To India With Love

[Siji]

http://www.sfgate.com/cgi-bin/article.c ... 5M3RS1.DTL

New Delhi -- Secretary of State Colin Powell, encountering the other side of a tempestuous debate in the United States, sought to assure Indians that the Bush administration would not try to halt the outsourcing of high-technology jobs to their country.

In a round of conversations with Indian leaders and college students on Tuesday, Powell found that the issue of the transfer of American jobs to India is as emotional in India as in the United States.

But whereas American politicians have deplored the loss of such jobs, it is clear that the anxiety in India focuses on threats by some in Congress to try to stop the transfer by legislation.

"Do you support outsourcing or are you against it?" a questioner asked Powell in the session with students.

"Outsourcing is a natural effect of the global economic system and the rise of the Internet and broadband communications," Powell said. "You're not going to eliminate outsourcing. But at the same time, when you outsource jobs, it becomes a political issue in anybody's country."

The secretary told the students what he had said to reporters earlier in the day after a meeting with Foreign Minister Yaswant Sinha -- that an appropriate U.S. response to outsourcing is to press India and other countries to open up to imports of American investments, goods and services.

Powell emphasized that one purpose of his trip is to explain to India that because outsourcing has created a political problem in the United States, India could help by lowering its trade barriers.

The secretary emphasized that he was making this request not as a condition for the United States allowing outsourcing to continue, but because it is in India's interest to be more open.

At times, Powell sounded almost as if he were participating in the presidential campaign in the United States.

In February, Gregory Mankiw, chairman of the White House Council of Economic Advisers, stirred a political outcry when he called the outsourcing of jobs a long-term benefit for the economy. While Powell said on Tuesday that "it is the reality of 21st century economics that these kinds of dislocations will take place," he was quick to add that the Bush administration would work to train people for new jobs.

The White House endorsed Powell's comments.

"The secretary made clear in his remarks that we are concerned when Americans lose jobs, and we are focused on creating jobs for American workers, and the best way to do that is to open markets around the world, including in India," said Claire Buchan, a spokeswoman for the White House. "He also talked about the importance of training workers for the opportunities of the future."

--------
How is sending all of the jobs to India going to be the best way to create new jobs for American workers? And what exactly are the opportunities of the future that will exist to be trained on, if the majority of the jobs are being outsourced to other countries?

Do these people even think before they talk?

[Chmee]

How is sending all of the jobs to India going to be the best way to create new jobs for American workers? And what exactly are the opportunities of the future that will exist to be trained on, if the majority of the jobs are being outsourced to other countries?

Outsourcing is nothing more than a form of trade. It has been well understood in economics for more than 200 years, dating back to Adam Smith and David Ricardo that trade is mutually beneficial to both countries. Yes, there is dislocation for individual workers, much the same thing happens with technological progress. Overall however, both countries are better off.

[Voronwë]

that argument is valid if you are offshoring (outsourcing is not necessarily removing them from our economy) lower level factory jobs (textile worker for example).

but when you are offshoring upper middle class jobs like electrical engineers and programmers, and also jeopardizing our intellectual property by removing it from the legal control of the US, i think it is an entirely different matter.

it is not good for our economy for $80,000 a year jobs to be offshored. period. each job that goes effects other jobs, because that money does not go to consumer goods in our economy. it does not get reinvested in our markets.

[Chmee]

that argument is valid if you are offshoring (outsourcing is not necessarily removing them from our economy) lower level factory jobs (textile worker for example).

but when you are offshoring upper middle class jobs like electrical engineers and programmers, and also jeopardizing our intellectual property by removing it from the legal control of the US, i think it is an entirely different matter.

it is not good for our economy for $80,000 a year jobs to be offshored. period. each job that goes effects other jobs, because that money does not go to consumer goods in our economy. it does not get reinvested in our markets.

The type of job or how much the person makes is immaterial (at least as far as the effectiveness of trade goes). Trade is just as beneficial if we are talking about white collar work as blue collar.

[Voronwë]

i completely disagree.

i think to oversimplify it into something basic like "trade is good" is a retreat from the issue.

we are not trying to get to a true global free market. we don't have an "Adam Smith" style free market here in the US. The government sets the rates that debt pays.

the balance sheet in this case is this:

US loses tax revenue (both corporate as well as individual income), US loses money staying in the economy. do you think the growing middle class in New Dehli is going to fund equipment purchases for small caps in the US? do you think they will create jobs in the US? no. and they won't invest their retirement money in our markets either.

the only way to bring India's economy in this manner, is to remove wealth from our own economy. Wealth is finite. Yes global trade is necessary and important, but it has to be limited. Right now our government is not only allowing massive offshoring, it is in some cases incentivizing the behavior, because it generates wealth for the corporations to reduce their operating costs. This wealth translates into campaign contributions which translates into legislation.

[Aaeamdar]

It is a direct result, btw, of Labor successfully lobbying for changes in the application process for permanent residence. So to that extent, it is deserved.

See, it has been possible to ship high-tech jobs overseas for some number of years now. This, however, was not done, because until this last year, the best market for employees was the United States - where the market consisted both of high-tech gradutes of US institutions and oversees gradutes seeking work in the US. Well, the economy went south for a short time (2.5 years) an labor got all upset of those foriegners "stealing" jobs from red-blooded Americans. They successfully lobbied a change.

Here is the change, by way of example.

Hadji is a computer science grad from New Deli University. He comes to work in the US for IBM on an H-1(b) Visa. He works for aproximately 2 years at IBM, after which IBM sponsors him permanent residence.

Old system: On his application, IBM lists Hadji's 2 years of experience at IBM as part of the reason he is uniquely qualified for a permanent employment at IBM (and permanent US visa).

New system: Work done for the current employer cannot be listed, so Hadji is considered a new colledge grad on his application for permanent residence.

UNLESS: Hadji takes his 2 years at IBM and gets a job at Oracle. Oracle can list his two years at IBM when sponsoring him.

Result: Companies realize they are going to be acting as the thrainers of other companies employees. Great disincentive to hire foreigners out of college. Exactly what labor wanted.

Result 2: US companies reevalute whether it is more efficient to stick with purely US labor in the US, or, since their options of a labor market are being restricted anyway, whether it is better to form up all sorts of high-tech overseas - coding, R&D, etc. Many companies, mainly those with overseas presence already, decide to go overseas.

Don't blame the companies. They did not do this willingly and fought these changes.

Blame Congress, blame Bush (for not vetoing it), blame Labor.

[Chmee]

i completely disagree.

i think to oversimplify it into something basic like "trade is good" is a retreat from the issue.

In my opinion the constant attempts to redefine the issue by coming up with new terms like outsourcing or claims that this is somehow radically new are misleading. As Julian Sanchez of Reason magazine has pointed out, "Free traders are trapped in a public policy version of 'Groundhog Day,' forced to refute the same fallacious arguments over and over again, decade after decade." Outsourcing is trade. We can now trade programs as well all the things we used to trade. It doesn't change the basic of mechanics of trade, which is beneficial. As to why that is, here is a link that goes over some of the basics.

http://www.econlib.org/library/Enc/FreeTrade.html

In it, he points out Adam Smith's basic insight ...

"It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy... If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage. "

He also explains the basis of Ricardo's contribution. The concept of comparative advantage.

Some lawyers are better typists than their secretaries. Should such a lawyer fire his secretary and do his own typing? Not likely. Though the lawyer may be better than the secretary at both arguing cases and typing, he will fare better by concentrating his energies on the practice of law and leaving the typing to a secretary. Such specialization not only makes the economy more efficient, it also leaves both lawyer and secretary with productive work to do.

The same idea applies to nations. Suppose the Japanese could manufacture everything more cheaply than we can—which is certainly not true. Even in this worst-case scenario, there will of necessity be some industries in which Japan has an overwhelming cost advantage (say, televisions) and others in which its cost advantage is slight (say, chemicals). Under free trade the United States will produce most of the chemicals, Japan will produce most of the TVs, and the two nations will trade. The two countries, taken together, will get both products cheaper than if each produced them at home to meet all of its domestic needs. And what is also important, workers in both countries will have jobs.

we are not trying to get to a true global free market. we don't have an "Adam Smith" style free market here in the US. The government sets the rates that debt pays.

Our markets are certainly not completely free. I would be a lot happier if they were much freer than they currently are. Its not necessary to have a completely free market howerever to benefit from trade.

the balance sheet in this case is this:

US loses tax revenue (both corporate as well as individual income), US loses money staying in the economy. do you think the growing middle class in New Dehli is going to fund equipment purchases for small caps in the US? do you think they will create jobs in the US? no. and they won't invest their retirement money in our markets either.


the only way to bring India's economy in this manner, is to remove wealth from our own economy.

The people in India are ultimately paid with U.S. dollars. Once they have those dollars, there are essentially only a few things that they can do with them. They can keep them. In which case we are sending pieces of paper with pictures of dead presidents on them in return for goods and services. Its hard to say how this is bad for us. Or they can use them back in the U.S. in which case they get used to buy U.S. goods or services or investments (they can also trade them with other people outside the U.S. but that only delays the basic choice of keep them or send them back to the U.S.). You say they won't invest their money in our markets. That could possibly be true. In general however, that is precisely what many outside the U.S. do. The primary reason we have a trade deficit is because the U.S. does attract a lot of foreign investment. Since that comes in the form of foreign currencies that ultimately we need to spend back in the countries they come from, we end up buying more than we export. For a more thorough explanation see http://www.freetrade.org/pubs/pas/tpa-002.html

Wealth is finite.

No it isn't. Wealth is not a zero sum game. Wealth is created by human action as we move goods from lower value configurations to higher value ones (or through providing services). The cheaper we can do this, the more wealth is created.

Yes global trade is necessary and important, but it has to be limited.

I disagree, the more trade the better. For the reasons I have given.

Right now our government is not only allowing massive offshoring, it is in some cases incentivizing the behavior, because it generates wealth for the corporations to reduce their operating costs. This wealth translates into campaign contributions which translates into legislation.

To whatever extent the government is subsidizing a particular trade, I have no problem with removing that subsidy. To whatever extent they are favoring certain trade transactions over others, I would favor removing the more restrictive of the two policies to make them more even. Actually I would favor us dropping all barriers to trade (other than where the items are illegal obviously).

[Chmee]

Dar,

Interesting comment. I am sure that this is a factor and I am certainly for less restrictive immigration policies. I suspect though that there would still be outsourcing going on even without those policies however, perhaps just not quite as much.

[Voronwë]

i'm gonna bump this, and keep this as a placeholder in case i formulate a counter argument =)

i'm not convinced that a few of your assumptions are as true as you say they are, but i also am not in a position to refute them at the moment =)

[Cartalas]

Is there any way we can outsource Shaerra's sexcapades?
Who knows Hadji might find a use for it.

Im sure she has been outsourcing her shit for years!!

[Winnow]

I wonder if DirecTV is outsourcing their customer service to india. I got an indian guy the other day but didn't ask him if he was actually located in india. I thought about trying to get him to say, "no wheezing the juice" but didn't want my order request screwed up.

I'm thinking about outsourcing my general forum VV responses to India so I can focus on current events.

[kyoukan]

why don't you just replace all your posts with a 10 year old ziggy comic; they would be about as humorous and entertaining.

[miir]

You dissin' Ziggy?


BLASPHEMY!

[Chmee]

i'm gonna bump this, and keep this as a placeholder in case i formulate a counter argument =)

i'm not convinced that a few of your assumptions are as true as you say they are, but i also am not in a position to refute them at the moment =)

Fair enough.

In the meantime I will throw out a bit more food for thought.

The points I made already have largely been about the efficiency of free trade. There is another aspect though, probably even more important. The moral aspect.

First and foremost, in my opinion it shouldn't be any of the governments business who I choose to trade with (and I realize you didn't actually propose that the government legislate against outsourcing, I am speaking broadly here). If I want to buy a japanese car or an american car, whether I want to hire an Indian programmer or an American programmer is between me and whoever I am doing business with. I don't have a problem with someone trying to convince me that I am wrong in my decision, but I do have a problem if the government steps in and tries to mandate or influence the decision. I think this is particularly striking in todays' world, where modern communications and travel make interacting with people in other countries so much more prevelant. Consider this board, and how many people from other countries we interact with on a regular basis. If I had some work I wanted to farm out why should I necessarily pick someone that happened to live near me (if it isn't work that requires geographical proximity) that I don't know at all instead of giving it to, say Drolgin?

I also find it ironic the outrage you hear from some people in the media and on the web regarding outsourcing. I work in the IT field, one of the areas most impacted by outsourcing. I certainly remember the late 90s fondly. Bill rates were high, you had pretty much your pick of contracts. I also felt the pinch when things got tight. I was unemployed for an extended period and when I came back it was for less than I was making before (although still a decent salary). I wasn't particularly suprised however. In the late 90s we were in the midst of the tech boom, plus we had all the extra demand generated by y2k. A correction was not that much of a shock. However, I find the proposal that we should not outsource any programming work to people for whom it will be a large step up over the average standard of living in their country so I can keep my guaranteed job and nice fat salary to be a not particularly defensible moral position to stake out.

There are certainly some people that lose out, particularly in the short term when they lose their job (and I realize others are being impacted than just high paid IT people). Much the same thing happens when jobs are destroyed due to technological process. IT itself destroyed whole hosts of jobs as it came into widespread acceptance. Many new jobs were also created though and overall the economy is better off which is generally better for everyone.

[Zaelath]

Okay, I'll bite

The people in India are ultimately paid with U.S. dollars. Once they have those dollars, there are essentially only a few things that they can do with them. They can keep them. In which case we are sending pieces of paper with pictures of dead presidents on them in return for goods and services. Its hard to say how this is bad for us. Or they can use them back in the U.S. in which case they get used to buy U.S. goods or services or investments (they can also trade them with other people outside the U.S. but that only delays the basic choice of keep them or send them back to the U.S.). You say they won't invest their money in our markets. That could possibly be true. In general however, that is precisely what many outside the U.S. do. The primary reason we have a trade deficit is because the U.S. does attract a lot of foreign investment. Since that comes in the form of foreign currencies that ultimately we need to spend back in the countries they come from, we end up buying more than we export. For a more thorough explanation see http://www.freetrade.org/pubs/pas/tpa-002.html

Yeah, umm... OR, then can trade them DIRECTLY for Rupees and spend them solely in their country. The very concept that paper changes hands in this transaction just shows how ignorant you are or how ignorant you think your "audience" is.

The main reason this is good for/supported by the US is it's good for the rich (who gee whiz, Chuck, control your government), and it's good to have someone tied to you in that region given their propensity to make and USE nuclear weapons (albeit in extensive "testing" exercises along borders)

I'm pretty much in favour of this BTW, purely because I like the transfer of wealth involved. Your continued insistance that this is good for everyone in the US and doesn't have any effect on your economy or standard of living (for lower and lower middle classes) however... shenannigans!

[Ransure]

i'm gonna bump this, and keep this as a placeholder in case i formulate a counter argument =)

i'm not convinced that a few of your assumptions are as true as you say they are, but i also am not in a position to refute them at the moment =)

Did Voro give Adex his login? I know they used to be guildies and all.....

[Sueven]

It has been well understood in economics for more than 200 years, dating back to Adam Smith and David Ricardo that trade is mutually beneficial to both countries.

This is simply not true. Mankiw himself states that this is not true. Trade is mutually beneficial in the absence of extenuating circumstances and in the presence of a perfectly competitive market. Often, this is not the case, and thus, trade is not mutually beneficial.

If you want, I can dig out my econ textbook and quote him verbatim.

Very little pisses me off more than the statement "trade is always good." I know so many ignorant conservatives who will just spout that shit without understanding that it's not always supported by the very economic thought they claim to espouse.

Not that you're doing that. And I know that trade is generally good. But damn.

[Chmee]

Okay, I'll bite
Yeah, umm... OR, then can trade them DIRECTLY for Rupees and spend them solely in their country. The very concept that paper changes hands in this transaction just shows how ignorant you are or how ignorant you think your "audience" is.

Then whoever they traded the dollars to for rupees has dollars, and has pretty much the same choices as I mentioned before. Keep them or ultimately send them back to the U.S. I mentioned before that the dollars may trade hands outside of the country, but that only delays things a bit.

I'm pretty much in favour of this BTW, purely because I like the transfer of wealth involved. Your continued insistance that this is good for everyone in the US and doesn't have any effect on your economy or standard of living (for lower and lower middle classes) however... shenannigans!

As I have mentioned, some will experience job loss, which is of course a problem in the short term. In the long term though generally the economies of both countries are better off.

[Chmee]

It has been well understood in economics for more than 200 years, dating back to Adam Smith and David Ricardo that trade is mutually beneficial to both countries.

This is simply not true. Mankiw himself states that this is not true. Trade is mutually beneficial in the absence of extenuating circumstances and in the presence of a perfectly competitive market. Often, this is not the case, and thus, trade is not mutually beneficial.

From Mankiw's testimony before the joint economic committee

http://post.economics.harvard.edu/facul ... _feb04.pdf

talking about trade.

Chapter 12, International Trade and Cooperation, discusses how growing trade helps to spur U.S. and global growth. Since the end of the Second World War, international trade has grown steadily relative to overall economic activity. Over time, countries that have been more open to
international flows of goods, services, and capital have grown faster than countries that were less open to the global economy. The United States has been a driving force in constructing an open global trading system. The Administration has pursued, and will continue to pursue, an ambitious agenda of trade liberalization through negotiations at the global, regional, and bilateral levels.
8
New types of trade deliver new benefits to consumers and firms in open economies. Growing international demand for goods such as movies, Pharmaceuticals, and recordings offers new opportunities for U.S. exporters. A burgeoning trade in services provides an important
outlet for U.S. expertise in sectors such as banking, engineering, and higher education. The ability to buy less expensive goods and services from new producers has made household budgets go further, while the ability of firms to distribute their production around the world has cut costs and thus prices to consumers. The benefits from new forms of trade, such as in services, are no different from the benefits from traditional trade in goods. Outsourcing of professional services is a prominent example of a new type of trade. The gains from trade that
take place over the Internet or telephone lines are no different than the gains from trade in physical goods transported by ship or plane. When a good or service is produced at lower cost in another country, it makes sense to import it rather than to produce it domestically. This allows
the United States to devote its resources to more productive purposes.
Although openness to trade provides substantial benefits to nations as a whole, foreign competition can require adjustment on the part of some individuals, businesses, and industries. To help workers adversely affected by trade develop the skills needed for new jobs, the
Administration has worked hard to build upon and develop programs to assist workers and communities that are negatively affected by trade.
The Administration has also worked to strengthen and extend the global trading system. International cooperation is essential to realizing the potential gains from trade. Trade agreements have reduced barriers to international commerce, and contributed to the gains from trade. A system through which countries can resolve disputes can play an important role in realizing these gains.

And talking about capital flows, and their effect on trade.

Chapter 14, The Link Between Trade and Capital Flows, shows that trade flows and capital flows are inherently intertwined. Changes in a country’s net international trade in goods and services, captured by the current account, must be reflected in equal and opposite changes in
its net capital flows with the rest of the world. The large net inflow of foreign capital experienced by the United States in recent years has funded more investment than could be supported by U.S. national saving. Corresponding to these inflows is the large U.S. current account deficit. These patterns reflect fundamental economic forces, notably strong growth in the United States that has made investment in this country attractive compared to opportunities in other countries. An adjustment of the U.S. current account deficit could come about in several ways.
Faster growth in other countries relative to the United States could increase demand for U.S. net exports. Trade flows could also adjust through changes in the relative prices of U.S. goods and services compared to the prices of foreign goods and services. Any reduction in the U.S. current account deficit would also require reduced net capital inflows into the United States. This might occur if U.S. national saving increased, reducing the need for foreign funds to finance U.S.
domestic investment, or if U.S. investment declined, so that the United States required less capital inflows. Lower investment is the least desirable form of balance of payments adjustment, however, as it could slow the expansion of U.S. productive capacity and reduce economic
growth. It is impossible to predict the exact timing or magnitude of any adjustment in the U.S. current account balance. After a large increase in the U.S. current account deficit in the 1980s, the ensuing adjustments were gradual and benign. Public policies can facilitate smooth changes
in the U.S. current account and net capital flows by creating a stable macroeconomic and financial environment, promoting growth abroad, and encouraging greater saving in the United
States.

later in his Remarks on the 2004 Economic Report of the President
to the National Economists Club and Society of Government Economists

http://post.economics.harvard.edu/facul ... _feb04.pdf

An open system of world trade raises living standards both in the United States and in other nations. This conclusion commands near unanimity among economists.

and

At the same time, changes in the world trading system are occurring, largely because of
the Internet and advances in telecommunications. We are all used to goods being produced in
one country and transported to another on ships or planes. We are less used to services being
produced in one country and sent to another over fiber optic cable. Advances in technology have
expanded the range of commercial activities that can be traded internationally.
5
The basic laws of economics, however, have not changed. Free markets remain the best way to promote growth, create good jobs, and ensure rising living standards. That is why the President has actively sought to open markets. Some would respond to the recent challenges facing the economy by erecting trade barriers. History teaches that a retreat to economic isolationism is a recipe for economic decline. The Smoot-Hawley tariffs of the 1930s, for example, contributed to the hardship of that period.

Not exactly what I said certainly, but pretty much in the same vein.

[Sueven]

Thanks for posting a bunch of shit that didn't have anything to do with what I said.

that trade is mutually beneficial to both countries

I took issue with the fact that you did not use a qualifier in your statement. If you would like to post 10 pages of quotes that actually have something to do with that, feel free.

[Zaelath]

Okay, I'll bite
Yeah, umm... OR, then can trade them DIRECTLY for Rupees and spend them solely in their country. The very concept that paper changes hands in this transaction just shows how ignorant you are or how ignorant you think your "audience" is.

Then whoever they traded the dollars to for rupees has dollars, and has pretty much the same choices as I mentioned before. Keep them or ultimately send them back to the U.S. I mentioned before that the dollars may trade hands outside of the country, but that only delays things a bit.

No, no, no, f'ing NO!

You do NOT get this cash back into your economy by default, screw the "dollars" think of it in terms of the gold that traditionally backed currencies.

Then, just so you can grasp the enormity of the situation, pretend we're talking about a small local economy.

I used to give my neighbour gold to mow my lawn, because he had a lawn mower. He used to give me the gold back to trim his hedges, because I had a hedge trimmer. The gold was basically a way to keep score of who did the most work, but it never LEFT the local economy.

Now, you decide that mowing the lawn is a shitload more difficult than trimming the hedges, so I start paying a guy who lives in the next town to mow my lawn. He gets his hedges trimmed by his neighbour, so I never get any of my gold back from him, but I seem to have a good deal.

Eventually, my finite supply of gold runs out because I'm not getting any back, so now I can't get my lawn mowed.

Oh, but I could be getting gold for trimming hedges still! Ok, so then HIS supply of gold runs out and he can't pay me to trim his hedges, so we're BOTH out of gold, the guy in the next town has ALL the gold.

Oh, right, wealth is infinite! Yeah, right, again that's complete bullshit. The reason America is wealthy is because you have massive natural resources[\b] not because you're just smarter than the rest of the world. If you want to see people who are rich because they're smart and work hard, look at the Japanese...

Wealth tracks back to primary production and verifiably finite resources eventually. You basically claim you can give India all the money you want w/o any shift of wealth from the US to India. This is patently and obviously false, OR you're smarter than the entire Indian population put together.

Which also brings me to another point.. you can't just look at the balance of trade in raw figures. If I'm giving you service for gold, I now have more wealth than you. I can give my service/knowledge away again and again, it is one of your inifinite resources, but now I have more gold and you have less.

[Chmee]

Thanks for posting a bunch of shit that didn't have anything to do with what I said.

Quote:
that trade is mutually beneficial to both countries


I took issue with the fact that you did not use a qualifier in your statement. If you would like to post 10 pages of quotes that actually have something to do with that, feel free.

I ended up quoting more than just to answer that question since a lot of the other points he was making were in line with some of the other sources I had been quoting. Specifically in those quotes though he does say the following.

An open system of world trade raises living standards both in the United States and in other nations. This conclusion commands near unanimity among economists.

A little broader than my statement, but the same basic intent. Perhaps I should have been more exact in specifying that by trade being beneficial I meant having free trade between countries is beneficial. Certainly a country could create regulations or subsidies that would cause someone to buy a foreign good or service rather than a domestic that might not be as good of a deal as buying something domestically (although typically governments to do the reverse). Adding additional bad regulations on top of the ones creating the distortion only makes things worse however. I don't have a big problem with saying generally there if you like. In the case of an individual trade, there is no guarantee it will be the most economical solution, but over time if people are allowed to choose freely that is the way things will trend in most cases.

[vn_Tanc]

Economists announce "Trade is teh gud!" shocker.

Then again these economists also say the UK has a 1.7% inflation rate while house prices have slowed down to a 15% yearly increase after 5 years of 20-25%.

I'll take a pinch of salt with that info

[Neroon]

I have to ask, what exactly do you people think companies should do? Should the government pay companies with tax dollars to keep Americans hired? Put huge tarriffs on imports, artificially driving up consumer costs?

I'll give you an example. Maine used to be huge in the paper mill industry. Entire communities were employed by these huge mills. Now, you have mills in China selling pulp for a fraction of the cost to the paper manufacturers. How do you justify forcing the paper manufacturer to buy from the overpriced American companies, when they can get the same product from China, and provide cheaper paper to the consumer?

The unfortunate side effect, is the bloated mills in the US will close. Sure, it's bad these people are out of work, but you can't spend money just for the sake of keeping them employed. By spend, I mean either through subsidies, or by forcing the consumer to pay more for the end product.

Like Chmee, I am in an industry that is moving overseas (semiconductor). I don't like the fact that my job is going to go away in the near future, but that's life. I will find a new career, and go from there.

[vn_Tanc]

The first thing I'd do is ask why China can produce the same product and ship it 1/3rd the way around the world and it still be drastically cheaper than the domestic product.
If it turns out they're using unsafe sweatshop practices and polluting the environment to save on costs then I'd object to the purchase on moral grounds.

[Sueven]

Chmee: I don't mean to be a dick, and I think I'm trying to make a point that you already understand.

I always jump on that subject because I've heard a number of politically well-educated people arguing for absolutely idiotic economic positions on the basis of "it's trade, and that's always good!"

The goal of most of our economic policy should be to create policy that prevents all of the things that prevent trade from always being good (monopolies, collusions, externalities, and so on). Sometimes, this does require interference in the market. Many people don't seem to understand this.

[Chmee]

You do NOT get this cash back into your economy by default, screw the "dollars" think of it in terms of the gold that traditionally backed currencies.

Then, just so you can grasp the enormity of the situation, pretend we're talking about a small local economy.

I used to give my neighbour gold to mow my lawn, because he had a lawn mower. He used to give me the gold back to trim his hedges, because I had a hedge trimmer. The gold was basically a way to keep score of who did the most work, but it never LEFT the local economy.

Now, you decide that mowing the lawn is a shitload more difficult than trimming the hedges, so I start paying a guy who lives in the next town to mow my lawn. He gets his hedges trimmed by his neighbour, so I never get any of my gold back from him, but I seem to have a good deal.

Eventually, my finite supply of gold runs out because I'm not getting any back, so now I can't get my lawn mowed.

Oh, but I could be getting gold for trimming hedges still! Ok, so then HIS supply of gold runs out and he can't pay me to trim his hedges, so we're BOTH out of gold, the guy in the next town has ALL the gold.

You are overlooking the opportunity for new job creation in your example. Presumably you are switching to the guy in the other town to mow your lawn because he is more efficient and can do the job cheaper. You reduce how much you have to pay. In the short term you have less money coming in, but the people in the other town have more money available. So you open up a leaf raking business, or whatever else you can think of where you can fulfil a need that they may have. By everyone concentrating on what they are best at, you end up getting more done.

Oh, right, wealth is infinite! Yeah, right, again that's complete bullshit. The reason America is wealthy is because you have massive natural resources[\b] not because you're just smarter than the rest of the world. If you want to see people who are rich because they're smart and work hard, look at the Japanese...

How much do you think the raw natural resources in the typical PC adds up to? The metal, wires, plastic etc? Anywhere near the price that the PC actually commands? Not even close. Its worth more than the raw materials because someone found a more useful recipe for putting those materials together. As people figure out more ways to do things, wealth increases. How much was Iron worth before people figured out how to make things out of it? Wealth is not a zero sum game.

Wealth tracks back to primary production and verifiably finite resources eventually. You basically claim you can give India all the money you want w/o any shift of wealth from the US to India. This is patently and obviously false, OR you're smarter than the entire Indian population put together.

You are still overlooking the consumption side of the equation. The reason why you are buying the service is because you can get it cheaper. Which means I can get the same thing that I had for less than I was paying before. Which means I have more money to spend on other things. Which drives new job creation.

Which also brings me to another point.. you can't just look at the balance of trade in raw figures. If I'm giving you service for gold, I now have more wealth than you. I can give my service/knowledge away again and again, it is one of your inifinite resources, but now I have more gold and you have less.

But I have a service that I valued more than the gold (or I wouldn't have given you the gold for the service).

[Chidoro]

You are still overlooking the consumption side of the equation. The reason why you are buying the service is because you can get it cheaper. Which means I can get the same thing that I had for less than I was paying before. Which means I have more money to spend on other things. Which drives new job creation.

The only way you have more money to spend on other things is if you're the job that wasn't removed in the first place. And where does the new job creation come into play, from overseas availability? How does this help the overall job level in this country?

[Voronwë]

increased revenue does not necessarily mean money will be invested in job creation or durable goods purchases.

You don't have to look any further than last years tax cuts and the current anemic job growth numbers.

[kyoukan]

what? you mean ultra rich corporate officers and major shareholders aren'e benevolent entities that don't automatically equate more profits due to outsourcing with an opportunity to stimulate the economy by spending what they saved on new jobs for the good of all americans?

[Zaelath]

Congratulations on missing the point entirely.

I'm not overlooking any new job creation.. the flow of gold (it's just a way of keeping score remember) is a one way exit to another community. At some point, if you don't get gold back from that community, it doesn't matter what skills you have, there's no local market.

So, by your theory you will sell stuff to the Indians.. what service do you think they will buy from America? Paying for a service from overseas is vastly different than buying OJ or rice from overseas.

You are right in that knowledge has value, but fuck off w/ your zero sum game shit. You need *resources* to make stuff, physical and ephemeral resources. Besides, you're actually defending my position, because what you're doing is exporting knowledge to India and paying them to get it back...

BTW, you're not getting any new money, the job is being done for the same amount since the local price went up. And it still doesn't answer the problem of the one way flow of wealth out of the country.

Yes, you have a service.. wait no, you HAD a service. You can spend the price of another computer just on advice on how to keep it ticking along, but eventually it's dead and that service is too. The gold still exists.

[Chmee]

The goal of most of our economic policy should be to create policy that prevents all of the things that prevent trade from always being good (monopolies, collusions, externalities, and so on). Sometimes, this does require interference in the market. Many people don't seem to understand this.

The government can fufil a role certainly. It can establish the rule of law, defend the borders, enforce contracts. Negative externalities may justify government action, either through the tort process or through regulation. I am a little more skeptical regarding monopolies or collusions. The government seems to usually be more of the problem than the solution in these cases. I am skeptical of the ability of a monopoly or a cartel to cause signficant harm without maintaining barriers to entry enforced by force (in most cases meaning the government). I also think that any economic policy has to take into account the moral issue as well. I should be able to make my own choices about what I want to buy, who I want to trade with etc. even if someone thinks that it may not be the most efficient overall.

[Chmee]

You are still overlooking the consumption side of the equation. The reason why you are buying the service is because you can get it cheaper. Which means I can get the same thing that I had for less than I was paying before. Which means I have more money to spend on other things. Which drives new job creation.

The only way you have more money to spend on other things is if you're the job that wasn't removed in the first place. And where does the new job creation come into play, from overseas availability? How does this help the overall job level in this country?

I specified the consumption side of the equation. Meaning the person who was paying for the service. If they had to pay x for the service before, and can get the same service for x - y, then they have y left over to do something else with.

[Chmee]

what? you mean ultra rich corporate officers and major shareholders aren'e benevolent entities that don't automatically equate more profits due to outsourcing with an opportunity to stimulate the economy by spending what they saved on new jobs for the good of all americans?

As Adam Smith pointed out ...

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow citizens.

It isn't necessary for the ultra rich corporate officer to be a benevolent entity. Even if all of the money goes to the officer, very few people stuff all their money in a mattress or bury it in the back yard. Most of it will be spent, or invested. Plus, although I am sure the officer would like to keep all the money, competition will likely force him to pass along some of the savings on to the consumer (if he won't his competitors will, and his company loses market share).

[Chmee]

Congratulations on missing the point entirely.

I'm not overlooking any new job creation.. the flow of gold (it's just a way of keeping score remember) is a one way exit to another community. At some point, if you don't get gold back from that community, it doesn't matter what skills you have, there's no local market.

You are overlooking new job creation. As I mentioned, the person in the other town has more money coming in now that you are hiring him to mow your lawn as well. And he is spending more time mowing lawns, so there are more opportunities for him hire someone to do something he was previously doing for himself.

So, by your theory you will sell stuff to the Indians.. what service do you think they will buy from America? Paying for a service from overseas is vastly different than buying OJ or rice from overseas.

You are right in that knowledge has value, but fuck off w/ your zero sum game shit. You need *resources* to make stuff, physical and ephemeral resources. Besides, you're actually defending my position, because what you're doing is exporting knowledge to India and paying them to get it back...

As I said before, the raw resources are only a part of economic wealth, and generally speaking a decreasing part. The price of most raw materials when adjusting for inflation have been decreasing for quite some time now. You may not like it, but I will say it again, wealth is not a zero sum game. There is not some finite amount of wealth in the world where the only way to get more is to take it from someone else.

BTW, you're not getting any new money, the job is being done for the same amount since the local price went up. And it still doesn't answer the problem of the one way flow of wealth out of the country.

If I am not getting the job done for less, why would I switch? If there was gold going from one community to the other, the tendency would not be for the local price to go up. If the local economy has less gold, that gold become relatively more valuable, pushing prices down. Conversly with more gold in the other town, it becomes worth relatively less, pushing prices up.

[Zaelath]

Congratulations on missing the point entirely.

I'm not overlooking any new job creation.. the flow of gold (it's just a way of keeping score remember) is a one way exit to another community. At some point, if you don't get gold back from that community, it doesn't matter what skills you have, there's no local market.

You are overlooking new job creation. As I mentioned, the person in the other town has more money coming in now that you are hiring him to mow your lawn as well. And he is spending more time mowing lawns, so there are more opportunities for him hire someone to do something he was previously doing for himself.

So, by your theory you will sell stuff to the Indians.. what service do you think they will buy from America? Paying for a service from overseas is vastly different than buying OJ or rice from overseas.

You are right in that knowledge has value, but fuck off w/ your zero sum game shit. You need *resources* to make stuff, physical and ephemeral resources. Besides, you're actually defending my position, because what you're doing is exporting knowledge to India and paying them to get it back...

As I said before, the raw resources are only a part of economic wealth, and generally speaking a decreasing part. The price of most raw materials when adjusting for inflation have been decreasing for quite some time now. You may not like it, but I will say it again, wealth is not a zero sum game. There is not some finite amount of wealth in the world where the only way to get more is to take it from someone else.

BTW, you're not getting any new money, the job is being done for the same amount since the local price went up. And it still doesn't answer the problem of the one way flow of wealth out of the country.

If I am not getting the job done for less, why would I switch? If there was gold going from one community to the other, the tendency would not be for the local price to go up. If the local economy has less gold, that gold become relatively more valuable, pushing prices down. Conversly with more gold in the other town, it becomes worth relatively less, pushing prices up.

Because apparently you can't f'ing read. The price of the service didn't go down by switching, it just didn't go up.

Your backwoodsian grasp of supply and demand not withstanding, how about you just simply try and explain this:

If you believe that "new job creation" will come out of Dell saving 50% of their call centre budget, how do you create 100% of the value of the jobs w/ 50% of the budget? Lets leave out the fact that I think assuming they will plow that 50% back into salaries laughable, just do your loaves and fishes act.

BTW, the repeating "Wealth is not a zero sum game" ad infinitum does not increase it's credibility. I actually completely agree that it's not a zero sum game, as such, but you lack the insight or the understanding to see what the sum is or that it cannot expand infinitely, there IS a breakpoint. If you insist there is not, explain how you feed a family of 20 from the produce grown in a windowbox (and now, not with some mythical technology that enables you to grow bushells of grain in a cubic foot of soil)

Oh and again, you can't f'ing read. I'm not overlooking job creation in my example. The guy in the other town doesn't hire anyone in my town, he sends NO cash back in our direction and has no need to. There's no reason to assume at all that India will spend all that cash back into the US other than various economic faries you think watch over God's own country.

[Chmee]

Because apparently you can't f'ing read. The price of the service didn't go down by switching, it just didn't go up.

If the price was going to go up, and it didn't because of switching, then it is cheaper than it would have been if I didn't switch.

Your backwoodsian grasp of supply and demand not withstanding, how about you just simply try and explain this:

If you believe that "new job creation" will come out of Dell saving 50% of their call centre budget, how do you create 100% of the value of the jobs w/ 50% of the budget? Lets leave out the fact that I think assuming they will plow that 50% back into salaries laughable, just do your loaves and fishes act.

First, as I explained in my post responding to kyoukan's point earlier that I am not assuming they will plow 50% back into salaries. If you get something cheaper, you have money left over. That money will be used somewhere, either in spending on something else, savings, investment, etc. that will ultimately drive job creation. As to the money that left, as I said before ultimately it comes back into the country. Currency by itself is ultimately useless except for its ability to be exchanged for goods and services at some point. It may not take a direct route, but ultimately it will come back one way or another. Yes, we have a trade deficit, but as I pointed out earlier, that is because of the surplus of investment that flows into our country.

BTW, the repeating "Wealth is not a zero sum game" ad infinitum does not increase it's credibility. I actually completely agree that it's not a zero sum game, as such, but you lack the insight or the understanding to see what the sum is or that it cannot expand infinitely, there IS a breakpoint. If you insist there is not, explain how you feed a family of 20 from the produce grown in a windowbox (and now, not with some mythical technology that enables you to grow bushells of grain in a cubic foot of soil)

If there is a breakpoint, it is so far past where we currently are to be effectively meaningless at the moment. Although it isn't a zero sum game, that doesn't mean we will have a thousandfold increase overnight that your windowbox example would require. It just means that more people producing stuff more productively means more overall wealth. One of the ways that you acheive that is through trade.

Oh and again, you can't f'ing read. I'm not overlooking job creation in my example. The guy in the other town doesn't hire anyone in my town, he sends NO cash back in our direction and has no need to. There's no reason to assume at all that India will spend all that cash back into the US other than various economic faries you think watch over God's own country.

The problem is that cash by itself, outside of its worth to exchange it for goods and services, is meaningless. I could have my entire house stuffed with thousand dollar bills, but if I wasn't willing to ever actually spend it on something then its only so much paper.

[Chmee]

A few recent articles on trade that are pretty good.

http://www.dallasfed.org/research/ei/ei9801.html

http://www.foreignaffairs.org/20040501f ... eyman.html

http://www.reason.com/hod/tb031904.shtml

[Zaelath]

Because apparently you can't f'ing read. The price of the service didn't go down by switching, it just didn't go up.

If the price was going to go up, and it didn't because of switching, then it is cheaper than it would have been if I didn't switch.

Your backwoodsian grasp of supply and demand not withstanding, how about you just simply try and explain this:

If you believe that "new job creation" will come out of Dell saving 50% of their call centre budget, how do you create 100% of the value of the jobs w/ 50% of the budget? Lets leave out the fact that I think assuming they will plow that 50% back into salaries laughable, just do your loaves and fishes act.

First, as I explained in my post responding to kyoukan's point earlier that I am not assuming they will plow 50% back into salaries. If you get something cheaper, you have money left over. That money will be used somewhere, either in spending on something else, savings, investment, etc. that will ultimately drive job creation. As to the money that left, as I said before ultimately it comes back into the country. Currency by itself is ultimately useless except for its ability to be exchanged for goods and services at some point. It may not take a direct route, but ultimately it will come back one way or another. Yes, we have a trade deficit, but as I pointed out earlier, that is because of the surplus of investment that flows into our country.

BTW, the repeating "Wealth is not a zero sum game" ad infinitum does not increase it's credibility. I actually completely agree that it's not a zero sum game, as such, but you lack the insight or the understanding to see what the sum is or that it cannot expand infinitely, there IS a breakpoint. If you insist there is not, explain how you feed a family of 20 from the produce grown in a windowbox (and now, not with some mythical technology that enables you to grow bushells of grain in a cubic foot of soil)

If there is a breakpoint, it is so far past where we currently are to be effectively meaningless at the moment. Although it isn't a zero sum game, that doesn't mean we will have a thousandfold increase overnight that your windowbox example would require. It just means that more people producing stuff more productively means more overall wealth. One of the ways that you acheive that is through trade.

Oh and again, you can't f'ing read. I'm not overlooking job creation in my example. The guy in the other town doesn't hire anyone in my town, he sends NO cash back in our direction and has no need to. There's no reason to assume at all that India will spend all that cash back into the US other than various economic faries you think watch over God's own country.

The problem is that cash by itself, outside of its worth to exchange it for goods and services, is meaningless. I could have my entire house stuffed with thousand dollar bills, but if I wasn't willing to ever actually spend it on something then its only so much paper.

I'm pretty sure you spend more time formatting the quote tags than you do thinking about these posts... enough time wasting. I'm going to go do something more productive w/ my time now, like teaching chimps not to masturbate in public.

[Chidoro]

You are still overlooking the consumption side of the equation. The reason why you are buying the service is because you can get it cheaper. Which means I can get the same thing that I had for less than I was paying before. Which means I have more money to spend on other things. Which drives new job creation.

The only way you have more money to spend on other things is if you're the job that wasn't removed in the first place. And where does the new job creation come into play, from overseas availability? How does this help the overall job level in this country?

I specified the consumption side of the equation. Meaning the person who was paying for the service. If they had to pay x for the service before, and can get the same service for x - y, then they have y left over to do something else with.

Which means exactly zero when it comes to new job creation unless the company is magnanimous enough to do so. No, typically they'll keep it out of the workforce and more in their EPS. I targeted your incorrect assumption of x - y = more jobs

[Chmee]

I specified the consumption side of the equation. Meaning the person who was paying for the service. If they had to pay x for the service before, and can get the same service for x - y, then they have y left over to do something else with.

Which means exactly zero when it comes to new job creation unless the company is magnanimous enough to do so. No, typically they'll keep it out of the workforce and more in their EPS. I targeted your incorrect assumption of x - y = more jobs

I am not saying that the company that is benefiting from a cheaper service will necessarily be the direct creator of new jobs. They might, or they might not. If it all goes to the company executives then they are going to spend it, or invest it. If competition forces them to use some of it to lower the price of their good then the people buying it will have more money left over that they will use to spend on other things, or invest. Ultimately unless someone is burying the money in their backyard or burning it it gets used somewhere, and will ultimately drive new job creation. It may not be directly at the company, it may lag in time, but if an entity gets the same thing they had for less, they will have more left over to do something else with, and will be looking for someone to provide that something else.

[Zaelath]

Ahh, so Chmee is a republican; tax cuts == money in your pocket == job creation. Oh wait, it's money in the top 1% of pockets, who indeed DO love to sit on it, piss it away, or generally not do anything that would create a job.

It's FAR FAR easier to keep the jobs in the US, thereby putting money in the middle class's pockets (because they DO spend their money into the local economy) and create more jobs.

Actually, by Chmee's reasoning there's NOTHING you can do that doesn't increase the size of the economy. Just makes me wonder how the greater percentage of the world population has failed to do that.

[Chmee]

Ahh, so Chmee is a republican; tax cuts == money in your pocket == job creation.

Oh wait, it's money in the top 1% of pockets, who indeed DO love to sit on it, piss it away, or generally not do anything that would create a job.

As I pointed out earlier, to really remove the money from the economy means that they have basically destroy it or stuff it in their matress or something. Not something I see many rich people doing. Most of them will be investing the money (ultimately provides more capital for businesses to work with) or spending it. Those things will tend to create jobs.

It's FAR FAR easier to keep the jobs in the US, thereby putting money in the middle class's pockets (because they DO spend their money into the local economy) and create more jobs.

By limiting yourself only to the US you limit the opportunities to create more productivity through specialization. And productivity gains are what you really want to grow the economy.

Actually, by Chmee's reasoning there's NOTHING you can do that doesn't increase the size of the economy. Just makes me wonder how the greater percentage of the world population has failed to do that.

No, what I said is if someone can get something for less cost, it increases the size of the economy. I have what I used to have, plus some money left over.

[Chidoro]

I specified the consumption side of the equation. Meaning the person who was paying for the service. If they had to pay x for the service before, and can get the same service for x - y, then they have y left over to do something else with.

Which means exactly zero when it comes to new job creation unless the company is magnanimous enough to do so. No, typically they'll keep it out of the workforce and more in their EPS. I targeted your incorrect assumption of x - y = more jobs

I am not saying that the company that is benefiting from a cheaper service will necessarily be the direct creator of new jobs. They might, or they might not. If it all goes to the company executives then they are going to spend it, or invest it. If competition forces them to use some of it to lower the price of their good then the people buying it will have more money left over that they will use to spend on other things, or invest. Ultimately unless someone is burying the money in their backyard or burning it it gets used somewhere, and will ultimately drive new job creation. It may not be directly at the company, it may lag in time, but if an entity gets the same thing they had for less, they will have more left over to do something else with, and will be looking for someone to provide that something else.

That's just not true. It guarantees nothing. Your trickle down approach just doesn't work, especially in a situation where domestic job creations are concerned. Just because an account grows by 2 percent doesn't mean the workforce managing it increases by 2 percent. THEN you throw in the fact that the possible but normally unnecessary increase of staff that may have to manage any drastic increases will be hired overseas and not domestic at all since it's the white collar positions that are leaving.

Quite frankly, all it's really doing is lowering the average standard of living for most americans regardless of whatever schmuck you try to quote to explain yourself out of this.

[Krurk]

Here's something you won't find on most major American media.

http://english.aljazeera.net/NR/exeres/ ... 31A994.htm

The U.S. strikes back!

Just incase someone doubts this since it's Al-J

http://www-1.ibm.com/press/PressServlet ... US=publish

[Zaelath]

They're "outsourcing" hardware. Which is much as I said earlier, you give them (as an economy) money for ephemerals like telephone support, they spend that money on capital. Chmee gets his precious greenbacks back, but the intrinsic value they represent has moved off-shore.