Thursday, May 6, 2004
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Bwa ha ha ha!!
The Los Angeles Times reports that the political tide may be turning on offshore outsourcing:
It's just coordinated lobbying?! What about well-honed rhetoric backed by cogent analysis and hard data? [Yeah, you know it's actually the lobbying, right?--ed. Allow me my meager illusions of influence, OK?]
Part of the Times' reasoning is based on the E-loan experiment that I blogged about in March. Consumers are given a choice between having their paperwork processed in 10 days overseas or 12 days in the United States. According to the LAT, "In the three months that ended Monday, 85.6% of 14,329 loan applicants chose processing overseas."
Meanwhile, Miguel Helft writes in the San Jose Mercury News that data privacy concerns with regard to offshore outsourcing are grossly exaggerated:
Read both pieces.posted by Dan on 05.06.04 at 01:01 PM
Are the liberal media responsible for the bubonic plague during the Middle Ages? I know that I may sound like a broken record when repeatedly blaming the major media for just about everything. Still, they are the primary reason why our perceptions of events are often so distorted. We must never forget that the outsourcing issue is only being used to destroy President Bush. There were never this many stories concerning the unemployed during President Clinton’s reelection bid. Also, please note the relative silence of the moderate liberal economist community. They are apparently following the number one rule of academic life: Do nothing to help a Republican administration. You may not have to lie for the liberal cause---but you must minimally keep your mouth shut.posted by: David Thomson on 05.06.04 at 01:01 PM [permalink]
Even those who have lost jobs sometimes express more resignation than outrage.
People who are unable to find gainful employment for over a year tend not to be passionate -- they tend to be severely depressed.
(Alas, we see the clinical fallacy of economic science: in which people are not organic entities whose behaviors and opinions are based on experiences and feelings, but simply balls on a pool table that bounce around according to the laws of economic physics. How ironic that we should rely on such an impassionate, robotic science to determine the lives of millions of real, breathing, living humans.)
Consumers are given a choice between having their paperwork processed in 10 days overseas or 12 days in the United States. According to the LAT, "In the three months that ended Monday, 85.6% of 14,329 loan applicants chose processing overseas."
Well, you've discovered two things:
This study only shows why offshoring opponents need to work harder to expose the problem, or else these tendencies done without thought of the consequences will lead to even greater economic depression.
Can you really tell me that increased personal debt as a result of lost living wage jobs is good for the economy? Can I really trust an economic argument that relies only on one unweighted figure of "net new jobs"? How does net new jobs relate to purchasing power? It doesn't, without quantified data on just what those new jobs are and what they pay.
A matter which Daniel is still reticent to investigate.
As I've said before, if we replace one thousand $15/hr computer support jobs with two thousand minimum wage $6/hr Walmart cashier jobs, we're still *down*.
Do we really think that the executives who've managed to make more money for themselves via offshoring will have a stroke of generosity and decide that they can now pay their remaining, employees better thanks to increased revenue?
Darn it, there's that human aspect again.posted by: Keith Tyler on 05.06.04 at 01:01 PM [permalink]
Keith: before talking about new jobs, you gotta convince me that offshore outsourcing is responsible for the massive destruction of old jobs. I'm not convinced.posted by: Dan Drezner on 05.06.04 at 01:01 PM [permalink]
“Darn it, there's that human aspect again.”
Yes, and that’s why I am a conservative. It behooves one to deal with the world as it is. Utopian schemes always end in a disaster. Lastly, there is no such thing as “economic physics.” Economics is a Liberal Art’s activity which in a professional setting requires advanced mathematical skills. It is senseless not to premise one’s economic theories on how real human beings may react in certain situations.posted by: David Thomson on 05.06.04 at 01:01 PM [permalink]
There are other factors which need to be considered here.
How much of the 'change of the tide' is just the people getting weary of being hammered with it? How much is it from being identified as one of Kerry's big arguments and a rejection of the whole concept on that basis?
Dan Drezner writes:
"before talking about new jobs, you gotta convince me that offshore outsourcing is responsible for the massive destruction of old jobs. I'm not convinced."
Free Trade Uber Alles is your dogma and your religion. You will be convinced only after you have trained an Indian Professor to teach in UC branch in Bangalore in outsourced PoliSci department and were laid-off.
UC does disservice to its customers by keeping PoliSci department in expensive Chicago, they can have better quality people at 1/4 of the cost in Bangalore.posted by: Homer Pile on 05.06.04 at 01:01 PM [permalink]
Keith: before talking about new jobs, you gotta convince me that offshore outsourcing is responsible for the massive destruction of old jobs. I'm not convinced.
Unfortunately, Dan, as I pointed out in the comments of that story the BLS's numbers show a remarkably increasing trend of companies not reporting the reason for their layoffs.
"No reason reported" makes up 12.17% of the layoffs reported to the BLS for 2003, compared with 4.8% for 2002 and 3.3% for 2001.
In which case, there is no way you can say with any certainty the statement you make there:
Offshore outsourcing is not responsible for a significant percentage of the jobs that have been lost.
I don't seriously accept your challenge to "prove" that offshoring has led to a massive destruction of old jobs (or even of *my* point, that offshoring has led to a significant decrease in median purchasing power) -- because I see nothing convincing in the inspecific statistics, limited sample analyses, or anecdotes you've provided for the pro-offshoring agreement. And even those anecdotes you have provided still showed less jobs regained compared to jobs lost.
But I can point to this FastCompany story, which refers to a Foote Partners study reporting that IT compensation dropped 7.6% in 2003. That's compensation, mind you -- not expense. Programming compensation dropped 17.5 percent between 2002 and 2004, according to this VNUnet story.posted by: Keith Tyler on 05.06.04 at 01:01 PM [permalink]
Most Americans - like most people - are cheap, selfish, and short-sighted. They might wake up when the full effects of outsourcing become clear.
Instead of worrying about security between the U.S. and India, perhaps we should worry about security here. People who make statements about something being very secure are usually overtaken by events.posted by: The Lonewacko Blog on 05.06.04 at 01:01 PM [permalink]
For less liberal hubris and more straight dope, try General Glut's commentary on the same article.posted by: General Glut on 05.06.04 at 01:01 PM [permalink]
Keith Tyler wrote:
"I don't seriously accept your challenge to "prove" that offshoring has led to a massive destruction of old jobs (or even of *my* point, that offshoring has led to a significant decrease in median purchasing power) -- because I see nothing convincing in the inspecific statistics, limited sample analyses, or anecdotes you've provided for the pro-offshoring agreement."
Muddy statistics, limited samples and anecdotes is what Derzner thinks economics arguments look like.posted by: Homer Pile on 05.06.04 at 01:01 PM [permalink]
Jobs will grow by more than 400,000 for April.posted by: aaron on 05.06.04 at 01:01 PM [permalink]
Do nothing to help a Republican administration.
I always thought the Republican philosophy was that you're on your own. God Helps Those and all that. Why then would Republicans expect political handouts -- especially by a media which is being hammered from the right under the name of decency, a labor force whose income is being decimated by pro-corporate policy, and a public who has been scared to death over terrorism (to the point that much of it is already desensitized to the fear) yet receives only increased law enforcement power and no actual increased security?
(Speaking of which, whatever happened to the Homeland Security Advisory System? Wouldn't you think the exposure of the Abu Ghraib photos would have triggered a bump? [And after all, an American was publicly executed in the aftermath.] I think it's about due for another two-week Orange Alert fest, lest the HSAS fade into obscurity so soon, and we all forget that we're still in imminent danger from hordes of crazy Muslims.)posted by: Keith Tyler on 05.06.04 at 01:01 PM [permalink]
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