A recent article in the Washington Post outlines expansion of aid programs to laid-off computer workers who’s jobs have been moved offshore. Last year, there were 1400 petitions approved and 800 denied. The denied ones were predominantly IT workers with jobs that were off-shored. Up until now, they were denied aid because they did not create “goods” to reach the market.
What do you think of this expansion of government aid to off-shored IT jobs? Unnecessary intervention in free trade? Not enough aid? A valuable contribution to a growing problem of IT workers requiring retraining due to jobs shipped to India and Uzbekistan?
Bias..
I call bias based on your us eof the term “expansion of government”. I don’t consider this expansion of government at all.
Look, I’m a free market guy.. but that buck stops somewhat when that market is not national.
The idea of the free market in America says “the market decides what is best for the people”. BUT – America is affluent, and to expand the free market to include what is best for non-Americans is not what the free-market idea intended.
Since information has no tariff, there needs to be protection in place for the people who lose jobs because corporations have found a way to circumvent the American free market. I think a tax law with breaks for American using companies and increased taxes for non-american using companies is a way to go.
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Expansion et al…
I used the loaded term intentionally, but not necessarily to represent my own bias. There are many — Daniel comes to mind, possibly 🙂 — who generally believe that the government has little or no right to extort money from citizens to fund these kinds of programs.
That’s the interesting thing to me. Everyone sees that offshoring is results in an increase of the standard of living — and therefore an increase in cost — on the part of the country receiving the business. Most people seem to understand that this usually implies a loss of standard of living on the part of the country losing the business.
I see examples of this happening in our country all over. Real wages haven’t budged in seven years. The per-capita percentage of the cost of food vs. income — a fairly reliable benchmark as to the wealth of a nation — is at the highest point since the 1950’s. Which means we’re getting poorer and food costs more of our budget.
I’m making $5K less than I was in 2001. Sure, I can’t apply my own experience universally, but I’ve heard the same song so many times that I know it by heart. The large software company I work for officially pays the “going wage”… but unofficially, my bosses have told me that they’d rather pay a fellow $10,000 a year to do the job in Bangalore than pay $90,000 to do the job here. This philosophy is used as a bludgeon to get compliance in the face of opposing viewpoints.
And I do, too. We’re agreeing loudly 🙂 It’s obvious to me that the off-shoring of technical jobs is going to continue. We should try to make the best of it by providing retraining on a large scale as U.S. jobs leak abroad for 1/10 the wage.
Bill Clinton has an interesting quote relevant to economics as a zero-sum game… he implies that improvement of the lot of others will improve our own lot as well:
The more complex societies get and the more complex the networks of interdependence within and beyond community and national borders get, the more people are forced in their own interests to find non-zero-sum solutions. That is, win–win solutions instead of win–lose solutions…. Because we find as our interdependence increases that, on the whole, we do better when other people do better as well — so we have to find ways that we can all win, we have to accommodate each other…. Bill Clinton, Wired interview, December 2000 .
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Matthew P. Barnson
Too late?
Am I in time to join this fight? You’re all communist pinkos, I tell ya!
Anyway, I actually AGREE that there are some issues with international trade. I would limit that to situations where another government is subsidizing a competing company or industry. In this case, we are right to levy tariffs and such in order to rebalance the playing field. And we shouldn’t complain when it happens to us for the same reason.
That’s easier said than done, of course, because it’s tough to define “subsidizing” an industry. What about tax breaks for developing a blighted area? What about having a different corporate tax rate than the other nation? Etc.
That said, Americans have a somewhat inflated sense of their contribution to the world. A clothing worker in the US can get paid $20/hour for something someone in India will do for $1/day. That tells me that the US worker ought to be doing something else. I’m not saying clothes shouldn’t be made, but that unskilled labor is abundant in the world. It’s like teachers: everyone agrees that they are engaged in a noble work, but we don’t pay them more because we don’t need to–there are plenty of folks waiting in the wings to step in at the going wages.
So, if someone in Eastern Europe is willing to write code for $10/day, it’s time to find something else to do. It’s not the government’s job to do that for you, nor is it the government’s job to provide training. I have put myself through two graduate programs, one at great personal expense (the other on a research stipend), in order to more than double my income in the last 5 years. I’m in a position that can’t be outsourced, but I could still lose my job at any time. And then I’d have to sell myself to get another one. That’s the great challenge of living–find food. (Okay, maybe that’s after “avoid becoming food” and tied with “procreate.”)
Or perhaps the government should outlaw Linux. What did workers get paid for writing that? Who’s protecting the well-paying jobs at Microsoft?
I will ask for data to support this. Somehow, I don’t believe it. Are there individual losers and winners? DEFINITELY. But as a whole? Nope–any free transaction is win-win, otherwise people wouldn’t engage in it. So to continue with the coding discussion, consider a company that lays off a few people to save $100k net-net. Now the company will either spend that money elsewhere (increase other wages, hire in another department, invest in equipment, etc.) or return it to the shareholders/owner. Alternatively they lower their prices, allowing customers to retain more value. But no value has been destroyed in the system–only the laid-off workers are out of the loop. But with 4-5% unemployment, they won’t be out of the loop for long.
Now, we could say that this doesn’t account for the anxiety and suffering that attends losing your job. No, it doesn’t, and getting laid off obviously sucks a lot. But the alternative (protection of American jobs) doesn’t account for the anxiety and suffering of living in a 5’x5′ room without plumbing that our 3rd-world fellow humans enjoy. I don’t think most Americans appreciate what daily suffering is relative to some of the people who benefit from free trade. When you visit a place like India or Sub-Saharan Africa, you immediately gain a new perspective on what it means to be born in America, regardless of your socio-economic class.