Monday, August 6, 2012

Offshoring ensures loss of good U.S. jobs

From Mike Gimbell:
I received this article in an email. I think that it is very worthwhile reading. The corporate masters and their bought-and-paid-for Republican and Democratic Party politicians are on a mission to destroy our living standards. What they don't realize, in their greed for immediate profits, is that they are destroying their own market in the process. Who is going to buy the goods produced by these low paid workers, when these same workers have no money in their pockets to purchase those goods?
U.S. big business is attacking our living standards. They could care less if we all ended up living in cardboard boxes. Isn't it about time that we held them accountable? You can waive the corporate master's flag all you want, as you waive "goodbye" to our good paying jobs, but some of us are going to stop waiving that flag and start targeting the U.S. ruling class: Wall Street and the .001%. These parasites are only too happy to destroy the lives of millions of hard working people, so that they can live like feudal princes. Marie Antionette once famously said: "Let them eat cake". Is that anything different from what Wall Street and the .001% are saying today? People are getting angrier and angrier. Is the fate of Marie Antionette in store for these modern parasites as well? Time will tell, and it may not be that far off!
--Mike Gimbel
Offshoring ensures loss of good U.S. jobs

By Donald L. Barlett and James B. Steele

"The Betrayal of the American Dream," Donald L. Barlett and James B.
Steele revisit their 1991 Inquirer series, "America: What Went Wrong,"
in which they forecast a decline of the middle class. Now, they document
how actions going back three decades have left millions of Americans in
economic ruin. Excerpts from their book continue in Currents every
Sunday through Aug. 19.
On his last day on the job, Kevin Flanagan, after clearing out a few
personal effects and putting them in boxes in the back of his Ford
Ranger, left the building where he'd worked for seven years.

He settled into the front seat of his pickup truck on the lower
level of the company garage, placed a twelve-gauge Remington shotgun to
his head, and pulled the trigger. He was forty-one years old.

He was a computer programmer. He'd been a programmer his entire
working life. Until, that is, his job was shipped overseas. The business
of moving traditional U.S. jobs abroad-called "outsourcing"-has been
one of this country's few growth industries. It's the ultimate
short-sighted business promoted by the country's elite because it means
lower wages and fatter profits.

As for the American workers eliminated along the way, they are just
collateral damage. Kevin was a casualty of the new American economy.
Only a few years before, programmers like him were seen as some of the
brightest lights of a modern American workforce as technology became the
backbone of so many corporate operations.

His employer, Bank of America, did what so many companies now do to
their employees. After years of dedicated service, one day they're told
they're being replaced. Not because they haven't worked hard enough. Not
because they aren't dedicated to their jobs. Not because they're not
educated or qualified. They're being replaced because the company,
thanks to federal policies, can hire someone else a lot cheaper.

Kevin's replacement was a programmer from India who had gained
admission to the United States under a U.S. government program pushed
through Congress by big business. Corporate lobbyists claimed the
program was needed to ease a shortage of domestic programmers and
computer specialists. In fact, it was a way for corporations to cut

Kevin was ordered to train his replacement or lose his modest
severance package. It ripped him apart. Playing by all the rules had
gotten him a pink slip.

Kevin Flanagan didn't lose his job by accident. Outsourcing is not a
freak occurrence of nature like an earthquake or hurricane, although we
often use metaphors like that to describe what it feels like for those
on the wrong end of it. Kevin Flanagan lost out because the economic
policies that those in power have imposed on America guarantee that jobs
like his will be eliminated. Of course, they never told Kevin that when
he went off to college to study computer science.

Any product or service in America can be imported or outsourced with
little or no duty, regardless of where or how it is made. The product
may be produced cheaply under dangerous conditions, in a nation with no
labor standards or environmental regulations. But to the folks who run
the country, that's okay. Sorry, they say, but American workers will
have to pay the price.

That's just the way it's going to be. That's the market at
work. This is not the market at work-this is the market they created
that works for them. The ruling class sold the idea of opening the
country to an unrestricted flow of imports on the basis that American
society as a whole would benefit: we would buy from other countries, and
they would buy from us. But from the start there has never been a
balance. No safeguards were ever put in place to prevent other nations
from taking advantage of our open-door policy to sell us goods produced
under conditions that made their cost artificially low. One of the
central manufacturing costs is the price of labor. Inevitably, the
consequence of inviting foreign firms into the American market is that
labor costs fall to the level of the lowest suppliers.

Global free trade is an invitation to cut the cost of labor at
home or, even more profitably, shift jobs abroad. Like so many other
chapters in the nation's trade history, the shipment of work offshore
began imperceptibly as a way for companies to trim costs, and was
seemingly so inconsequential in the beginning that it appeared to pose
no threat to U.S. workers.

America essentially invented outsourcing, but few outside the
corporate world realized how rapidly it, along with other trade
policies, would devastate employment across the middle class as imports
quickly overwhelmed exports and workers in industry after industry were
sacrificed on the altar of unrestricted free trade.

For the ruling class, this was just fine. Everything was
proceeding along the lines of their free market theories. They wanted no
restrictions on trade policy, and Congress obliged. They wanted
complete freedom to close plants in the United States, set up plants
offshore, and outsource work to anywhere in the world without any tax
penalty, and Congress obliged. They wanted to stonewall the wage demands
of workers back home by hinting that their jobs might be ticketed for
the next offshore shuttle if they asked for too much, and Congress went
along. With this kind of oversight, was any job safe?

Kevin Flanagan certainly thought his field was safe when he
entered it in the 1980s. Computer programming looked like one of the
surefire careers for the future. Everyone said so. The advent of large
mainframe computers in the 1960s had kicked off the first big increase
in jobs, and the demand for programmers rose even more in the late 1970s
with the introduction of personal computers and the extension of data
processing into more and more businesses. Everyone thought that even
bigger growth in programming jobs lay ahead. It didn't.

By 2002, the number of computer programmers in the United States
had slipped to 499,000. That was down 12 percent from 1990-not up.
Nonetheless, the Labor Department was still optimistic that the field
would create jobs-if not at the robust rate the agency had predicted,
then at least at the same rate as the economy as a whole.

Wrong again. By 2006, even that illusion couldn't be maintained.
When the number of jobs fell to 435,000-130,000 fewer than in 1990-the
Labor Department finally acknowledged that jobs in computer programming
were "expected to decline slowly." It was a telling confession of a huge
miscalculation: computer programming and the kind of work it
represented-skilled work that usually required a bachelor's or higher
degree-had been assumed to be beyond the capabilities of competitors
from abroad with their less vaunted educational systems and lack of
English language skills.

They couldn't take that away from Americans, could they? But they
did. The reason? While some in Congress are simply ignorant about trade
matters, a lot of free trade legislation is passed because people with
money want it and make sure the money gets to those who vote.

In spite of strong evidence put forth at the time of NAFTA about what
would happen to jobs-which ultimately turned out to be
accurate-Congress ignored it.

>From 1990, when Labor made its rosy prediction that programming jobs
would increase at a faster rate than other jobs over the next fifteen
years, the U.S. workforce grew by 24 percent.

If the number of programmers had increased at just the pace of the
overall workforce-let alone at the optimistic rate that Labor had once
projected-at least 700,000 programmers would have been employed by 2006.
Instead, there were only 435,000.

The job opportunities have continued to decline: in 2008, the last
year for which figures are available, the number had dropped to 427,000.
Even that number masks the magnitude of the domestic job losses. For
among those 427,000 programmers were thousands of H-1B guest
workers-foreign nationals brought in by U.S. companies, as allowed by
immigration law, to do programming, usually at much lower pay and
benefits. Like the guest worker who took Kevin Flanagan's job.

In place of well-paid programming jobs in the U.S., the growth
fields in the two decades after 1990 were for home health aides, retail
clerks, customer service agents, truck drivers, security guards, and
child care workers-low-paying jobs with few opportunities for
advancement or better pay.

Domestic programmers, like millions of workers in other fields,
are casualties of a Congress long indifferent to the plight of American
workers. Rather than create a level economic playing field, lawmakers
and presidents, both Democrat and Republican, have permitted foreign
governments to set American job policies by eroding this country's basic

While free-traders in the United States have been busy honking their
horns against any form of government intervention in the market, they
have turned a blind eye to what has been going on in the globalized
world they are so proud of having created.

Many foreign governments ignore such theories and subsidize
industries that they believe will help their people. In the 1980s, the
government of India began supporting its nascent software industry in
order to encourage companies to produce software for export. India's
software exports totaled a mere $10 million in 1985; by 2010 they had
reached an estimated $55 billion.

Service jobs in fields such as programming once were thought of as a key to America's future.
As factory jobs were decimated by the imports encouraged by federal policies, service jobs were to take their place.

America was in transition, we were told-the brawny factories with
their bellowing forges and thunderous stamping machines were simply
giving way to entirely new workplaces with sleek workstations housed in
office towers.

Sure, it was sad about all those people losing their factory jobs to
imports, but foreign competition would make our remaining plants more
competitive, and the upheaval would be just a pit stop on the way to a
bright postindustrial America.

The future might seem bleak to anyone who worked in a factory that
made cars or shoes, but the nation as a whole would adjust and move on
to greater things. America always adapts, we were told. Isn't that what
makes America great?

But there were fatal flaws in this theory. The first was that
America's corporate leaders-executives and their boards-saw quickly that
they could make enormous profits producing goods offshore rather than
reinvesting at home.

Labor was cheap abroad, and the developing countries would do
anything to get the jobs. And none of these other countries were subject
to the regulations that U.S. companies had to adhere to: fair labor
standards, workplace safety rules, environmental standards-all rules
that most Americans supported to make the nation a more livable place.
As a bonus, thanks to corporate lobbying, whatever these U.S. companies
made abroad under primitive conditions using slave labor they could
bring back to the United States paying little or no import tax.

The other flaw in the theory, and the one that will be causing
grief for working Americans for years to come, is that while China and
India may be poor countries, each has millions of very bright, talented
people eager to work at a fraction of what bright, talented people need
in the United States to maintain a middle-class lifestyle here.

The first of the service jobs to be outsourced in great numbers
were the back-office operations of banks, investment houses, insurance
companies, and any business that processed huge amounts of paper, from
credit card charges to procurement manifests to legal exhibits. Most of
this work went to India, and as the industry grew, American corporations
began sending more work there.

Soon programmers in India were writing code and shipping it back
to the United States. Other companies established call centers to field
customer inquiries from the United States, and soon they too began to
take on more complex tasks. Most large American health insurers now have
call centers in India where workers answer questions following a highly
detailed script on a computer screen. It is a
multibillion-dollar-a-year industry that employs millions-in India. No
one knows how many jobs this strategy has cost Americans, but who's
counting? We still have those smart jobs, the creative ones-don't we?

Jobs at Risk

Some of the 160 service jobs that are susceptible to offshoring. Jobs
with easily-defined outputs, like tax preparation, are more vulnerable.
Those that are more creative, or require cultural knowledge are less

Most vulnerable to least vulnerable, with annual average salary.

Tax Preparers

Insurance Underwriters


Financial Analysts

Architectural Drafters


Aerospace Engineers



Aircraft Mechanics


Chemical Engineers

Multimedia Artists


Nuclear Technicians

Market Research Analysts


Fashion Designers

Graphic Designers

Source: Investigative Reporting Workshop

The Philadelphia Inquirer

Even the jobs requiring ingenuity and brain power are going too.
The earlier phase of outsourcing was known as business process
outsourcing (BPO). The latest is called knowledge process outsourcing
(KPO). The corporate focus has expanded to the highly sophisticated
operations that represent, in the words of one management consultant,
the "very heart of the business . . . involving complex analytics."
Where an earlier generation in India might have been reconciling credit
card balances, today they perform statistical analyses, run growth
projections, and do all the other things that number crunchers back home
do-or once did.
The global consulting firm KPMG explained the
appeal of KPO in a 2008 report: "Knowledge process outsourcing (KPO)
enables clients to unlock their top line growth by outsourcing their
core work to locations that have a highly skilled and relatively cheap
talent pool "

This phrase should send a shudder down any
economist's spine because it says out loud, albeit with a bit of jargon,
the truth that cannot be spoken if you believe in a growing economy and
shared prosperity: companies can get richer by moving the essence of
what they do to cheaper countries. Why be located in the United States
at all?

Advances in technology, along with rising education levels in
India and other low-wage countries, have eased the reservations that
many corporations once had about outsourcing and off-shoring, according
to KPMG. In its view, KPO is unstoppable.

An ever-greater share of sophisticated analytics as well as
creative jobs that were once done by middle-class Americans are being
shipped offshore. Indian vendors create advertising copy, high-end
photography, marketing brochures, graphic art, original illustration,
and even music videos for the U.S. market-all at a fraction of what that
work would cost in the States.

Outsourcing is beloved by management consultants, and none more
so than Accenture. The world's largest consulting firm, Accenture is a
$25 billion a year global enterprise and a far cry from its days as a
modest unit within the Arthur Andersen accounting empire in the United

Since branching out on its own, Accenture has reaped untold
riches helping U.S. companies send work out of the country. Far and away
the most successful outsourcer, the company is referred to on Wall
Street as the "outsourcing giant." Accenture doesn't dispute the claim.
The company says its "outsourcing services touch every industry and
business process." Every year Accenture is voted the "top outsourcing
service provider globally" by professionals in the industry, a
distinction that a spokesman says the company earns by taking
"outsourcing deeper" than others.

Deep into its own ranks, it turns out. Petitions are on file with
the Labor Department by onetime Accenture employees in Atlanta,
Georgia; Birmingham, Alabama; Chicago, Illinois; Dayton, Ohio;
Morristown, New Jersey; Richfield, Minnesota; Wilmington, Delaware; and
other cities. Their jobs as software developers, global management
consultants, accountants, and financial agents were eliminated by
Accenture in the United States and shipped to Argentina, Brazil, India,
the Philippines, and other countries. Whatever you say about Accenture,
the company practices what it preaches.

One of the most overlooked-and most frightening-forecasts about
the future of the middle class was released in December 2008. This was a
study by researchers at the Labor Department that
identified service jobs that might go offshore.

Despite its scholarly tone, its conclusions are alarming.

It found that as many as 160 service occupations-onequarter of the
total service workforce, or 30 million jobs-could go offshore. Jobs in
those 160 categories were growing at a faster rate than service jobs
overall and, ominously for future middle-class incomes, they were among
the higher-paying service jobs.

The Bureau of Labor Statistics calculated the annual wage for these
jobs at $61,473-significantly higher than the $41,610 in annual wages
for all service occupations.

The list of vulnerable jobs and their average annual earnings is breathtaking:

aerospace engineers ($92,700); aircraft mechanics ($49,670);
anthropologists ($55,490); architectural drafters ($45,280); biochemists
($85,290); chemical engineers ($84,240); chemists ($68,520);
epidemiologists ($63,600); fashion designers ($71,170); financial
analysts ($81,700); graphic designers ($45,340); insurance underwriters
($60,120); market research analysts ($66,980); mathematicians ($90,930);
microbiologists ($66,430); multimedia artists ($61,010); nuclear
technicians ($65,850); pharmacists ($98,960); and tax preparers

The most revelatory aspect of the BLS report was how surprised by its conclusions its authors seemed to be.

The agency that specializes in economic matters affecting working
Americans has spent little time looking at what may be an Armageddon for
service workers. But that's in keeping with the perennial optimism that
economists generally peddle about the direction of the American economy
when the subject involves free trade.

Why give much ink, these optimists reason, to a problem that doesn't fit the prevailing theory that offshoring is good?

One of the few economists who did sound an alarm on off-shoring,
Alan S. Blinder of Princeton, was roundly criticized by his fellow
economists when he predicted in 2007 that the off-shoring of service
jobs from rich countries to poor countries "may pose major problems for
tens of millions of American workers over the coming decades." While
it's clear that free trade, as practiced by the United States, is
driving down the income of millions of working Americans, the
economically elite are sticking to their message that America is on the
right track.

Harvard economist N. Gregory Mankiw, a former chairman of the
Council of Economic Advisers under President George W. Bush, says that
the migration of jobs from offshoring makes economic sense and is "the
latest manifestation of the gains from trade that economists have talked
about at least since the days of Adam Smith. . . . More things are
tradable than were tradable in the past, and that's a good thing."

For decades, Americans have been given misleading assurances like that.

Many so-called experts have also made rosy predictions about the U.S. trade deficit.

In a Washington Post article in 1992, Stephen Cooney, a senior policy
director for international investment and finance for the National
Association of Manufacturers, predicted that because of changes under
way in the American economy, "with luck our trade deficit could
disappear by 1995." No such luck. In 1992, when Cooney made his
prediction, the deficit was $39 billion.

Rather than disappearing by 1995, the deficit nearly tripled to
$96 billion, and it has continued to escalate; by 2011 the trade deficit
had reached $560 billion that year.

Gary Clyde Hufbauer, a former deputy assistant secretary at the
Treasury Department, predicted in a research paper that was widely
picked up by the media that NAFTA would "generate a $7 to $9 billion
[TRADE]surplus that would ensure the net creation of 170,000 jobs in the
U.S. economy the first year."

Instead, NAFTA caused an immediate trade deficit with Mexico.

By 2012, the cumulative total was $700 billion. More importantly,
NAFTA wiped out hundreds of thousands of good-paying manufacturing jobs
in the United States.

Hufbauer is still in the job-predicting business at a Washington
think tank. One of his latest: "When American multinationals go
overseas, on balance, they create more jobs here in the United States
than they would have if they'd not gone overseas." Right.
--Mike Gimbel
The stupidities and absurdities by which mathematicians have rather excused than explained their mode of procedure, which remarkably enough always lead to correct results, exceed the worst and real fantasies of the Hegelian philosophy of nature.
                                                                  --Frederick Engels
Good physics is the study of three-dimensional matter in motion. Good mathematics involves unlimited dimensions, from utilization of just one dimension, two dimensions, four dimensions or as many dimensions as can be imagined. This is bad physics, however. Matter has only three dimensions: Length, Width & Height.
Physics has been in crisis for a century due to the intrusion of the field of mathematics. String Theory is the ultimate result of this nonsensical mathematical intrusion into physics.
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