The Race to the Bottom
Thanks to the Republican/Democrat consensus on globalization, no American job is safe from offshoring.
Now, American companies are beginning to ship out their professional jobs. Although the movement is still in its infancy, IBM is far from the first to move higher-paying professional positions off shore. To name just a few, Accenture Ltd., formerly known as Arthur Andersen Consulting, has operated locally in India for some time [tasnote: I guess they just can't destory enough good jobs], and recently announced plans to more than double its Indian workforce to 10,000. And both privately held Google and Time Warner (NYSE: TWX) division AOL are also planning to open new engineering centers in India.
It is beginning to seem like there is no work that a U.S. worker can do that his employer cannot convince a foreign worker to do as well, and for less wages.
This is an interesting column, it details one company which is offshoring jobs to India and discussing the profits to be made. They are as great as you think at the beginning of the transition, but as overseas workers become more accustomed to these jobs, the easier the transition will be, hence increased profits for corporations.
What happens to the jobless Americans, though? The column seems to dismiss this issue in the last paragrah:
The double-savings to the American companies that buy the legal services will then trickle down further to the great mass of American consumers of the companies' products.
You gotta be kidding me. There's two ways to take this: It's either very, very false, or very very true in the most negative sense. I can't speak for all products, but I haven't noticed a correlation between cheap labor and a cheap cost for consumers. Take Converse, for example. The last model of shoes they made in America were Chuck Taylor All-Stars. In the mid 90's, the going price for these American made products was $15-20. Converse's other models, hencho en Mexico, were at least double the price. Converse was recently bought out by Nike and all production most moved to China, and now I can't find a pair of chucks for under $35. Most I see go for around $40. Maybe there's a case to be made for electronics, DVD players are awfully cheap these days, but through personal experience I've found out that you get what you pay for. If you pay pennies for a product, it's usually ends up having a short life span.
Of course, this could be true. It makes sense. With free trade agreements encouraging a race to the bottom as far as wages are concerned, there's only so many good paying jobs America can lose our citizens can no longer afford to spend money loosely anymore. Our sum consumer debt has sky-rocketed to $2 trillion, which averages out to thousands of dollars for every adult American. This debt does not take into account mortgage/rent and student loans, this is just credit card and loan debt. When one corporation lowers the cost of labor, their competition has to do the same to compete, because their corporations are dependent on stockholders and they won't purchase stock if the corporation can't grow. The only way American workers can compete with this is to lower our wage expectations, but that's impossible given our higher and more expensive standards of living. A worker in India typically doesn't face debt from a $200,000 mortgage, car payments, and student loans. American workers also have to demand health insurance, whereas workers in other countries which have a nationalized health care system do not have this problem. So America will continue to lose jobs, and eventually our standard of living will decrease and for corporations to sell anything in one of the markets in the world, they will have to decrease their prices. Of course, this means they will lose a lot of money from the American market, and if they can't recoup these costs from other emerging economies (China, India, Russia), then they can't grow their corporation, stockholders will dump their stock, corporations will go out of business, and then they'll wish the just paid those goddamn expensive American workers in the first place.
I don't want to seem reactionary or prejudiced (I guess it's too late for that..), and I'm not adverse to other countries looking to increase the size of their economy. All countries need to do this because all countries need jobs. It's just that I can't help but feel betrayed by American corporations. As if offshoring there business offices to avoid paying taxes wasn't enough, now they have decided that they can't pay wages to American workers. In the meantime, the bosses increase their salary and bonuses when more jobs are exported outside the borders. It's enough pure, unmitigated selfishness to make you sick. And it doesn't make sense. How do these corporations expect to sell their wares when we can't afford to buy them? Something's gotta give and when it does, it won't be pretty.