Undecided
05-24-04, 03:48 PM
Some excerpts from a article from the CATO institute:
According to a 2003 study by the McKinsey Global Institute, outsourcing delivers large and measurable benefits to the U.S. economy: It reduces costs for IT and other services by as much as 60 percent, keeping U.S. companies competitive in global markets, benefiting workers and shareholders alike. It stokes demand abroad for the export of U.S.-supplied computers, telecommunications hardware, software, and legal, financial, and marketing services. It returns profits to the United States from U.S.-owned affiliates abroad, and it allows U.S. companies to redeploy workers in more productive jobs here at home. McKinsey calculates that every dollar spent on foreign outsourcing creates $1.12 to $1.14 of additional economic activity in the U.S. economy.
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The best estimates from the IT industry are that perhaps 300,000 to 400,000 jobs previously performed in the U.S. are now done overseas through contractors. The much-cited Forrester Research report of November 2002 projected that 3.3 million jobs would be outsourced from 2000 through 2015, or about 220,000 a year. (More than half of those would be call-center type jobs, and only one out of six would be white-collar IT jobs.)
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The Labor Department figures that, during the past decade, our economy created an average of 32.8 million new jobs each year while eliminating 31.0 million, for a net annual gain of 1.8 million. Jobs lost to outsourcing are but a small channel in the torrential "job churn" normal for a dynamic market economy.
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Indeed, far more Americans lose their jobs to technology or domestic competition than to foreign outsourcing or other forms of international competition
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Between 1988 and 2000, a net half-million jobs for typists and word processors were eliminated, not because they were outsourced but because they were made redundant by computers.
------------------------
Displaced high-tech workers should blame not Indian computer programmers but the bursting of the dot-com bubble, the market plunge, the 9/11 attacks, the corporate scandals, and slow growth abroad. A fundamental mistake made by outsourcing's critics has been to confuse the passing pain of the IT recession with an alleged long-term decline in this sector.
----------------------
From 1999 through 2002, total employment in the IT industry did drop by more than a quarter of a million, from 6.24 million to 5.95 million. But declining employment was concentrated in those occupations requiring relatively low or moderate levels of training and education. In contrast, the number of IT jobs that require a relatively high level of training and education was actually higher in 2002 than it had been in 1999. In the year before the bubble burst, the industry employed 3.43 million workers whose jobs required at least an associate's degree and work experience. After a surge of hiring in 2000, followed by a painful shakeout, the number of such skilled workers stood at 3.51 million in 2002, up 2.3 percent from 1999. Contrary to the popular fear that "our best jobs" are going overseas, the best jobs are staying here.
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Another reality lost in the outsourcing debate is the amount of outsourcing the rest of the world sends to the U.S.: We are far and away the world's top destination of outsourcing of information-technology, financial, communications, and other business services.
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So for every dollar Americans sent abroad for IT outsourcing in 2002, the world sent more than three dollars to the U.S. for "insourcing." If Congress launches a war against foreign outsourcing, American companies and workers will be among the first casualties.
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outsourcing invigorates the U.S. economy at the same time it builds a pro-American middle class in India and other developing countries. The Indian high-tech sector is flourishing because they are following the U.S. model of zero tariffs on imported software and hardware, no restrictions on foreign investment, and an emphasis on postsecondary education. The Indian economy is now achieving Chinese levels of double-digit growth. So far the growth has been concentrated in the high-tech sector, but the effect there has been profound. Hundreds of thousands of young Indian college graduates are realizing the fruits of middle-class life that we all take for granted. Although the $8,000 paid to an Indian programmer sounds ridiculously low in American terms, it can buy about five times as much in India, enabling a worker to rent his own apartment, own a cell phone, make car payments, and travel abroad.
--------------------
The Indian high-tech companies and workers who service the U.S. market have an obvious affinity for the American model. They consciously follow U.S. business practices. They have adopted our policies of deregulation and open markets. They buy American hardware. They work with and for American investors. They speak fluent English. Many have relatives who live and work in the U.S. In this time of rising anti-American feeling around the world, when we are desperately trying to win friends and influence events in South Asia and elsewhere, it would be hard to find a more naturally proAmerican enclave than the Indian high-tech sector. What could be more short-sighted than to disrupt our growing, mutually beneficial trade with the world's most populous democracy to save a sliver of jobs that are probably heading out the door anyway?
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http://www.freetrade.org/pubs/articles/dg-05-03-04.html
Interesting take on outsourcing, I am a free trader because I believe that the principle of "comparative advantage" does indeed exist. No one state can live in autarky and still have economic growth. If a company is going to make more money in India then they would in the US why shouldn't we allow that happen? The great irony here for the US is that she fought the USSR for this globalized capitalist economy, it has always been the US who has pushed for greater access to markets, yet when it hits home the population doesn't like capitalism anymore? American consumers benefit greatly from outsourcing, your computer is almost certainty made in China, or Taiwan, or has parts originating from there. If you have a toy, it's Chinese, if you have a shirt its made in Central America or Asia (where I object to the working conditions), and you have more disposable income then before. If the US was enact tariffs, and to stop outsourcing firstly there would be shortages of goods, secondly inflation would skyrocket, and American industry would be weaker for it (yes you heard me). This is quite possibly the only line of argumentation in which I agree with the Bush administration, I support its trade policy. I support globalization as well because it is the great equalizer, it does spread the wealth. Granted corporations are raking in the profits, but wages and living standards all over the world have increased, and in some places significantly. Countries like China, Brazil, even India have a greater voice in the economic survival of the world. The Chinese now account for 7.9%(2002) of total world trade and the US 14.5% (2002), consider that China in 1975 didn’t even account for 1%. The US is increasingly dependant on states like China, and with over $75 billion worth of American investments in China, it would be the epitome of economic idiocy to stifle that trade. But that's what is being lauded by some in the US, and effectively stop about $150 billion worth of bilateral trade. India is another country where Americans obviously feel iffy about; so much IT jobs are being created in India Americans feel like they are losing out. As the aforementioned article already outlined it's not that bad.
But there is undoubtedly a dark side to outsourcing (if you perceive it as such), one that it would force the US economy to change. That change is from an economy that could absorb the "lower educated" masses into jobs like textiles, steel works, and manufacturing, into one that simply cannot. The US is transforming into one where a college education is a necessity not an asset. Yes jobs in the US are now starting to pay more in the sense that they are more specialized, and require so much professionalism that you have to pay them highly. But the US economy is having a shift, one that puts so many people into the services sector (i.e. McDonalds, the Gap,etc) . There is a growing disparity btwn rich and poor in the US. It's an educational divide, and the US is not known for her "excellent educational programs". Real wages have been declining since the economic liberalization of the mid-70's. What a worker was making back in 1975 (around $15/hr), he now makes around$9/hr (real wages). Yet most jobs in the US are lost to technological and productivity gains. As shown with the typists, 500,000 jobs were lost, as a result of the PC rather then an Indian.
What about Kerry? Well he does scare me in this sense; I support his candidacy because Iraq is a much bigger problem imo. But his trade policy seems to be a bit, backward. Kerry is a crude politico and he realizes that thanks to media spokespersons like Lou Dobbs, there is an overt and over reactionary backlash against free trade. Kerry will exploit Bush's trade policy as one of "Benedict Arnolds CEO's", that it is not patriotic, and that entire BS. (Now don't confuse my support of Bush's trade policy, with anything else, like the budget, or tax cuts). It would be almost impossible to convince the American public that outsourcing is a good thing. Typical of politics, short sighted individuals seem to determine everything. So what do you think is outscoring and globalization a good thing? Or a disaster waiting to happen?
According to a 2003 study by the McKinsey Global Institute, outsourcing delivers large and measurable benefits to the U.S. economy: It reduces costs for IT and other services by as much as 60 percent, keeping U.S. companies competitive in global markets, benefiting workers and shareholders alike. It stokes demand abroad for the export of U.S.-supplied computers, telecommunications hardware, software, and legal, financial, and marketing services. It returns profits to the United States from U.S.-owned affiliates abroad, and it allows U.S. companies to redeploy workers in more productive jobs here at home. McKinsey calculates that every dollar spent on foreign outsourcing creates $1.12 to $1.14 of additional economic activity in the U.S. economy.
--------------------
The best estimates from the IT industry are that perhaps 300,000 to 400,000 jobs previously performed in the U.S. are now done overseas through contractors. The much-cited Forrester Research report of November 2002 projected that 3.3 million jobs would be outsourced from 2000 through 2015, or about 220,000 a year. (More than half of those would be call-center type jobs, and only one out of six would be white-collar IT jobs.)
----------------------
The Labor Department figures that, during the past decade, our economy created an average of 32.8 million new jobs each year while eliminating 31.0 million, for a net annual gain of 1.8 million. Jobs lost to outsourcing are but a small channel in the torrential "job churn" normal for a dynamic market economy.
----------------------
Indeed, far more Americans lose their jobs to technology or domestic competition than to foreign outsourcing or other forms of international competition
----------------------
Between 1988 and 2000, a net half-million jobs for typists and word processors were eliminated, not because they were outsourced but because they were made redundant by computers.
------------------------
Displaced high-tech workers should blame not Indian computer programmers but the bursting of the dot-com bubble, the market plunge, the 9/11 attacks, the corporate scandals, and slow growth abroad. A fundamental mistake made by outsourcing's critics has been to confuse the passing pain of the IT recession with an alleged long-term decline in this sector.
----------------------
From 1999 through 2002, total employment in the IT industry did drop by more than a quarter of a million, from 6.24 million to 5.95 million. But declining employment was concentrated in those occupations requiring relatively low or moderate levels of training and education. In contrast, the number of IT jobs that require a relatively high level of training and education was actually higher in 2002 than it had been in 1999. In the year before the bubble burst, the industry employed 3.43 million workers whose jobs required at least an associate's degree and work experience. After a surge of hiring in 2000, followed by a painful shakeout, the number of such skilled workers stood at 3.51 million in 2002, up 2.3 percent from 1999. Contrary to the popular fear that "our best jobs" are going overseas, the best jobs are staying here.
-------------------
Another reality lost in the outsourcing debate is the amount of outsourcing the rest of the world sends to the U.S.: We are far and away the world's top destination of outsourcing of information-technology, financial, communications, and other business services.
-------------------
So for every dollar Americans sent abroad for IT outsourcing in 2002, the world sent more than three dollars to the U.S. for "insourcing." If Congress launches a war against foreign outsourcing, American companies and workers will be among the first casualties.
-------------------
outsourcing invigorates the U.S. economy at the same time it builds a pro-American middle class in India and other developing countries. The Indian high-tech sector is flourishing because they are following the U.S. model of zero tariffs on imported software and hardware, no restrictions on foreign investment, and an emphasis on postsecondary education. The Indian economy is now achieving Chinese levels of double-digit growth. So far the growth has been concentrated in the high-tech sector, but the effect there has been profound. Hundreds of thousands of young Indian college graduates are realizing the fruits of middle-class life that we all take for granted. Although the $8,000 paid to an Indian programmer sounds ridiculously low in American terms, it can buy about five times as much in India, enabling a worker to rent his own apartment, own a cell phone, make car payments, and travel abroad.
--------------------
The Indian high-tech companies and workers who service the U.S. market have an obvious affinity for the American model. They consciously follow U.S. business practices. They have adopted our policies of deregulation and open markets. They buy American hardware. They work with and for American investors. They speak fluent English. Many have relatives who live and work in the U.S. In this time of rising anti-American feeling around the world, when we are desperately trying to win friends and influence events in South Asia and elsewhere, it would be hard to find a more naturally proAmerican enclave than the Indian high-tech sector. What could be more short-sighted than to disrupt our growing, mutually beneficial trade with the world's most populous democracy to save a sliver of jobs that are probably heading out the door anyway?
---------------------
http://www.freetrade.org/pubs/articles/dg-05-03-04.html
Interesting take on outsourcing, I am a free trader because I believe that the principle of "comparative advantage" does indeed exist. No one state can live in autarky and still have economic growth. If a company is going to make more money in India then they would in the US why shouldn't we allow that happen? The great irony here for the US is that she fought the USSR for this globalized capitalist economy, it has always been the US who has pushed for greater access to markets, yet when it hits home the population doesn't like capitalism anymore? American consumers benefit greatly from outsourcing, your computer is almost certainty made in China, or Taiwan, or has parts originating from there. If you have a toy, it's Chinese, if you have a shirt its made in Central America or Asia (where I object to the working conditions), and you have more disposable income then before. If the US was enact tariffs, and to stop outsourcing firstly there would be shortages of goods, secondly inflation would skyrocket, and American industry would be weaker for it (yes you heard me). This is quite possibly the only line of argumentation in which I agree with the Bush administration, I support its trade policy. I support globalization as well because it is the great equalizer, it does spread the wealth. Granted corporations are raking in the profits, but wages and living standards all over the world have increased, and in some places significantly. Countries like China, Brazil, even India have a greater voice in the economic survival of the world. The Chinese now account for 7.9%(2002) of total world trade and the US 14.5% (2002), consider that China in 1975 didn’t even account for 1%. The US is increasingly dependant on states like China, and with over $75 billion worth of American investments in China, it would be the epitome of economic idiocy to stifle that trade. But that's what is being lauded by some in the US, and effectively stop about $150 billion worth of bilateral trade. India is another country where Americans obviously feel iffy about; so much IT jobs are being created in India Americans feel like they are losing out. As the aforementioned article already outlined it's not that bad.
But there is undoubtedly a dark side to outsourcing (if you perceive it as such), one that it would force the US economy to change. That change is from an economy that could absorb the "lower educated" masses into jobs like textiles, steel works, and manufacturing, into one that simply cannot. The US is transforming into one where a college education is a necessity not an asset. Yes jobs in the US are now starting to pay more in the sense that they are more specialized, and require so much professionalism that you have to pay them highly. But the US economy is having a shift, one that puts so many people into the services sector (i.e. McDonalds, the Gap,etc) . There is a growing disparity btwn rich and poor in the US. It's an educational divide, and the US is not known for her "excellent educational programs". Real wages have been declining since the economic liberalization of the mid-70's. What a worker was making back in 1975 (around $15/hr), he now makes around$9/hr (real wages). Yet most jobs in the US are lost to technological and productivity gains. As shown with the typists, 500,000 jobs were lost, as a result of the PC rather then an Indian.
What about Kerry? Well he does scare me in this sense; I support his candidacy because Iraq is a much bigger problem imo. But his trade policy seems to be a bit, backward. Kerry is a crude politico and he realizes that thanks to media spokespersons like Lou Dobbs, there is an overt and over reactionary backlash against free trade. Kerry will exploit Bush's trade policy as one of "Benedict Arnolds CEO's", that it is not patriotic, and that entire BS. (Now don't confuse my support of Bush's trade policy, with anything else, like the budget, or tax cuts). It would be almost impossible to convince the American public that outsourcing is a good thing. Typical of politics, short sighted individuals seem to determine everything. So what do you think is outscoring and globalization a good thing? Or a disaster waiting to happen?