Wednesday, March 10, 2004

ABC News gives us a glimpse of the future....

...When [Jon] Carson started CMarket several months ago, a consultant urged him to send his computer programming jobs overseas to lower his costs.

That's because a programmer in the United States makes about $80,000 a year, but the same job overseas would cost only $40,000.

So Carson placed a help-wanted ad in
The Boston Globe offering overseas wages for computer programmers. Within 48 hours, he had more than 100 resumes....

Hal Reed, unemployed before he took Carson's offer, says it's simple economics.

"I think it's very smart what Jon did. He took a look at what the financial realities were and sort of turned it on its ear."

Carson said he considers his alternative to outsourcing to be a win-win situation. "We found reat people who allowed us to get off the ground at lower wages," he said....


Yup, and we can probably also prevent outsourcing of manufacturing jobs to China and the Third World if we just get rid of that pesky minimum wage.

(I don't really think this is a laughing matter -- given the nature of capitalism and the widespread aversion to protectionism among decision-makers and opinion-mongers across the political spectrum, all of this seems, well, inevitable.)

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Meanwhile Ezra Klein at Pandagon posted this rather chilling quote yesterday about the two different types of unemployment, cyclical (jobs that come back) and structural (jobs that don't); the quote is from Charlie Cook's political newsletter:

[A] New York Fed study showed that during the twin economic downturns of the mid-1970s, 49 percent of the job losses were cyclical -- or temporary job losses -- such as letting a shift go at the plant. Meanwhile, 51 percent of the job losses were structural, permanent job losses. The study went on to show that during the next downturn -- in 1981 and 1982 -- the percentages were exactly the same, 49 percent were cyclical, 51 percent were structural. The 1991-92 downturn was somewhat different, with only 43 percent of the job losses cyclical, and 57 percent structural.

What about this downturn? A measly 21 percent of the job losses are cyclical ones, while a whopping 79 percent are structural, permanent job losses. Why is this bad? It's bad because we know that it always takes longer to create a brand new job than it takes to call a shift back at the plant.


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Thomas Friedman of The New York Times thinks the answer is our plucky American spirit of innovation -- hey, a guy whose job is being outsourced is now making big bucks selling anti-outsourcing T-shirts! But Tom Tomorrow has discovered what any idiot could have surmised -- that you make tiny bucks selling novelty T-shirts. (I know. I've done it myself.)

Oh, and Tom T. notes that the T-shirt guy "has even got job offers from India (including one at $20,000 a year, which he says is 'plenty in India but won’t pay my bills in America')," according to an article in The Times of India.

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This is the "race to the bottom" -- companies will inevitably seek to lower wages and salaries as much as possible. And right now, pretty much anything is possible.

Owners in America will get richer. Non-owners will get poorer. The middle class will just shrink and shrink.

I really worry that America's eventually going to become what a globalization critic (I don't remember who it was) a few years back said we'd eventually be: Brazil with nuclear weapons.

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