On Off Shore

Here's an interesting take on "off shoring": Outsourcing's offshore myth [CNET News.com - Front Door]

Salaries in India are growing at 15 percent to 30 percent per year, and the gap with U.S. salaries will be negligible by about 2020.

I am forwarding Messrs. Gilbert and Sood my invoice for $1,216,000 representing my salary, including inflation, until 2020. Since their proposed policies are such a great idea, I figure they'll have no trouble covering the difference with my current unemployment.

Ya suppose they'll pony up? I'm not holding my breath...

In the interest of self-disclosure, including this more relevent bio at the footer of the article would have been appropiate and enlightening.

Even better is the bio at the end of this article in the San Jose Mercury News by Mr. Sood:

RAHUL SOOD is a principal at Tech Strategy Partners, a Redwood City-based consulting firm that advises software companies on offshoring. This column was written for the Mercury News.

Do you think maybe he has a vested interest in seeing this world thru rose colored glasses?

And ya giotta love how his primary concern with companies sending highly skilled technical jobs overseas is not the poor engineers grubbing for a living, but the protection of precious corporate "intellectual property" rights! Gag me...

I notice no technical accomplishments - no innovations at all. Only "management leadership". While Mr. Sood seems to have a BSCS, he apparently has no practical experience as an engineer, probably having used his BS as a mere stepping stone to his MBA. Mr. Gilbert has no technical degrees or experience whatsoever - which obviously qualifies him to pontificate on "innovation".

Remember the late 70's and early 80's - when manufacturing fled overseas by the boatload? Remember the mantra of the time: learn a technical skill - programming, engineering, math. Learn to live in the Information Age and the Information Economy! Let the puny Third World enter the Industrial Revolution - we're moving forward! Onward and Upward!

I heeded that advice, and watched as my factory worker, blue collar compatriots were slowly reduced to marginal, at best, positions, well below the middle class status held by their blue collar, factory worker fathers. I, however, was safe, as I had learned the lessons of the past, and was moving into the future. I was living in the Information Age, and life was good.

Boy, was I suckered into the pit!

What do I do now? Go to law school? Get an MBA? Who's gonna be left when the engineers go? I wonder what the MBA's and lawyers will do when foreign capital controls the corporate boards, and decides to "off shore" their strategic positions? You want a Fast Fourier Transformation with that burger? How 'bout a chapter 11?

Bitter? Yeah, I suppose I am.

Of course, offshoring will save corporations money - in the short term. Next quarters profits at IBM will definately be up, having axed 4700 programmers earning an average of $67,000 per year and replacing them with Indian programmers making $12,000 per year. I'm sure that shareholders will be happy, no doubt including some of the laid off programmers, as they cash in their 401k's laden with IBM stock to buy groceries.

In the long run, however, only one outcome is possible. Our standard of living will go down, probably rather dramatically, as India's and China's rises. Globalization is a great leveller - it will eliminate the Third World, but it will do so by eliminating the First World as well, raising some and lowering others. This is not to say that I see economics in the classic Marxist sense of a "zero-sum game" - I don't. Capitalism does create wealth. But it creates wealth by creating products - something that neither MBA's nor lawyers do - they only move wealth around. Engineers, farmers and craftsmen create products. And we ain't gonna have too many of those left if we keep sending them overseas. The reality of the situation is simple: lacking high paying jobs, Americans displaced by off shoring will be forced to take lower paying jobs. This means less disposable income for real producers. It also means higher profits for corporations and shareholders - enriching the very MBA's and lawyers who promulagate this policy.

Even farming is being moved overseas ... 99% of the lamb sold in American supermarkets comes from Down Under, and a good deal of the beef comes from Argentina. We're still a net exporter of agricultural products, but if you look at the long term trends, it's the same as it is in manufacturing and technology sectors: it's cheaper, get it from "over there"!

This is not only a recipie for the destruction of our technological and agricultural infrastructure, it's a sure fire way to generate a class war, something we in the United States have generally been able to avoid over the course of our history. You think Pat Buchannan's policies were fascist and scary? Wait til you see some of the politicos that get generated by the backlash to this trend! There will always be more people effected negatively by this: there's simply a lot more blue collar workers, farmers and engineers than there are corporate executives, MBA's and lawyers. Scores of unemployed, angry workers who felt their country had been screwed out of a high standard of living by an internationalist conspiracy once elected Adolph Hitler. Who are we gonna put in the White House in 2012 or 2016?

Indians (and Chinese) will see their disposable incomes rise as demand for their (relatively) cheaper services inceases, until it's moot, as Mr. Sood points out, at which point they'll plateau. With both India and China having considerably greater populations than the US, the plateau will be considerably below where we are today.

If it's to be considered quaint and parochial to wish the best for my neighbors and countrymen, then I'll just have to be written off with those monikers.

Of course, industry is not solely to blame here: government policy, from enviromental regulation to free trade to labor and securities laws encourage off shoring.

Between over-regulation of the economy by government agencies, and the short-sighted, "next quarters profits must be up" thinking of the MBA's and lawyers that pull policy for the Fortune 500, we're gonna be in deep shit long before 2020. While we accept immigrants (both legal and not so legal) in droves, it's simply impossible for an American (or European) engineer to move to India or China and get a job legally.

"Long term investing" is now defined as investing to achieve a positive ROI in less than two years. Even the Commies had the infamous Five Year Plans. We seem incapable of seeing much past next week, much less past the end of the decade.

Today I actually got a nibble on some contract programming! You'll never guess this one - it's for a records processing company that wants a validation program, driven off an SQL server, allowing an operator to view a scanned image and manually key values for various fields. It operates over the 'Net.

The operators are in China ....

I believe it was Lenin who once said that a true capitalist would sell him [Lenin] the rope he'd hang the capitalist with. It may end up costing me everything, but I shall decline the contract. I guess I'm not a capitalist anymore. I will not be a willing participant in my own or my country's destruction. They'll have to buy their rope elsewhere...

Copyright 2003 by Daithi M Haxton