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Obama and Outsourcing

Posted on Friday, Mar 21st 2008

I love listening to Obama. After a long time, a real orator is dominating the political coverage on television, and it’s an absolute treat.

But, one thing he keeps saying that I find confusing is that he will stop US jobs from going abroad.

How exactly is he going to do that? What policy would enable him to achieve this objective?

Any guesses?

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Yes, stopping outsourcing would be inflationary and against free trade. Obama needs to think as if he is the world leader, not just america’s leader. Instead of stopping outsourcing, there should be more focus on good education for not just americans but people everywhere. It is in letting go, that one receives more. And when one can open one’s hands to let go of the stones, then only one can make space for diamonds.
Volunteer of Art of Living course http://www.artofliving.org

Mohan Friday, March 21, 2008 at 7:59 AM PT

I’m also generally supportive of Obama, but his anti free-trade and anti globalization posture is a real concern and a turn-off.

Having said that, I find it hard to believe he would push for draconian anti-globalization policies. Instead, I think he’ll focus on longer term solutions to keeping jobs here, primarily via education reform and possibly some tax reform…. I hope!

stefan Friday, March 21, 2008 at 8:28 AM PT

Talk about the tail wagging the dog! Mr. Obama (and others in the Presidential fray) really ought to present their views on how they will stimulate the US economy and the job market, rather than stopping jobs from moving out of the country. We are in an election year and because I believe that Mr. Obama is a reasonably smart guy, I will give him the benefit-of-doubt on this one.

Regarding policies that will deter/impede the jobs movement to foreign countries, I think it could be a combination of rewards (like tax incentives) for the companies that help keep jobs here and reprimands (“outsourcing” penalty) for those who do not. The more intersting question to ask is “How does Mr. Obama propose that all this job movement will be monitored/tracked?” This type of attitude is just going to stifle growth and encourage companies to find creative ways of beating the system.

Uday Kumar Friday, March 21, 2008 at 12:48 PM PT

Obama is talking about tax incentives for hiring in America – I think that’s a great idea. I’d prefer not to have good jobs exported to the lowest bidder. Yes we do need better education, and Obama is for that as well, but we also need the jobs for those who graduate with those better educations.

BTW: with a name like Sramana Mitra I’m guessing you are a guest in this country? As a guest you may not be concerned about the plight of the American middle class but most American Citizens are.

skeptictank Friday, March 21, 2008 at 11:22 PM PT

Hari – I'm talking statistically. I'd guess that statistically speaking odds are that you're a guest worker as well. Yeah, I'll be voting for Barak. True, if I didn't know his bio I'd wonder if he was born here based on his name… but I do know his bio. It's still an open question as to whether or not the blogger here is an H1B, GreenCard, Naturalized Citizen or 2nd generation…

My point was simply that those of us who are citizens have some skin in the game. Guests can find it easy to criticize our lack of wanting good jobs exported (in the name of free trade) because in a few years they'll be going back to their home country where they'll hope that that US corporations send jobs their way… and I suspect they'll also not want jobs eventually outsourced from their country.

skeptictank Saturday, March 22, 2008 at 2:59 AM PT

Skeptictank – your last paragraph is stupid at best, and downright deplorable at worst. What makes you think that a name can determine if someone is a guest or not ? You must be thinking a name like Barack Obama must definitely also be a guest in this country, and perhaps the job of the President of the United States itself is being outsourced. Get yourself educated on who an “American” really is today..

Hari Swaminathan Saturday, March 22, 2008 at 9:33 AM PT

I think you are focusing on the wrong issue. Whether I am a guest in the US or not is not the real issue. The real issue is whether free trade is a philosophy that America will continue to support, or not.

America has a lot of problems. After the baby-boomers, and to some extent generation X (my generation), the new generation – generation Y – is an affluenza generation. They don’t want to work as hard. They are not studying math and sciences that way especially China is doing. As a result, the jobs that require math and science expertise are at risk.

I think, over the next decade, the wage equation will normalize, especially for the math/science / engineering jobs. However, the American population may still not get the jobs back due to lack of trained resources, except by importing people on H1B visas.

If Obama wants to make a dent on keeping jobs in the US, he really needs to address the broader education and work-ethic issue. If he does that, a sustainable change can come about. If not, if free trade and globalization is checked artificially by imposing taxes, I think MNCs will find loop-holes in his tax laws, and figure out a way to preserve profits some other way, since in the end, they are slaves of their stock prices, and stock prices require earnings and profitability to perform.

Unless Obama wants to take that on as well, and create some sort of reform to change Wall Street as well.

In other words, Obama may be taking on – through his rhetoric – a proven economic model called Capitalism. I am not at all convinced that he has thought through the ramifications of this, and what this alternate economic model would be.

Communism and Socialism are both, in my opinion, disastrous economic models that create welfare economies. I hope America is not going in that direction, but listening to Obama, I do get a sense of wishy-washiness packaged in beautiful language and oratory.

Sramana Mitra Saturday, March 22, 2008 at 11:42 AM PT

“The real issue is whether free trade is a philosophy that America will continue to support, or not.”

The proof is in the pudding as they say. The results of our “free trade” policies haven’t been uniformly good – in many areas these policies have proven downright detrimental.

“America has a lot of problems.”

Indeed. From our foreign wars of aggression to our complete dependency on foreign oil, we’re up to our eyeballs with problems at this point – and most people in the US are only just starting to sense this. This is what happens when you try to build a world Empire instead of a stable Republic. This is what happens when the determination is made that we are mere “consumers” instead of Citizens.

“After the baby-boomers, and to some extent generation X (my generation), the new generation – generation Y – is an affluenza generation. They don’t want to work as hard. They are not studying math and sciences that way especially China is doing. As a result, the jobs that require math and science expertise are at risk.”

I’m also in Gen-X and from what I see the affluenza goes all the way back to the boomers… Yes, it probably grows in Gen-X and even more in Gen-Y, but it’s been there for quite some time. You have to go back to the children of the Great Depression to people who are relatively free of the affliction.

In regards to education and young people not being willing to work as hard to get an Engineering degree: yes, you are correct to some degree. However, if you are a reasonably bright 18 year old and your choices are to go into Engineering (with all the math & science) or to go into Law aren’t you going to do a cost-benefit analysis and quickly determine that you can make a hell of a lot more money in Law than in Engineering? And Law hasn’t been outsourced (yet – I suppose it’s possible) so it’s going to be a heck of a lot more stable as a profession. And in Law you actually become worth more as time goes on, while in Engineering your skills actually lose value over time if you’re not constantly upgrading them. So you see, it could be that in many cases our young people are just making a smart choice.

Now, of course, I know a lot of 20 somethings who aren’t doing much of anything at this point – though, there I go judging them by saying they’re “not doing much of anything”. They’re in a band (I live in the Portland – bands for us are like startups in silicon valley ;-) or they’re doing art. It looks like an incredibly fun existence… but, I do wonder what a lot of these folks will be doing to get by in their 40s. Still, why are they like this? I think there’s a logical answer: they saw what their parents got for being good corporate employees and it wasn’t all that good. They decided that they didn’t want to live that kind of existence and (as someone who works for a corporation) I can see their point. They’d rather live than become some sort of corporate drone. They’ve got a bit of Thoreau in them and I’ve gotta say I tend to admire that.

I do know a lot of 20 somethings that are in a different camp but for the same reasons – to escape death by corporatism: they’re the ones starting little “shoestring” startups. Two or three of them will decide they’ve got a great idea for a web startup and they’ll take their macbooks and meet at a wifi equipped cafe and start coding. Sometimes they actually manage to make money. I also admire these folks as well for escaping the corporate world and doing so very creatively. BTW: Paul Graham is the prophet for these folks – you should read his latest essay entitled “You Weren’t meant to have a boss” http://www.paulgraham.com/boss.html
It will really help you understand this group.

So, I’m not sure you can lump all of the Gen-Y folks together. That 2nd group I mention above is incredibly hardworking – it’s just that they view working for a corporation as being the lazy way out. And it’s not like the first group (let’s call them the artists) are lazy either, it’s more like they didn’t see the point of working for “The Man” after they saw their parents get screwed by “The Man”. They also don’t seem to value money or material things as much.

“Communism and Socialism are both, in my opinion, disastrous economic models that create welfare economies. “

Perhaps, but our current corporate capitalism isn’t working out either – essentially we’re on the road to fascism in the US (the corporations and the government working hand in glove) and we have been since the Reagan years. But the process has accelerated greatly under Bush. It’s time to get away from the deviant type of Corporatism that has developed in the US… if not we will arrive at a fully formed fascism.

You don’t have to look far to see the failure of our current brand of “Capitalism” – the current mortgage crisis is exhibit A. Many of the banking regulations put in place during the Great Depression have been repealed (like the Glass-Steagall Act which was repealed in 1999 under Clinton’s watch). Next thing you know we’ve got Bankers run amok. Now hundreds of $Billions (some say $Trillions) have been are are being lost. Greatest economic upheaval since the Great Depression. Funny thing is that the government and the Fed are bailing out these rich Bankers – privatize the gains and socialize the losses. So much for unregulated Capitalism – it always ends up this way.

skeptictank Saturday, March 22, 2008 at 1:15 PM PT

SkepticTank – Your statistics are wrong this time. I am an American citizen, and my guess is so is Sramana. Notwithstanding that, my point is when you make assumptions of citizenship simply going by the name, you are only putting up a brilliant display of your ignorance.

Hari Swaminathan Saturday, March 22, 2008 at 1:27 PM PT

I am not an American citizen, but that is entirely beside the point.

Can we discuss the policies, rather than this personal attack back and forth, please?

Sramana Mitra Saturday, March 22, 2008 at 1:33 PM PT

“Can we discuss the policies, rather than this personal attack back and forth, please?”

I thought I did discuss policies at length in my last post…

skeptictank Saturday, March 22, 2008 at 1:42 PM PT

Going back to the first comment by Mohan:
“Yes, stopping outsourcing would be inflationary and against free trade.”

Real, inflation adjusted wages in the US are actually flat since 1998. They’re down since the 1970s – back when a family with only one breadwinner could easily afford to buy a home. Now it takes 2 breadwinners and they’d better both be making good money (and heaven help them if one of them loses a job).

The point is that we had the inflation in housing over the last 10 years with absolutely no corresponding inflation in wages. This led people to do imprudent things like borrow equity out of their houses in order to maintain their lifestyle (or in many cases to live a lifestyle that wasn’t sustainable). We could actually use some wage inflation in the US about now so people can catch up with expenses like housing. Is it going to happen? Not likely under the current policies. Perhaps an Obama administration could return us to policies which actually favor labor again. At this point I don’t see that as a bad thing unless the pendulum swings too far in that direction.

skeptictank Saturday, March 22, 2008 at 1:51 PM PT

I have a few thoughts listening to you:

The assumption is that people have to own their homes. Most of the rest of the world does not operate on this assumption, yet, I have seen Americans (and immigrants in America) obsessed with the notion that they HAVE TO OWN a home.

THIS has led to the subprime crisis, much as you blame capitalism. Sure, some idiots were dangling credit in front of non-creditworthy consumers. But they were not forced to take credit?

There is a BIG problem with America’s value system, and that is DEBT IS ACCEPTABLE. This inability to live within ones means is a huge problem, which is now coming to bite the country in its ass. And this phenomenon is now being widely exported to the rest of world, along with rampant consumerism.

If Obama wants to address certain fundamentals, he should re-establish the value system that DEBT IS BAD. He should re-educate the culture on how to live within their means. And if that means you don’t own your home, so what? As long as you can rent, and you have a comfortable roof over your head, it’s fine. And from that basis, work hard, if you want more, build up an asset base which would allow you to own your own home.

Yes, there are problems in the capitalistic system, no question. The primary one of those is this instinct for trying to make a quick buck without producing anything. I am not at all disputing that the capitalistic system also needs to be “linted”. But it isn’t all bad, and without a better system in place, if we start messing with it, there may well be more harm than good.

My point is, we should not create a system where people expect to have the cake and eat it too. Life is full of trade-offs. Either you work hard, “make” money, build assets, afford luxuries. Or, you do other things, like play in bands, “live” as you call it, live modestly, have a good time, etc. I suspect, music doesn’t flow so freely in an empty stomach.

To the extent that Generation Y is gravitating towards entrepreneurship, working hard to build, to produce, etc. – it’s a great thing. To the extent that Generation Y is vegetating, we have a problem. This problem, as you rightly say, will manifest itself a bit later, in their mature age.
Entrepreneurship in rebellion against their parents’ corporate droning may be good, doing nothing cannot possibly be good.

Affluenza isn’t good. Entitlitis isn’t good.

And it isn’t good anywhere – not only not in America.

At the end of the day, a domestic producer – domestic consumer economy is one of the most sustainable models. But, as we have found out, no one country has all the resources. Thus, international trade is a necessity. In a way, for America, outsourcing has also emerged out of a necessity.

That necessity, from what I can tell, is going to become more acute due to young kids shunning the science and engineering professions. You think law will help? Legal Process Outsourcing is an emerging field that is going to be just as big a phenomenon as anything else.

Extrapolate, and perhaps we are going towards a world where Americans will need to shake off their provincial lethargy, and go seek work in other countries. What’s so wrong with that, anyway? The Indians and the Chinese have been immigrating to America for decades. May be, we will be going towards a reverse model.

Who knows?

My point is, stopping free-trade, somehow, doesn’t feel like the right solution to me. Socialism and Communism – most certainly not.

I am anxious to hear from Obama on what he really plans to do, and how he would do it. I want to know the economic ramifications of what an Obama presidency is likely to bring upon the world.

I just want Obama to stop treating his audience like intellectual adolescents, and start talking concrete.

Sramana Mitra Saturday, March 22, 2008 at 2:58 PM PT

“The assumption is that people have to own their homes. … THIS has led to the subprime crisis”

That was part of it, but it’s much more complex than that. Certainly greed was a factor on all sides (buyers, lenders, bankers, realtors, etc.). And this is no longer just a “subprime crisis”. Just saw a statistic the other day that said 43% of all foreclosures now are on Alt-A and prime loans. Almost 1/2 now. As the recession deepens and unemployment rises there will be more foreclosures in the prime space. Another part of the problem was that people overbought – they bought more house than they could afford and loose lending standards let them do that. The incentives were all wrong – mortgage brokers didn’t care if the loan was paid back, they only cared about the commission they were going to make on the loan.

“There is a BIG problem with America’s value system, and that is DEBT IS ACCEPTABLE. This inability to live within ones means is a huge problem, which is now coming to bite the country in its ass.”

Amen. You’re preaching to the choir here – my house has been paid off for several years now and I’ve been driving the same car for almost 20 years now – no debt. But I’m an endangered species in America ;-)

“If Obama wants to address certain fundamentals, he should re-establish the value system that DEBT IS BAD. He should re-educate the culture on how to live within their means.”

I have come to believe that the only thing that’s going to teach America that debt is bad and to live within it’s means is another Great Depression. People who lived through the Depression learned these lessons for the rest of their lives.

“Either you work hard, “make” money, build assets, afford luxuries. Or, you do other things, like play in bands, “live” as you call it, live modestly, …
To the extent that Generation Y is vegetating, we have a problem.”

I sense that there is “affluenza” fatigue in our culture. In China and India you’ll find the majority of young people are probably optimistic about their standard of living rising. In the US, however, a large percentage of young people will not have a higher standard of living that their parents and they realize it. This is the first generation in a very long time where that has happened in America. The pessimism among members of the 20-something generation is somewhat understandable in that context.

The artist types I see are living a simple lifestyle – they often live in community houses and share rent between many people. They get their clothes from 2nd hand shops and they often don’t own cars – that could be a Portland thing since biking and public transit are big here. They don’t see much need to collect “stuff” – they like to travel light.

I suspect that in India and China they’ll have a generation like our Gen-Y in about 30 years or so. It almost seems like a natural outcome.

“I suspect, music doesn’t flow so freely in an empty stomach.”

Actually, I think we generally get better art from people who are not well off.

“Extrapolate, and perhaps we are going towards a world where Americans will need to shake off their provincial lethargy, and go seek work in other countries. What’s so wrong with that, anyway?”

Hey, I wouldn’t mind working in Europe for a few years. Where do I sign up?

“My point is, stopping free-trade, somehow, doesn’t feel like the right solution to me.”

Who’s talking about stopping free-trade? Certain aspects of it need to be moderated. We need fair trade.
And we need to ensure that we’re not actually incentivising outsourcing.

In your previous question you asked why Americans don’t move overseas to find jobs – problem is, I don’t think there are many other countries out there where it’s as easy to get a work visa as it is in the US. Would I be able to go to India or China and work as a programmer? Would they let me?

“I just want Obama to stop treating his audience like intellectual adolescents, and start talking concrete.”

The guy’s written books. He has more concrete stuff online. The media is probably as much to blame as anything – they can only work with 30second sound bites. How often do you see concrete from Hillary or McCain?

I think the most important thing Obama brings to the table is the fact that an Obama presidency would improve the view of America in the rest of the world. That and the fact that he can bridge several racial, cultural and religious divides. Oh, and being able to string together several coherent sentences doesn’t hurt either, especially given how badly our current president is at that ;-)

skeptictank Saturday, March 22, 2008 at 4:59 PM PT

I think both India and China would welcome middle and upper management in IT with open arms right now. They have a total crisis going on, with really bad managers running the shows. And I suspect, yes, they will also welcome you as a programmer.

And that’s why, at least in India, we have this “buying and selling people” phenomenon going on. It’s because no one can come up with anything better than financial incentives.

Sramana Mitra Saturday, March 22, 2008 at 5:12 PM PT

Regarding communism: Whenever I read Marx’s Communist Manifesto (1848) I’m struck by how contemporary it seems. Marx’s prescriptions may have been off, but his diagnoses often seem to be right on target:

“The bourgeoisie, wherever it has got the upper hand, has put an end to all feudal, patriarchal, idyllic relations. It has pitilessly torn asunder the motley feudal ties that bound man to his “natural superiors”, and has left no other nexus between people than naked self-interest, than callous “cash payment”. It has drowned out the most heavenly ecstacies of religious fervor, of chivalrous enthusiasm, of philistine sentimentalism, in the icy water of egotistical calculation. It has resolved personal worth into exchange value, and in place of the numberless indefeasible chartered freedoms, has set up that single, unconscionable freedom — Free Trade. In one word, for exploitation, veiled by religious and political illusions, it has substituted naked, shameless, direct, brutal exploitation.

The bourgeoisie has stripped of its halo every occupation hitherto honored and looked up to with reverent awe. It has converted the physician, the lawyer, the priest, the poet, the man of science, into its paid wage laborers.

The bourgeoisie has torn away from the family its sentimental veil, and has reduced the family relation into a mere money relation.

The bourgeoisie has, through its exploitation of the world market, given a cosmopolitan character to production and consumption in every country. To the great chagrin of reactionaries, it has drawn from under the feet of industry the national ground on which it stood. All old-established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilized nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones; industries whose products are consumed, not only at home, but in every quarter of the globe. In place of the old wants, satisfied by the production of the country, we find new wants, requiring for their satisfaction the products of distant lands and climes. In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations. And as in material, so also in intellectual production. The intellectual creations of individual nations become common property. National one-sidedness and narrow-mindedness become more and more impossible, and from the numerous national and local literatures, there arises a world literature.”

Sounds like he’s quite conflicted: he’s criticising free trade (as exploitation) but he’s also praising globalization to some extent in that last paragraph.

Check it out, it’s not a long read. It’s amazing how much of his criticisms are still problems.

Personally, I don’t believe Capitalism is the end-all, be-all: it gets stuck in too many local minima. Especially not the type of capitalism we have now – corporate capitalism. I tend to like Chesterton’s Distributism which was conceived as a third way between Socialism and rapacious Capitalism:
http://en.wikipedia.org/wiki/Distributism

Chesterton said about Distributism: “Too much capitalism does not mean too many capitalists, but too few capitalists.”

skeptictank Saturday, March 22, 2008 at 6:27 PM PT

Sounds inconsistent, to me. Logic and consistency are keys to a system that can withstand the test of time. Marxism and Distributism don’t seem to have that character … or does it?

That “artisan” society they are talking about – getting rid of mass production and focusing on small businesses only – at this stage of the game, this is downright impractical.

I do believe that a vibrant small business ecosystem is vital to the health of any economy, hence to whatever extent we’re seeing greates uptake in entrepreneurial efforts – is very welcome.

But the death of the corporation is not about to happen, and I don’t think it should. The ability of a Billion dollar enterprise to “carry” a large base of employees is enormous, and hence its impact on the global economy is also humongous.

Another alternate system of thought could be, let’s figure out how to double or triple the number of billion dollar enterprises around the world, and that would really help economies and development. That would be the opposite thesis of distributism, and it is a thesis that is also being studied at major academic institutions.

Entrepreneurship is hard. Very few entrepreneurs survive. Most of the fat belly of any economy is dependent on other people offering them jobs. Thus, if you take away the corporations, this fat belly is going to collapse.

Sramana Mitra Saturday, March 22, 2008 at 6:51 PM PT

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This is an outstanding thread of discussion. I’ve learned a lot.

One step we can take to restore economic balance is to insist on fair trade, e.g., following consistent safety and environmental standards. If a country is free to sell us food containing ground-up plastic and products coated with lead paint, of course their products will cost a fraction of our domestic products. With fair trade, we stand a better chance of keeping manufacturing jobs.

For “intellectual” jobs, the points about the need to study and work hard are well taken. Engineering can be a hard but rewarding career. As noted above, Law can also be hard but appears to have longer “legs” and more resistance to outsourcing.

John B Thursday, March 27, 2008 at 1:00 PM PT

Some thoughts from a longtime Democrat here, veteran watcher (sometime participant) in many campaigns going back to Carter 1980.

1) BHO doesn’t care. Obama probably hasn’t the faintest idea what if anything his admin should do re. outsourcing. Of all the Democratic candidates I’ve seen over the last few decades, Obama is probably the least concerned with bread-and-butter economics issues like trade, inflation, industrial policy etc.

2) BHO doesn’t know. Where Obama does dabble in economics, his views are a muddle. Speaking to the party’s left-wing base, he’s against free trade. But when he’s with an upscale, educated, elite audience, he winks and nudges and gives the strong impression that this is just a primary campaign ploy and that he’s safely in the free-trade camp along with the party’s modernist, yuppie, DLC wing– see his adviser Goolsbee’s comments to the Canadian press re NAFTA for an explicit example of this coy positioning.

3) Even if Obama did care about trade, and were in fact as opposed to it as his primary-campaign rhetoric suggests, it’s unlikely that he would spend political capital to get anti-outsourcing legislation passed on Capitol Hill. The issue is too small, too diffuse, and too arcane to have legs in today’s America. It wouldn’t deliver a single district.

Bottom line: of the candidates’ campaign priorities, this issue is near the bottom of the list.

If you want to see industries that will be hugely affected by a left-lib Democratic administration, I’d focus on private for-profit insurance and pharma (short) and agribusiness/biofuels and alternative energy (long). Wherever ex-DNC Chair and Global Crossing investor Terry McAuliffe has his money parked is where I want to put my money.

tom mclaughlin Friday, April 25, 2008 at 2:54 PM PT

Tom,

I think the pharma/ healthcare reforms are long overdue, so that’s okay.

What I am saying is that Obama really turns me off with his anti-free trade rhetoric, and even though I like his oratory, his lack of intellectual rigor is continuously eroding my liking of the guy.

Sramana

Sramana Mitra Friday, April 25, 2008 at 3:57 PM PT

Thanks for the great posts above.
I especially liked the post by Sramana regarding American’s sense of “entitlement” and comfort with high debt levels.
It is the same in New Zealand.

Simon Jacques Saturday, April 26, 2008 at 1:29 AM PT

The ecomony of our day was created when a choice was made by business between cheap labor or high automation. Cheap labor was decided mostly because our industrial base was not metric. Now we have placed our economic base at risk(middle class) by allowing the market forces to run their own course. Balance will be hard to return to because we are so far down this really bad road. Resources are out of balance, both in distribution and use. Free markets are great if managed correctly, but we have thirty five years of no management at all to correct, and in that time imbedded forces with their own self interest have grown and will oppose any change for their own self interest to the direct detriment of our country and the world in general.

Tyrone Wednesday, June 11, 2008 at 5:50 AM PT

Look folks, there is no free trade. If it would ever be a really free market it will create monopolies. That is what we see now. Corporations got stronger than Law. There is less competition in America, less quality products. People losing jobs and they can’t pay for expensive quality products, so they have to buy cheap low quality. They are forced to train foriegn workers that takes thier jobs. Corporations care only about thier profits, not about workers, even not about customers anymore. That’s actually why there was a set of laws in America (antitrust law for example) to prevent corporation from hurting people’s interests. And now we, Americans, are forced into the market that hurts our economy. Why should we continue? Why should we develope other countries at our expense?

Kat Friday, August 8, 2008 at 1:42 PM PT

Sorry Sramana Mitra. But that is you who don’t understand economy and should educate yourself. If there is just a free trade without any regulation, big corporations turns into monopolies and that would be no good for everybody exept the owners of the corporations. That’s why in any country the free trade is always regulated. There are enviromental rules, there are antitrust rules, there are regulations on savety of the product and savety of the workers. We had pet’s food from China that poison our pets already. No keep your free trade for yorself. We don’t need such a free trade here in US.

Kat Friday, August 8, 2008 at 1:50 PM PT

http://www.lewrockwell.com/thornton/thornton20.html

all americans must read this excellent article on outsourcing and it underlines how important it is for american economy

aswin Friday, August 29, 2008 at 8:38 PM PT

Very interesting views from people from all walks of American life.As a non-american,I find it very engaging that common people in America are so involved and aggressive about their favoured politicians.However,as in India ,in America too ,the real test will begin when the elections have happened and the new government has been formed.

manjeet Thursday, September 4, 2008 at 12:33 AM PT

I see outsourcing as an opportunity than a threat and the whole world is a global village recent comment by Obama in tax incentive cut for US companies if they outsource doesnot affect the economy of other developing countries.

Thanks,
KSK
http://www.outsource2.net

santhosh Thursday, September 4, 2008 at 3:37 AM PT

What is free trade for? Is it for Corporations to keep bettering their QoQ or YoY profits on the same ruthless business-model (lacking innovation)? And what do these corporate give back to their employees (they prefer referring them as associates!)? Unruly expectations of more working hours, steeper targets to achieve, marginal incentives (mostly monetary), attaching ZERO importance to family/personal life… Isn’t this some form of communism – employees being referred as “Resources”!

I agree with Kat says-

“Corporations got stronger than Law.” – True

“Corporations care only about their profits, not about workers, even not about customers anymore.” – Completely True

I can’t see how IT outsourcing is helping India? most of these out-sourcing companies are not creating any intellectual property, not creating products, most of them in today’s market have no clue where their next “project” or “account” is coming from…There are no more IIT backed wiz kids who are really good in Math and Science (check out the IIT entrance exam cut-offs for the past 5 years)… the so-called “hard working engineers” from India are being “manufactured” for “the IT”! by setting up engineering colleges in every nook and corner of the country – ZERO emphasis on quality – cold chilling truth – kids being manufactured to work in “IT” where they wont have to use their brains but add up to “head-count” in some “IT” company…

I think of Obama as a very good orator. But if at all he is to become the next US president, he needs to set an example for others to follow… and create an environment, an economy which is sustainable, accommodative and treats its people as human beings.

BTW Sramana, your site doesn’t work (breaks-up the UI components) in Firefox or Google Chrome browser! plz fix it…

Amit Thursday, September 4, 2008 at 4:52 AM PT

Amit, Corporations are one of the most powerful methods of job creation. Before you bash them, come up with an alternative that creates as many jobs as corporations do.

And what did Infosys and the entire It/ITES industry do for India? How about create 4 million well-paid jobs? How about, those 4 million jobs support 40 million or more people’s livelihood?

I am sorry, but this anti-corporation rhetoric is very shallow and off-putting. I certainly don’t subscribe to it.

Sramana Mitra Thursday, September 4, 2008 at 8:27 AM PT

Sorry if I gave an impression of being anti-corporate (I work in one too!). But you missed the point. Companies sustain through focus on finding ways to improve productivity, innovating new business strategies constantly. Evolving as the time passes. Look at Apple – it started by making computers and now it has iphones, ipods and many more… Plz don’t consider this as a harsh analogy that’s the first thing that came to my mind. But, my point is companies need to constantly find innovative ways to earn profit.

The IT in India started with a USP of low cost, good quality and many people. But now, competitors have evolved. American companies like Accenture and IBM are still the leaders. An American market slowdown and Indian IT companies suffer in profits. The reason is not only dollar fluctuation and order cancellations/delays. There is more to it. Indian IT needs to move up in value chain. Yes! employing 4 million people is a job-well-done but will the Indian IT companies be able to sustain these many people if market continues to remain the way it is say for another year or say more than that? Yes, we do have many engineering colleges, but what about the quality?

Focus needs to be shifted from old USPs to new ones (off course old ones are added bonus). Enter into product markets, build tools/frameworks – focus on quality not on quantity. Rising wages are a result of the competition amongst the companies. Competitors pay job-hoppers more when they have an immediate project opening or expect a big project in the pipeline (It is a do or die situation for the staffing department). We have a huge IT market here in India but, probably that doesn’t earn the companies the 1 is to 40 profit like in American market!

Barak Obama is not the person who will jeopardize the outsourcing festival for India. We are very well placed to do it our self. There is something amiss… don’t you think so?

Cheers,
Amit

[PS – Sorry for the browser remark. It is only in Chrome that the site is in disarray… :)]

Amit Friday, September 5, 2008 at 9:18 AM PT

I have discussed the Indian IT issues widely under the “Death Of Indian Outsourcing” series of articles.

Sramana Mitra Friday, September 5, 2008 at 9:42 AM PT

Anyone that believes that we simply have to allow NAFTA to continue unchecked so we can compete in the global market is insane.

The housing market failure that everyone keeps saying is the reason for ecomomic collapse is pure BS. That is what they want you to hear. Only 5% of all mortgages failed. That is a drop in the bucket. I have seen this coming for a long time. The mortgage crisis is the “needle” that broke the camels back. Did anyone ever stop and think for a minute as to why all of these people lost their homes?

NAFTA caused much of it. Over 6 million jobs (reportedly) but probably much more than that and the trillions of dollars that leave this country each year! This keeps repeating itself every year and it does not take a rocket scientist to figure out that eventually we are all screwed. No middle class will exist. Only those who live in poverty and the super rich.

It’s all about greed which is basic human nature and our elected government is there to protect us from harm. That includes ecomonical as well as foreign threats.

Yet another friend of mine is losing his job because the plant that he has worked at for twenty years is closing and move its entire operation to China. I say “yet another” because last year it was a shoe factory. Same scenerio.

Being able to buy and sell on the global market is important but at what cost to the citizens of their country. To point that they are all on the sidewalk and some person in India or China has their job?

I think our government is squarely at fault for allowing this to happen and if it does not stop within a few more years, we are going to be lining up to get “green” cards to work in foreign countries just to survive.

jimbo Friday, September 26, 2008 at 2:55 PM PT

Americans going to work abroad may not be a bad experience … it will open their eyes to the fact that other cultures exist. Citizens of all those countries have come to work in America over the last 40 years. What is so wrong with Americans venturing out a bit?

Sramana Mitra Saturday, September 27, 2008 at 1:26 PM PT

Citizens of all those countries have been coming to work here for 400 years, not 40.

All I can say is that it is a real shame what this country has become. The way our government favors the rich at the cost of the average tax payer.

Another great depression is right around the corner. Maybe that is what it will take to replace our government from the ground up.

jimbo Saturday, September 27, 2008 at 3:22 PM PT

I agree with your comment that it is a real shame what this country has become. But some of it is because of the degradation of the work ethic in America, and the complacence. What worries me about Obama is that he is going to make this work ethic degrade further by making it comfortable to be unemployed. I just cannot get my arms around the welfare economics that he preaches in the name of “safety net”.

Sramana Mitra Saturday, September 27, 2008 at 4:28 PM PT

There are two sides to outsourcing. Some believe that it takes jobs from Americans and others think that because of outsourcing prices are lowered and “better, higher standards jobs.” Hard and low paying jobs are being exported to foreign countries because of lower wages. Yes, that does mean those jobs that remains in the United States are those that require less manual labor, but require more skills and education that other countries could not produce. Which does not guarantee those workers who lost their jobs because of outsourcing a “better job.”

In response of the “what’s wrong with Americans venturing out question” the answer depends on the different aspect of the subject. Although it may be true that Americans working abroad may not be a bad experience, stating that Americans working abroad is new is not. Americans have been working abroad for a very long time. Have we forgotten about the imperialism period? How countries like that of the U.S, Germany,France, England and Japan “ventured” out so far that it lead to WWI? Have we forgotten how these powerful nation at the time benefited from venturing out obtaining more raw materials and resources so much that their greed led to war?

Minh Huynh Wednesday, October 1, 2008 at 7:47 PM PT

Mr. Obama has TWO plans for outsourcing. The other is sending free money to the countries that lose jobs because of no outsourcing.

A lot of Americans can not afford products made in the USA, so we can have a recession. Mr. Obama seems to have a lot simple answers to complicated problems.

Charles Nickalopoulos Friday, October 10, 2008 at 4:21 AM PT

Watch Obama T.V in http://www.AryaCity.com

Kanaka Thursday, October 16, 2008 at 9:10 PM PT

To me, it looks bit tough for Obama to stop the outsourcing. Corporate accepted outsourcing because they were not in position to pay high salaries however if now outsourcing gets banned, many of the companies will go into heavy losses and some perhapes would like to close their businesses which would not easy for Obama to accept.

Yes chances are that some particular sectors will be outsources partially however stopping outsourcing would not be easy for Obama. Outsourcing is need of almost all corporate which everyone understands now.

Sunny Tuesday, November 4, 2008 at 1:14 PM PT

Obama cannot just do that if you can see the status of the economy, I dont think it will do any help, it will even make the situation worse. The price that US is paying for the employees working in the outsourced country is one over ten of what they will have to pay if they’re going to hire people in US.

Shane Wednesday, November 5, 2008 at 1:25 AM PT

Guys,

First of all Obama dosent have a plan to stop outsourcing ,

he rather has a proposition to lower tax benefits to the corporations who outsource.

From a simple rule of economics one knows that the treasury grossly depends on tax revenues from large corporates also from the people of the country allthough.

If the corporates are taxed more its a bonus for the Govt, call it penalty for outsourcing which the corporate giants would perhaps be willing to pay , of course on a fair deal .

But again , the cost that they would save on labor , by outsourcing would still be three fold than the extra tax they would have to bear for it.

Now even a college grad. in economics would easily make out from this that ‘Outsourcing will continue …. anyways
and it would multiply to out of bounds in the within next half a decade.

Needless debate..

leo Wednesday, November 5, 2008 at 3:43 AM PT

along the lines of rather uninformed assumptions by skeptictank (march 21) above about names being supposedly indicative of citizenship status of people in this country, i also wonder why the need for non-white US citizens to be refered to including country / region of origin – why aren’t “white” americans refered to as caucasian-american / british-american / russian-american / european-american and so on? talk about the inherent negative biases in this supposed “melting pot”, “open-arms” land of immigrants.
so am i an israeli-american ?

amit Thursday, November 6, 2008 at 3:31 PM PT

it’s all here.

http://www.change.gov/agenda/economy/

American Jobs: Barack Obama introduced the Patriot Employer Act of 2007 to provide a tax credit to companies that maintain or increase the number of full-time workers in America relative to those outside the US; maintain their corporate headquarters in America; pay decent wages; prepare workers for retirement; provide health insurance; and support employees who serve in the military.

MIKE Friday, November 7, 2008 at 12:55 AM PT

hey skeptictank, why are you making racist remarks about Sramana Mitra and the issue a racist one? Your comments reek and pong of ultra-radical communism cum racism, more than anything else. It would be much nicer and civilised to acept the discussion as one of analysis about Rev. Respected, Saintly Obama rather than of who sounds like he/she is from a certain community or country. It also will be much much nicer if you stick to discussing about his (Obama’s) coming global policies than talking endlessly about how first names and last names sound in the regional twist. TSK, TSK, TSK GROW UP SKEPTICTANK – – – ELSE YOU MIGHT END UP GOING THE SEPTICTANK WAY_____ WELL, AHEM, YOU KNOW WHAT I AM TRYING TO SAY AINT IT?

ajay Monday, November 10, 2008 at 3:55 AM PT

Defending/arguing against a racist or any such out of context remark is no better than actually making one such.
If Sramana could move on, why cant you? Besides Skeptictank’s explanation was more sensible than those speaking against him.
Before any further comments on me taking sides – I am not speaking against a person, race or community, I am against non-sense and lack of logic.

Anyways – quite a few interesting thoughts here. But Leo (3-4 comments above) hits the nail on the head. Outsourcing is not going anywhere, as long as its profitable for organizations to outsource and Govt policies ‘allow’ it ( as Leo said – increasing taxes doesn’t equate to ‘ban’).

In time of depression – people tend to cut down on luxuries/costs, why do you think Corporations would prefer to keep high cost labor/workforce over the cheaper options available in outsourced world. Unless ofcourse it is not legally allowed.

So given the economic condition – it makes more sense for organizations to outsource whatever that can be outsourced.

akshay Monday, November 10, 2008 at 10:44 AM PT

Hi All,

I am technology guy working here on H1B. One think I understand is outsourcing of technology jobs is due to education.

But do the call center and similar backoffice job need very high educational qualification.
Guys, the cos. here need to understand they simply need jobs in their own country.

sst Tuesday, November 11, 2008 at 4:15 AM PT

No they don’t. As long as the cost-structures are dramatically in favor of the Indians, this industry will continue to off-shore. But over time, may be not.

On the Indian side, the call-center industry is creating strange dynamics … working through the night is not a healthy lifestyle.

Sramana Mitra Tuesday, November 11, 2008 at 10:45 AM PT

[…] Reading: * Obama and Outsourcing and its 49 comments * Obama’s Economic Policy Thoughts which […]

Forbes Column: Perilous Protectionism - Sramana Mitra on Strategy Friday, November 14, 2008 at 3:38 AM PT

I just want to say that ever since Bush was in office and allow the free trade, our country has gone to Hell in a handbasket.

Look at our economy. Tons of americans buy their stuff from Wal-mart. We are not feeding our country, we are feeding China, and other countries.

They have outsourced jobs and companies have shut down because of the free trade agreement. It is no wonder our economy is in a recession.

Mr. Barack Obama I am one of the millions of americans struggling to find employment.

Better education is not the answer to our problems. It is only a small increment of what our nation needs.

Mr. Obama I say for my fellow americans that we need to create tariffs on imports and exports to this nation. We need to get the jobs back that President Bush so willingly handed to the chinese and other nations.

I guarantee that if Wal-mart were shut down, most of the jobs in this nation would return. Factories that had to be shut down because of competitive prices with foreign countries would re-open.

If you really want to stop the chos this is a start.

The other thing you can do for this country is to send the illegal mexican immigrants back to Mexico. President Bush has caused our economy to suffer by allowing millions of illegal immigrants into our nation.

They need to be send back to mexico to work in the plants that got outsourced to mexico.

It just angers me that Bush has screwed this nation up so bad that people cannot find employment.

Mr Obama this is your call to action. Please Save the American Public from further Economic Crisis and help do something about this.

One last thing Mr Obama, is that Gas prices have majorly contributed to the Economic Crisis that we now face. Greater Government regulation on the fluctuation of prices between winter and summer needs to be made so that the american public doesn’t have to shell out more money during the summer for High Gas Prices.

Something needs to be done about an economy that is getting out of control.

Job Outsourcing needs to be stopped. We need to quit patronizing the foreign countries that our jobs have been outsourced to. In the end we are only hurting ourselves the american public, just to save a few bucks.

mrichins Saturday, January 24, 2009 at 9:20 PM PT

WE MUST STOP OR ATLEAST CUT BACK ON THE OUTSOURCING. NO JOBS ON AMERICA MEANS A WEAK AMERICA AND A WEAK AMERICA IS BAD FOR EVERYBIDY IN THE WORLD. DO YOU WANT A CHINEESE OR RUSSIAN SUPER POWER? THINK ABOUT IT.

MATHAI Tuesday, February 24, 2009 at 2:21 AM PT

I think skeptictank above is right. US needs to adopt West european style of capitalism + socialism mix. Free healthcare is a must. Citizens in West european countries/australia work reasonable hours with good work/life balance.

Unregulated capitalism creates monopolies (or “bipolies”) and also can bring entire system on its knees because of atmosphere of low accountability that feeds a high risk appetite (lehman, bofa).

I hope sanity returns to US.

vijay Friday, February 27, 2009 at 6:49 PM PT

THIS PARAGRAPH IS COMPLETLY FABULOUS

Courtney Tuesday, March 10, 2009 at 5:40 PM PT

What do people think the future holds for the working folk of the world?

Improved productivity globally is making each worker so much more productive that the number of jobs available to unskilled workers is decreasing rapidly.

The poster who said that the US needs to be concentrating far more energy on basic education was right on.

We don’t realize how important improving our workforce’s basic scientific and mathematics literacy is to our future economic wellbeing.

Otherwise, there won’t be any jobs for Americans in 20 years. Most people wont have the skills to be hired for any jobs at all.

Most unskilled jobs will be automated, everywhere in the world. We have to spend a lot more money on education, and make it possible for every student who wants an education to get one, even if they are poor.

Even the military is automating. We need to see the writing on the wall. If we reduce the work week to 30 hours a week, and institute universal healthcare, so that business isn’t bearing the huge cost of insurance, we could slow down the decrease in employment and give us some breathing room to educate the workforce and rebuild the infrastructure to bring high paying jobs back to the US.

Traditional vocational education has major shortcomings, we need to give people the equivalent of an BS or MS to ensure that they will get good jobs.

Or we are basically in denial.

The open source software movement has some good models that could be applied in education. We should look at them.

Frank Wednesday, March 11, 2009 at 7:58 PM PT

His recent Jobs Act is an attempt to stop jobs from going abroad!

Akshay Shah Thursday, October 13, 2011 at 4:16 AM PT

It depends on where you are outsourcing to and what the job is. I had a really difficult time with a computer problem and I looked online and found a nice American company that has insurance you can buy and they work on your computer during a year and clean up the problems. When I go to call this American company I found out I am speaking to a group in India. I can barely understand them and they are not doing what I requested and wished to charge me $100 above what was advertised. They showed one source of payment which was pay pal so I chose that because I was desperate. The problem was fixed for awhile but afterword all these people kept calling me from India stating I was having computer problems and they were getting messages from my computer. By this time I had reformatted my computer. They tried their hardest to actually get my card number because they offered a refund and I said fine but you have to do it through PayPal because that is how I paid you. It was the base price because they blatantly said, we can't charged you more if you use PayPal and I had refused to pay them any other way. Someone from that area tried to get into my PayPal account but couldn't do it and then my bank account but couldn't. They kept calling for awhile but now I think they have given up. The bottom line is maybe some of these people were honest but the only number I had gotten redirected to India. Who did I have to complain to when I felt they were passing around my information to others? This is part and parcel of why outsourcing some things to other countries is counterproductive. I have decided if it is in the area of customer service in any way if they are not in the US I won't use the service period ever. If it comes to something like hiring security for someone in a specific country it seems like a money saving tactic if they are properly trained. This is better than sending people all the way from the US in my opinion as long as those close to the person are from the US, like personal body guards. Those that have a vested interest in outsourcing seem to be foreigners. We need to keep jobs here so we can control the quality. We can buy other things from the foreign countries. They can create their own businesses and sell their goods or services to us if the quality is good. That is how we should work with others and keep manufacturing and services here in our country.

VeronicaD Friday, October 5, 2012 at 9:27 PM PT

I dont think Obama has decided if he really wants to be a supporter of outsourcing on one hand I think he knows its the right thing to do but then on the other he likes to be seen as "saving american jobs". Tough call for-sure!

Jon Monday, October 8, 2012 at 9:33 AM PT
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