Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.Ronald Reagan
Dear Vorticians,
The technology industry has always had an odd relationship with the world of politics. For the better part of its history, the IT world maintained a strong “keep your hands off us” stance toward Washington. It has only been in recent years that the top executives in Silicon Valley and the rest of the tech kingdom have gotten more savvy about playing the Big Game. At recent VORTEX conferences we’ve talked about the key issues that tech leaders want Uncle Sam to focus on, from telecom reform to (not) expensing stock options.
Well, tech has ol’ U.S.’s attention now, but not the way it would like. During this very political season, as we head toward a presidential election, the tech world will be squarely in the political spotlight thanks to one hot potato of an issue: outsourcing of jobs. Industry leaders like Intel, IBM, Dell and others, long accustomed to being praised for creating jobs and boosting the productivity of American workers, are defending themselves against critics who decry their shifting of work to India and other parts of the world. Expect the candidates to make this an issue in their appeals to AWJ – the average working Joe.
If it seems inconsistent that our leaders can favor free trade and loudly lament outsourcing at the same time, you’ve astutely identified a glaring logic gap in Washington. If you believe in free trade and all the benefits that come with it (including the efficient deployment of capital, rising standards of living, lower prices and the like) you can’t criticize companies for outsourcing work that can be done equally as well, but cheaper, elsewhere.
Outsourcing is certainly painful for displaced workers and I would be howling in anger and pain if outsourcing of newsletter writers and/or event producers became a common practice. (Note to our VP of Events: Outsourcing of executive producers is a very bad idea.) But free trade and open markets demand that money and labor flow toward their most efficient uses.
This point was sounded in an op-ed piece in The Wall Street Journal written by Thomas Sowell, a senior fellow at the Hoover Institution. Howell added that outsourcing critics forget that jobs flow both ways. “Those who complain loudly about how many jobs have been ‘exported’ to other countries because of international free trade totally ignore all the jobs that have been imported to the American economy because of that same free trade. Siemens alone employs tens of thousands of American workers and Toyota has already produced its ten millionth car in the U.S. Management guru Peter Drucker has said that this country imports far more jobs than it exports and no one has contradicted him.”
Adding a tech element to the outsourcing equation has really ratcheted up the heat (rather than the light of reason). It’s one thing when the minimum-wage guy who makes ball bearings loses his job to a Mexican worker, but it’s another, apparently much scarier thing when – gasp – programmers, those educated, white-collar workers, lose jobs to workers in India who make one-fifth the pay.
Tech is our crown jewel, the thinking goes, and we’re losing valuable, skilled workers in the industry that gives America its very competitive edge. (A recent Business Week piece does a good job of showing, however, that most of our more highly paid software jobs are not particularly vulnerable to outsourcing). The politicians tut-tut and wag their fingers at the bloodless corporate executives in tech who are sending these jobs abroad (how could you??), while the executives fire back that the U.S. needs to improve its educational system and invest in basic R&D or we stand to lose our world leadership, for heaven’s sake!
With the resurgent economy failing to produce significant job growth, you can be sure that outsourcing will be a major topic of ‘debate’ and finger-pointing in the months leading up to the presidential election. I’d love to believe the discussion will be reasoned and enlightening. But it won’t be so, at least in the public forums. However, here, we can have a reasoned and enlightened talk about outsourcing, and I encourage you to share your thoughts as jgallant@vortex.net.
This topic is particularly interesting to me in light of the New Data Center concept I’ve been discussing. A couple of people who read my white paper immediately voiced concern over the potential cost in IT jobs. I’ll share their thoughts next week.
That’s it for now. Bye.
