The American Nightmare: No Exit, No Entry

I have always wondered how the USA is going to adjust with the issue of overseas labor working at much lower costs than American labor.

If I get a contract for $20/hr per programmer, I can start a company in Pakistan and make a profit. In addition, Pakistan has given me a tax holiday, on IT, for a few years. Even more, I don`t have to worry about hiring and firing, legal issues, extensive employee benefits, getting sued, etc. Moreso, I can even pirate expensive software, if I really want o cut costs.

Even an entry level html developer charges more than $20/hr in the USA. A consulting company has to charge, at least $100/hr to make any kind of a profit. On sophisticated software, they have to charge much more. IBM etc., even now, charge well over $150/hr. With some consultants coming in at $300/hr. When I was working in a company, once we hired a few consultants for $500/hr each!

Now, once the other countries start getting things sorted out, how in the world is the USA labor going to compete. Why in the world will a US company develop anything in the USA.

Moreover, in manufacturing, engineering etc. how is the USA going to compete. Other than forcefully restricting work visas, on domestic contracts, what else could the USA do. If it refuses visas or off-shoring of jobs, it will lose its exports to companies in Europe, who allow visas and off-shoring, i.e. SAP will develop its software much cheaper than Oracle, if Germany has easier visa conditions than USA...........

In a world, where everyone is competing and everyone is asking for a piece of the pie (not to mention a piece of the natural gas), how can one civilization - Western - forever maintain such a high standard of living? Regardless of the policies it makes........

Uptil WWII, the West was able to control the world`s resources and labor through colonialism. From then till now, the West was able to control the world`s resources, through support of, ``friendly`` regimes and through its coroparations being the only game in town......

But in another 25 years, this corporate colonialism will end also, since other countries corporations will also start competing...........As I said earlier, the cycle driver in Bombay will sllowly move towards a Huyndai, through his off-shored job, causing the SUV driver in California to move down to one, as his job gets off-shored........

Somehow some sections seem to regurgigate the message highlighted in Mike Moore`s film, ``The Corporation``. The length of this analysis does not add much credibility to the described doom and gloom. With the changing times people need to learn how to accept and embrace change.

Re: # 93

The sentiments as express by the gentleman here are a live example of some of the thought processes that I have tried to articulate in the article.

1. Labeling a dissenting view as Marxist. And what`s wrong with Marxism?

2. Confusing creative brainstorming in Corporations with dissent on ethics.

3. Gentleman has also ended up agreeing to some things stated in the article yet made it sound that he has presented the argument.

4. The subtext that he happens to be on the right side of the issue and as long as he wins and his interests are being served than who cares if, as he puts it, 18 yr old girls are starving with 3 kids.

So, from the vantage pt of what was it again; being able to say go fetch in mysql? the gentleman feels that he knows it all.

Re: # 98

And how do you propose `people` should `adapt` to `change.` For example:
1. Who should adapt?
2. What does adaptation mean?
3. What does the change you talk about look like? What is changing? who is changing IT? and why?.
4. How should we convince people that it is they who need to adapt to change?
5. If they agree to `adapt` to `change` what can they do to prove they have successfully `adapted?`.

Re: 99#

Saima, Saima, Saima.....when will u learn to not just demand answers to ur questions, but also be fair enough to reply to my points, instead of going on tangent, and attack ad hominem

I feel like I wrote 95 in vain......no answers. Your reply seems like playing to audience. Pretty pathetic, i would say.

Re: # 101

Surely you misunderstand. I got bored. Heard arguments like this a million times and then some. I can probably argue on similar lines longer than you about exactly why A. US is a meritocracy B. Why a meritocracy is just dandy and C. How humans must evolve. Unfortunately the truth is that most arguments like this are fallacious.

You will get your responses, perhaps in greater detail than you expect, except not in this board but over time in the column.

Thanks for interacting.

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Saima:

I finally got to your essay. This is quite a broad sweep. It would have been easier to comment on if you had presented it in instalments, like ferozk`s war dispatches.

I haven`t read earlier interacts and the points I want to make may already have been made. It is quite clear that this is an essay by an anti-globalisation activist and by not an economist. Let me take your statement about the market:
``The market is, in its ideal form, you and I. Simple people at the grassroots can solve problems if they co-operate.``
This is certainly a new definition for me. I was told that market is merely a clearing mechanism for goods and services produced and demanded; it just provides a signal to both producers and consumers to adjust their behaviour in view of the current and expected change in price. In that sense, it is still working. Look at what`s happening to the oil market - as the price of oil jumped and people believed that this rise is not a temporary phenomenon, they have started to adjust their behaviours. Oil and gas producers are going to the end of the world, oil sands, deep ocean, alaska and wherever the prospects have become more commercially viable because of higher prices. You also see people spending more on reasearch and search for alternatives to oil. People are willing to swap their oil-guzzling SUVs for smaller cars and have better insulation in their homes. This is how the market always worked and is still working.

``The corporation has no allegiance to people. Those who own a corporation, are only interested in the profits that it creates. Therefore the Corporation is inherently disloyal.``

This is true and perhaps more so now than it was before. But corporations are also less powerful today than they were before in many areas. Companies which were once impervious to market forces - Telecoms, National Airlines, Buses, Big car makers, etc. - can no longer take their survival for granted and have become more ruthless than before. But this is not a one-way street. Employees, too, have become less loyal than before and both workers and managers are ready to go to their arch competitor for a small consideration. In many fields, there is a more level playing field than before as information, a big factor in the success of big corporations, is now easily accessible to anyone with a PC. In many service industries, the Internet has made it possible for a newcomer to set up a business in his basement and compete with big corporations. Companies like Yahoo, Google, Amazon, Microsoft have been created this way and were able to compete and beat the more established players in their fields.

``Like the East India Company which acted as the arms of the British Empire, the modern day Corporation will go to any country and in its wake lay to waste the natural ecology, culture, businesses and way of life of that country.``

This has nothing to do with globalisation. Are local companies less rapacious than multinationals? How much of the thick forest cover in India has been destroyed by multinationals and how much by local companies and even small time thugs? The problem of destruction of ecology and environmental pollution is real but the solution is not to ban multinationals but to have stringent laws and their implementation by both local and multinational companies.

As far as your comparison of Canada and the US is concerned, it is a case of ``Bud achhaa, budnaam bura``. The US may not tout its multiculturalism, but cultural diversity is as much a fact of life in the US as in Canada. You see hijabi employees both in Canadian and American malls. New York is every bit as muticultural as is Toronto, if not more. Every dance or music or bollywood group that comes to Canada visits more cities in the U.S than it does in Canada. The Americans have accomodated their hispanics by providing them ESL instructions in schools and providing them services in their language in many cases. Earlier this year, I conducted several focus groups of people on racism in workplace in Canada. Again and again, black participants wanted Canada to adopt the American approach of Affirmative Action Program, which they were convinced, is more business-like and effective than the soft, wooly approach adopted by Canada.

I agree however that the US economy is facing a serious long-term malaise. It is ill-equipped to compete with the newly energised giants like China and, to a lesser extent, India. Its consumption is financed by foreigners who may at some point refuse to do so. When that happens, the US dollar may face a precipitous drop, there may be a spurt of inflation and Federal Reserve may have to substantially jack up interest rates for foreigners to buy its Treasury Bonds in declining dollars. This would have already happened but for the fact that it is in nobody`s interest to cause a deep recession in the US, which is still the major driving engine for the rest of the world. But as Europe, China and the rest of Asia`s markets grow, this may not be the case always.

Re: # 95

These notions are out of ``The Myth of the Welfare Queen 101`` and are not worth responding to. Stop talking out of your ass and dont post to me in the future. Thank you.

#100

Saima,

Thanks for writing on this excellent topic. However, freesoul is making some very valid points. My two cents:

1. Creative brainstorming IS allowed in corporate life otherwise they will become dinosaurs and would disappear. Look at GM, almost dead. IBM has essentially reinvented itself. If Microsoft had not moved aggressively, it was going to be clobbered by Netscape.

Besides if one is too creative and original and no one cares about your ideas, be entrepreneur. More jobs are created every year by small companies than large corporations.

2. American capitalism cares about competition and global expansion as its moral responsibility. Yes, there will be temporary dislocations and job loses, but then the system works itself out like it did in mid-west in 70s. There was an interesting comment by one of my fund managers’ report recently: in 1867, 67% of American work force was in farming and now it’s 3%. He said that if some politicians had known at the time the impact of mechanization, they would have passed legislation to bar development of farm machinery.

My point is that Americans are bold and take chances with life rather than cowards in stagnant societies who live either on other people’s innovations or if they have beneficial position, will suppress innovation so that their relative advantage is preserved for ever. This culture thrives on change. Will it cause turmoil and force people to upgrade their skillset continuously? Yes. Will it let you rest so that you can enjoy shairo-shairi by the time you are 40 in a “stable” job? No, they will kick your behind to premature retirement or starvation. Do you need to save while you are at peak of your career at 35-40 rather than get carried? Absolutely, otherwise you might have to move to Arizona to retire sooner than later.

This constant drive to open the new markets, moral obligation to provide benefits of all innovations (e.g., medical, technological) to all those people from third world who are coming late to the party, constantly risking its own competitive position by moving production and even best jobs to developing countries is one of the most daring (some may call it greedy) approach taken by any civilization anytime in human history.

The challenge for us in this generation is to adjust to it by being innovative in terms of how we can still add value to the system. It’s not an easy task. Focus should be on our education system and finding other ways to add value rather than questioning wisdom of global competition.

China thought this important enough for drastic action. No one here even wants to comment. I wonder why?

Consumption Levels:
Well, if you think ``outside the box`` consumption levels can remain high in the U.S. even as other countries approach those same levels. It`s a matter of population control, world-wide. My rude friends put it nicely: ``You`ve fucked yourself out of a place at the dinner table.`` I don`t mean by this to indorse the U.S. level of consumption, I simply state the obvious - the difference between fewer people sharing limited resources and...but then, didn`t Malthus talk about this?

Re: # 104

DM,

Yes, the market generates signals. At present economists are grapling with the following problem: how are these signals generated and what is the quality of these generated signals (Of course Walras also dealt with the problem, what I am saying is that this has become a dominant theme once again in contemporary economics). We do not have elegant theories on these issues, a la Arrow-Debreu, but there is a growing consensus that people (players) generate these signals and their ability to produce good signals depend on the rules (mechanisms, institutions or game) governing their actions. But how are these rules created? There is less of a consensus on this issue. But a sizeable minority, me included, believe that rules are set co-operatively. For example, designing a ``good`` constitution requires a great deal of cooperation in defining the term ``good``. (In other words the definition of ``good`` has to be taken as an axiom). Thus Saima, in stating that people like you and me working co-operatively form the market, may not be very far off the mark. In fact, it could be a cutting edge definition.

GT

Chowk Staff,
Although the following vulgar post is addressed to ``freesoul,`` I find it in poor taste, a bit too profane, and very snobbish. Is this the manner in which we expect semi-literate imposters of acedemic accomplishment to interact? Please do something to correct this terrible display of hooliganism. Thanks,

#105 by Saminasha on November 20, 2005 7:01am PT
Re: # 95

These notions are out of ``The Myth of the Welfare Queen 101`` and are not worth responding to. Stop talking out of your ass and dont post to me in the future. Thank you.

The notion that ``corporations generate competition`` is widely accepted and touted around. But one needs to be a wee bit careful in doing so. Of course corporations vigorously compete against each other. But from a purely profit maximizing viewpoint they would surely like to act as monopolists. Thus they are not always pro-market! They are pro market when it suits them (i.e when they are entrants) and not necessarily pro-market when it does not suit them (i.e. when they are incumbants). I believe Raghu Rajan has a good book on this: ``Saving capitalism from the capitalists``. I believe that ultimately the Free market system has to be defended by individuals (say through democracy). I may very well be wrong. But if I am right, then you may not want too many people to be against it, be they 18 year old mothers or drug addicts. Thus ``equity`` could be an important consideration, more so because at times it conflicts with ``efficiency``.

Pardesi:

[My point is that Americans are bold and take chances with life rather than cowards in stagnant societies who live either on other people’s innovations or if they have beneficial position, will suppress innovation so that their relative advantage is preserved for ever. This culture thrives on change. Will it cause turmoil and force people to upgrade their skill set continuously? Yes.]

Excellent point. That is why the term ``change`` is not an alien term to the locals. It’s also part of the growth and development that many of us crave for. Initially, there was all the concern on outsourcing and other countries taking over the jobs of the locals. The locals had to accept the change and move on. Many started their own businesses. Many went back to school to acquire additional skills. Even in Professional Services, many have adjusted their rates according to the market. The adjustment has not caused anyone to die so far. Yes, certain compromises needed to be made. Still people have not stopped taking risks and moving ahead. On the one end, globalization is a subject covered in all business publications. Most of the competitive business schools have included work-abroad courses to expose their students to foreign economies and cultures. Whereas locally, some of the governmental organizations won’t give a contract to any firm outside of the home state. These organizations have clauses in their contract that only companies in NY State or NJ State should respond to the RFP. It is their way of promoting local firms.

On a general note:

[This is quite a broad sweep. It would have been easier to comment on if you had presented it in installments]

I agree with Dost Mittar`s point that this article has encompassed million items under one umbrella. It’s very vague in its scope. In fact, it’s a hodge podge. Who is the audience? Which sector? Which industry? Which immigrants? The core focus seems to revolve around the life of a South Asian immigrant and his/her challenges. That is a completely different subject area. Just because some South Asian immigrants decided not to accept change and went back to their havens (wherever) does not imply that the rest of the immigrant population is ready to stagnate in this country. On certain ends, this article depicts a very close-minded approach. I have personally known of people who have taken on prestigious roles despite the changing economy. Some have opened their own businesses. Some have decided to go back to school taking huge loans and have already lucrative positions lined up. The trend of single women professionals buying homes is on the rise in recent years. Some professionals (immigrants) have been getting double digit salary raises whereas WSJ is quoting 3 %– 4 % average increment. Indeed, that’s not a case with all. Obviously, every one is not at the same level (experience, age group, and approach). Still, I won’t take the example of those who did not make it as a representative criterion. You need to compare apples with apples.

On a different note, I also strongly believe that diversity should not be misread for people bringing their cultures to work. It’s bringing their strengths and perspectives and not necessarily their shalwar qameez and duppattas. This article has a very strong Canadian streak in it. One of my close Canadian-Pakistani friends would always find an occasion to wear shalwar qameez at work. I never understood her rationale behind that move. Later on, when she came to the US for her post-grad, she was quite critical of the restrictions and heavy focus on professional attire.

When we say immigrants, we should not forget that South Asians are not the only immigrants blooming and residing on the US soil. There are many Europeans who have been here for over a century or so. They must have had their challenges and lessons learned. Rather than drawing a bleak picture, why not learn from their challenges and approach. South Asian approach has different kind of hindrances attached. Probably, your next column should be on overcoming hindrances and accepting change by taking risks. In order to undertake that initiative, you will have to view the world around you in a different way. That includes embracing technology as part and parcel of running an effective business.

Re: #105 by Saminasha

[These notions are out of ``The Myth of the Welfare Queen 101`` and are not worth responding to. Stop talking out of your ass and dont post to me in the future. Thank you.
]

You have finally demonstrated the remaining depth of ur intellect. Thanks.