Group Discussion Wrap Up

Note : This blog was posted before noon 12/6/2004. The date has been altered only to ensure that this entry remains right on the top. Welcome !

As America steps into the 21st century, the outsourcing of jobs has become a big problem that the country faces. Earlier, the outsourcing of jobs was limited to cheap labor jobs into third world countries, but now the outsourcing is being done altogether on a different level – a much higher one. The primary reason which prompts companies to outsource jobs, is that it cuts down on their expenses. However today, outsourcing has given other countries not only labor jobs, but also important ones including those related to technology, and this has fast emerged as a threat to our future. It’s not as if cost-cutting by IT companies is more important than the preservation of jobs back at home, so that the average American can be able to lay food on the table to feed his wives and children. With outsourcing still on the rise, new competitors have emerged from the very same countries that jobs are being outsourced to, and this might lead to America’s detoriation. Today, companies are trying their level best to be have 100% efficiency, and cannot be solely blamed for shipping jobs abroad. Compared to other countries, the cost of living in America is high thus making it hard to have a market with a supply of cheap labor. But outsourcing has been called by many as a step of growth towards a better economy. In fact, neither President Bush nor Senator Kerry have the power to end outsourcing. What the government could do to make matters better, is to not give tax-cuts to companies outsourcing jobs and raise education standards. Making citizens of this country smarter, would lead to a rise in labor productivity thus giving America's labor an edge over that of other countries to take on demanding jobs. As John Kerry once said, "My value is good, old-fashioned four words: 'Made in the USA.' "

Blog #6 : A MATTER OF OPINION: Three things Bush must deliver: jobs, jobs and more jobs

This is by far the most insightful article I have seen on the outsourcing issue. While it does not dig deep in to the specifics, the general ideas listed in the article are very agreeable. After analyzing the dilemma Bush is facing in the current situation, the author suggests two possible approaches the government could take to best prepare itself for the future.

The article begins by establishing the importance of jobs as a weakness in our economy, and the only way to address the disproportional wealth distribution. Then it explains outsourcing is being used as a political tool of a scare tactic, comparing it to al-Qaida. As I have stated earlier in blog #14, I concur outsourcing is not some life threatening issue that goes with Kerry’s opinion. Bush administration is in a tight spot as they have to battle inflation and deficits to achieve healthy economy with a reasonable job growth. Neither overprotective tariffs nor tax cut incentives is a panacea since there are some severe drawbacks.

I particularly liked the part where the author says we need to work on the quality of the workforce geared toward the 21st century. Just as he points out, quality matters equally as much as quantity, if not more; not all labors are equal in terms of efficiency, and keeping highly profitable jobs would prove more beneficial than just breaking our backs trying to fight outsourcing. The second point he makes is raising minimum wage will boost domestic economy and thus create more job opportunities at home. When there is no easy way out, the best we can do is do what we can within our limits and hope for the best.

Link to the original article : http://www.stltoday.com/stltoday/news/columnists.nsf/amatterofopinion/story/365F86B5A1503D1386256F42003B51E1?OpenDocument&Headline=A+MATTER+OF+OPINION%3A+Three+things+Bush+must+deliver%3A+jobs,+j&highlight=2%2Cbush%2Cdeliver%2Cjobs

Blog # 5 : Link7

Judging by the article alone, it sounds like just another one of those anti-Bush agendas of Senator Kerry. The fact that even top economic advisor approves benefits of free trade, and many of Senator Kerry’s endorsers are biggest outsourcers in the industries makes it unmistakably clear Kerry is exaggerating the effects of the outsourcing. According to the republicans, there is a study done by a Labor Department showing insignificance of outsourcing totaling at only 1 to 2 percent of all jobs.

The article made me believe Kerry is making a fuss out of a rather unimportant issue blowing it out of proportion. 160,000 is a relatively small number, and it would have hurt the industry in many ways if they were forced to keep those positions in the States. I am not sure why and how Kerry turned from free trade to fair trade, but most see free trade as a good thing in the long run.

Yet again we see republicans favoring a plan that looks ahead in the distant future, and the Democrats countering it by an opposing plan that concentrates on solving current problems, unless it was just Kerry’s dogmatic opinion different from the rest of his party members’. In previous two blogs where I discussed minimum wage and social security overhaul, I felt addressing the current problem was of higher priority. When it comes to trade policies, however, I believe overprotective trade barriers are always a dead end, becoming a cause of bigger problems in the future. To me it just seems Kerry just wanted to find a way to attack Bush, I doubt he would have done much about outsourcing even if he won the elections.

Blog # 4: Link 8

My original intent of linking this article to our blog was to show that not all jobs offered overseas by American companies necessarily translate into reduced jobs in the U.S. The article seems to be saying two things: one is the obvious fact that many software firms are hiring the locals for lower cost of labor. The other point they make is Microsoft is not setting up these facilities to replace the existing ones in the Seattle, which is where their corporate headquarters is located.

India is becoming what China is in the light industries; the sheer amount of quality programmers that could be hired at much more competitive wage made Indian workforce gain extraortinarily high popularity among the software developers. A move by a software giant like Microsoft committing a major investment in India may raise some concern to the job market in the U.S. However, the article mentions they already had branches of the same facility at other places around the globe – Beijing and Cambridge namely.

In my opinion this research center will primarily serve as a strategic outpost for localizing Microsoft’s programs and developing products pertinent to India’s needs. Needless to say, it only makes sense these tasks to be done locally in India, and Microsoft must have felt the domestic market in India is now worthy of their attention. At least that is Microsoft’s official stance as seen in the article: “The researchers in India will focus on ways to create, store and search information in multiple languages, as well as technology for use in emerging markets and other specialties.” Towards the end, the author quotes an analyst saying the facilities are additive. Since we are not confined to a communist world where the pool of resources and benefits are limited, increased job opportunities in one country is not necessarily bad for another.

Link to the original article: http://news.yahoo.com/news?tmpl=story&u=/ap/20041201/ap_on_hi_te/microsoft_india

Link #12 : Just How Cheap Is Chinese Labor?

http://story.news.yahoo.com/news?tmpl=story&e=5&u=/bw/20041202/bs_bw/nf20041226762db039

Blog Entry #3 : Just How Cheap Is Chinese Labor?

The simple truth is any privately owned cooperation is about making money and has to be profitable to validate its existence. In order to achieve this fundamental goal, they could either find ways to expand their market, or cut the cost of production, marketing and distribution. With economy just slowly recovering after depression, the former is practically out of question for most firms. Naturally, they seek to reduce their expenditure to improve their efficiency; while increasingly many processes are becoming fully automated, even the most high tech industries still require a great deal of menial and tedious labor to get their products shipped out of their plants.

According to the article written by Peter Coy, the U.S. Bureau of Labor Statistics has labor cost statistics for all major industrial countries except for China, which is the easily the biggest player in the labor market at the moment. An American consultant was hired to do the most extensive and dependable research on the issue, and her estimate on Chinese labor cost was 64 cents for hour. That compared to $21.11 of an average American work really does make a striking difference. The rest of the article is mainly concerned about how the researcher managed to get the results through very rigorous and ingenious steps.

The commendable work aside, we are more concerned about the more than the 20 folds difference between the two figures. I vaguely suspected the Chinese labor costs would have been higher by now, it turns out I was wrong. Still, I highly doubt the gap would increase in the future, much less dropping significantly. It has been a routine process throughout the world where a developing third country stole all the labor opportunities from more well-off countries. Sooner or later the time will come when even China will start outsourcing their jobs to newer industrial giants of that time. Let us hope “The Chinese Scare” may fade away soon enough.

Link to the original article : http://story.news.yahoo.com/news?tmpl=story&e=5&u=/bw/20041202/bs_bw/nf20041226762db039

Blog # 6 - Vaibhav Shah

Respone to Sam Kim’s blog “Economists Say Employment Will Strengthen”: http://jobsandoutsourcing.blogspot.com/2004/12/blog-2-economists-say-employment-will.html

Sam Kim in his blog entry “Economists Say Employment Will Strengthen”, analyses the article “Economists Say Employment Will Strengthen” written by Martin Crutsinger, which talks about the Bush government’s failure in it’s economic policy. Sam starts off with an in depth summary of the article, addressing important issues within it and adding his own comments. He is successful in pointing out the gravity that the writer wishes to bring to his article in calling the Bush administration the only one “that suffered near-zero job increase since the president Herbert Hoover.” Sam also refers to Bush having learnt from his father’s experience as his father lost re-election to Presidency since his presidential term ended with a bad economy. The writer also identifies the reasons for job loss : the trade deficit and high international competition. In his analysis, Sam successfully points out that the writer missed in pointing out the outsourcing of jobs as a major cause of job loss, and goes on to refer to a personal account to support his claim. Sam thus effectively analyses Crutsinger’s article, applauding the good arguements he makes and also bringing to light the places where he misses out.

Blog # 5 - Vaibhav Shah

Link 3 : http://www.prospect.org/web/page.ww?section=root&name=ViewWeb&articleId=8742

“The Stupid Poor”, written by Garance Franke-Ruta, is an article highly critical of President Bush’s attitude towards jobs and unemployment. To counter unemployment and outsourcing of jobs, President Bush plans to raise education standards and funding to community colleges. As the aricle says, when asked about the poor, he replied by saying that they are in that state because of having low-education which in turn could secure them only low-wage jobs. Bush thus implied that the poor are stupid and do not deserve to have a greater income unless they can achieve a higher standard of education. The writer thus disapproves of Bush’s shallow attitude, and accuses him of having the notions that wealth is an indication of being Godly, and that only educated people are estimable. When asked about raising the minimum wage, which has a record low real value since 50 years, Bush would digress into the relationship between education and employment. Franke-Ruta agrees with Bush that educated people do receive high-paying jobs, but does that mean that we ignore the majority three quarters of the society who do not have college degrees? But the writer fails to mention Senator Kerry’s stance on this issue and whether he intends to raise the minimum wage or not. Nevertheless, Garance Franke-Ruta effectively uses rhetoric to convince the reader that a large chunk of the society is being neglected by President Bush in the effort to raise education standards, and that there is nothing being done about it.

Blog # 4 - Vaibhav Shah

Link 2 : http://www.msnbc.msn.com/id/5931049/


President Bush has allowed tax-cuts for companies outsourcing jobs, thus leading to great pressure being applied on him from many sides to stop supporting the shipping of job benefits and wages out of the country. Senator Kerry plans to end the promotion of outsourcing by ending the tax-cuts currently being offered to such companies. In his proposed economic policy, Kerry plans to void the rule which currently allows companies, participating in the outsourcing of jobs, to not pay taxes on income earned by foreign subsidiaries until they were brought back into the country. This step would ensure that such companies pay taxes on their foreign income, just like they have to on their domestic ones. On the other hand, President Bush, to lower the outsourcing of jobs, has plans to boost job training, increase the funding of community colleges and create “opportunity zones” of lowered taxes. “Kerry rips Bush over outsourcing” addresses these concerns with an impartial view. But what it fails to do is mention that despite Kerry having solid plans to tackle outsourcing, he does not have the power to do much. In fact, many believe that outsourcing is a part of the growth of the economy and leads to an increase in the labor productivity. Another way to deal with outsourcing would be to raise minimum wage, thus bringing up the income of low-end families. Outsourcing has thus created a mixed feeling, leaving many confused whether it would be more in their interest.

Blog # 3 - Vaibhav Shah

Link 10 : http://www.freep.com/news/politics/pols4e_20040904.htm

Ron Hutcheson’s article, “Job statistics suit both Bush, Kerry”, describes how statistics of job availability and unemployment is being used by both the Republican and Democratic candidates in there campaigns as they gear up for their elections. It is true that since Bush has become the president, the economy has fallen. But it is also true that since August 2003 the economy has become stronger and the unemployment rate has fallen down. The Republican Party is thus focusing on the latter fact, projecting an image that America’s economy is doing well. Despite all this, the economy is one million jobs short of what it was like when Bush became the President. Kerry has used these same statistics to show that Bush has been doing a bad job of managing the country’s economy. Even though the economy continues to add jobs, the rate still isn’t fast enough and nowhere close to what it was four years ago. The writer thus with the effective use of rhetoric and statistics, shows the reader how the same figures is being used by both parties to get their point across to the electorate. He is not biased in his argument, and successfully informs the reader of the facts, allowing that individual to make his or her own decision.

Blog # 2 - Vaibhav Shah

Link 5 : http://www.stltoday.com/stltoday/news/columnists.nsf/amatterofopinion/story/365F86B5A1503D1386256F42003B51E1?OpenDocument&Headline=A+MATTER+OF+OPINION%3A+Three+things+Bush+must+deliver%3A+jobs,+j&highlight=2%2Cbush%2Cdeliver%2Cjobs

In “Three things Bush must deliver: jobs, jobs and more jobs”, writer David Mason has a well structured argument saying that in the long run outsourcing is good for the economy, and debates both sides of the argument fairly and suggests measures which can be taken to boost the economy. He supports the decision by companies to outsource jobs as a bid to lower costs, fuelled by consumer demand for lower prices. This has only made it difficult for the government to keep the economy stable while preserving jobs within the country. The writer now offers various means to achieve that. America could stop trade with other countries sending in cheap products, but that would lead to a trade war and recession. The government could give perks to companies choosing not to outsource, but this might lead to an increase in the deficit and taxes and those companies could eventually become dependant on the perks offered to them. Now that the 21st century is here, effort has to be made to boost the productivity of American labor, which would in turn bring back some jobs. The writer also suggests raising the minimum wage, which would lead to a temporary inflation spike, but in the long run that would increase the income of low-income earning people, thus ‘insourcing’ back some of the jobs.

Blog # 1 - Vaibhav Shah

Link 7 : http://washingtontimes.com/national/20040920-123916-5429r.htm


As the elections draw closer, both major presidential candidates are at each other’s necks, trying to get the other down. The play on each candidate’s economic policy has been especially interesting, with lot of controversy surrounding the availability of jobs and its outsourcing. Donald Lambro in his article “Bush, Kerry diverge over Economy” addresses this problem and debates the policies put forward by both parties.

Bush has been accused of having resulted in the worst economy since the Great Depression. The writer uses statistics to prove to the reader the rise in unemployment and points out that Bush has allocated the reason for this to stock market crashes, terrorist attacks, corporate scandals and Iraq. But there has been an improvement in the economy, and the Bush Government has pointed it out that the economy has risen since August 2003, and that there currently are low interest rates and no glimmer of an inflation. In his second term, Bush plans to make tax cuts to upper-class permanent, and make trade free with parts like Asia and Africa. Social Security reform is also on the agenda, which would invest taxes in stocks and bonds that individuals could control.

Kerry has appealed against the tax cuts Bush is offering to people whose income exceeds $200,000, and would instead use those funds to cut the budget deficit in half. He also stands against the fact that companies which outsource their jobs receive tax cuts. But the writer, with the effective use of reliable quotes, points out that Kerry’s attacks have no “credibility”, since he himself won’t be able to stop outsourcing of jobs, and that he is financed by companies who outsource jobs. Reliable sources say that outsourcing does not affect the economy, and is only a part of growth. Lambro thus effectively brings out the pros and cons of both the candidates’ economic policies, while maintaining an impartial view, thus giving the reader a chance to analyze them, without any distortions.

Blog 6 - Kelvin Suen (Link 11)

Link 11 - Canada, the Closer Country for Outsourcing Work
http://www.nytimes.com/2004/11/30/business/worldbusiness/30outsource.html?oref=login&oref=login

This article pertains to the outsourcing of American work closer to home. Keane is a company based in Boston that outsources to India. However, Keane will expand its software develop growth to a closer country such as Canada. Although the mass of workers are more abundant in India, Canada has less cultural differences with the United States which also draws calls for business. So far Canada continues to hold its own against India in high end work. It is forcasted that the Canadian call industry will approximately grow 7.9 percent each year for the next three years. And as for the United States, its segment expanding would increase more than 12 percent annually. The closeness and cultural similiarities definately help the Canadian outsourcing companies. More jobs and software development will soon be outsourced to Canada due to its proximity rather than being outsourced all the way to India. Nontheless, is this going to furthermore help America's economy? Or as we creating more jobs for other countries, rather than creating more for the people inside the United States? It is very hard to decide if helping our economy by outsourcing would help employment rates in the long run.

Blog 5 - Kelvin Suen (Link 8)

Link 8 - Microsoft to Open Research Center in India
http://news.yahoo.com/news?http://news.yahoo.com/news?tmpl=story&u=/ap/20041201/ap_on_hi_te/microsoft_india

Microsoft currently operates reserarch centers in foreign countries such as China and England, along with campuses here on American ground. In early 2005, a new Microsoft Research campus will open. Researchers in India will focus on creating programs where information can be stored and searched in multiple different languages. Microsoft had decided to place an center in India because of the computer science students coming out of universities there. The company is to hire appoximately two dozen workers in the next year. As one of the dozens of American technological companies to set up in India, Microsoft will try to take advantage of the skilled workers who can be hired for less than a fraction of those in the United States. Could this become a problem dealing with the outsourcing issue? If important work and the key product ideas start being outsourced to India, Microsoft could suffer a huge job loss here in the United States. Also, if our technology was being outsourced to other countries, that wouldn't look so great either. Hopefully, these centers will be helping our economy instead of hurting it by paying less and growing more.

Blog 4 - Kelvin Suen (Link 5)

Link 5 - Three things Bush must deliver: jobs, jobs, and more jobs
http://www.stltoday.com/stltoday/news/columnists.nsf/amatterofopinion/story/365F86B5A1503D1386256F42003B51E1?OpenDocument&Headline=A+MATTER+OF+OPINION%3A+Three+things+Bush+must+deliver%3A+jobs,+j&highlight=2%2Cbush%2Cdeliver%2Cjobs

In the course of the next four years, America's economy will rest on the shoulders of President George W. Bush. This article talks about the weakening of our economy and how the only way the gap between the rich and poor will become slimmer by creating more jobs. America's poor economic growth and job growth rate blames outsourcing for its failure. However, there are no easy ways to get around outsourcing. For instance, if tax incentives were given to companies that did not outsource, than those businesses would start relying on incentives and become permanent jobs. Otherwise, jobs would be lost. In this article, it says that "utimately we have to improve how we prepare people to enter the work force". This is very true, but then one has to realize that its not just the education that is affecting our economy. And for the gap between the rich and the poor to become slimmer, I think adjusting the minimum wage would have a huge impact. Of course it would have it's downsides too such as a possibility of an inflation. However, it would look better in the long run for our economy.

Blog #2 : Economists Say Employment Will Strengthen

According to “Economists Say Employment Will Strengthen” by Martin Crutsinger, the Bush Administration is facing the disgrace of being remembered as the only U.S. Government regime that suffered near-zero job increase since the president Herbert Hoover. Despite the largely optimistic outlook on the economy after the elections has settled quickly without too much turmoil, the job gain is very underwhelming, to many economists’ dismay.
The republicans are blamed for the low job growth, which is why they lost against the democrats against Clinton, the article says. Bush has not been great as far as the employment rate goes, but he won it somehow in this round; as such the author shows his apprehension of history repeating itself again. The article lists increased global competition and soaring trade deficit as two major culprits for such job loss. Then it suggests the worker class did not get their share of benefits from the rebounding economy, since most of the corporate adjustments to cope with more competitive market came in the form of boosting the efficiency of each worker without increasing the number of employees. The article ends on a positive note by citing relatively low unemployment rate on a larger scale, decent real growth and mild inflation.

My initial impression to the article was that perhaps the economists were too quick to jump to the conclusion after seeing just few good signs. Additionally, outsourcing of the jobs to overseas is definitely another reason for retarded growth of payrolls not covered in the article. In fact, I have heard many personal accounts of how their entire departments of the firm are fired and relocated to some other place like Mexico.

link to the original article : http://story.news.yahoo.com/news?tmpl=story2&u=/ap/20041205/ap_on_bi_ge/disappointing_jobs

Blog 6 - Bumjoon Kim

http://news.yahoo.com/news?tmpl=story&u=/ap/20041201/ap_on_hi_te/microsoft_india

This article is about Microsoft have a plan to open a new research center in India. India has many charming aspects for technological companies to outsource their jobs. It’s cheaper and more, and sometimes they have better and younger programmers. However, some of disadvantages are different system of education causing Indian programmers to have a lack of some skills, cultural difference causes confusion, or language barrier makes miscommunication. The brilliant side of this project can resolve some of those aspects by teaching the sufficient skill, and Microsoft can have a programmer without the previous shortcomings. Sometimes the great news for the company is the terrible news for the situation. Those multi-national companies will do anything beneficial for themselves. Now they have a solution of making academic center in foreign lands to solve the shortcomings they had, so outsourcing jobs will be accelerated. Not all of those research center graduates will be hired, and the rest with the same skill will be hired by Indian companies. Component with more skill will generate more intense competition, and that will be eventually bad for Microsoft. Even though Microsoft is based on Seattle, the multi national company is out of the United States government’s control. The government can only generate some disadvantage, but whenever it’s crucial for companies, they will sue the government to prevent the disadvantage. It means the government can only make a trifling disadvantage. However, the only solution might be keep making those effort and make competitive American computer science program to raise the strong side of American programmers who don’t have a language problems.

Link 11 : Canada, the Closer Country for Outsourcing Work

http://www.nytimes.com/2004/11/30/business/worldbusiness/30outsource.html?oref=login&oref=login

Blog 5 - Bumjoon Kim

http://www.nytimes.com/2004/11/30/business/worldbusiness/30outsource.html?oref=login&oref=login

While the most of our concern about outsourcing jobs is concentrated on Asia or third world countries, this article picks Canada as a different threat for outsourcing. This article says in the early age of outsourcing, most of outsourcing was about cheap labors in third world countries, but Canada started to absorb some of the higher jobs. Canada can offer something else that India or China can’t offer to American companies. The geographical closeness and the cultural similarity are those. Except for some computer based technology jobs, those merits greatly increase number of jobs that can be moved. Nowadays the outsourcing can be categorized in two ways; the one with cheap labors in foreign countries, and the one with cheap ‘brains’ in foreign countries. The tendency of shifting focus is going to those cheap brains, and Canada can offer cheap brain with familiar culture. It might be little bit different because Canada is friendly with the United States, so it’s hard to blame or use a repressive measure. Since American tends to have less rejection about outsourcing jobs to Canada, it’s just better for us to just aware the presence of outsourcing, but not to be oppressive about the case yet.

GROUP MEETING

This is just to remind everyone that we are meeting at 8PM today (Sunday 12/5) to work on the group authored blog.

Thanks
Vaibhav

GROUP MEETING

This is just to remind everyone that we are meeting at 8PM today (Sunday 12/5) to work on the group authored blog.

Thanks
Vaibhav

Link 10 : Job statistics suit both Bush, Kerry

EMPLOYMENT FIGURES: Job statistics suit both Bush, Kerry

Link 9: Textile jobs: Goodbye U.S., hello China

Textile jobs: Goodbye U.S., hello China

Link 8 : Microsoft to Open Research Center in India

http://news.yahoo.com/news?tmpl=story&u=/ap/20041201/ap_on_hi_te/microsoft_india

Link 7 : Bush, Kerry diverge over economy

Bush, Kerry diverge over economy - The Washington Times: Nation/Politics - September 20, 2004