long as they uphold their part of the deal and the breaks don't harm the community by giving away too much.”

“That's the nail on the head! Assmeblyman Brodsky is saying that they are not keeping up their end and that they should be punished instead of further rewarded...”

“I would agree with that.

I also don't have an issue with a company getting these breaks laying off works temporarily. Unfortunately a company has to to that sometimes due to various market issues. But this isn't a layoff this is having the work to be done and sending the work outside the community that is bending over backwards to accomodate you.

It is dishonesty, it is breaking a contract and more to the point it is stealing from people who made a sacrifice because they want you there.”

“http://www.townhall.com/columnists/alanreynolds/ar20040311.shtml


Outsourcing and other trivial pursuits
Alan Reynolds (archive)


March 11, 2004 | Print | Send


The unemployment rate has fallen by half a percentage point over the past six months. If it merely continues to drop at the same pace, unemployment will be 5.1 percent in another six months (August) and below 5 percent before the election. Unemployment would then be the lowest ever for any president seeking reelection -- lower than it was for Nixon in November 1972 (5.3 percent) or for Clinton in November 1996 (5.4 percent).

If Sen. Kerry had hoped to make a big political issue out of an unemployment rate that is likely to be below 5 percent by election time, he had better start trying to change the subject as soon as possible. And his never-ending wisecracks about Herbert Hoover could to backfire, too, because Hoover enacted the same policies key Democrats now recommend -- namely, higher tax rates and tariffs.

Another non-issue that is sure to grow tiresome within a few more months is the maniacal anxiety about imports of business services -- a trivial pursuit that would have gotten no attention at all had it not been deviously mislabeled as "outsourcing."

That is not what outsourcing means. Outsourcing means having business services done by specialist firms rather than inside a manufacturing or financial firm. When I was a vice president at a Chicago bank, we had an entire floor of attorneys and a few dozen economists on the payroll. The bank could have gotten better service for less money by putting legal firms and economic consultants on retainer. It often makes sense to also let specialist firms handle accounting, employee benefits and payroll. That is outsourcing.

What uninformed politicians and journalists mean by "outsourcing" is importing services. They would have you believe the United States has suddenly been importing many more services. Yet the increase in service imports last year was precisely zero.

From 1997 to 2000, by contrast, U.S. service imports grew by 9.7 percent a year. So why did the media start fussing about imported services only after such imports stopped growing? Politics aside, this makes no more sense. Outsourcing is a senseless name for nonsense.

U.S. imports of both goods and services grew by 10.5 percent a year from 1992 to 2000 in real terms, but by only 1.5 percent a year from 2000 to 2003. Nobody complained about losing jobs to imports while imports were growing rapidly. The pretense that Americans are losing jobs to imports did not gain political traction until imports turned stagnant. Turning facts on their head is, of course, a familiar symptom of election-year mania.

Trade warriors have been staring down the wrong side of their canons -- imports, rather than exports. Imports have been weak for three years, but exports have been even weaker. That matters because the United States is by far the world's largest exporter of goods -- China ranks fifth. U.S. merchandise exports rose by 6 percent a year from 1990 to 2001, while exports from Europe grew by only 4 percent a year and exports from Japan by 3 percent. The United States is the world's largest exporter of services by an even wider margin -- India ranks 21st. Like China, India's imports of commercial services have doubled since 1995. Although India did achieve a tiny surplus in services in the past two years, the country has a sizable overall trade deficit.

By the fourth quarter of 2003, real U.S. exports of services were 5.2 percent higher than a year before. That is, the United States was exporting more "outsourcing" services, though service imports were flat. Real exports of goods were 7.2 percent higher. But those gains were still not enough to get exports back to where they had been before the global recession. Real U.S. exports in 2003 were still 0.6 percent smaller than they were in 2000.

Here is the problem: Just as U.S. imports grow only when the U.S. economy is growing (and shrink only in recessions), other countries' imports also grow only if and when their economies are growing. Strong economies, including ours, need more industrial imports and can afford to buy them. Unfortunately, the economies of our biggest trading partners have not been strong.

Canada accounted for 23.8 percent of U.S. exports last year, Mexico for 13.7 percent, Germany and France for 6.4 percent, and other OECD countries (mainly Europe) for 17.6 percent. If these economies don't grow, then neither can U.S. exports.

By the fourth quarter of 2003, real GDP in the United States was 4.3 percent higher than a year before, compared with only 1 percent in Canada and 2 percent in Mexico. GDP was up by a pathetic 0.2 percent in Germany and 0.5 percent in France -- two countries with unemployment near10 percent. When your biggest customers are broke, it is not easy to sell them more.

Blame Europe and Canada's weakness for relatively weak U.S. exports, not China's strength (which is helping Japan). As the year-end 2003 report from the U.S. trade representative noted, "Over the last three years, while U.S. exports to the rest of the world have decreased by 10 percent, U.S. exports to China have increased by 66 percent."

The United States would benefit greatly if there were more strong economies in the world, such as China and India, and fewer laggards like Germany, France and Canada. The latter countries could learn something from China and India, both of which found prosperity only after doing the exact opposite of what Herbert Hoover did in 1930-32 and what the Democratic Party now threatens to repeat.

The economies of China and India grew by drastically reducing tariffs and tax rates. China's average tariff on imports has fallen from well over 50 percent in the early 1980s to about 10 percent now, but actual tariff collections average less than 3 percent because so many goods are tariff-free. India slashed tariffs, too, and cut the top income tax rate from 62 percent in 1984 to 30 percent today, becoming just another in a long list of supply-side miracles.

Politicians now proposing that the United Stats should do the opposite of what China and India have done, and instead move closer to emulating Sweden and France, are amazingly slow learners.”

“And the problem with all that is that we have the largest economy in the world and can dictate workers rights and environmental policy to better even the playing field - if we get a president who can stand up to multinationals.

Also, I notice that the author of said article did not mentiona that the unemployment rate does not include those who have stopped receiving benefits...”

“That is quit long winded for something that doesn't get to the thrust of the situation. Why should a company, that receives subsidies in turn for providing jobs, continue to take our taxpayer money to ship these jobs elsewhere? Why should i give two sh_ts about their self-serving ability to cut costs? What does this do for my community? Your post says nothing of this...”

“Outsourcing means having business services done by specialist firms rather than inside a manufacturing or financial firm.

That is exactly what these big companies are doing only that "Firm" is from India or China. So then it magicly ceases to be outsourced and now should be called Imported business services? They are two terms that describe the same thing.

I don't particularly care what the author chooses to call it. Sending work out of a company, out of state or even out of the country has been termed as "Outsourcing" for a very long time. Long before 1999 in fact and his semantical arguement on that point is only intended to make those who don't like the fact that Americans are losing jobs look like they aren't informed.

I'm not a brilliant economist but I do know that Alan Reynolds of the Cato Institute is in the pocket of those self same corporations who are doing all the "Business Service Importing" as of late.”

“True, HPM. And that whole post is as evaasive as can be...”

“Bush appointee in question
Choice for manufacturing spot opened China factory

By Mike Allen and Jonathan Weisman Washington Post

Six months after promising to create an office to help the nation's struggling manufacturers, President Bush settled on someone to head it, but the nomination was being reconsidered last night after Democrats revealed that his candidate had opened a factory in China.

Several officials said the nomination may be scrapped because of the political risk but said that had not been decided. Bush's opponent, Sen. John F. Kerry (D-Mass.), has made job losses his chief point of attack, and some administration officials feared the nomination could hand him fresh ammunition.

In late afternoon, the administration announced that the new assistant secretary of commerce for manufacturing and services would be named at a ceremony this morning. Industry officials were told that the job would go to Anthony F. Raimondo, chairman and chief executive of a Nebraska company that makes metal buildings and grain silos.

But Kerry's campaign, tipped off about the impending nomination several hours earlier, hastened to distribute news reports that Raimondo's firm, Behlen Manufacturing Co. of Columbus, Neb., had laid off 75 U.S. workers in 2002, four months after announcing plans for a $3 million factory in northwest Beijing.

<snip>
Raimondo, who is chairman of the Omaha Branch Board of the Kansas City Federal Reserve Board, contributed the maximum of $2,000 toward Bush's reelection in June, a month after the campaign opened for business.”

“Outsourcing is GOOD for America! The PM of India says so! It must be true then!

http://news.yahoo.com/news?tmpl=story&u=/ap/20040312/ap_on_bi_ge/india_outsourcing”

“No job... More free time!

No home... More time in the outdoors!”

“DETROIT (Reuters) - The head of a group representing the chief executive officers of America's largest corporations on Monday accused CNN's Lou Dobbs of "one-sided" reporting about outsourcing and the shipping of U.S. jobs overseas.

"He's on a jihad," John Castellani, president of the Washington-based Business Roundtable, told reporters.”

“
Companies Finding Some Computer Jobs Best Done in U.S.
By EDUARDO PORTER

Even as the prospect of high-skilled American jobs moving to low-wage countries like India ignites hot political debate, some entrepreneurs are finding that India's vaunted high-technology work force is not always as effective as advertised.

"For three years we tried all kinds of models, but nothing has worked so far," said the co-founder and chief technology officer of Storability Software in Southborough, Mass. After trying to reduce costs by contracting out software programming tasks to India, Storability brought back most of the work to the United States, where it costs four times as much, and hired more programmers here. The "depth of knowledge in the area we want to build software is not good enough" among Indian programmers, the executive said.

If it sounds like "Made in the U.S.A." jingoism, consider this: The entrepreneur, Hemant Kurande, is Indian. He was born and raised near Bombay and received his master's degree from the Indian Institute of Technology in that city, now known as Mumbai. Mr. Kurande is not alone in his views on "outsourcing" technology work to India. As more companies in the United States rush to take advantage of India's ample supply of cheap yet highly trained workers, even some of the most motivated American companies — ones set up or run by executives born and trained in India — are concluding that the cost advantage does not always justify the effort.

For many of the most crucial technology tasks, they find that a work force operating within the American business environment better suits their needs.

"Only certain kinds of tasks can be outsourced — what can be set down as a set of rules," said Nariman Behravesh, chief economist of Global Insight, a forecasting and consulting firm based in Waltham, Mass. "That which requires more creativity is more difficult to manage at a distance."

Another Indian executive in the United States who has soured on outsourcing is Dev Ittycheria, the chief executive of Bladelogic, a designer of network management software with 70 workers, also in Waltham. Bladelogic, whose client list includes General Electric and Sprint, outsourced work to India within months of going into business in 2001. But it concluded that projects it farmed out — one to install an operating system across a network, another to keep tabs on changes done to the system — could be done faster and at a lower cost in the United States.

That was true even though programmers in India cost Bladelogic $3,500 a month versus a monthly cost of $10,000 for programmers in the United States. "The cost savings in India were three to one," Mr. Ittycheria said . "But the difference in productivity was six to one."

more...”

“That ain't the only thing being outsourced!


http://www.news4jax.com/employment/3239938/detail.html”

“lol treebait!

Check out this BS”

“Geez, that's just as evil as what goes on at UNF! Our ex mayor is now president of the school, and the vast majority of the campus is becoming hyper-conservative. I want to go back and take classes there with professors I respect. I just hope they're still there when I can (someday) afford to go back.”

“The rising tide of corporatism is squashing real free enterprise and we pay for it with corporate welfare.”

“The article I posted above is a story of a small business dude who runs a restuarant at a University, and pay 16K per year in rent to the university to lease the space. The University is going to end his 8 year lease in order to possibly offset a $100,000 subsidy that Aramark (big, big corp) gets for running the rest of the eating areas on campus.

The corporation that doesn't pay rent, and actually collects it, will get the space and profits, while the rent payer for the last 8 years gets booted.

Unfingbeiveable!”

“BB - I think these stories make it perfectly clear why Aramark is the preferred tenant:

Hefner admits in affidavit trying to trick auditors

Aramark gifts


I wish Sam McNulty had an email address in that article.”

“I emailed those links to the reporter. I'll bet there's fire behind all that smoke.”

“Thanks Violin. Check out this article. I'm meeting with the guy who wrote that today to discuss the sad economic state of our schools out there, and how the reason they are in that state is soley based on republican idealism and rule.”

“republican idealism and rule?

liberal democrats have fought the private school movement and home schooling tooth and nail from the....


you know what? forget it, you're brainwashed. have fun hating and teaching other to hate via disinformation”

“If you live in CA and are receiving food stamps I hope you don't have any problems...because if you do, when you call the number to ask for help you get...you guessed it, India.”

“"...have fun hating..."

What ever happened to ridiculing liberals for being soft-headed bleeding hearts?

Now we're black-hearted and greedy and hateful, huh?”

“Charter Schools cost Cleveland Public schools 45 million in funding.

You are right Strat, we do fight the privatization of schools tooth and nail, but, as usual, you can't seem to comprehend the arguement.”

“Hello?

Private schools don't get stuck with the problems kids.”

“Charter schools try to make a profit.”

“whatever.

i'm having a tough time holding my tounge right now, i'm just going to say that i'm amazed that people of your mentality actually exist.

your ill will sickens me.

enjoy.”

“GAO: Using Foreign Developers For Weapons Software Carries Risk

The investigative arm of Congress says the Defense Department
needs to do more to deal with the potential that developers from
unfriendly nations could write code for U.S. weapons systems.

http://update.informationweek.com/cgi-bin4/DM/y/ehJV0GMhnj0G4n0CYbS0A8”

“Ok, now that completely pisses me off. In order to work directly on defense jobs it requires background checks and security clearances. It's invasive, a real pain and keeps a lot of folks from getting the work.

But it's ok for a contractor to subcontract that same sensitive work overseas to nameless and faceless developers. Many of whom are in India, Russia and China. If you don't think that is serious security risk then you are a fool.

If I were involved with DoD purchasing I'd be looking very hard at who I sent work to in the future.”

“Yeah this is BS big time! We should make them get our secrets the old fashioned way, wait for someone like Clinton to get in office and pay for them.”

“The lights are on but nobody's home.”

“Aren't there rules about this kind of stuff? I rember when the armed forces were taking bids to replace the old Colt .45 ACPs and they would only take offers from companies within the USA.”

“I certainly thought there were rules regarding subcontracted work.”

“Until I heard this, the only other liability issue I'd heard about re: offshoring related to data privacy.

This is nuts.

Just now I'm thinking about the last FRONTLINE I saw -- Cyber Warfare. If the Black Hats can just come in through a back door, GAME OVER.”

“My dad was just on a 4 day strike (he works for SBC). One of the main things they were striking over was to get the jobs that went overseas to India back in the USA, and bring them in the Union. CWA won the strike, and because of the UNION, not SBC or GWB or congress, we get more good paying jobs back here in the USA!

How bout' that, that dirty union helped land jobs here, in this country, so some poor smucks can have decent healthcare, a good wage, and increase the tax base.”

“I also want to add that as of yesterday, 4 superintendents of area local schools, asked me, thier "enemy", how they can help in moving the politicians in this state to get off thier a$$ and start funding the schools legally. Together, we'll help keep jobs, and most importantly, provide adequate education for the kids.

What will all these evil unions do next?”

“bastard”

“LMAO Tilt!”

“Tilt?”

“BURN!”

“lol.”

“That was the oxycontin talkin'. Good thing it's the last dose, my leg is getting sore from kicking all these homeless people.”

“Rush? Is that you?
What did you do with the real Buddha Bear?”

“LOL”

“First, they came for the Manufacturers, but I was not a Manufacturer, so I did not speak out. Then they came for the Service Jobs and the Tradesmen's Jobs, but I was neither, so I did not speak out. Then they came for the IT Technicians, but I was not an IT Specialist, so I did not speak out. And when they came for me, there was no one left to speak out for me.
- Norma Sherry”

“What?! The information on job creation coming from the white house is misleading?!

I don't believe it!”