'Exporting' high-tech jobs

Date: Sunday, December 28, 2003 9:35 PM

JOB DESTRUCTION NEWSLETTER

www.ZaZona.com

Ilana Mercer's articles are always thought provoking, and this series
of three articles is no exception. The articles can be found at:
http://www.ilanamercer.com/Globtrade.htm

Here are a few things that grabbed my attention:

* Indeed, the belief that this business model will see American
high-tech workers elevated into ever "higher-value work" is a
pie-in-the-sky fantasy. The reality, according to Professor Norman
Matloff's data, points instead to massive underemployment: Computer
programmers are "working in nonprofessional jobs such as bus driver and
real-estate appraiser."

* Clearly, government and the market today are inextricably enmeshed,
and for this reason, trade is not free. Trade is regulated to the hilt,
so that many corporations are now incorrigibly corrupt rent seekers. In
this mixed-economy milieu, trends like exporting jobs, and importing
cheap labor with visas that do not require employers to give hiring
preference to Americans, do not epitomize the classical liberal idea of
laissez faire. Those who say they champion laissez faire must
understand this, and stop confusing current reality with their
proclaimed ideal. Rather than endorse the mixed-economy mess in our
labor markets, they must uphold a principled alternative.

* An American worker will generally still perform the task faster and
better than his foreign equivalent. But the price of wages and the cost
of living in China and India are so very low that a team of Chinese can
be hired for the price of one American.

* If you want to stay employed in the U.S., choose a job, preferably
service oriented, that can't be relocated. Got the aptitude to probe
the field of fiber optics? Don't. Instead, become a gym instructor to
the multiplying population of menopausal gym-bunnies.

* If the trend continues, we may see a dramatic shift in the labor
landscape: more retail jobs, fewer knowledge jobs. Understanding this
impetus begins with a recognition that we do not have a free market.

* What then of my claim that offshoring in the high-tech industry is a
response to a shackled and not a free market? Aren't we, after all, as
free as can be? At least, that's an inanity this administration has
hammered into a good many hollow heads.

Friday, December 26, 2003

Outsourcing American lives

Posted: December 26, 2003
1:00 a.m. Eastern

By Ilana Mercer

The McKinsey Global Institute's preferred idiom for what they do is,
"To work with executives to improve a company's performance." But many
understand that this is code for outsourcing work to China, India and
elsewhere.

When a high-tech corporation hires McKinsey Global's consultants - or
ghouls with a similar mission - the writing is on the wall, at least
for the company's creative core: its engineers and programmers.
McKinsey typically recommends "exporting" jobs to locations offering
cheap labor. And when McKinsey gets going, it's not call centers on the
chopping block, but CAD centers. Execrable chief executives complement
the McKinsey strategy by importing cheap labor through hustling H-1B
and L-1 visas.

McKinsey has claimed that the savings it achieves for corporate clients
by these methods are plowed straight back into the economy, resulting
in a "reinvestment in new ventures and ideas." That's the way it's
supposed to work, and there is, of course, a large kernel of truth in
this. At least stockholders - and they include a great many average
Americans - benefit, because downsizing by "exporting" jobs and
importing cheap workers reduces costs, thus increasing profits. Ergo,
stock prices rise.

And it is this stock blip that has become the be-all and end-all of
American corporate culture. There's no mystique involved: The
individuals leading corporate America do not stand outside the culture
like Ayn Rand's heroes, but are an extension of it. The trends that
have infected American society contaminate the captains of industry
just the same. For the corporate clients who court it, McKinsey fosters
a short-term stock surge - but it does so by plowing under their rising
talent, destroying the intellectual seed capital that ensures
sustainable long-term business.

Indeed, the belief that this business model will see American high-tech
workers elevated into ever "higher-value work" is a pie-in-the-sky
fantasy. The reality, according to Professor Norman Matloff's data,
points instead to massive underemployment: Computer programmers are
"working in nonprofessional jobs such as bus driver and real-estate
appraiser."

A reality that the IEEE-USA, the world's largest technical professional
society, is also hip to. The organization reports "the highest level of
member unemployment ever recorded, more than double the levels reached
in the recession periods of the mid-1970s and early 1990s." Since U.S.
IEEE members were far less likely to be out of work than their non-IEEE
counterparts, these estimates are probably optimistic. The data portend
a sharp decline in the overall demand for electrical, electronics, and
computer engineers.

As I said in a previous column in this series, the improved
productivity - the kind McKinsey is instrumental in achieving for its
clients - is a form of market efficiency. But what form, and at what
long-term costs? After all, a price - and this includes the price of
labor - doesn't have absolute value; it is a function of the subjective
evaluations of the parties involved in the exchange.

Yes, all trade is ex ante beneficial to the traders because it is
voluntary and hence desirable. But often lost in the reflexive praise
for "market efficiencies" is (1) the role of state grants-of-privilege
to the special interests involved in some "trades," and consequently
(2) the long-term costs to the legally disempowered.

For the high-tech firm and its newly acquired Indian techies, the
benefits of job exportation or of the easily available, state-sponsored
visa system, are obvious. For Professor Matloff's American
computer-science students, though, the harm is just as apparent. A
vocal critic of H-1B and L-1 visa programs, Matloff has seen how his
students, many of whom are Asian-American, are progressively prevented
from practicing their professions in the U.S. because corporations are
systematically replacing them with immigrants.

The labyrinth of work visas is one example of the fascistic
government-business cartel in operation. This domestic partnership has
become the model for a sordid series of global liaisons. Through the
programs of the International Trade Administration, the Export-Import
Bank, the Overseas Private Investment Corporation, the International
Monetary Fund, and other oink-operations, taxpaying American workers
are forced to subsidize and underwrite the investment risks of the very
corporations that then give them the boot.

Clearly, government and the market today are inextricably enmeshed, and
for this reason, trade is not free. Trade is regulated to the hilt, so
that many corporations are now incorrigibly corrupt rent seekers. In
this mixed-economy milieu, trends like exporting jobs, and importing
cheap labor with visas that do not require employers to give hiring
preference to Americans, do not epitomize the classical liberal idea of
laissez faire.

Those who say they champion laissez faire must understand this, and
stop confusing current reality with their proclaimed ideal. Rather than
endorse the mixed-economy mess in our labor markets, they must uphold a
principled alternative.

Government involvement with the commercial life of the community must
be eliminated. This pertains to regulation of, as well as to all grants
of special privilege to, business. Sanctions on corporations should be
confined to removing all taxpayer subsidies - those issuing from
programs like the Export-Import Bank are an example.

Certainly, to recommend restrictions on the movement of capital to
foreign destinations is verboten for libertarians. Similarly, a free
society cannot make it illegal for employers to transact over the
Internet. The emigration end of the outsourcing problem is thus taboo
for liberty lovers. The right of exit - the ability to take one's money
and run - must be inviolable.

But conversely, the immigration aspect of the job quagmire ought to
become fair game for libertarians. America's immigration policy
manifests the transfer society at its worst. And as long as we have a
profligate welfare state, there's nothing wrong in stopping would-be
parasites at the border.

Likewise, there's nothing wrong in refusing work visas that will only
result in the dispossession of perfectly qualified American workers -
workers who are forced to subsidize the high-tech industry lobby and
the hordes of immigrants they bring in. That policy is a gross
injustice, one that cries out for moral opposition from those truly
concerned with individual rights.

Ilana Mercer is a columnist for WorldNetDaily. Her forthcoming book is
"Broad Sides: One Womans Clash With A Corrupt Culture." To learn
more about Ilana and her work, please visit her website.

Friday, December 19, 2003

'Exporting' high-tech jobs II: The tipping point

Posted: December 19, 2003
1:00 a.m. Eastern

By Ilana Mercer

) 2003 WorldNetDaily.com

For at least 4,730 IBM computer programmers, the Christmas and New Year
holiday will not be too festive. According to the Wall Street Journal,
IBM plans on "moving their work" to India, China and "elsewhere."

It's not alone. High-tech companies like Microsoft, Oracle, Sun and
others have similar plans. Citing research by International Data Corp.,
the Journal estimates that by 2007, 23 percent of all
information-technology services jobs will move to "emerging markets."

If the trend continues, we may see a dramatic shift in the labor
landscape: more retail jobs, fewer knowledge jobs.

Understanding this impetus begins with a recognition that we do not
have a free market. Like the Aliens in the Sigourney Weaver sci-fi
films, the tentacles of the interventionist state innervate and
enervate everything.

Because we live and work ensnared in a seamless web of statism, market
solutions are often circuitous responses to the government's laws and
wars. These statist assaults on our prosperity ought to be the proper
focus of the fight.

Unarguably, high-tech customers drive each company's need to stay
competitive. The message IBM consumers convey through their buying
patterns is: "Keep those prices where we want them or else we'll
purchase our software from Hewlett-Packard or EMC Corp." Indisputably,
offshoring or "exporting jobs" is a market efficiency. These companies
must meet the challenge of competition by making their products more
appealing to buyers. And in the current commerce-averse climate, this
challenge necessitates moving operations to where highly skilled labor
is infinitely cheaper: China, India, Russia.

Furthermore, it is far preferable that IBM "export jobs" to retain a
competitive edge and stay in the game, than lose market share and be
forced to fold up and fire all its employees. High-tech companies
increasingly must offshore or eventually risk going belly up.

If what I've delineated is a healthy, consumer-dictated, competitive
response, what then of my claim that offshoring in the high-tech
industry is a response to a shackled and not a free market? Aren't we,
after all, as free as can be? At least, that's an inanity this
administration has hammered into a good many hollow heads.

Inflation is one good gauge of the degree of freedom we enjoy. Observe
how American high-tech firms are accused of taking advantage of "cheap"
foreign labor. This implies that the "cheap" wage price is the
incorrect or "unfair" price, and that the American salary approximates
the right remuneration (whatever that means).

However, an Indian technology worker lives very nicely on his "cheap"
$6,000 annual wage, while an American with a similar skill-set needs 10
times as much to make do. In 1960, the average annual salary of an
American was about what it is today for our Indian "techie," and - to
paraphrase the song - the living was just as easy.

Without belaboring how government spending and the Federal Reserve
System brought about this state of affairs, suffice it to say that if
not for the inflation caused by their money-printing, credit-creating
profligacy, U.S. wages and domestic prices would probably be falling
now, making offshoring far less attractive.

How else does the American state benefit China and India?

As I wrote previously, "To the cost of the assorted alphabet soup of
regulatory agencies a corporation must pay off [in the U.S.], add
exorbitant corporate taxes and expenses like workers compensation
insurance ... as well as the cost of a government rape known as Social
Security."

"Buried under regulation" is how business ethicist Tibor Machan
describes the plight of companies: "One license after the other, one
permit after the other ... [and] zillions of forms" to fill in daily.
What with the legal obligation to give an employee practically a
lifetime of benefits, who can afford to start a business? he asks.

If the ratio of lawyers to engineers in an economy is a measure of
statism, then the preponderance of lawyers we suffer gives our
competitors yet another edge. When indicting culprits who gum up the
economy and drive business offshore, please find against tort lawyers.

There is something to be said about the concept of a "tipping point."
It's not one thing that causes a rivet to pop in an economy, but many
(although the state is invariably involved) - and it's not their added
effects that bring about a fundamental change, but their synergistic
workings over time.

Clearly, foreign investors in China and India are not subject to more
than 180 federal labor laws; to an Equal Employment Opportunity
Commission, an Occupational Safety and Health Administration, an IRS
and an EPA; or to a work force where merit is marred by affirmative
action.

Our competitors might not have been certified "free" on the various
indexes of economic freedom, but they haven't yet reached the tipping
point.

Other tilting factors: We spend more than any other nation on the
military, and the nation's culture reflects this. While we hound and
scorn self-made productive individuals like Rush Limbaugh and Martha
Stewart, we promote and lionize the parasitic, wealth-destroying
stooges of the state - politicians, bureaucrats and their assorted foot
soldiers.

As we continue to hone a global advantage in the use of state force,
other nations - free of such drains on their economies - can
concentrate on prosperity-generating market activities and begin to
chip away at America's economic armor.

Ilana Mercer is a columnist for WorldNetDaily. Her forthcoming book is
"Broad Sides: One Womans Clash With A Corrupt Culture." To learn
more about Ilana and her work, please visit her website.

http://www.ilanamercer.com/

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