10 Articles Worth Reading
10 Articles Worth Reading
Date: Friday, May 13, 2005 12:06 PM
JOB DESTRUCTION NEWSLETTER
by Rob Sanchez
May 13, 2005 No. 1257
MESSAGE TO CONNECTICUT READERS: The job hemorrhaging in Connecticut
continues. Be sure to read #6 and #7. I don't often feature letters on
my newsletter but this one is a must read. You have to scroll down
because it's not online.
If you live in Conneticut and want to do something about H-1B and
offshoring, Send an email to CTCIC@optonline.net
CT Citizens for Immigration Control
Article 1:
http://www.computerworld.com/managementtopics/outsourcing/story/0,10801,101383,00.html?source=NLT_WS&nid=101383
EBay considers outsourcing U.S. work to Indian subsidiary
Online auction portal eBay Inc. is considering outsourcing key business
functions to its Indian subsidiary in Mumbai, according to an executive
at the company. EBay already outsources some work to third-party
service providers in India. "Some of the functions we are considering
moving to India such as customer relationship management, product
development, trust and safety, and network management operations are
critical to our business, and we are evaluating whether we should do it
in-house in India.
Article 2:
http://www.dailynews.com/Stories/0,1413,200~24781~2854073,00.html
Transforming U.S.
Bush, senators play blind, deaf about illegal immigrants
Want to frighten a roomful of U.S. senators? One of the most certain
ways is to try to get them to debate the hotly emotional, but vitally
important, topic of illegal immigration. Craig's proposal was peanuts
compared with what President George W. Bush has proposed -- a much
larger plan inviting workers to enter the country legally for a limited
period, after which they'd have to go home. The history of programs
like the one for postwar braceros and today's H-1b visas for highly
skilled workers indicates at least half those who come in under
short-term visas stay much longer, legally or not.
Article 3:
http://hosted.ap.org/dynamic/stories/C/CREATIVE_EXPORTS?SITE=NVLAS&SECTION=HOME&TEMPLATE=DEFAULT
Indian Ad Companies Gaining Clients
If you're watching TV in Britain or flicking through a newspaper in
Russia or Southeast Asia, there's a decent chance the ad that makes you
pause and laugh was made in India.
Article 4:
http://www.corpwatch.org/article.php?id=11849
WORLD: The Rise of the Micro-Multinationals
To start up here, companies hire over there.
OfficeTiger is the sort of young technology company that once created
thousands of high-paying jobs in the USA, fueling sizzling economic
growth. The 5-year-old business employs 200 in the USA. Yet it employs
2,000 more in southern India, with plans for hundreds more performing
tech-heavy financial services and other tasks. None of those jobs got
there through traditional "offshoring." They were never in the USA to
begin with.
Article 5:
http://www.orlandosentinel.com/news/local/southwest/orl-swswbritkids0505
0505may05,1,4572793.story?ctrack=1&cset=true
British invaders' kids face visa glitch
The E-2 business visa requires children to leave when they turn 21.
Dismayed parents would like that changed. Under current laws, children
of the E-2 visa holders are free to accompany their parents to the
United States, but upon reaching adulthood, they must leave unless they
too qualify for an E-2 or another type of visa such as the H1B,
Article 6:
http://www.courant.com/business/hc-outsource0511.artmay11,0,7447140.story?coll=hc-headlines-business
Insurer's IT Plan Puts Jobs At Risk
The Hartford's property-casualty operation may outsource several
information technology applications as part of a larger IT overhaul,
raising layoff fears among employees as the company aims for more speed
and efficiency. Rumors have been circulating at the company about
hundreds of layoffs later this year or next.
The company's Hartford Life unit said last month that it would cut 50
IT jobs in Windsor and add more foreign workers this year through
outsourcing in a project aimed at expanding its investment products
business.
Article 7:
Letter from a Hartford Employee
5 years ago, the Hartford was a great company to work for. Morale was
high and the vast majority of the employees were very happy there. Then
about 3 or 4 years ago, Vic Severino joined the company as the CIO. He
is the one that started the offshoring big time at the company.
Article 8:
http://news.com.com/Johnny+can+so+program/2010-1007_3-5700858.html
Johnny can so program
By Norm Matloff
"America is slipping!"
It's become a standard lead, guaranteed to grab readers' attention. Add
in a few alarmist quotes from self-serving lobbyists with hidden
agendas, along with the obligatory conclusion that "Education is the
answer," and you've got the economic horror movie that Americans love
so much to watch.
Article 9:
http://www.nytimes.com/2005/05/12/opinion/12herbert.html?oref=login
The Young and the Jobless
There were high fives at the White House last week when the latest
monthly employment report showed that 274,000 jobs had been created in
April, substantially more than experts had predicted. Gains among
recently arrived immigrants seem to have accounted for the entire net
increase in jobs from 2000 through 2004.
Article 10:
http://www.vdare.com/roberts/050512_jobs.htm
More Jobs Hype
Careless journalists and commentators are hyping the 274,000 new April
payroll jobs as evidence of the health of the US economy. An
examination of the details of the new jobs puts a different view on the
matter. Aprils job growth is consistent with the depressing pattern
of US employment growth in the 21st century: The outsourced US economy
can create jobs only in domestic nontradable services. Of the 274,000
April jobs, 256,000 were in the private or nongovernment sector, and
211,000 of these were in the service sector as follows:
1. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.computerworld.com/managementtopics/outsourcing/story/0,10801,101383,00.html?source=NLT_WS&nid=101383
EBay considers outsourcing U.S. work to Indian subsidiary
News Story by John Ribeiro
APRIL 28, 2005 (IDG NEWS SERVICE) - Online auction portal eBay Inc. is
considering outsourcing key business functions to its Indian subsidiary
in Mumbai, according to an executive at the company. EBay already
outsources some work to third-party service providers in India.
"Some of the functions we are considering moving to India such as
customer relationship management, product development, trust and
safety, and network management operations are critical to our business,
and we are evaluating whether we should do it in-house in India,"
Avnish Bajaj, country manager of eBay India, said Wednesday in
Bangalore.
EBay India, formerly Baazee.com India Pvt. Ltd., was acquired by eBay
last August. In March, the Baazee.com platform was integrated with
eBay's platform, giving Indian users access to the eBay global
marketplace, Bajaj said. EBay India has over 1 million registered users
spread over 240 cities in the country.
The Indian subsidiary now plans to provide access to its online auction
portal to artisans in Indian villages, according to Bajaj. The company
may even provide computers and Internet connectivity if required, Bajaj
said. Although this initiative aims to primarily fulfill the company's
social responsibility objectives, down the line eBay expects online
sales by artisans and people in other trades in Indian villages to be a
significant revenue stream for the company, he added.
EBay India will also provide facilities to enable people such as
freelance software engineers or Web site designers to offer their
services online. This may take the form of an auction category for
services, or a separate site for classified advertising.
In a move to expand beyond online auctions, San Jose-based eBay Inc.
began running Web sites earlier this year that offer classified
advertising. The Web sites, where users can sell services, were
launched under the brand "Kijiji," which is Swahili for "village."
Although auctioning of services has been tried by some sites in the
U.S., the tendency is for people to want to talk to the service
provider after seeing the classifieds, rather than quickly buy services
online, Bajaj added.
EBay India is cooperating with the cybercrime cells of the Indian
police, and has offered to report information of any infractions on its
auction site to an e-mail address provided by the police. Last year
pornographic video compact discs (VCD) showing two Delhi school
students engaged in a sexual act were put up for sale on Baazee.com by
a student. Bajaj was arrested by the Delhi police for Baazee's role in
that event, and later released on bail.
The decision by eBay India to pass on information of infractions to the
police is in line with eBay policy in other countries, Bajaj said. In
the case of the pornographic VCDs, the company took the auction off its
site as soon as it was informed, he added.
2. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.dailynews.com/Stories/0,1413,200~24781~2854073,00.html
Transforming U.S.
Bush, senators play blind, deaf about illegal immigrants
By Thomas D. Elias
Guest Columnist
Friday, May 06, 2005 - Want to frighten a roomful of U.S. senators? One
of the most certain ways is to try to get them to debate the hotly
emotional, but vitally important, topic of illegal immigration.
How important is immigrant labor -- illegal or not -- to the American
economy? Think this issue is confined only to agricultural states?
Well, Democratic Sen. Barbara Mikulski of Maryland predicted the other
day that the crab processors of her state's Chesapeake Bay might have
to close their factories this summer if they can't get visas for
temporary workers from Mexico.
At the same time, potato farmers in Idaho, cherry growers in Michigan
and cotton farmers in Georgia and South Carolina are on record saying
they'd suffer dearly if they couldn't hire illegal immigrants.
That's why they solidly backed an amendment proposed by Republican Sen.
Larry Craig of Idaho that sought to grant legal status and permanent
resident status to any agricultural worker who has been in this country
illegally, but has worked 100 days out of any one-year period during
the 18 months before Jan. 1 of this year. Their families would also
have qualified under the Craig plan.
Some estimates put the number of working illegal immigrants Craig
sought to legalize and allow to stay in America for good at 1 million,
with an additional 2 million family members quickly legalized, too.
Had Craig's plan been approved, it would have started the largest
immigration amnesty program of the last 19 years, one that might have
dwarfed the 1986 amnesty plan that eventually produced more than 1.5
million new American citizens -- more than half of them living in
California.
That program was a major factor in changing the political complexion of
California from a state that mostly voted Republican in statewide and
national elections to one that has been solidly Democratic in such
votes since 1994 -- except when a celebrated and muscular actor was
running.
This history terrifies many Republican senators. They were also scared
by seeing hundreds of Minuteman quasi-vigilantes conducting private
patrols in the deserts near the Mexican border with Arizona. They get
uncomfortable when they see how popular a few strongly
anti-illegal-immigrant congressmen have become with far-right,
grass-roots elements of their party, such as the California Republican
Assembly.
One of these -- Tom Tancredo of Colorado -- is even actively
contemplating a run for president in 2008.
Republican senators are divided on illegal immigration because they
know cheap labor provided by the undocumented immigrants helps many
businesses, which in turn boost the economies of their states and --
not incidentally -- contribute to their campaigns.
At the same time, some share the concerns of groups like the American
Patrol, which are convinced that any amnesty would open the floodgates
of illegal immigration, inspiring moves by many thousands of Mexicans
and Central Americans who now hesitate to make the hazardous trek
north. They believe even a limited legalization would cause those still
living in the sending countries to believe all they need is patience
and they, too, can one day win amnesty and eventually U.S. citizenship.
In fact, Craig's proposal was peanuts compared with what President
George W. Bush has proposed -- a much larger plan inviting workers to
enter the country legally for a limited period, after which they'd have
to go home. The history of programs like the one for postwar braceros
and today's z visas for highly skilled workers indicates at least half
those who come in under short-term visas stay much longer, legally or
not.
Craig argued for his plan on moral and business grounds and vows to
bring it back to the Senate soon. "We want to stabilize the current
agriculture work force -- workers who are trusted, who are already on
the job, who are already putting food on our tables. It makes more
sense to allow them to earn legal status than to try to replace a large
part of the agriculture work force," a top Craig aide told a reporter.
But most senators don't even want to talk about this idea. That's why
Craig was unable to break the threatened filibuster that limited debate
on his measure and killed it for now. But they had to say a little,
because Craig attached it to a spending bill covering costs associated
with the War on Terror.
This didn't sit well with most senators. A week before the filibuster
threat derailed the plan, they passed a nonbinding resolution calling
for passage of the spending bill with no immigration amendments on a
bipartisan vote of 61-38, with California's Dianne Feinstein in favor
and Barbara Boxer against.
The entire sequence was merely avoidance behavior, though. For illegal
immigration and its role in American business is the ignored elephant
sitting in America's living room and especially in California's.
This state now is host to more than one-fourth of all illegal
immigrants in America.
Eventually, both California and national politicians will have to bite
the bullet and confront the conflict between fears of business failure
and fears that a huge influx of Latino immigrants will change the very
nature of America.
The sooner the better, even if it makes all of us uncomfortable.
3. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://hosted.ap.org/dynamic/stories/C/CREATIVE_EXPORTS?SITE=NVLAS&SECTION=HOME&TEMPLATE=DEFAULT
May 8, 12:46 PM EDT
Indian Ad Companies Gaining Clients
By RAMOLA TALWAR BADAM
Associated Press Writer
BOMBAY, India (AP) -- If you're watching TV in Britain or flicking
through a newspaper in Russia or Southeast Asia, there's a decent
chance the ad that makes you pause and laugh was made in India.
Indian advertising agencies, graphic design houses and film production
companies are bagging clients with wacky ads and alluring graphics to
showcase products from cosmetics to chewing gum that are being sold
from Canada to China.
With many Western firms already outsourcing accounting, software design
and other chores to countries with lower labor costs such as India, it
was one more step to pick India as a source for creative ideas for ads
and design work.
One ad that was a huge hit shows a Bombay barber popping candy into a
client's mouth, setting off convulsions that transform the man's oily
hair into a spiked spectacle. The ad for Italian confectionary giant
Perfetti was made to show in India, but was so successful it was used
in Italy and China, too.
"My Italian colleagues realized there was good stuff coming out of
India so why don't we get work done here?" said Sameer Suneja,
Perfetti's head of marketing.
Abhijit Avasthi, senior creative director at the Bombay branch of the
New York-based advertising agency Ogilvy & Mather, said his team has
done nearly a dozen commercials for Perfetti over the past two years.
"Now we're doing tons of work on film and print. Some ads are shown in
Italy, some in Belgium and Luxembourg, others in Greece and Russia,"
said Avasthi.
His team uses basic themes "like romance or kids making fools of
adults" to grab the attention of audiences in different countries, he
said.
Most of the outsourced ads are not shot in India but are conceived and
put together here. Many are too racy to be shown in conservative India.
India is fifth in the Asia-Pacific region in advertising spending,
behind China, Hong Kong, South Korea and Australia. In 2004 India's
estimated ad spending was about $2.6 billion, according to Nielsen
Media Research. No figures are available on ads made for overseas
markets.
Indian agencies can make an ad at one-third the cost of foreign
agencies and do it more quickly, said Cyrus Pagdiwala, executive
producer of Bombay-based Corcoise Films, which is now working on ads
for an American fast-food giant and a Japanese car maker - neither of
which he is allowed to identify yet.
"They make one film in three months. We are used to making three films
in a month. And we can match global film-making standards," he said.
Increasingly top Indian agencies are bagging orders for the entire
creative process - from thinking up the idea to writing the script to
executing the ad.
"Production is cheaper, ideas are not. They come to us purely because
of our creativity," said Avasthi, who wouldn't specify his firm's fees
but said they were about the same rate as top London-based firms.
But communicating via e-mail or voice conferencing can leave crossed
wires.
Rabia Gupta, founder of Rabia Gupta Designs, thought the Czech-based
cosmetic house Body Basics wanted an "exotic, Indian look" when it
asked for help in creating a new brand identity and new packaging for
its skin and hair products.
"But they said no, we just like your work, we are not looking at
something Asian at all," said Gupta, who kept the contract.
She said companies were turning to India because "there's a freshness
about us. The way we use colors, the way we interpret information is
different ... and we're proficient in English."
Indians' diverse culture also helps them understand a variety of
markets, Gupta said. "We can be very upmarket, mainstream or
vernacular. If someone says they want a 'trendy design, very New York'
- we get it. If they want something ethnic - we get it."
Now, even smaller ad agencies are getting contracts aimed at a wider
audience.
Adesh Navkudkar, a Bombay-based ad film producer, is just back from
shooting a wedding planner's commercial in London. His Holistic Film
Works first did work targeting Asians for British companies but now is
getting inquiries from Saudi Arabia, Dubai and Egypt.
Industry analysts see bright prospects for the nascent industry.
"It's a very exciting time. It's still at the initial stage but I
believe outsourcing opportunities will only increase," said Amit
Agnihotri, director and editor of exchange4media.com, India's leading
media industry Web site.
) 2005 The Associated Press. All rights reserved. This material may
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about our Privacy Policy.
4. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.corpwatch.org/article.php?id=11849
WORLD: The Rise of the Micro-Multinationals
To start up here, companies hire over there.
by By Jim Hopkins, USA Today
February 11th, 2005
OfficeTiger is the sort of young technology company that once created
thousands of high-paying jobs in the USA, fueling sizzling economic
growth.
The 5-year-old business employs 200 in the USA. Yet it employs 2,000
more in southern India, with plans for hundreds more performing
tech-heavy financial services and other tasks. None of those jobs got
there through traditional "offshoring." They were never in the USA to
begin with.
Nearly 40% of start-ups in a new USA TODAY study employ engineers,
marketers, analysts and others in jobs created in India and other
nations. Russell Hancock, CEO of an influential group charting Silicon
Valley's future, called the findings "amazing."
The study found that many U.S. start-ups, speeding the pace of
globalization, now bypass the USA for nations where customers and cheap
labor are plentiful.
The newspaper studied 106 software firms, started since 1999, that got
money last year from influential investors called venture capitalists.
VCs pump more money into software than into any other industry.
The rise of these "micro-multinationals" is worrisome because start-ups
generate most tech jobs. Their role is now more vital as mature tech
firms consolidate and export work, cutting U.S. employment. Indeed,
tech's share of all U.S. jobs fell last year to 4.4% from a record 5%
in 2001. Tech's job share is now near a level last seen in 1992.
And it may not have hit bottom. Hewlett-Packard's ouster Tuesday of CEO
Carly Fiorina raises doubts about its plans. Software giant Oracle just
laid off 5,000 workers after swallowing rival PeopleSoft. Top chipmaker
Intel has said it plans to do most of its future hiring outside the
USA.
Now start-ups are joining the exodus. Micro-multinationals create jobs
that aren't reflected in the Labor Department (news - web sites)'s
influential monthly jobs survey. The number of these jobs is unknown
because most start-ups are private. But USA TODAY's study, examining a
slice of software start-ups, found nearly 900 jobs created in foreign
nations - the tip of the iceberg.
"It's an irreversible trend," says Nick Sturiale, general partner at
Sevin Rosen Funds, a VC firm that has made up to half of its
investments since early 2003 in micro-multinationals. "You have to be
global."
Private investors like Sevin, dangling scarce start-up financing, now
insist that ventures expand outside the USA from the get-go. Start-ups
say survival hinges on global markets where cell phone software and
other new tech gear spring to life. Young ventures want cheap labor to
keep prices low to better compete.
Speedy Internet access lets entrepreneurs ship software design and
other work anywhere from Day 1. What's more, start-ups are hiring well
beyond India, the nation most closely identified with offshoring.
They're also hiring in Germany, Italy, France and even closer, in
Canada.
That's a switch from tech's historic evolution: Start-ups grew and
hired in the USA for years before spreading to foreign nations. H-P,
for one, didn't expand abroad until 20 years after its 1939 start. Tech
consultant EDS hired abroad 13 years after starting in 1962.
Now look at online search giant Google. It hired outside the USA just
three years after its 1998 start. It won't say how many of its 3,000
workers are outside the USA.
But here's a clue: It has offices in Toronto, London, Tokyo, Hamburg,
Paris, Milan, Sydney, Amsterdam, Dublin and Madrid.
Mendocino Software, which makes software that recovers data and
computer programs, moved even faster. Begun near San Francisco in 2003,
it employs 17 workers in India among its 67 staffers.
Across the USA, lawmakers are taking up anti-offshoring legislation
again amid continued weak job growth. Employers added just 146,000 jobs
last month, the government said last week: Economists had expected
190,000.
'Overseas strategy'
At least 40 states debated bills regarding offshoring last year. But
they focused mostly on traditional offshoring, in which companies lay
off white-collar workers in the USA, then replace them with lower-paid
workers abroad. Not addressed are jobs seeping invisibly beyond the USA
as micro-multinationals respond to a raft of market forces.
Venture-capital firms now routinely ask entrepreneurs about their
"overseas strategy" to be considered for crucial start-up money.
"We really are pushing a lot of these companies into this model," says
Eric Gonzales, a general partner at Doll Capital Management in Silicon
Valley's Menlo Park.
As much as half of Doll's investments are in these ventures, vs. 10%
five years ago. "And that's definitely increasing," Gonzales says.
Doll's investments include Coradiant, which develops business software
and hardware to improve online transactions for companies such as
payroll service provider ADP.
Coradiant has nine workers near Boston and 32 in Canada, where labor is
cheaper. It got $5.3 million from VCs early last year.
In many cases, USA TODAY found, start-ups such as Coradiant got more VC
money: a median $6.1 million, more than twice the amount given to firms
with U.S.-only operations. That's a sign VCs may have more confidence
in the micro-multinationals' prospects, says Mark Heesen, president of
the National Venture Capital Association, a trade group.
VC firms, which invest for institutions and rich individuals, play an
outsize role in the globalization trend because they dominate finance
of the most elite start-ups. VCs invest money that banks won't lend for
labor and other expenses.
Yet since the tech bubble burst in 2000, VCs are investing less and
growing pickier, bolstering their leverage. They pumped $5.1 billion
into software start-ups last year, down from the record $23.2 billion
in 2000.
Private-equity firms, which invest in more mature companies, also are
circling micro-multinationals. Francisco Partners said it poured $50
million into OfficeTiger in June. OfficeTiger would not have won the
money if it weren't a global player, says co-founder Randy Altschuler.
He and partner Joseph Sigelman started the company in late 1999 with 25
employees at Chennai in southern India. Altschuler, 34, works at New
York headquarters. Sigelman, 34, is at a sprawling Chennai complex.
OfficeTiger sells a host of services to banks, print shops, insurance
companies and other clients demanding high-quality work at rock-bottom
prices. An investment bank, for example, might want research on a
client's competitors for a sales presentation. A print shop in Iowa
might need type set for a restaurant menu.
OfficeTiger workers in Chennai do the work, then ship it back to the
USA over the Internet for a fraction of the cost if done in the USA.
Altschuler wouldn't disclose wage rates in India. But he didn't dispute
VC estimates that labor costs there are often one-fifth those in the
USA.
Business is booming. OfficeTiger won't disclose revenue. But it expects
to add 1,500 workers by the end of this year. About 500 will be in the
USA; the rest will be in India, Sri Lanka and elsewhere, Altschuler
says.
Tech start-ups feel pressure to aim at worldwide markets, rather than
focus solely on the USA. That means hiring foreign software developers
and other workers to better serve customers abroad.
"You could build a nice $25 million business with a domestic niche,"
says Mike Morini, North America president at OutlookSoft in Stamford,
Conn. But to serve Fortune 1,000 customers, he says, "It's going to be
very difficult to survive."
OutlookSoft, started in 1999, develops business-management software. It
has 140 U.S. workers and an additional 60 in sales, design and customer
support in France, Italy, the United Kingdom and Germany.
Customers there are more comfortable dealing with neighbors. "People in
France want to buy from people in France," Morini says.
Pinching pennies
Entrepreneurs, who spent like drunken sailors in the dot-com years, now
pinch pennies by hiring abroad on the cheap.
"The dot-com meltdown is long over," says Mike Chuli, CEO of Coradiant.
"The board will tell you I watch cash as closely as if it's our last
dollar."
Coradiant employs 30 workers in Montreal doing research and
development. Labor in Canada costs 70% of the U.S. rate, Chuli says.
It's even cheaper in Russia, Romania and India. Highly skilled software
developers in India earn as much as $3,000 a month vs. as much as
$15,000 in the USA, says Sturiale, the venture-capital executive. Lower
overhead keeps prices low so start-ups can better compete for business
from tightfisted buyers. Annual corporate tech spending is expected to
rise as little as 3% this year, about the same as last year, Goldman
Sachs says.
Pricing is key in every industry, including anti-spam software, one of
tech's rare hot spots, says Pavni Diwanji, founder of e-mail security
firm MailFrontier. "Keeping costs low for any business is always a
competitive advantage," she said.
MailFrontier, begun in 2002, has 20 contract workers in India doing
quality control in New Delhi and Gujarat. Three more do research and
development in Australia. The company has about 70 U.S. workers in
Silicon Valley.
Creating 'the best kind of jobs'
To be sure, many young U.S. tech companies, including
micro-multinationals, also create jobs in the USA. Among the software
start-ups studied by USA TODAY, more than 80% of their combined 5,300
jobs are in the USA.
And many of those jobs are for highly paid CEOs, senior software
developers and other professionals at corporate headquarters. "The best
kind of jobs," says Mark Zandi, chief economist at consultant
Economy.com. "The ones you want in the United States that create the
most income and wealth."
By tapping global markets, tech start-ups may beat foreign competitors
and grow stronger and more prosperous, Zandi says. Eventually, that
could mean they'll create more good jobs back in the USA, he says.
That's a view shared by those downplaying the threat of offshoring by
mature companies.
But in the short run, that's little comfort for Silicon Valley, hardest
hit in the tech meltdown. The San Jose area, home to Hewlett-Packard,
Intel and other tech giants, lost one in five jobs - 189,000 - since
2000.
Valley productivity is up, says a January report by influential local
group Joint Venture: Silicon Valley Network. But that hasn't spurred
job gains. "That's a big story," says Hancock, the group's CEO. And
micro-multinationals are "a part of it."
5. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.orlandosentinel.com/news/local/southwest/orl-swswbritkids0505
0505may05,1,4572793.story?ctrack=1&cset=true
British invaders' kids face visa glitch
The E-2 business visa requires children to leave when they turn 21.
Dismayed parents would like that changed.
By Kelly Griffith
Sentinel Staff Writer
May 5, 2005
CLERMONT -- Sue Wicks knows her chances of making it in the United
States may be short-lived.
As one of a growing number of British residents with a special business
owners' visa, Wicks may find her stay in Central Florida restricted by
rules that require her teenage son to leave the country when he turns
21.
It's a law that dismays many British parents who opt to take advantage
of favorable exchange rates, sell their homes in the United Kingdom and
build a new life in the United States by owning a business under an
obscure but increasingly popular visa known as the E-2. The visa
holders often feel without a voice or a vote in trying to change
things.
"The only way our son could stay is if we buy him a business," said
Wicks, who used a Kissimmee real-estate and consulting firm to help her
get the visa that is used more and more frequently by those who have at
least $100,000 to invest in a successful business in the United States.
Wicks, a 48-year-old former probation officer in the United Kingdom,
and her husband, Neil, 51, plan to invest $100,000 to $200,000 in an
existing property-management company in the Four Corners area where
Polk, Lake, Orange and Osceola counties meet. They are renting a home
in Clermont and hope their 14-year-old son, an in-line skating
aficionado, will attend ninth grade at East Ridge High School in the
fall.
The idea of having another $100,000 to invest in another business for
him in just a few years seems more than daunting.
"While this is an exciting time for us, we know it's limited," Sue
Wicks said.
Under current laws, children of the E-2 visa holders are free to
accompany their parents to the United States, but upon reaching
adulthood, they must leave unless they too qualify for an E-2 or
another type of visa such as the H1B, sometimes granted to those who
have hard-to-find skills such as computer programmers. There is no
guarantee of receiving any visa, though, so E-2 children who may be
reared most of their lives in the United States could have to abandon
the only country they have known.
That, visa holders say, should change.
Some say children should be allowed to stay as long as their parents
do, for instance, in case the parents get sick and need care. Others
say they would be content if the kids could stay as long as they were
dependent upon their parents, which in Britain is increasingly beyond
age 21, some say.
While E-2 visas are intended for people from countries with which the
United States has special commerce treaties, Britons are using the
visas in increasing numbers. Last year, they accounted for more than 10
percent of all E-2 visas issued, even though people from 73 countries
can qualify. Favorable exchange rates, making the move accessible to
many middle-class Brits, seems to be propelling the move, experts say.
Last year, 2,966 Britons received the visas, up 30 percent from the
year before and an increase of 58 percent from 2002. Many come to
Central Florida, consultants say, because they often have already
vacationed in the area.
Those making such a move, though, should count the costs and understand
that the visas, which can be renewable indefinitely, are not a ticket
to stay forever, some say.
"E-2 people need to remember they are not over here to live," said
Peter O'Connell, 54, a British E-2 visa holder living in Brandon. "They
are here to run a business."
O'Connell does not have children, but he sympathizes with the plight of
those with kids who face the dilemma. He said lack of a united voice
and citizenship leaves the visa holders an unheard minority. He said
visa holders have no way to reach each other to share common concerns.
He has tried to use the Web to do that, but with limited success.
"I'm not a voter. I'm not a citizen. Why should they listen to me?" he
said of lawmakers who are charged with changing immigration laws.
O'Connell says Americans should care. With hundreds of visa holders
coming to buy businesses, he said they are valuable contributors to the
area's economy. They not only own businesses, but also buy homes and
cars, and pay taxes.
"Florida gets an awful lot of retirees who actually keep their money in
other states," he said. "But I brought money from the U.K. and invested
it in America. We add to the economy of the state."
It's difficult to know how much the E-2 visa holders mean to the U.S.
economy, because no government agency tracks the data. But consultants
in Central Florida say the trend isn't going away, and those with
children are lured here as much as anyone.
"A lot of them say, 'I have absolutely no idea [what I want to do for a
living], I just want to move out of here [the U.K.], get to a warmer
climate, not have to learn a second language and have a great education
for my kids,' " said Shani Parkin, vice president of the Pegasus Group,
a Kissimmee real-estate and consulting firm that helps Brits make the
move with greater ease.
Parkin urges clients to seek help from a lawyer specializing in
immigration and an accountant familiar with the visa.
The Wickses took her advice. They hired Parkin to assist in the
details, but they now feel helpless in changing U.S. law to allow their
son to stay past his 21st birthday.
If he has to leave in seven years, she said they will go with him.
"If we come here as a family, we will leave here as a family."
6. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.courant.com/business/hc-outsource0511.artmay11,0,7447140.story?coll=hc-headlines-business
Insurer's IT Plan Puts Jobs At Risk
By DIANE LEVICK
Courant Staff Writer
May 11 2005
The Hartford's property-casualty operation may outsource several
information technology applications as part of a larger IT overhaul,
raising layoff fears among employees as the company aims for more speed
and efficiency.
Rumors have been circulating at the company about hundreds of layoffs
later this year or next. But company officials say they don't know yet
what the job impact will be, and that they have no directive to cut a
specific amount of expenses - although millions in savings are
expected.
Potential vendors of IT services have been visiting The Hartford
Financial Services Group Inc. before formulating bids, and the company
is checking out the firms. The Hartford could decide not to proceed
with one or more of the outsourcing projects, and won't speculate on
potential job loss.
"It would be irresponsible of me to say because I don't know," said
John Chu, senior vice president of e-business and technology for
property-casualty at The Hartford. "I'm not going into this with a
specific number in mind. I'm going in there with `What's the best thing
to do?' "
Management hopes to tell employees more by the end of June or early
July, depending on how negotiations with vendors go.
The Hartford's property-casualty operations have 1,886 employees in IT,
including 1,580 in Connecticut. As of January, The Hartford had 4,145
IT employees companywide.
The company's Hartford Life unit said last month that it would cut 50
IT jobs in Windsor and add more foreign workers this year through
outsourcing in a project aimed at expanding its investment products
business. Layoffs could number less than 50 because of attrition and
placing employees in different jobs, the company said.
The property-casualty operation's outsourcing, dubbed "Project Green
Light," is just one of five major IT initiatives in a four-year
"transformation." It's designed to enable the business to move more
quickly because a fast rollout of new rates and products is a
competitive advantage, Chu noted.
It used to take two years or more to launch a new personal insurance
product, and as long as nine months to change rates by territory. Now
The Hartford, for instance, could roll out products in its new
"Dimensions" auto insurance program in less than 12 months, and in
homeowner's insurance in fewer than nine months, Chu said.
"We can change rates and rules in terms of how we price today in under
a week," he added.
In addition to Green Light, other IT initiatives are looking at the
whole setup of applications, how IT is delivered, a better way to plan
and more accurately forecast investments in IT, and infrastructure -
desktop computers, data center, storage and more.
Chu said The Hartford's property-casualty business has used IT vendors
many times in recent years. Current partners include Accenture,
Computer Sciences Corp., and IBM. Now Green Light aims to make
outsourcing a more "embedded" activity to avoid the current red tape in
arranging each outsourcing transaction, Chu said.
"Frankly, it taxes the system and puts a lot of cost into the system,"
he said. "We have to go through legal every time, procurement every
time, and we have to `spec' out every single piece, every time" that
something is to be outsourced, he said.
If Green Light proceeds, vendors would be "at our beck and call," Chu
explained. "They're part of our strategy, they know everything we're
doing, and we're thinking of them as an extended part of our family,
not just necessarily as a vendor anymore."
The savings from outsourcing won't be all in IT, but will come from
driving productivity in property-casualty operations and the sales
channel, Chu said.
The applications that may be outsourced include policy administration
systems for personal auto and homeowner's insurance, and for specialty
insurance for large commercial customers. Policy administration systems
hold all of the information about a policy, such as property
descriptions, coverage limits and riders.
A third system being considered for outsourcing is one that manages
business insurance and personal lines billing and premium audit
processes.
If The Hartford cuts jobs because of new outsourcing, "we'll look to
re-skill, retrain and retool and redeploy as many [employees], if not
all, if possible," Chu said.
It's not known how much of the work might end up offshore - a sore
point with many American workers.
"A lot of companies who go offshore, i.e., just go to India to take
advantage of the cost differential [in labor], those are always the
sourcing deals that don't do well," Chu said.
"We're not going to take all 2,000 jobs and give them to somebody, and
say `Give me 30 percent off,' " Chu said. Management's charge is to be
the best at getting IT to drive the success of The Hartford's
businesses, and "we don't want to give up control."
7. +++++++++++++++++++++++++++++++++++++++++++++++++++
Hi Rob,
As an employee of the Hartford. I wanted to write to you and thank you
for sending out the article on the Hartford. Hopefully, some of our
customers will read it and let the company know that they do not want
their data sent overseas. 5 years ago, the Hartford was a great company
to work for. Morale was high and the vast majority of the employees
were very happy there. Then about 3 or 4 years ago, Vic Severino joined
the company as the CIO. He is the one that started the offshoring big
time at the company. At an employee assembly shortly after he arrived,
he told us that there were two reasons he was going to offshore. One
was because everyone else was doing it. The other was because he needed
it on his resume. He also proudly informed us that the last company he
worked for went bankrupt. Hmm, wonder why.
The company claims that they are doing it to cut costs and be more
effecient. As for effeciency, of all the projects that have been
offshored, not a single one has been delivered on time. Some have been
delivered as
much as 1-1/2 years late. For saving money, some have come in at as
much as 400% of what they were budgeted for. Yet, each time one is
completed, management sends out congratuatory emails saying what a
great job everyone did. Cost cutting must be up to the employees only
and not management since this company has announced at least 49 new VPs
and AVPs so far this year, roughly 16 a month. In the IT area, they
have added two whole layers of management. The number of management
positions created just to handle offshoring is amazing.
About the middle of last year the company did a survey to determine
employee morale. The results were as expected, horrible. Over 60% of
the employees said that they would not recommend one of the Hartford's
products to anyone. Management then formed survey review committees
with employees that "volunteered" to be on them. They told us that the
reason for the committees was to come up with ways to raise morale.
They also told us that discussing offshoring was out of scope for these
committees.
A couple weeks ago, the VP in charge of IT had a brown bag lunch with
some of the employees. The employees raised concerns about the security
of the data being sent overseas. This data is not encrypted and many
times is just sent in an email or ftp'd to India or outside companies.
The data includes customer information including SSNs, names,
addresses, birth dates, Hartford account numbers and even customer's
bank account numbers. When the VP was asked why we didn't encrypt the
data, he told them that it was not worth the cost. Wonder if the
customers would feel the same way.
Myself and many others have contacted Connecticut's senators and
representatives in Washington. These members of Congress don't even
bother to respond any more if the letter to them mentions H-1B or L-1.
I contacted Connecticut's governor's office concerning these visas and
asked her to please discuss the visas and job losses with Connecticut's
members of Congress in Washington. Her office responded by telling me
that this is a federal issue and not a state issue and that I should
contact them. I wrote back to her office saying that since Connecticut
jobs are being loss, it seems like it is a state issue. Her office
never responded to that.
Thanks again for all your hard work trying to save American jobs. Sorry
to make this email so long, I just got on a roll.
8. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://news.com.com/Johnny+can+so+program/2010-1007_3-5700858.html
Johnny can so program
By Norm Matloff
http://news.com.com/Johnny+can+so+program/2010-1007_3-5700858.html
Story last modified Tue May 10 04:00:00 PDT 2005
"America is slipping!"
It's become a standard lead, guaranteed to grab readers' attention. Add
in a few alarmist quotes from self-serving lobbyists with hidden
agendas, along with the obligatory conclusion that "Education is the
answer," and you've got the economic horror movie that Americans love
so much to watch.
CNET News.com has got this formula down pat. Its piece, Can Johnny
still program?, laments that in the annual collegiate programming
contest held by the Association for Computing Machinery, the best that
any American team could do this year was a miserable 17th place. The
United States hasn't won a world championship since 1997--"an ominous
sign for the U.S. tech industry," News.com fears.
"Oh my god," readers must have thought. "How could the quality of
American computer-science students have sunk so quickly in the short
time span of just eight years?" It's an absurd conclusion, of course,
but readers have been conditioned to believe any claim, no matter how
outlandish, about the decline of the U.S. educational system.
But let's see what News.com didn't tell you.
Start with what it means statistically to perform well in this contest
today. News.com didn't tell you that the number of teams competing has
grown nearly sevenfold from 1994 through 2005. In other words, for a
team to finish at, say, third place, in 1994 would be equivalent to
finishing 21st this year. So a hypothetical team that News.com would
have lauded in 1994 would now be dismissed as having badly "slipped" in
2005, even though it would be of the same quality.
The American showing in the ACM contest does not mean that the U.S. is
losing its technological mettle. Second, News.com seems to have
forgotten the history of the Olympics. Long before Olympic athletes
from all countries became quasiprofessionals, the Eastern European
countries were seeing to it that training for the Games was their
athletes' full-time job, giving them a major advantage over other
nations' athletes.
Some nations, or some individual universities, make similar time
commitments in the ACM contest. Xu Jun, a public-affairs officer at the
school, which fielded this year's first-place team in the programming
contest from Shanghai Jiao Tong University, put it in Olympian terms:
"All their time was spent in preparation except for their class work."
A faculty colleague of mine who is a veteran coach in the ACM contest
estimates that many foreign teams devote at least 10 times the amount
of time to practice as do American teams. Xu's statement suggests that
the factor is much greater than 10.
As someone who married into a Shanghai family, I congratulate the
bright, dedicated members of the winning Jiaoda team, which also took
first place in 2002. But it would be wrong to view their victories as
measures of general superiority over other schools, let alone other
nations. Indeed, a number of ethnic-Chinese universities that are
considered far more prestigious than Jiaoda weren't in even the top 10,
such as Peking University (11th place), Tsinghua University (13th
place) and National Taiwan University (Honorable Mention, below 30th
place).
In a companion editorial, News.com Executive Editor Charles Cooper
repeated the lobbyists' favorite example, the seemingly poor showing of
American kids at the grade-school level on international math and
science tests. Yet it has been repeatedly pointed out by education
experts that differences in test scores are primarily due to America's
struggle to deal with a social underclass.
Consider the Trends in International Mathematics and Science Study
eighth-grade science test, for instance, and the scores achieved by
Colorado, Connecticut, Iowa, Maine, Massachusetts, Minnesota, Montana,
Nebraska North Dakota, Oregon, Utah, Vermont, Wisconsin and Wyoming.
Had these states--none of which has a substantial underclass--been
treated as separate nations, each of them would have been outscored
only by Singapore. (China, the nation that produced the ACM contest
winner this year, has refused to participate in TIMMS.)
Differences in test scores are primarily due to America's struggle to
deal with a social underclass. So the American showing in the ACM
contest does not mean that the states are losing their technological
mettle. To News.com's credit, after I brought some of these points to
its attention, it did include them in a follow-up piece on April 19.
But it is a shame that News.com did not cover the real threat to
American technological competitiveness--a threat that comes from the
very entities News.com quoted as saying that the contest means America
is doomed.
The earlier CNET article, for instance, quoted Jim Foley, chairman of
the Computing Research Association, David Patterson of the ACM and
former Intel CEO Craig Barrett, all of whose organizations have hidden
agendas in playing the education card. And those interests, I contend,
form the real technological threat to the states. Here's why:
In the late 1990s, the computer industry claimed a desperate labor
shortage. No independent study ever confirmed that shortage, but the
hidden agenda behind the shrill shortage claims was to push Congress to
increase the yearly cap on the H-1B work visa program, which enabled
industry to import cut-rate engineers from abroad. Government data
show, for instance, that Intel, which claims that its H-1Bs have
master's degrees and Ph.D.s, pays them far less than the national
medians for engineers with these degrees.
University computer science departments used the "labor shortage"
claims to get more faculty, more doctoral students, and more research
dollars from Congress and industry. Since research funding and Ph.D.
production are key to prestige in universities, the claims of a labor
shortage were manna from Heaven, and a number of prominent academics
rushed to publicly support the industry's push to expand the H-1B
program to remedy the "labor shortage."
University computer science departments used the "labor shortage"
claims to get more faculty, more doctoral students, and more research
dollars from Congress and industry. To be sure, research should indeed
be an integral part of a university's work. But academics long ago
abandoned the noble notion of scholarship for the less noble goal of
empire building, a transition that should have been better covered in
News.com's interviews with Foley et al.
Congress, openly admitting that it was responding to industry campaign
donations rather than the popular will, complied by increasing the H-1B
cap in 1998 and 2000, the latter action coming at the time the mass
layoffs began. This past December, despite a continuing abysmal tech
labor market, Congress enacted another expansion of the program.
Contrary to these parties' putative goal of maintaining American
technological competitiveness, H-1B has brought great harm. How can
American engineers compete with cheap, imported labor? And now the
industry, notably including Barrett, is promoting the offshoring of
tech work (in which the H-1B program also plays a key role), obviously
even more harmful to maintaining America's technological skills. And
yet these guys now have the nerve to make the claim that the solution
to all the layoffs of engineers is to have our educational system
produce more engineers. Sadly, News.com never questions such "Alice in
Wonderland" claims.
Nor does News.com challenge the rich hypocrisy of those whom it quotes.
Foley, who now cites the results of the programming contest as
signifying America's decline, told the same News.com reporter last
August, "It does not make sense to become a programmer...(because)
programming jobs will continue to go offshore."
No, Johnny's ability to program hasn't slipped. What has slipped,
though, is his respect for our cherished major American
institutions--industry, academia, Congress and, most sadly, the press.
9. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.nytimes.com/2005/05/12/opinion/12herbert.html?oref=login
May 12, 2005
The Young and the Jobless
By BOB HERBERT
There were high fives at the White House last week when the latest
monthly employment report showed that 274,000 jobs had been created in
April, substantially more than experts had predicted.
The employment bar has been set so low for the Bush administration that
even a modest gain is cause for celebration. But we shouldn't be
blinded by the flash of last Saturday's headlines. American workers,
especially younger workers, remain stuck in a gloomy employment
landscape.
For example, a recent report from the Center for Labor Market Studies
at Northeastern University in Boston tells us that the employment rate
for the nation's teenagers in the first 11 months of 2004 - just 36.3
percent - was the lowest it has ever been since the federal government
began tracking teenage employment in 1948.
Those 20 to 24 years old are also faring poorly. In 2000, 72.2 percent
were employed during a typical month. By last year that percentage had
dropped to 67.9 percent.
Even the recent modest surge in jobs has essentially bypassed young
American workers. Gains among recently arrived immigrants seem to have
accounted for the entire net increase in jobs from 2000 through 2004.
Over all, only workers 55 and up have done reasonably well over the
past few years. "Younger workers," said Andrew Sum, the center's
director, "have just been crushed."
Whatever the politicians and the business-booster types may be saying,
the simple truth is that there are not nearly enough jobs available for
the many millions of out-of-work or underworked men and women who need
them. The wages of those who are employed are not even keeping up with
inflation.
Workers have been so cowed by an environment in which they are so
obviously dispensable that they have been afraid to ask for the raises
they deserve, or for their share of the money derived from the
remarkable increases in worker productivity over the past few years.
And from one coast to the other, workers have swallowed draconian cuts
in benefits with scarcely a whimper.
Some segments of the population have been all but completely frozen
out. In Chicago, only one of every 10 black teenagers found employment
in 2004. In Illinois, fewer than one in every three teenage high school
dropouts are working.
Last month's increase of 274,000 jobs was barely enough to keep up with
the increase in the nation's working-age population.
"The economy is growing and real output is up," said Mr. Sum, who is
also a professor at Northeastern. "But the distribution of income, in
terms of how much is going to workers - well, the answer is very little
has gone to the typical worker."
The squeeze on the younger generation of workers is so tight that in
many cases the young men and women of today are faring less well than
their parents' generation did at a similar age. Professor Sum has been
comparing the standard of living of contemporary families with that of
comparable families three decades ago.
"Two-thirds of this generation are not living up to their parents'
standard of living," he said.
College graduates today are doing better in real economic terms than
college graduates in the 1970's. But everyone else is doing less well.
"If you look at families headed by someone without a college degree,"
said Professor Sum, "their income last year in real terms was below
that of a comparable family in 1973. For dropouts it's like 25 percent
below where it was. And for high school grads, about 15 to 20 percent
below."
It shouldn't be surprising that the standard of living of large
segments of the population is sinking when employers have all the
clout, including the powerful and unwavering support of the federal
government. Workers can't even get a modest increase in the national
minimum wage.
Globalization was supposed to be great for everyone. Nafta was supposed
to be a boon. Increased productivity was supposed to be the ultimate
tool - the sine qua non - for raising the standard of living for all.
Instead, wealth and power in the United States has become ever more
dangerously concentrated, leaving an entire generation of essentially
powerless workers largely at the mercy of employers.
A remark by Louis Brandeis comes to mind: "We can have democracy in
this country, or we can have great wealth concentrated in the hands of
a few. But we can't have both."
10. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.vdare.com/roberts/050512_jobs.htm
May 12, 2005
More Jobs Hype
By Paul Craig Roberts
Careless journalists and commentators are hyping the 274,000 new April
payroll jobs as evidence of the health of the US economy. An
examination of the details of the new jobs puts a different view on the
matter.
Aprils job growth is consistent with the depressing pattern of US
employment growth in the 21st century: The outsourced US economy can
create jobs only in domestic nontradable services.
Of the 274,000 April jobs, 256,000 were in the private or nongovernment
sector, and 211,000 of these were in the service sector as follows:
58,000 in leisure and hospitality (primarily restaurants and bars),
47,000 in construction, 29,200 in wholesale and retail trade, 28,000 in
health care and social assistance, 17,300 in administrative and support
services (primarily temps), 11,700 in transportation and warehousing,
8,800 in real estate. A few scattered jobs in other service categories
completes the picture.
Americans regard themselves as "the worlds only superpower," but the
pattern of American job growth in the 21st century is that of a third
world economy. The US economy has ceased to create jobs in high tech
sectors and in export and import-competitive sectors. Offshore
outsourcing of manufacturing and of engineering and professional
services is dismantling the ladders of upward mobility that made the
American Dream possible.
Not only is the US economy creating third world jobs, according to
analysis by Edwin S. Rubenstein (vdare.com, April 2, 2005), it is
creating the jobs for Hispanic immigrants. Rubinstein examined job
growth by ethnicity and found that Hispanics (13 percent of the work
force) are gaining 60 percent of the new service jobs.
Rubinsteins findings are consistent with the racial composition one
observes on construction sites, in fast food restaurants, in waste
services and among hospital orderlies.
Until recent years American jobs had nothing to fear from low-wage
foreign labor. Americans high pay reflected their high productivity
from working with the most capital and best technology.
The collapse of world socialism and the rise of the high speed Internet
forced Americans to compete head to head in the same global labor
market with low wage foreign labor working with identical capital and
technology. When US and European corporations move their manufacturing,
research and development offshore or contract with offshore producers
to supply the products and services that they market, the jobs and
associated incomes are also transferred abroad.
Americans and Europeans cannot compete in labor markets with Chinese,
Indians, and Eastern Europeans, because the cost of living in North
America and Europe is so much higher. In addition, there is a vast
excess supply of labor in China and India that overhangs the labor
markets there and keeps wages low.
The claim by outsourcings proponents that outsourcing creates new
and better jobs for Americans is pure fantasy. This claim can find no
support in job and income data. Moreover, the same incentive to
outsource that is sending so many jobs abroad applies equally to any
new replacement jobs.
The only American jobs that are safe are in domestic nontradable
services that cannot be outsourced, and even in these domestic
services, such as school teachers and nurses, foreign workers are being
imported via work visa programs.
Outsourcings proponents claim that it benefits corporations and
their shareholders. This is true only in the short run. The
substitution of foreign labor for American labor allows executives to
reduce costs and increase profits, thus producing large bonuses for
themselves and capital gains for shareholders. The long run effect,
however, is to destroy the US consumer market and to reduce US
corporations to a brand name with a sales force selling foreign made
products to Americans employed in third world jobs.
Offshore outsourcing is a new phenomenon that has received little
attention from economists, who mistakenly view offshore outsourcing as
just another manifestation of the beneficial workings of free trade and
comparative advantage. In fact, offshore outsourcing is the flow of
resources to absolute advantage. Economists have known for two
centuries that absolute advantage does not produce mutual gains. Unlike
the operation of comparative advantage, absolute advantage produces
winners and losers.
China and India are winning. America is losing. It is as simple as
that.
Paul Craig Roberts, a former Reagan Administration official, is the
author of The Supply-Side Revolution and, with Lawrence M. Stratton, of
The Tyranny of Good Intentions : How Prosecutors and Bureaucrats Are
Trampling the Constitution in the Name of Justice. Click here for Peter
Brimelows Forbes Magazine interview with Roberts about the recent
epidemic of prosecutorial misconduct.
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