Re: Russell / Capital Destroying Jobs / Mar 04

I attended a discussion on offshoring last night for my public policy 
class. In attendance were local blogger and Oracle employee Ted 
Gilchrist ( his site is at 
http://portsmouth-global-telecommuter.blogspot.com ), the Software 
Association of New Hampshire (SWANH) chairman James McKim, and 3 teams 
representing various stakeholders who gave mock testimony before 
congress.

  What's interesting about SWANH is that they represent businesses and 
individual developers, both sides of the spectrum.  When you think 
about it, outsourcing is inevitable, there is no reason IT jobs should 
be any more secure than manufacturing jobs. Furthermore, what's to stop 
foreign software companies from competing with American software 
companies? The quality of code coming from offshore, even if you assume 
it's not up to our quality now, can only improve.  However, there is 
one place where cultural factors among other things will keep America 
strong: innovation.  IT workers need to learn to be management-types as 
well.  Has our quality of life on the whole increased or decreased 
since all those manufacturing jobs left?

Another interesting point that was brought up is that outsourcing 
happens all the time.  It's offshoring that people have a problem with. 
  For example, New Hampshire labor (even knowledge labor) is 
considerably cheaper than in California.  Is a company that moves work 
to New Hampshire outsourcing? Is it outsourcing when Oracle creates a 
development office in Bangalore?

What needs to be done to maintain our economic superiority is to create 
centers of excellence, such as those in India around IIT campuses.  The 
governments of India and China have taken education very seriously, and 
it is showing.  The US government needs to spur innovation, not 
implement protectionist policies.  One way we can do this is through 
the Small Business Administration (that's why I wanted the quote from 
FFN.) The SBA currently gives out $12B in loans per year, they need to 
give more of those loans to innovative businesses and less to things 
like fast-food franchises.

(There also was a presentation by the company that will have a monopoly 
on container-tracking in the shipping industry, but that's a story for 
another day.)

BTW I loved the use of "Bushevics" in the article. Shouldn't it be with 
a k instead of the c though?

l8a
Nick

On Mar 5, 2004, at 12:01 PM, dvanhorn wrote:

> [ whispers in the basement... ]
>
> ZNet Commentary
> Capital Destroying Jobs March 04, 2004
> By Marta Russell
>
> It was predicted by Business Week in the 90s and assumed by disability 
> groups
> that in the Information Age disabled workers would get a shot at 
> improving
> their employment lot. Technology makes it possible for significantly 
> disabled
> persons to use computers and Information Technology (IT) promised 
> plenty of
> office deskwork.
>
> One spin Business Week put on the ADA in its early days was that 
> disabled
> people would "become a strategy for profitability - a new competitive
> advantage in the search for capable workers." Business Week stated, 
> "one of
> the hidden keys to profitability may be a large and growing bloc of
> Americans-people with disabilities ... in a decade in which willing 
> and able
> workers will be increasingly hard to find, the nearly nine million 
> working age
> Americans with disabilities now outside the job market may be one of 
> the best
> sources of new employees - period."
>
> What happened instead is that government and the corporations abandoned
> American workers, including disabled workers, leaving them in the dust 
> in
> search of cheaper labor made possible by that very technology. 
> Privatization
> of government jobs and IT outsourcing -- sending jobs overseas -- have 
> become
> a popular means to lower the cost of labor committed to perform
> computer-related functions.
>
> The corps with the approval of the Bushevics are shipping prospective 
> jobs
> overseas to India, Malaysia, Eastern Europe, and soon, to China where 
> workers
> can be hired for about 10% the salary of an American worker. Banks,
> corporations, Wall Street, and governments have all jumped on the 
> outsourcing
> bandwagon.
>
> The White House Council of Economic Advisors released its Economic 
> Report of
> the President in February stating "When a good or service is produced 
> more
> cheaply abroad, it makes more sense to import it than to make it or 
> provide it
> domestically."
>
> Economist Gregory Mankiw, who chairs the Council, called outsourcing 
> which
> usually comes hand in hand with firing Americans and sending their jobs
> overseas "a good thing."
>
> To the Bushevics it makes good economic sense to outsource jobs that 
> could be
> going to unemployed American workers. This administration has no 
> allegiance to
> the nation's unemployed. Rather Bush's people take Calvin Coolidge's 
> statement
> as a given "The business of America is business." What's good for the
> corporations is not to be tied down by pesky regulations that would 
> place a
> premium on hiring Americans.
> It's profit maximization they are after.
>
> In praising the merits of outsourcing, Bush's administration is 
> following the
> lead of CEOs such as General Electric's Jack Welsh who shifted software
> development and back office jobs to India years ago.
> Today firms such as McKinsey & Co. and A. T. Kearney have shifted the 
> bulk of
> their research divisions to places such as Bombay and Chennai, India. 
> J.P.
> Morgan Chase & Co. has hired junior stock analysts and other research 
> staffers
> in its Bombay office. US Banks such as Citibank, brokerages such as 
> Merrill
> Lynch, mutual companies and other financial services companies are 
> planning to
> relocate 500,000 jobs offshore, or 8 percent of their work force over 
> the next
> few years. Deloitte Research forecast in April last year that about 
> 15% of
> financial jobs worldwide would be moved to countries sporting cheap 
> labor.
>
> If it can be done sitting in front of a desk it is game for 
> outsourcing.
>
> The trend is not limited to corporations. Bush's White House plans to 
> subject
> at many as 850,000 federal jobs to competition from the private sector
> including desk jobs that can find their way overseas to politically
> well-connected contractors with offices in India, Malaysia, the 
> Philippines,
> and perhaps Russia.
>
> Forty States have already hired foreign workers in other countries to 
> perform
> such jobs as answering questions about food stamps or welfare 
> programs. India
> is a favorite contracting country because people there speak English. 
> Public
> and private call centers are being off-shored en masse. India now has a
> booming industry of telemarketers, phone banks, taking information 
> economy
> jobs from the US.
>
> Technology has backfired on disabled job seekers.  Capital has taken 
> off with
> the IT Technology to make as large a profit as possible.
>
> There are other factors involved in the poor labor market. Massive 
> layoffs, a
> de-skilling of the American labor force into low-paying service sector 
> jobs,
> downsizing, factory shutdowns, outsourcing of jobs overseas, and NAFTA 
> have
> all contributed to the 65%-70% disabled unemployment rate.
>
> Of course this is serious trouble for all U.S. workers 14.7 million of 
> whom
> have no job. The administration likes to point to the fact that there 
> was a
> recent decline of the official unemployment rate but it fell two 
> tenths of a
> percentage point not because more people got jobs but because 
> 538,000.workers
> left the labor market and are "not in the labor force."  Discouraged, 
> they
> gave up looking for a job and aren't counted as unemployed anymore.
>
> The nation's official jobless rate is 5.9% but that figure tells only 
> a part
> of the story of the labor market.
>
> To begin with, there are the 8.7 million unemployed, defined as those 
> without
> a job who are actively looking for work. However, 4.9 million part-time
> workers say they would rather be working full time -- the highest 
> number in a
> decade.
>
> There are also the 1.5 million people who want a job but didn't look 
> for one
> in the last month. Nearly a third of this group say they stopped the 
> search
> because they were too depressed about the prospect of finding anything.
> Officially termed "discouraged," their number has surged 20% in a year.
>
> Add these groups together and the jobless total for the U.S. hits 
> 9.7%, up
> from 9.4% a year ago.
>
> In fact payroll jobs are down well over two million since George W.
> Bush moved into the White House. Bush's economic policies have not 
> added
> enough jobs to compensate for the loss. Despite Bush's State of the 
> Union
> Address citing need for focus on jobs, in January the economy only 
> added one
> thousand jobs, making this a jobless recovery.
>
> The jobless recovery may well be a permanent job loss "recovery."
> According to Doug Henwood a Federal Reserve Bank study confirms that 
> job
> losses over the last few years were "structural and not merely 
> cyclical."
>
> Usually a recovery is accompanied by the return of jobs. Layoffs were
> temporary and workers recalled when the economy performed. Henwood 
> notes "in
> the current cycle, almost all of the job losses have been the result of
> positions being eliminated." (see Left Business Observer No. 106, 
> January 2004)
>
> Structural changes bode ill winds ahead for would be disabled workers. 
> If the
> American labor force is shrinking, it is hard to see any room for 
> gain. The
> rule of thumb for disabled workers is last one hired and first one 
> fired.
>
> With Presidential comments praising the merits of offshore 
> manufacturing and
> hiring practices we are a long way from bringing government round to 
> take some
> social responsibility for the loss of jobs in our country.
>
> Still our directive should be clear. There will be a greater need for
> unemployment benefit extensions, job creation in the public sector, 
> and above
> poverty level income support to avoid conditions of greater 
> homelessness and
> poverty in the nation.
>
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