We Sold Our Country
We Sold Our Country
Date: Tuesday, April 15, 2003 5:15 PM
H-1B and JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
The article that follows this one proves Choate's point, the
outsourcing problem is too big for boycotts to work - ditto for
H-1B/L-1.
http://www.usadaily.com/Commentary/Choate/030406_we_sold_our_country.htm
We Sold Our Country
By Pat Choate
Imagine an old and prosperous family where the traditional values, such
as never touching capital and working hard, have long dominated. But
then imagine that a new generation takes charge and decides to party.
They sell off the assets, buy all the trinkets they've always wanted,
stop working, start gambling, and slowly go broke.
Thats America over the past twenty years. In the early 1980s, we
elected a generation of public officials who decided they wanted to
increase consumption and cut taxes. Let the good times roll.
But the bills had to be paid. Thus, as an established family led by
wastrels first sells off their stocks and bonds, then real estate
and other assets, and finally the family heirlooms, so has America.
This foolishness, of course, is obvious. But the political pull of
spending without taxing is strong for politicians. And quick,
short-term profits through low-wage foreign labor are equally seductive
for the corporate manager-class that now dominates U.S. business.
Ironically, the recklessness of this spending binge is unintentionally
being highlighted by the war in Iraq. Now, when we are virtually alone
in that war, many U.S. political leaders, ever ignorant of what they
are doing, are calling for consumer boycotts on nations that refused to
join the U.S.-led Coalition of the willing.
Some outraged Members of Congress had the cafeterias in the U.S.
Capitol complex change their menus and rename French fries as
Freedom fries and French toast as Freedom toast.
For others, however, symbolic foot stomping is insufficient. They
demand boycotts of all the goods and services produced by the reluctant
nations corporations. The South Carolina Legislature, for instance,
passed a resolution calling for a boycott on all goods made by
French-owned companies. Then, someone remembered that Michelin, one of
South Carolinas largest employers, was French-owned. That
resolution died silently and
quickly.
One U.S. Congressman was incensed to learn that the main supplier of
headstones for Americas national cemeteries was a French company,
Imerys. He suggested two alternatives Vermont Quarries and Sierra
Minerals. Yet, a quick examination of those two companies revealed that
two Italian companies, RED Granite and Mazzucchelli Marmi, own Vermont
Quarries. And a Swiss corporation, OMYA AG, owns Sierra Minerals. Of
course, neither Italy nor Switzerland is part of the Coalition of the
Willing. Their troops stayed home.
And as for the French marble boycott: Imerys produces headstones for
Americas national cemeteries in its U.S. subsidiary - Georgia
Marble Co. located in Tate, Georgia. A boycott of Imerys would destroy
the jobs of 130 Georgia workers.
And so the list goes. A boycott of German products would mean
boycotting most U.S. book publishers, since most, such as Random House,
are German-owned. Boycotting the Dutch would mean no more U.S. made
Magnavox electronics.
And even if a boycott were limited to France, which seems to be a focal
point of so much Congressional anger, the ultimate effect would be to
destroy literally tens of thousands of American jobs in French-owned
companies such as Culligan (water purifiers), George Magazine, Motel 6,
Motown Records, Red Roof Inns, Technicolor, Uniroyal, and Wild Turkey
Bourbon.
If all that were not enough sacrifice, the Jerry Springer Talk Show is
also French-owned.
A similar list exists for Sweden, Switzerland, Germany, Italy, the
Netherlands, and a host of other nations not in the war with Iraq. The
list grows much larger if expanded to include two of our coalition
partners, Japan (supportive but no troops) and Great Britain.
What this long, long list reflects is that the United States sold off
much of itself to foreigners to finance its 20-year consumption binge.
The numbers are staggering. They are calculated by the U.S. Commerce
Department annually. Specifically, at the beginning of this historic
spending spree (1981), the value of foreign-owned assets in the United
States was $662 billion. By the end of 2001, it exceeded $8.1 trillion
a growth of 1,220 percent. Those assets include companies, land,
buildings, stocks, U.S. Treasury instruments and more than $250 billion
of currency.
Moreover, as the U.S. trade deficit grows ever larger each year, the
pace of the U.S. liquidation of national assets accelerates.
Worse, our national leaders -business, political, financial, media
and academic -still support the very policies that brought us this
liquidation, even as they oppose the policies required to stem this
financial hemorrhaging.
U.S. Trade policies, for instance, encourage - even force -U.S.
manufacturers to shift their factories to penny-wage nations such as
Mexico and China. Immigration policies promote the importation of
low-wage skilled workers to replace higher-waged American workers.
Today, corporations and many state governments are being encouraged to
outsource millions of other good-paying American jobs to low-wage
places such as India, China and the Philippines. These are some of the
best jobs that America can provide its people - engineering,
architecture, financial services, and design among many others.
When smaller, poorer nations, such as Argentina, engage in such folly,
they eventually run out of assets and are forced by foreign lenders to
stop their profligate ways. Inevitably, the resulting economic and
political pain is great.
The principal difference between these nations and the United States
today is we have more assets and atomic weapons. Eventually and at
some point no one can now predict, we will run of out assets that
foreigners want to buy. Unless, we are willing to become a predatory
imperialist power and seize the assets of others, foreign lenders will
then force us to stop our profligate ways.
And as with Argentina, Brazil and other nations who have been led by
the foolish, our people and our country will pay an awful and painful
price.
Ultimately, the question is not whether this will happen, for it will.
The question is when.
A USA Daily columnist, Pat Choate was Ross Perot's vice presidential
running mate in 1996. Mr. Choate has served on several presidential and
congressional commissions, worked as a senior economist in the US
Commerce Department and the Office of Management and Budget,
administered development programs for the States of Tennessee and
Oklahoma, and for a decade was the senior public policy advisor at TRW
Inc. A political economist, think tank strategist, and policy analyst,
Pat is also the author of three national best selling books, including
" Agents of Influence ".
http://www.timesonline.co.uk/printFriendly/0,,1-37-643220,00.html
April 12, 2003
India set for flood of jobs from the West
By Caroline Merrell
INDIA is set for the next stage of a revolution that could result in
the creation of up to four million jobs. The trigger is the seismic
shift of labour from the developed nations of Europe and America.
What began as a trickle eight years ago with a decision by GE, the
American giant, to shift thousands of back-office jobs from America to
India has become a flood. Household names are seeking to cut costs and
improve services by outsourcing back-office processes, call centres and
IT to a country where unemployment is up to three times the level of
the UK.
After China, India is set to be the worlds next trilliondollar
economy, according to a new research report from Morgan Stanley.
Business process outsourcing is expected to earn export revenue of $62
billion (#39 billion) by 2010 an impressive sum considering the years
of political instability that have dogged prosperity growth in India.
All over India, gleaming modern business complexes are sprouting amid
the poverty and chaos. They provide vital support for companies as
diverse as Prudential, P&O Nedlloyd, British Airways, Citibank and
Standard Chartered. BT has become the latest UK company to outsource
part of its operation provoking a union outcry.
The pace of change is expected to accelerate rapidly this year.
According to McKinsey, the management consultant, outsourcing of
business processing is expected to grow by 60 per cent to $2.4 billion
in India this year. The report, put together in conjunction with the
National Association of Software and Services Companies, which acts as
an umbrella organisation for industry in India, blames the shift
offshore on spiralling wages in the developed world, the decline in
active workforces and a slowdown in the global economy.
It is perhaps the financial services industry that has the most to gain
from the availability of cheap, highly qualified labour in India.
A report published this week by Deloitte Research estimates that $356
billion of cost for the global financial services industry will move
offshore. Much of it will go to India. Along with a high level of
numeracy and education, much of the population speaks English, giving
the country an edge over China, which is also seen as a big offshore
centre for a number of financial services companies.
Standard Chartered, the UK-listed emerging economies bank, has been
gradually transferring its back office to Madras in south India during
the past 18 months. The move has involved shifting 23 processing units
from 35 countries. Entry-level staff at the centre, where almost the
entire workforce are graduates or postgraduates aged under 32, earn
between $150 and $250 a year, a sum that equates to an annual salary of
just over #1,000. In the UK, back office workers, a small proportion
of whom are graduates, start on salaries that are ten times that
amount. For Standard Chartered, under pressure to improve returns for
shareholders, the decision seemed an obvious one.
The banking powerhouses Citigroup and HSBC are also in the throes of
transferring jobs. Citigroup was quick to spot the potential of India.
It now employs 3,000 people in India, a move that has had a dramatic
impact on its bottom line. During the past five years, costs at
Citigroup have grown by only $12 billion, while revenues have risen by
$35 billion, making the group the most profitable financial services
company in the world.
HSBC, its competitor, has now moved 2,000 jobs to India in a process
that looks certain to continue. Sir Keith Whitson, group chief
executive, caused an outcry in the UK last year when he extolled the
virtues of employees in India, when compared with UK staff.
The outsourcing phenomenon looks set to reach a more advanced phase in
the coming months, as Romi Malhotra, head of Standard Chartereds
processing in Madras, points out. Western companies, he says, are
looking to recruit highly skilled workers to carry out more complex
tasks. We are trying to move the best of our staff up into the
management of the bank. He added that in the future a big proportion of
medical claims processing could be carried out in India. You can get a
doctor for $10,000 to $12,000 a year in this country. Indias
burgeoning venture capital industry is specifically targeting companies
in developed nations that do not have the expertise to start up a
processing centre in India from scratch.
Anupam Sahay, a partner in McKinsey, says that little will stop the
inexorable shift of jobs from the Western economies to the emerging
markets of India and China. There will be very few barriers as this
whole phenomenon plays out, but you will get some backlash.
Sahay adds: In America, certain states have said that some jobs will
not be done offshore, especially call centre jobs. There are certain to
be more regulatory interventions as the industry gathers momentum.
American regulators have raised concerns over the security issues
raised by giving customer details to companies outside the US.
According to McKinsey, 203 of Fortune 1000 companies already outsource
to India. A recent Garnet Dataquest survey of 917 companies found that
40 per cent of respondents had more than $1 million earmarked for
upcoming offshore service initiatives. Such is the sensitivity of the
perceived threat to local employment that BT was forced to deny that
its recent decision to recruit 3,000 workers in India was a threat to
UK jobs.
Sahay says business leaders will need to exercise caution. Company
chief executives do have to be careful how they approach the whole area
of moving offshore, he says. They will need to moderate their
approaches. Some have been more aggressive than others obviously the
companies with global reach were quick to spot the potential.
So what will happen when India becomes more prosperous? According to
McKinsey, it will take 15 years for wages in India to catch up with
wages in the UK. The skills gap may never be closed.
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