I am someone who works on a daily basis in software development for one of the world's largest corporations, with offshored team members, mostly from India, occasionally getting up early to attend those lovely conference calls when they're about to go home and we're drinking our morning coffee.

I find that our offshore "resources" (all of whom are supplied by outsourcing consulting firms, none of whom are company employees) run the gamut from extremely competent developers on a par with the best I've seen in America, to beginners who may be perfectly able to do the work but lack experience, to those who are in the wrong profession.

I don't think our corporation is saving much money by employing these resources. The expenses of coordination, communication, misunderstanding, etc. eat away both at the supposed cost savings and at the quality of the overall product. Management likes them because, for the most part, they do whatever they're told, even if what they're told makes no sense. In other words they don't ever call bullshit on Dilbert pointy-haired boss type managers.

Another thumb placed on the scale in favor of offshoring is that these offshore resources are NOT expected to maintain their code after it is in release, whereas the onshore developers are. I don't suppose it has to be this way, but that's the way it is. The offshore developers, therefore, not surprisingly, opt for speed, and just "getting it to work" somehow, while the onshore folks, knowing they have to maintain code, may tend to be more careful. That's good in the long run, but in the short run, managers who aren't too sharp may be wowed by "speed" that doesn't add up in the long run.

Further I believe their hiring is dictated by Wall Street. I have seen things offshored that worked out very well for the company. I have seen others that were tremendous fiascoes. And I have never once seen a manager punished for making the wrong decision if it went in favor of offshoring. I see no signs that the experiences of one fiasco are considered before the next mistake is made. The corporation is willing to take these risks, and middle management is presumably well-compensated in stock options for going along.

In other words, there continues to be a heavy bias in favor of offshoring that is not always justified by the results.

Offshoring may be here to stay, but what needs to go is the excessive bias in its favor, particularly when that bias is not justified by results. Offshored projects need to be evaluated the same as non-offshored projects, in terms not only of cost, but also of quality. And that is not happening, at this point in time. Instead management has its percentage targets for offshoring and pursues them, cluelessly most of the time.

I find your supposed remedies offensive. The people who are getting screwed in this game neither ask for nor expect charity, or pious promises about the social safety net - which we well know is on the way out, not on the way in. And we're quite willing to see offshoring succeed but resent the fact that it retains momentum whether it succeeds on the corporation's terms or not.

Ganesh-

I would be skeptical of any economist that is just realizing that offshoring is a problem.

I vowed I would not buy another Dell computer about 8 years ago (and I buy about 300 notebooks a year) when they moved most of the phone tech service to India. Why? Because I got tired of the racism involved in the Indian companies, attempting to make the phone jockeys more "white" by making them take on waspy-sounding aliases ( Hello, this is Clint...oh hi, "Clint"- where are you? Bangalore? What's your real name? "Rahjev") and displacing $30K/yr workers in Austin with $300/month boiler room slaves.

Now the low cost of that labor is turning on the Indian enterprises, with the $300/mo "buppies" coming down with digestive problems, emotional issues, etc. Well, welcome to our high stress, low security world, little buppie. But the Indian management guys I know look past all that- there's several hundred million right behind that guy that want his job. So he's burned and the next one in line is in his place. And guess what? Look out buppies! LaHore's getting ready to eat your lunch.

My real question is: What's Blinder's big idea?

"Second, we must take steps to ensure that our labor force and our businesses supply and demand the types of skills and jobs that are going to remain in America rather than move offshore. Among other things, that may require substantial changes in our educational system—all the way from kindergarten through college."

Well that's sage advice. What are we going to teach our children? To step on and over the other guy to get whatever scraps are left? Tell me what type of IT job can't be done cheaper over a wire? What "industry" (manufacturing, production, design) will not allow a job to be sent anywhere that cost can be trimmed?

Listening to people like Blinder just give me a headache. Not because I can't comprehend what they're saying; on the contrary, it's the dearth of ideas in their empty rhetoric that hurts.

Alphonse ( Al ) Kada
Iranians are fighting the Americans in Iraq so they don't have to fight them on the streets of Tehran

The job retraining "option" is simply ludicrous. The jobs which will not be exportable will be face to face service jobs with low incomes. A loss of 29% of U.S. employment, along with the general thrust of global competition, will put tremendous downward pressure on wages. The result would be that in a generation or 2 the U.S. would see its living standards cut substantially - perhaps in half.

And once we reach that point, it would become functionally impossible to redistribute the income, since the new global investment structure would allow the elite to threaten "capital flight" if they were taxed more heavily.

Tell me again what's so great about globalization?

Re: likes them because, for the most part, they do whatever they're told, even if what they're told makes no sense.

Where I worked this was a major headache: the offshored programmers were incapable of innovation. When they had a questiion, no matter how trvial, they stooppped work until they get an answer (creating a day;s delay everytime they couldn't figure something out on their own.) Your managers must enjot being pestered about trivia constantly.

Re: Another thumb placed on the scale in favor of offshoring is that these offshore resources are NOT expected to maintain their code after it is in release

??!!? How is that a benefit? That invites bad coding and software full of bugs! The business you work for must not care about the quality of its product.

Re: Another thumb placed on the scale in favor of offshoring is that these offshore resources are NOT expected to maintain their code after it is in release

Eventually the results come back to haunt. I would suggest looking at the stats. The offhsoring trend is already slowing as many businesses discover the hidden costs and hassles.

"business exists to make money"/"cost alone is not the issue"

I do not disagree with either point, but just to put things in historical perspective:

We had slavery in this country because it was good for business, principally the textile business. There is no limit to how far businessmen are willing to drive down the cost of labor, as long as the law allows it, and as long as the work gets done.

I do not think that the people currently engaged in offshoring are morally different from the textile manufacturers who consumed cotton produced by slaves or the planters who owned the slaves that produced the cotton. They are all driven by the almighty dollar.

That is why government has to have a role.

Unfortunatley, retraining does not work very well, because the entry level jobs are the ones that seem to disappear. It is very difficult to get established in a new career.

Sure, offshoring doesn't always work out. That's inevitable. As time goes on, however, businesses will get smarter about it, and the folks overseas doing the work will continue to improve their skills, so the problem from point of view of US workers can only get worse.

There have been periods of more or less globalization in the past depending on the geopolitical situation but I don't see the US having much of a problem with India anytime soon.

The real hard part is that Americans have gotten used to a very wasteful lifestyle during the period 1945-1990 when they had huge built-in advantages over workers in other countries. Now that they have to compete internationally on wages, they will no longer be able to afford it. I wonder who they will blame?

The problem with the remedy which is recommended by economists is that it is recommended by economists.

Why believe them?

They said we would offshore jobs and keep the good jobs, and move into new fields with new jobs.

They were wrong.

They said get an education and you'd get to experience the good side of globalization: a good secure job with benefits, etc.

They were wrong. Wages are actually falling for recent college grads *more* than for other less educated workers.

They say all we need is: a better EITC, wage insurance, and education.

I don't believe them.

They say we need to stay with globalization because it's the way of the world now, we can't go against the flow.

I don't believe them.

Note that China actually manipulates its currency to suck up our manufacturing jobs and the economists k*ss Chinese butt. They don't see this mercantilism as against free trade.

The reason so many sops, corporatists and economists, are fanatic in favor of free trade is NOT that it is good for Americans. Rather, they are MAKING MONEY off of it, and they value that more than they value Americans.

Time to rebel, folks!

Dude, if you don't know that newly minted college grads are taking it on the chin wrt wages and jobs, you shouldn't be posting in this thread, because this has been widely discussed and disseminated.
latimes, http://tinyurl.com/h85eh:

Wage stagnation, long the bane of blue-collar workers, is now hitting people with bachelor's degrees for the first time in 30 years. Earnings for workers with four-year degrees fell 5.2% from 2000 to 2004 when adjusted for inflation, according to White House economists.

It is a remarkable setback for workers who thought they were well-positioned to win some of the benefits of the nation's economic growth, and it may help explain why surveys show that many Americans think President Bush has not managed the economy well.

Not since the 1970s have workers with bachelor's degrees seen a prolonged slump in earnings during a time of economic growth. These workers did well during the last period of economic growth, 1995 to 2000, with inflation-adjusted average wages rising 12%, according to an analysis by the liberal-leaning Economic Policy Institute.

How about this -
(link http://tinyurl.com/2hqr7p, more refs at the link)

the numbers show that young college grads face a steadily worsening future of falling wages. The real earnings of workers aged 25-34 with a BA dropped by 3.3% in 2005. All told, the earnings of young college grads are down by almost 8% since 2002.

DOWN 8% !!!!!!!!!!!

How is it people can even suggest that education is a cure all for the dis-ease of globalization. Get real.

The slavery cost / benefit balance changed when the slave trade ended. Slaves became much more expensive. But by that time the plantation system was well established so there was little competition from cotton grown by hired labor. For most slave owners, manumission was not an option.

This is a hypothesis not a fact, I have no back-up, although I did read a lot about the US slave system when I was in college.

I don't have the answer to that, and it looks like I will have to leave that as a question for futher reading.

You may be entirely correct, but the implication of that is that cotton prices were overvalued not just for a few years, but for a few decades. I will admit that the people we are talking about are not known for being innovative, but it seems like some entreneurial type could have figured out a way to beat the system.

Maybe they were just so badly on the defensive that they weren't thinking anymore. The question needs some work.

I have read that in the North, and the same probably applies to the South, white workers would refuse to do work that was associated with slavery. That could have been a factor, but it was not absolute. I believe Olmsted reported that Irish immigrants did work loading cotton into boats that was actually more dangerous than what the slaves were allowed to do, on the grounds that the slaves were too valuable to risk.

Let me just raise the question -- which I admit that I cannot answer -- that possibly an ideological commitment to free markets might be skewing the investigation of whether or not free labor is the more efficient. It would be more in keeping with free market theory to believe that free labor is the more efficient, and that slavery was an irrational abberation, due to blind custom, racial prejudice, etc. The alternative view is that free markets naturally trend in the direction of slavery, which would be a controversial finding in the United States.

Anyhow, I do think that the issues that we are confronting today concerning offshoring are not entirely new. The position of the worker in a capitalist system has always been shaky.

Yes, but. I just don't think that the economy of the South was exactly what we call capitalist. I mean, the major benefit that the plantation owner got from the slaves was not money, it was a position in the society. So he could in principle free his slaves and hire free immigrants, but in practice there were many social barriers to that behavior. Likewise a Yankee capitalist could find some plantation to buy, but again the same.

To support the idea that the South was not capitalist, I just checked and before the Civil war there was very little urban population. Between the Atlantic and the Mississippi there was only ONE city in the South, Richmond.

Re: I have read that there is genuine debate over the question of whether or not slavery was more efficient than free labor

In antiquity you can make the case for slavery. In the Middle East, and other places where horse labor was limited by climate and disease, you can also make the case for slavery until well into modern times. But not in the ante-bellum South. The cost factors in slavery should be obvious: a slave must be purchased while a free laborer has zero engagement cost. An unsatisfactory slave cannot simply be fired but must be sold; but if he's unsatisfactory you'll will not get a good price for him. Salves have no positive incentive to work well (in our history that is, in antiquity they could earn their own money and buy their freedom) Slaves too young, too old or too ill to work must be cared for. Also, slavery imposes major security costs on society-- and on the slave-owner himself.

Re: That leaves open the question: if cotton could have been produced more cheaply by free labor, why didn't the textile manufacturers buy cotton from the cheaper source?

No where else was producing it in sufficiently large quantity, due to climate, infrastructure, and/or political issues.

Re; From this point of view, slavery was nothing but an evil, gratuitous hobby, which is in no way a commentary on the rational free market.

Slavery was not based on market factors at all. If it were, the 90% of Southerners who owned no slaves would not have supported it so vigorously, nor fought to the death to maintain it. Look at the all the old tintypes of slaves laboring in the fields and think about what you don't see: white slaves. American (incl. Latin American) slavery was based on racism, pure and simple, not on market factors. If it had been otherwise you'd be seeing lots of whites in those fields working under the lash too, as it was in antiquity.

Re: From this point of view, slavery was nothing but an evil, gratuitous hobby, which is in no way a commentary on the rational free market.

Eventually maybe it would have been defeated by market factors. The Founders of our nation thought/hoped so. But think of it this way: inefficient agriculture was a price the Southerners gladly paid to purchase the more desirable good of racial supremacy. Perhaps eventually that price would have grown so absurdly steep that Southerners would have been unwillin to pay it. But I'm not so sure: they were willing to pay the costs of segregation right down to our own time, and if not compelled otherwise they might be still be willing to do so.

Re: [comment someone made about cotton grown only by slave labor]

Many small-holders in the South grew cotton without slaves. Unfortunately the large-holders with slaves rigged the system against them, monpolizing the best acreage and securing the best contracts with gins and shipping for themselves. There was actually considerable class hatred in the old South among whites (see Gone With The Wind's depiction of the "white trash" Slatterys vs. the plantation-owning O'Haras) though they were united in wanting to keep Blacks down.

Re: The alternative view is that free markets naturally trend in the direction of slavery, which would be a controversial finding in the United States.

They do not in the modern world*, in fact they have not since the early Middle Ages when the rigid horse collar made horse labor more efficient than human-- that's why slavery abruptly vanished from Europe and much of Asia except the arid Middle East. (And Africa where the tsetse fly and sleeping sickness were deadly to horses). What happened in the New World was that the Europeans had to create a civilization and its infrastructure from scratch: the most advanced of the natives were barely at the Bronze Age level, and many were early Neolithic still. But they had a severe shortage of labor. The natives were dying rapidly from European diseases. They did not have the population at home to be brought over to do the work (Europe was still suffering the demographic effects of the Black Death and Little Ice Age), so they brought Africans over instead. In principle, after a couple generations they should no longer have needed slaves, but by then they had become addicted to the racism that had enabled them to justify what they were doing in the first place (in defiance of their culture's ethics). Slavery had been a temporary necessary evil, but the lies Europeans told themselves to lull their consciences endured for centuries.

* Even in antiquity slavery made sense mostly because ancient civilizations lacked the resources to support an incarcerated or idle population: POWs, petty criminals and debtors were pressed into slavery as an alternative to killing them all outright.

Re: In it Cash talks about the price of the free white wage could not rise above the cost of a slave.

The price of skilled and educated free labor could and most certainly did. Doctors, lawyers and even skilled artisans most certainly had a higher standard of living than slaves.

Re; Earnings for workers with four-year degrees fell 5.2% from 2000 to 2004

Yes, during George Bush's recession. Duh. That's a little like global warming denialists using the recent outbreak of cold and snow in the northern US as "proof" there is no global warming. You need a much bigger sample than that. I would suggest looking back to at least 1990. You will find that people with college degrees are indeed doing better than people without. (By the way, will all this doom-mongering stop if we can George Bush out of the White House and some reasonable Democrat elected instead? I don't recall any of this when Mr. Clinton was in office.)

I appreciate your personally experienced contribution to the discussion of this issue but I have to say that I very much disagree with your concluding comment. At the risk of digressing I must insist that the social safety net is not charity but rather the responsibilities of our society which, unfortunately, have too often been relegated to charities.

I find some encouragement in your characterization of offshoring as something of a faddish trend that may in the end be more objectively utilized if properly assessed.
Your comments about decisions coming from stock owners are spot-on in my opinion. One of my chief complaints about our whole system is that company ownership, often made up of speculators and fund managers seem to care a lot more about short-term stock value increases than long-term company health, never mind the needs of the actual employees. And it seems that short term cost-cutting or percieved cost-cutting operations are grossly overvalued in the corporate world.
As tied to profession as our society is and with the fact that people feel better about themselves when they earn their pay through the holding of a decent job it seems a pity that stock holders' well-being can't somehow be tied more thoroughly to the fates of their their employees, but in the absence of such circumstances social safety nets of one sort or another will have to be frequently strengthened and expanded.

I think the long-dead residents of Atlanta might disagree.

Re: An unsatisfactory slave was whipped, beaten and branded into submission.

Which is profitable how? Terminating an employee earns the employer an immediate benefit: the employee's salary that is no longer paid.

Re: Slaves grow, tend, harvest and prepare their own food (and yours, Massa!)

This was true of rural slaves, but not of urban slaves. (Most slave-owners had only a couple household servants).

Re: The financial incentives were huge for those with enough land to scale production, until the cotton gin evened out the playing field for the small producers.

I am certainly not saying that no one made money from slave labor, only that it was less efficient than free labor would have been. But the South already had salvery when the cotton gin came along (before that cotton was none too profitable), so the South went the route of slave labor.

As I think about it, the real point that I am making -- or at least one of them -- is that Blatt's book, The Meaning of Slavery in the North -- argues that slavery was not exceptional to the American experience. Slavery was one of the cornerstones of the industrial revolution, because the industrial revolution began with the textile industry.

The economies of New England and the Lower South were intertwined. A symbolic example is that New England textile mills produced a poor quality cloth, a cotton-wool blend, which they called "Negro cloth," that was sold to the plantations. An ex-slave testified to the fact that they always wore what he called "Lowell cloth," because it came from Lowell, Massachusetts. So the textile mills profited from slavery not only because the plantations were their suppliers, but also because the plantations were their customers, for a product that was specifically intended for the slaves.

Charles Sumner denounced the "unholy alliance between the Lords of the Lash and the Lords of the Loom." Sumner was not a hypocrite. He recognized the symbiotic relationship between the textile mills and the plantations, and he strongly objected to both parties of the relationship.

This point does not depend on whether or not slavery was particularly efficient. Whether it was efficient or not, the economic interdependency between New England and the Lower South existed.

The plantation system originated in mercantilism, but it was about to die out when it was revived by the invention of the cotton gin. The mercantilist system of colonial days became part of the industrial revolution -- the 19th century equivalent of what we call agribusiness today.

So slavery was one of the features of early, unregulated industrial capitalism. When slavery was replaced by the tenant farmer system, the basic living conditions of black people were not greatly changed.

One of my other points is that unregulated industrial capitalism, I think, will always try -- if it can get away with it and if the job market allows it -- to drive the living conditions of workers down to the level of tenant farmers, sweat-shop workers, debt slaves, or other near slaves.

We don't hear much about reparations for the descendants of slaves right now, but when that was a lively discussion, one of the points that was brought out is that Northern insurance companies, such as Aetna, profited directly from slavery. They sold insurance to reimburse owners for the loss of slaves that they hired out for dangerous work, such as work on boats or in mines. On the one hand, this encouraged owners to put slaves in dangerous positions. On the other hand, it was also an inhibiting effect, because the insurance would not be paid if the slave had been put into danger recklessly.

I don't know the numbers, but slaves were bought on credit. Somebody was willing to use slaves as collateral on loans, but I don't know who the financiers were. I have read that when the Confederate states seceded, theydefaulted on a staggering amount of debts owed to the North, but I don't know the details.

I think that it is by and large a myth that slave-owners were primarily concerned about status and not conscious of the dollars and cents of slavery, although there are exceptions to every generalization.

To the extent that this is a myth, it is comforting to those who want to think that slavery was exceptional. The point that Blatt makes is that, although the plantations were physically located in a particular part of the country, slavery was a functioning part of the national economic system.

I don't know where the capital came from that was invested in the plantations, but if it came from the North, then the slave economy is an almost perfect example of offshoring. The production of the raw materials for the industrial North was "offshored" to the plantations of the South, just as manufacturing is offshored to third-world countries today.

If the capital came from the North, that does not mean that slavery was not part of the capitalist system.

I have been told Atlanta is not really in the South. It merely is surrounded by the South.

--
Howard

*equal opportunity offense to both extremes*

"this isn't really a case of offshoring"

Now you are being coy. That is why I put the word in quotes in the follow-up sentence. The principle is exactly the same, especially since you always refer to the South not only as if it were a separate country, but a separate planet.

It is difficult to summarize a book in a few paragraphs. You really ought to read the book, "The Meaning of Slavery in the North," which is a result of a conference, held in New England, inspired by a black historian, sponsored by the National Park Service on the history of the textile industry in New England. I am quoting from solid, modern scholarship.

Here is a link to a summary of the book, http://www.cr.nps.gov/history/hisnps/NPSBooks/slavery.htm,
on the National Park Service website.

Since you obviously have a genuine interest in the history of slavery and racism in the United States, you should immediately look up the website, "Slavery in the North" (www.slavenorth.com). This website, which is written by a Pennsylvania historian, is very eye-opening.

Judging by the reviews that I have read, another important book written from a modern perspective, by the Connecticut historian, Joanne Pope Melish, is Disowning Slavery: Gradual Emancipation and Race in New England, 1780-1860. I have this book on order, but I cannot comment on it beyond what is in the reviews. You will find reviews of the book at Amazon.com, and it is also mentioned in the website referenced above, www.slavenorth.com.

"Atlanta is not really in the South"

Howard,

I do not know when that first started to happen. It was becoming true around 1900, when one of my great-grandfathers came to Atlanta from London, Ontario (by way of Minnesota and Florida). He constructed buildings of some sort. Although he was not of the "Scarlet O'Hara" generation, I suppose you could say that in some sense he participated in the rebuilding of Atlanta.

One of his sons, my grandfather, was a Methodist minister, who preached love for all mankind. Although my grandmother came from an old planter family, in her youth she worked for an organization that was allied with the suffragettes, and she worked all her life to encourage women to go on to higher education. So, despite all the stereotypes to the contrary, the Southern part of my roots actually gave me a rather Quaker-like orientation.

I don't understand racism, nor do I have much interest in understanding racism, because when I was growing up I never heard a single negative word about non-whites of any description.

When I was in college, I briefly did some volunteer work in Chronic Ward II of the Chicago State Mental Hospital. Only one person was ever known to have come out of that ward. There I worked with the Quakers. They made me feel as if I had known them all my life.

In fact, my wife has a Quaker background. So I feel right at home with abolitionists.

I attended college in Chicago at a school where the study body was at that time heavily dominated by the Old Left, and one of my first professors in the core course in Social Science (Soc. I), was Maynard Krueger, who had run for vice-president on the Socialist ticket in 1940 with Norman Thomas. He was a genial man, who never pushed his convictions. But it has never bothered me, either on religious or political grounds, to question the ethical foundations of unregulated capitalism.

Now I understand what you mean. I don't have any problem with that.