Thursday, May 6, 2004

previous entry | main | next entry | TrackBack (1)


Bwa ha ha ha!!

The Los Angeles Times reports that the political tide may be turning on offshore outsourcing:

Although public opinion polls show Americans are worried about this outsourcing of jobs, few people appear willing to back that up if it means spending more money or more time.

Even those who have lost jobs sometimes express more resignation than outrage. The lack of widespread passion on the subject, some say, helps explain why dozens of measures in Congress and state legislatures for limiting outsourcing have failed to gain much traction.

And the presumptive Democratic presidential nominee, Sen. John F. Kerry of Massachusetts, who in February characterized executives who outsourced as traitors, lately has toned down his rhetoric on the subject.

Against this backdrop, the nation's unemployment report for April — to be released Friday — becomes crucial. A strong report, coming on the heels of March's impressive net gain of 308,000 nonfarm jobs, will diminish remaining incentives to restrain outsourcing.

Sluggish job growth, on the other hand, will conjure up the slack reports of last winter. Outsourcing became a prominent election issue in December after a string of poor job reports sparked fears that U.S. job creation was in a long-term slump.

Opponents of outsourcing aren't sure how they were put on the defensive so quickly.

"It was shocking to find a Democratic-controlled House in the liberal state of Washington could not pass a significant piece of legislation dealing with the offshore-outsourcing issue," said Marcus Courtney, president of the Washington Alliance of Technology Workers. The bill would have prohibited state contracts from being sent overseas.

Courtney blamed "a nationally coordinated lobbying effort by corporate America" for the fact that none of the 80 bills in Congress and legislatures has passed.

It's just coordinated lobbying?! What about well-honed rhetoric backed by cogent analysis and hard data? [Yeah, you know it's actually the lobbying, right?--ed. Allow me my meager illusions of influence, OK?]

Part of the Times' reasoning is based on the E-loan experiment that I blogged about in March. Consumers are given a choice between having their paperwork processed in 10 days overseas or 12 days in the United States. According to the LAT, "In the three months that ended Monday, 85.6% of 14,329 loan applicants chose processing overseas."

Meanwhile, Miguel Helft writes in the San Jose Mercury News that data privacy concerns with regard to offshore outsourcing are grossly exaggerated:

like most issues in the polarized debate over outsourcing, the privacy fears are stoked by hype, misconceptions and a dose of xenophobia. Preventing personal data from going overseas will do little to keep Americans safe from privacy violations and identity thieves. Unless Americans get better privacy protections at home, they'll continue to be victimized by unscrupulous businesses and criminals.

To be sure, there have been some well-publicized privacy horror stories overseas. But American companies have been handling credit cards and financial records offshore for years with no evidence that there are any more privacy abuses or breaches overseas than domestically.

"The security of data is not determined by where it is geographically,'' says Dave Wyle, president and CEO of SurePrep. Wyle's California-based company employs a largely Indian workforce to help accounting firms with data entry and other tasks involved in tax preparation.

Wyle describes SurePrep's Indian operations as airtight. Customer data is stored at a highly secure data center in Irvine. All electronic correspondence with India is scrambled with the highest level of commercially available encryption. At the Indian offices there are no removable data storage devices, no printers, no Internet connections or telephones that reach outside the building. Workers aren't even allowed to bring paper and pens to take notes or cell phones to make unauthorized calls.

By comparison, Wyle says, at U.S. firms you'll find paper files stuffed with sensitive data lying around, data stored in removable hard drives and e-mail everywhere. "SurePrep has better security than any firm I've ever seen,'' says Wyle.

I have no way to confirm Wyle's claims, and it's likely that many other firms are less careful than SurePrep.

But Wyle makes a good point. American companies have been hacked countless times. Rogue employees have stolen and sold data from the most pedigreed blue chip companies. Once stolen, data is only a click away from Romania, Russia or any other organized crime haven. Because privacy laws in the U.S. are weak, at best, companies that are lax about data security rarely face consequences.

"We need to get our privacy protections in order first, before we start chastising other countries,'' says Chris Larsen, CEO of E-Loan.

Read both pieces.

posted by Dan on 05.06.04 at 01:01 PM




Comments:

Are the liberal media responsible for the bubonic plague during the Middle Ages? I know that I may sound like a broken record when repeatedly blaming the major media for just about everything. Still, they are the primary reason why our perceptions of events are often so distorted. We must never forget that the outsourcing issue is only being used to destroy President Bush. There were never this many stories concerning the unemployed during President Clinton’s reelection bid. Also, please note the relative silence of the moderate liberal economist community. They are apparently following the number one rule of academic life: Do nothing to help a Republican administration. You may not have to lie for the liberal cause---but you must minimally keep your mouth shut.

posted by: David Thomson on 05.06.04 at 01:01 PM [permalink]



Even those who have lost jobs sometimes express more resignation than outrage.

People who are unable to find gainful employment for over a year tend not to be passionate -- they tend to be severely depressed.

(Alas, we see the clinical fallacy of economic science: in which people are not organic entities whose behaviors and opinions are based on experiences and feelings, but simply balls on a pool table that bounce around according to the laws of economic physics. How ironic that we should rely on such an impassionate, robotic science to determine the lives of millions of real, breathing, living humans.)

Consumers are given a choice between having their paperwork processed in 10 days overseas or 12 days in the United States. According to the LAT, "In the three months that ended Monday, 85.6% of 14,329 loan applicants chose processing overseas."

Well, you've discovered two things:
1. Americans are lazy.
2. Americans are selfish.
Congratulations on your discovery of the human race, maybe you'll soon reach the point where you see why unemployed skilled workers get cranky when they have thousands of dollars in mounting debt and no income with which to pay it.

This study only shows why offshoring opponents need to work harder to expose the problem, or else these tendencies done without thought of the consequences will lead to even greater economic depression.

Can you really tell me that increased personal debt as a result of lost living wage jobs is good for the economy? Can I really trust an economic argument that relies only on one unweighted figure of "net new jobs"? How does net new jobs relate to purchasing power? It doesn't, without quantified data on just what those new jobs are and what they pay.

A matter which Daniel is still reticent to investigate.

As I've said before, if we replace one thousand $15/hr computer support jobs with two thousand minimum wage $6/hr Walmart cashier jobs, we're still *down*.

Do we really think that the executives who've managed to make more money for themselves via offshoring will have a stroke of generosity and decide that they can now pay their remaining, employees better thanks to increased revenue?

Darn it, there's that human aspect again.

posted by: Keith Tyler on 05.06.04 at 01:01 PM [permalink]



Keith: before talking about new jobs, you gotta convince me that offshore outsourcing is responsible for the massive destruction of old jobs. I'm not convinced.

posted by: Dan Drezner on 05.06.04 at 01:01 PM [permalink]



“Darn it, there's that human aspect again.”

Yes, and that’s why I am a conservative. It behooves one to deal with the world as it is. Utopian schemes always end in a disaster. Lastly, there is no such thing as “economic physics.” Economics is a Liberal Art’s activity which in a professional setting requires advanced mathematical skills. It is senseless not to premise one’s economic theories on how real human beings may react in certain situations.

posted by: David Thomson on 05.06.04 at 01:01 PM [permalink]



There are other factors which need to be considered here.

How much of the 'change of the tide' is just the people getting weary of being hammered with it? How much is it from being identified as one of Kerry's big arguments and a rejection of the whole concept on that basis?

posted by: Bithead on 05.06.04 at 01:01 PM [permalink]



Dan Drezner writes:

"before talking about new jobs, you gotta convince me that offshore outsourcing is responsible for the massive destruction of old jobs. I'm not convinced."

Free Trade Uber Alles is your dogma and your religion. You will be convinced only after you have trained an Indian Professor to teach in UC branch in Bangalore in outsourced PoliSci department and were laid-off.

UC does disservice to its customers by keeping PoliSci department in expensive Chicago, they can have better quality people at 1/4 of the cost in Bangalore.

posted by: Homer Pile on 05.06.04 at 01:01 PM [permalink]



Keith: before talking about new jobs, you gotta convince me that offshore outsourcing is responsible for the massive destruction of old jobs. I'm not convinced.

Unfortunately, Dan, as I pointed out in the comments of that story the BLS's numbers show a remarkably increasing trend of companies not reporting the reason for their layoffs.

"No reason reported" makes up 12.17% of the layoffs reported to the BLS for 2003, compared with 4.8% for 2002 and 3.3% for 2001.

In which case, there is no way you can say with any certainty the statement you make there:

Offshore outsourcing is not responsible for a significant percentage of the jobs that have been lost.

I don't seriously accept your challenge to "prove" that offshoring has led to a massive destruction of old jobs (or even of *my* point, that offshoring has led to a significant decrease in median purchasing power) -- because I see nothing convincing in the inspecific statistics, limited sample analyses, or anecdotes you've provided for the pro-offshoring agreement. And even those anecdotes you have provided still showed less jobs regained compared to jobs lost.

But I can point to this FastCompany story, which refers to a Foote Partners study reporting that IT compensation dropped 7.6% in 2003. That's compensation, mind you -- not expense. Programming compensation dropped 17.5 percent between 2002 and 2004, according to this VNUnet story.

posted by: Keith Tyler on 05.06.04 at 01:01 PM [permalink]



Most Americans - like most people - are cheap, selfish, and short-sighted. They might wake up when the full effects of outsourcing become clear.

Instead of worrying about security between the U.S. and India, perhaps we should worry about security here. People who make statements about something being very secure are usually overtaken by events.

posted by: The Lonewacko Blog on 05.06.04 at 01:01 PM [permalink]



For less liberal hubris and more straight dope, try General Glut's commentary on the same article.

posted by: General Glut on 05.06.04 at 01:01 PM [permalink]



Keith Tyler wrote:

"I don't seriously accept your challenge to "prove" that offshoring has led to a massive destruction of old jobs (or even of *my* point, that offshoring has led to a significant decrease in median purchasing power) -- because I see nothing convincing in the inspecific statistics, limited sample analyses, or anecdotes you've provided for the pro-offshoring agreement."

Muddy statistics, limited samples and anecdotes is what Derzner thinks economics arguments look like.

posted by: Homer Pile on 05.06.04 at 01:01 PM [permalink]



Jobs will grow by more than 400,000 for April.

posted by: aaron on 05.06.04 at 01:01 PM [permalink]



Do nothing to help a Republican administration.

I always thought the Republican philosophy was that you're on your own. God Helps Those and all that. Why then would Republicans expect political handouts -- especially by a media which is being hammered from the right under the name of decency, a labor force whose income is being decimated by pro-corporate policy, and a public who has been scared to death over terrorism (to the point that much of it is already desensitized to the fear) yet receives only increased law enforcement power and no actual increased security?

(Speaking of which, whatever happened to the Homeland Security Advisory System? Wouldn't you think the exposure of the Abu Ghraib photos would have triggered a bump? [And after all, an American was publicly executed in the aftermath.] I think it's about due for another two-week Orange Alert fest, lest the HSAS fade into obscurity so soon, and we all forget that we're still in imminent danger from hordes of crazy Muslims.)

posted by: Keith Tyler on 05.06.04 at 01:01 PM [permalink]






Post a Comment:

Name:


Email Address:


URL:




Comments:


Remember your info?