Thursday, June 3, 2004
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Outsourcing and insourcing the friendly skies
The Washington Post's Sara Kehaulani Goo has a story on how the outsourcing phenomenon is affecting aircraft maintenance. Turns out to be a two-way street:
The article also highlights a genuinely worrisome regulatory gap, however: "For example, airline maintenance workers in other countries do not have to undergo mandatory drug and alcohol testing or criminal background checks as they do in the United States." If I'm a terrorist wishing to strike fear into American travelers, this is an obvious loophole to exploit.
To be fair, the Transportation Safety Administration is planning on promulgating regulations this month to deal with this loophole -- I just hope they're implemented soon.
UPDATE: If you're interested in the topic, be sure to check out the Discovery Channel's "The Other Side of Outsourcing" this evening -- it's a documentary of Tom Friedman's trip to Bangalore. 10:00 PM, ET.posted by Dan on 06.03.04 at 10:46 AM
In my case, Daniel Drezner is writing to the already converted. It simply amazes me that anybody truly disputes the benefits of free trade. Common sense dictates that countries like China will send us the work that can't get done efficiently within their own borders. Oh well, I guess that’s why John Kerry has a good size number of supporters. He’s seemingly captured the economically illiterate vote.posted by: David Thomson on 06.03.04 at 10:46 AM [permalink]
Once cavil: I'm not sure how a mandatory alcohol test would deter an Islamic terrorist.
I am struck by the concern over the absence of worker's regulations in foreign countries. If pension funds and minimum wages are not mandated there, then what makes us feel that criminal background checks should be? It seems our sympathies swell when the unjustice may indirectly affect us.posted by: theVedantan on 06.03.04 at 10:46 AM [permalink]
I've talked with NWA maintenance workers who say they fear for airline safety because outsourced service is beyond US regulatory control.
Sounds similar to the pharmaceutical industry claim that Canadian suppliers are unsafe for the same reason.
Those NWA workers love the cheap drug prices, tho.posted by: wishIwuz2 on 06.03.04 at 10:46 AM [permalink]
It should be in the overseas company's own obvious self-interest not to hire someone who they think may sabotage the aircraft, and in the airline's self-interest not to go with a company they don't trust.
It'd be nice if modern life was so simple and could be reduced to a neat mathematical model. Unfortunately, not everything boils down to economics. Read this story for instance. How do we know that a state or non-state actor is not trying to sabotage our aircraft? Wouldn't some groups do that even if it wasn't in their economic best interest?posted by: The Lonewacko Blog on 06.03.04 at 10:46 AM [permalink]
"How do we know that a state or non-state actor is not trying to sabotage our aircraft?"
Of course we don't know this with 100% certainty. We also don't know about actors in US-based firms with 100% certainty, and we can't prevent sabotage with TSA-mandated drug tests. The only way to deal with it is to know who you're dealing with, both domestically and internationally.
Can anyone point me to any historical examples supporting the free trade dogma, other than blue sky academic theory. I beg to be enlightened.posted by: Dan P on 06.03.04 at 10:46 AM [permalink]
What literacy do I need to be able to measure my household's damaged income and the rising costs of my living expenses? Pretend its some complicated theoretical engine that I just don't understand -- but the math involved in how this affects the people I care about and the people in my community doesn't even require so much as a high school diploma.
U.S. carriers have outsourced thousands of maintenance jobs. At the same time, however, some airlines have stepped up their efforts to bring maintenance work into their shops.
I hope someone here can explain the business logistics here, because I don't get it. Let's move a significant portion of our labor force overseas. Then, lets take on MORE work.
Who does this added work? New hires? Why get new local hires when you can just get more overseas labor for cheaper?
Oh, you mean the already cranked-up local labor... because human capital is made of up stones that can spurt blood, if you squeeze hard enough. So you don't even need any new hires at all, you just need to implement a 16-hour workday while you look the other way.
All my cynicism aside, please, explain it to me.
To be fair, the Transportation Safety Administration is planning on promulgating regulations this month to deal with this loophole
Uh, isn't this regulation, and therefore anathema to free trade? Sheesh, how can the airlines expect to save money if they still have to maintain all those silly safety rules in foreign countries? I mean, isn't not having to worry about the safety of products (or of workers) the whole fun of overseas labor in the first place?
I just had a vision of the serendipitous new work for the drug testing industry as a result of all this -- with crates of Indian and Chinese laborer's urine being shipped across the Pacific.
Oh, I had a CFO.com article for Dan. My favorite bit:
Even this pro-offshore site agrees with my assessment, that offshoring eliminates high paying jobs, leaving little but lower-paying (or no) jobs in their wake. I'm trying to convince my tiny mind that this is a good thing.posted by: Keith Tyler on 06.03.04 at 10:46 AM [permalink]
Keith: Thanks for the link, which I'd been meaning to read. Here's the part I found interesting: "Offshoring isn't quite as common as the hype would suggest: according to CFO's survey of 275 finance executives at a broad range of companies, only 18 percent currently use offshore outsourcing." Furthermore, 70% of the respondents said their firm had no plans to outsource offshore.posted by: Dan Drezner on 06.03.04 at 10:46 AM [permalink]
I think it's safe to assume that we face a greater threat of sabotage from someone in North Korea or Yemen than someone in the U.S. Countries like Canada are closer to one end of the continuum, China is closer to the other.
Can anyone point me to any historical examples supporting the free trade dogma
I don't know of any, but, then again IANAE. I believe Paul Craig Roberts says the models in support of today's free trade are based on assumptions from the age of the steamships and are now outdated.posted by: The Lonewacko Blog on 06.03.04 at 10:46 AM [permalink]
"Furthermore, 70% of the respondents said their firm had no plans to outsource offshore."
Of course a bad publicity about outsourcing played no part in responses of those 70% of corporate shills. They all are looking forward to be called Benedict Arnolds by Kerry administration.
Mr. Drezner, I have a bridge in a very good condition for sale, interested?
"What literacy do I need to be able to measure my household's damaged income and the rising costs of my living expenses?"
Well, let's look at those rising costs. What's getting more expensive over time.
Housing? Heavily regulated. Medicine? Heavily regulated. Education? Heavily regulated.
What's getting cheaper over time? Computers? Lightly regulated. Other electronic goodies? Lightly regulated.
See a pattern here?posted by: Ken on 06.03.04 at 10:46 AM [permalink]
"For example, airline maintenance workers in other countries do not have to undergo mandatory drug and alcohol testing or criminal background checks as they do in the United States."
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