A Labor Problem Made in the U.S.A.
A Labor Problem Made in the U.S.A.
Patt Morrison
February 24, 2004
If this reads a bit awkwardly, it's because of a little experiment I've been conducting.
Overseas outsourcing. I'm having my column written by foreign workers.
I farm out my job to low-paid writers around the world, I get to keep most of my munificent wages, and I spend only about a half-hour on final inspection, compared to the dozen hours or more it takes to manufacture a column start to finish.
My nouns and pronouns are now made in Indonesia, verbs and adverbs in Mexico and adjectives in China. I tried subcontracting prepositions to Thailand, but someone thought I meant " propositions" and forwarded my inquiry to the Ministry of Sex Trade.
But the ideas are mine, generated right here, and that's why this column can proudly bear the words "Made in the U.S.A."
I spent an hour on the phone this weekend with "Larry" the computer troubleshooter. "Larry" is probably "Rajiv" in New Delhi. But he stuck to his "Larry" script, using my name in every sentence because Americans are supposed to like that. There were lots of sentences, because I had to ask him to repeat himself so I could understand him.
Larry is what intellectuals in India call a "techno-coolie." He answers the phone when you call some 800 numbers after your computer commits suicide or your credit card balks.
The Larrys of the world get coached in American slang, sports and pop culture; Larry could probably have told me what happened on the last episode of "Sex and the City." Some "techno-coolies" make up American bios for themselves, like Savitha in Bangalore, prepped to tell any inquisitive American that her name's Betty and she loves "Buffy the Vampire Slayer."
Shipping white-collar, info-tech jobs to foreign countries now has the White Housekeeping Seal of Approval. The Bush administration said last week, like Martha Stewart crooning over a pine-cone centerpiece, that this outsourcing is "a good thing." It may hurt in the short run, but we'll all love it eventually.
These jobs are not the lettuce-picking, burger-flipping jobs they say Americans won't take here at home — and by the way, it isn't the jobs Americans won't take, it's the lousy paychecks.
No, these are the bright, prosperous Jobs of Tomorrow that Americans were promised if we all put down our socket wrenches and picked up tech textbooks. The information economy lay glittering at the end of the information superhighway — which, as it turns out, looks more like a one-way road heading straight out of America.
Got laid off when Silicon Valley outsourced? Having a problem with your food stamps? You may find yourself talking to the foreign worker who got your job — because California has farmed out some telephone welfare services to India.
As for medical data — why bother making a big show of covering up my name on the doctor's office sign-in sheet, as required by the new patient privacy act, when some overseas outsourced medical tech could casually go flipping through my Pap smear results?
And the overseas outsourcing of consumer credit jobs means your Visa records and my Amex charges may be running across computer screens somewhere 10,000 miles away. Sen. Dianne Feinstein just wrote to the heads of credit corporations like Bank of America and Citigroup, "gravely concerned that consumer data is being sent overseas without proper safeguards."
I'm supposed to feel safer because the Patriot Act can check up on what I check out of the library, but any evil-doing Tom, Dick or Ahmed with an outsourced credit-company source may lay his mitts on my Social Security number, phony up a passport and slip into the country while airport security is busy cuffing some granny who left her crochet hook in her purse?
And what recourse would I have? Filing suit? I can't even get the local valet parking company to pay for breaking my car-door handle. How can I possibly recover an identity stolen in Uttar Pradesh?
This is "a sweet spot" time for corporate profits — so said a big-bucks Philly investor — "no hiring, no discretionary capital spending, no inventory building."
"No hiring" should mean more overtime for workers who still have jobs. It doesn't. Corporations are finagling to stretch the definition of who's entitled to overtime and who's not. Some California companies tried to dodge overtime pay by promoting almost every worker to "manager" — even though the only thing some "managers" managed was a broom.
Last month, American workers — the ones President Bush referred to not long ago as the most productive in the world — once again got more stick and less carrot.
New federal standards trim the ranks of overtime-eligible employees. Among them may be people who have "training in the armed forces." Welcome back, soldier, thanks for the service — and oh, by the way, you won't be getting overtime any more.
There's one job no one's talked about outsourcing: the presidency. Surely we can get more work for less money.
Hire Tony Blair for the showy stuff that Bush dislikes — the ringing speeches, the cut-and-thrust debates. The Guardian newspaper estimated that Blair costs his country about $38 an hour. Big savings there.
For the sneaky political work, there's Russian President and KGB alum Vladimir Putin. His financial declaration, filed a couple of weeks ago, shows he's been earning less than $100,000 a year. A bargain.
And I'll bet Spanish Prime Minister Jose Maria Aznar would speak better Spanish for less.
So what work is left in America for an American president to do? In the State of the Union speech, Bush dwelt on the horrors of steroids, and demanded that sports officials "take the lead, to send the right signal, to get tough and to get rid of steroids now."
That's it — he can take charge of the one job that will always stay in America, that's too important to privatize or outsource: baseball commissioner.
Patt Morrison's columns appear Mondays and Tuesdays. Her e-mail address is patt.morrison@latimes.com. Her earlier columns can be read at latimes.com/morrison.
Two views on outsourcing
What Goes Around . . .
What Goes Around . . .
By THOMAS L. FRIEDMAN
BANGALORE, India
I've been in India for only a few days and I am already thinking about reincarnation. In my next life, I want to be a demagogue.
Yes, I want to be able to huff and puff about complex issues — like outsourcing of jobs to India — without any reference to reality. Unfortunately, in this life, I'm stuck in the body of a reporter/columnist. So when I came to the 24/7 Customer call center in Bangalore to observe hundreds of Indian young people doing service jobs via long distance — answering the phones for U.S. firms, providing technical support for U.S. computer giants or selling credit cards for global banks — I was prepared to denounce the whole thing. "How can it be good for America to have all these Indians doing our white-collar jobs?" I asked 24/7's founder, S. Nagarajan.
Well, he answered patiently, "look around this office." All the computers are from Compaq. The basic software is from Microsoft. The phones are from Lucent. The air-conditioning is by Carrier, and even the bottled water is by Coke, because when it comes to drinking water in India, people want a trusted brand. On top of all this, says Mr. Nagarajan, 90 percent of the shares in 24/7 are owned by U.S. investors. This explains why, although the U.S. has lost some service jobs to India, total exports from U.S. companies to India have grown from $2.5 billion in 1990 to $4.1 billion in 2002. What goes around comes around, and also benefits Americans.
Consider one of the newest products to be outsourced to India: animation. Yes, a lot of your Saturday morning cartoons are drawn by Indian animators like JadooWorks, founded three years ago here in Bangalore. India, though, did not take these basic animation jobs from Americans. For 20 years they had been outsourced by U.S. movie companies, first to Japan and then to the Philippines, Korea, Hong Kong and Taiwan. The sophisticated, and more lucrative, preproduction, finishing and marketing of the animated films, though, always remained in America. Indian animation companies took the business away from the other Asians by proving to be more adept at both the hand-drawing of characters and the digital painting of each frame by computer — at a lower price.
Indian artists had two advantages, explained Ashish Kulkarni, C.O.O. of JadooWorks. "They spoke English, so they could take instruction from the American directors easily, and they were comfortable doing coloring digitally." India has an abundance of traditional artists, who were able to make the transition easily to computerized digital painting. Most of these artists are the children of Hindu temple sculptors and painters.
Explained Mr. Kulkarni: "We train them to transform their traditional skills to animation in a digital format." But to keep up their traditional Indian painting skills, JadooWorks has a room set aside — because the two skills reinforce each other. In short, thanks to globalization, a whole new generation of Indian traditional artists can keep up their craft rather than drive taxis to earn a living.
But here's where the story really gets interesting. JadooWorks has decided to produce its own animated epic about the childhood of Krishna. To write the script, though, it wanted the best storyteller it could find and outsourced the project to an Emmy Award-winning U.S. animation writer, Jeffrey Scott — for an Indian epic!
"We are also doing all the voices with American actors in Los Angeles," says Mr. Kulkarni. And the music is being written in London. JadooWorks also creates computer games for the global market but outsources all the design concepts to U.S. and British game designers. All the computers and animation software at JadooWorks have also been imported from America (H.P. and I.B.M.) or Canada, and half the staff walk around in American-branded clothing.
"It's unfair that you want all your products marketed globally," argues Mr. Kulkarni, "but you don't want any jobs to go."
He's right. Which is why we must design the right public policies to keep America competitive in an increasingly networked world, where every company — Indian or American — will seek to assemble the best skills from around the globe. And we must cushion those Americans hurt by the outsourcing of their jobs. But let's not be stupid and just start throwing up protectionist walls, in reaction to what seems to be happening on the surface. Because beneath the surface, what's going around is also coming around. Even an Indian cartoon company isn't just taking American jobs, it's also making them.
-------------------------------------------------------------------------------
Lou Dobb's points out:
What Goes Around . . .
By THOMAS L. FRIEDMAN
BANGALORE, India
I've been in India for only a few days and I am already thinking about reincarnation. In my next life, I want to be a demagogue.
Yes, I want to be able to huff and puff about complex issues — like outsourcing of jobs to India — without any reference to reality. Unfortunately, in this life, I'm stuck in the body of a reporter/columnist. So when I came to the 24/7 Customer call center in Bangalore to observe hundreds of Indian young people doing service jobs via long distance — answering the phones for U.S. firms, providing technical support for U.S. computer giants or selling credit cards for global banks — I was prepared to denounce the whole thing. "How can it be good for America to have all these Indians doing our white-collar jobs?" I asked 24/7's founder, S. Nagarajan.
Well, he answered patiently, "look around this office." All the computers are from Compaq. The basic software is from Microsoft. The phones are from Lucent. The air-conditioning is by Carrier, and even the bottled water is by Coke, because when it comes to drinking water in India, people want a trusted brand. On top of all this, says Mr. Nagarajan, 90 percent of the shares in 24/7 are owned by U.S. investors. This explains why, although the U.S. has lost some service jobs to India, total exports from U.S. companies to India have grown from $2.5 billion in 1990 to $4.1 billion in 2002. What goes around comes around, and also benefits Americans.
Consider one of the newest products to be outsourced to India: animation. Yes, a lot of your Saturday morning cartoons are drawn by Indian animators like JadooWorks, founded three years ago here in Bangalore. India, though, did not take these basic animation jobs from Americans. For 20 years they had been outsourced by U.S. movie companies, first to Japan and then to the Philippines, Korea, Hong Kong and Taiwan. The sophisticated, and more lucrative, preproduction, finishing and marketing of the animated films, though, always remained in America. Indian animation companies took the business away from the other Asians by proving to be more adept at both the hand-drawing of characters and the digital painting of each frame by computer — at a lower price.
Indian artists had two advantages, explained Ashish Kulkarni, C.O.O. of JadooWorks. "They spoke English, so they could take instruction from the American directors easily, and they were comfortable doing coloring digitally." India has an abundance of traditional artists, who were able to make the transition easily to computerized digital painting. Most of these artists are the children of Hindu temple sculptors and painters.
Explained Mr. Kulkarni: "We train them to transform their traditional skills to animation in a digital format." But to keep up their traditional Indian painting skills, JadooWorks has a room set aside — because the two skills reinforce each other. In short, thanks to globalization, a whole new generation of Indian traditional artists can keep up their craft rather than drive taxis to earn a living.
But here's where the story really gets interesting. JadooWorks has decided to produce its own animated epic about the childhood of Krishna. To write the script, though, it wanted the best storyteller it could find and outsourced the project to an Emmy Award-winning U.S. animation writer, Jeffrey Scott — for an Indian epic!
"We are also doing all the voices with American actors in Los Angeles," says Mr. Kulkarni. And the music is being written in London. JadooWorks also creates computer games for the global market but outsources all the design concepts to U.S. and British game designers. All the computers and animation software at JadooWorks have also been imported from America (H.P. and I.B.M.) or Canada, and half the staff walk around in American-branded clothing.
"It's unfair that you want all your products marketed globally," argues Mr. Kulkarni, "but you don't want any jobs to go."
He's right. Which is why we must design the right public policies to keep America competitive in an increasingly networked world, where every company — Indian or American — will seek to assemble the best skills from around the globe. And we must cushion those Americans hurt by the outsourcing of their jobs. But let's not be stupid and just start throwing up protectionist walls, in reaction to what seems to be happening on the surface. Because beneath the surface, what's going around is also coming around. Even an Indian cartoon company isn't just taking American jobs, it's also making them.
-------------------------------------------------------------------------------
Lou Dobb's points out:
In his column, "What Goes Around," Friedman says, "Although the United States has lost some service jobs to India, total exports from U.S. companies to India have grown to $4.1 billion in 2002."
Get it? We send them jobs and they buy our products. But what Thomas Friedman failed to point out to his readers, I'm sure it's just a simple lapse, is that our trade deficit with India at the same time has soared to $8 billion.
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All the computers are from Compaq. The basic software is from Microsoft. The phones are from Lucent. The air-conditioning is by Carrier, and even the bottled water is by Coke, because when it comes to drinking water in India, people want a trusted brand.
Where were those Compaqs made? The Lucents? The Carriers? Where was the Coke water bottled?
We're talking about jobs here, not cash flow. If an Indian outsourcing company buys products made by American companies that are built in Chinese plants, that benefits American executives and stockholders, not American workers.
Ryan
RQOTW: "I'll make sure that our future is defined not by the letters ACLU, but by the letters USA." -- Mitt Romney
A Phony Jobs Debate
By Robert J. Samuelson
Wednesday, February 25, 2004; Page A25
The Washington Post
We are having a ferocious jobs debate, most of it fraudulent. If presidents could easily create jobs, the unemployment rate would rarely exceed 3.5 percent. But all they can usually do is influence the economy through taxes, spending and regulatory decisions -- and hope that job growth follows. In our market system, private employers play the pivotal role. They will add jobs only if: (a) demand justifies new workers; (b) labor costs aren't at unprofitable levels; and (c) they think healthy economic conditions will last. Electing a president based on job creation makes as much sense as selecting a doctor based on palm reading.
The jobs rhetoric captures politics' casual cynicism. John Kerry and John Edwards must grasp a president's modest job-creating powers; otherwise, they wouldn't be fit for the White House. Their jobs obsession is dishonest expediency. They know President Bush is vulnerable. To be fair, the deceit is bipartisan. The Bush administration is ready to claim credit for almost any good economic news.
The contrast with Iraq is instructive. The administration is accused of falsifying the case for war by distorting the intelligence on weapons of mass destruction. This alleged dishonesty is a legitimate issue. But no one considers it dishonorable to blame a president falsely for job loss (or to credit him falsely for job gains). The dishonesty is so routine that it's respectable. The press abets the hoax because it must report what candidates say and because it favors campaign combat over substance.
Admitting the truth is no fun: On jobs, presidents are mostly prisoners of the business cycle. The present cycle has been particularly confusing. On the one hand, the monthly unemployment rate peaked at 6.3 percent in June 2003, much lower than in the slump of the early 1990s (7.8 percent). On the other hand, job creation has lagged badly. By the government's payroll survey, nonfarm employment is about 2.35 million below its March 2001 peak and up 366,000 from its August low.
What went wrong? Job losses stem mainly from the aftermath of the recent boom. Even weak companies can flourish in a boom. There's enough business for almost everyone. Rampant optimism encourages expansion. Once the boom collapses, surplus capacity means that vulnerable firms shut, shrink or merge. It's survival of the fittest -- a process that concentrates business at efficient firms. This improves labor productivity (which is a company's output divided by its employees' hours) but can temporarily hurt employment growth. Productive firms do more with less.
Countless industries followed this script. Consider plastics. From 1999 to 2002, the number of business establishments dropped 13 percent and the number of workers 8 percent (119,000 jobs). "The industry felt [the boom] was going to continue forever," says Lori Anderson of the Society of the Plastics Industry. The same Darwinian squeeze afflicted retailing. From 1998 to 2002, Wal-Mart expanded by almost a third to 4,694 locations, reports Stores magazine; meanwhile Kmart and Sears closed almost 1,300 stores.
Facing a weak economy, a government can do three things: cut interest rates; run a budget deficit; and allow -- or cause -- its currency to depreciate. The first two promote borrowing and spending; the last makes a country's exports cheaper and its imports costlier. All these weapons have been deployed. Bush's policies are mostly standard economics; based on past patterns, these policies should have produced stronger job growth. But private employers have resisted hiring. "Economists are scratching their heads," says Randell Moore, editor of the monthly Blue Chip Economic Indicators, which surveys 50 economic forecasters.
Some jobs have moved abroad. Slow foreign growth and (until recently) the high dollar have hurt U.S. exports and encouraged imports. Mark Zandi of Economy.com estimates that almost 900,000 manufacturing jobs have been lost to the higher trade deficit. By contrast, he reckons that "offshoring" of service jobs -- call centers, software design -- has cost only about 200,000 jobs over the same period. That's out of more than 130 million jobs. There are other theories. By one, higher fringe benefits (mainly health insurance and pension costs) have deterred companies from hiring. Although wage increases are slowing, total labor costs including fringes are actually rising. They grew 3.8 percent in 2003, up from 3.4 percent in 2002. Another theory is that employers have delayed hiring because they worry that the recovery will falter.
We don't know. But what we can know is that policies from a President Gore or Kerry or Edwards wouldn't have improved matters much. Of course, Democrats might have discarded some Bush policies: say, tax cuts for the rich. Still, the main forces shaping the job market would have remained well beyond presidential reach: the boom-bust cycle (President Bill Clinton didn't create the boom, and the bust was unfolding even before Bush's election); weak growth in Europe, Japan and Latin America, which account for almost 40 percent of U.S. exports; and business cautiousness. Protectionism is no panacea. It barely touches job creation; America's trade problem is weak exports as much as strong imports. Even if every offshored service job had somehow been saved, the job picture wouldn't have changed much.
No matter. During elections, politics overwhelms reason. Perhaps continuing economic growth and a weaker dollar will soon produce more jobs. On average, the economists surveyed by Moore expect 166,000 new jobs a month in 2004 -- or about 2 million for the year. Whatever occurs, someone will be blamed or credited. In war, truth is often said to be the first casualty. It's the same in campaigns.
By Robert J. Samuelson
Wednesday, February 25, 2004; Page A25
The Washington Post
We are having a ferocious jobs debate, most of it fraudulent. If presidents could easily create jobs, the unemployment rate would rarely exceed 3.5 percent. But all they can usually do is influence the economy through taxes, spending and regulatory decisions -- and hope that job growth follows. In our market system, private employers play the pivotal role. They will add jobs only if: (a) demand justifies new workers; (b) labor costs aren't at unprofitable levels; and (c) they think healthy economic conditions will last. Electing a president based on job creation makes as much sense as selecting a doctor based on palm reading.
The jobs rhetoric captures politics' casual cynicism. John Kerry and John Edwards must grasp a president's modest job-creating powers; otherwise, they wouldn't be fit for the White House. Their jobs obsession is dishonest expediency. They know President Bush is vulnerable. To be fair, the deceit is bipartisan. The Bush administration is ready to claim credit for almost any good economic news.
The contrast with Iraq is instructive. The administration is accused of falsifying the case for war by distorting the intelligence on weapons of mass destruction. This alleged dishonesty is a legitimate issue. But no one considers it dishonorable to blame a president falsely for job loss (or to credit him falsely for job gains). The dishonesty is so routine that it's respectable. The press abets the hoax because it must report what candidates say and because it favors campaign combat over substance.
Admitting the truth is no fun: On jobs, presidents are mostly prisoners of the business cycle. The present cycle has been particularly confusing. On the one hand, the monthly unemployment rate peaked at 6.3 percent in June 2003, much lower than in the slump of the early 1990s (7.8 percent). On the other hand, job creation has lagged badly. By the government's payroll survey, nonfarm employment is about 2.35 million below its March 2001 peak and up 366,000 from its August low.
What went wrong? Job losses stem mainly from the aftermath of the recent boom. Even weak companies can flourish in a boom. There's enough business for almost everyone. Rampant optimism encourages expansion. Once the boom collapses, surplus capacity means that vulnerable firms shut, shrink or merge. It's survival of the fittest -- a process that concentrates business at efficient firms. This improves labor productivity (which is a company's output divided by its employees' hours) but can temporarily hurt employment growth. Productive firms do more with less.
Countless industries followed this script. Consider plastics. From 1999 to 2002, the number of business establishments dropped 13 percent and the number of workers 8 percent (119,000 jobs). "The industry felt [the boom] was going to continue forever," says Lori Anderson of the Society of the Plastics Industry. The same Darwinian squeeze afflicted retailing. From 1998 to 2002, Wal-Mart expanded by almost a third to 4,694 locations, reports Stores magazine; meanwhile Kmart and Sears closed almost 1,300 stores.
Facing a weak economy, a government can do three things: cut interest rates; run a budget deficit; and allow -- or cause -- its currency to depreciate. The first two promote borrowing and spending; the last makes a country's exports cheaper and its imports costlier. All these weapons have been deployed. Bush's policies are mostly standard economics; based on past patterns, these policies should have produced stronger job growth. But private employers have resisted hiring. "Economists are scratching their heads," says Randell Moore, editor of the monthly Blue Chip Economic Indicators, which surveys 50 economic forecasters.
Some jobs have moved abroad. Slow foreign growth and (until recently) the high dollar have hurt U.S. exports and encouraged imports. Mark Zandi of Economy.com estimates that almost 900,000 manufacturing jobs have been lost to the higher trade deficit. By contrast, he reckons that "offshoring" of service jobs -- call centers, software design -- has cost only about 200,000 jobs over the same period. That's out of more than 130 million jobs. There are other theories. By one, higher fringe benefits (mainly health insurance and pension costs) have deterred companies from hiring. Although wage increases are slowing, total labor costs including fringes are actually rising. They grew 3.8 percent in 2003, up from 3.4 percent in 2002. Another theory is that employers have delayed hiring because they worry that the recovery will falter.
We don't know. But what we can know is that policies from a President Gore or Kerry or Edwards wouldn't have improved matters much. Of course, Democrats might have discarded some Bush policies: say, tax cuts for the rich. Still, the main forces shaping the job market would have remained well beyond presidential reach: the boom-bust cycle (President Bill Clinton didn't create the boom, and the bust was unfolding even before Bush's election); weak growth in Europe, Japan and Latin America, which account for almost 40 percent of U.S. exports; and business cautiousness. Protectionism is no panacea. It barely touches job creation; America's trade problem is weak exports as much as strong imports. Even if every offshored service job had somehow been saved, the job picture wouldn't have changed much.
No matter. During elections, politics overwhelms reason. Perhaps continuing economic growth and a weaker dollar will soon produce more jobs. On average, the economists surveyed by Moore expect 166,000 new jobs a month in 2004 -- or about 2 million for the year. Whatever occurs, someone will be blamed or credited. In war, truth is often said to be the first casualty. It's the same in campaigns.
"I recommend that you delete the Rancid Snakepit" - Grant
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Aw, gee, Krab. You're no fun. Right, but no fun.
I bash Bush over his job-creation "performance" simply because that's how he sold his tax cuts -- that they would create millions of jobs quickly. Clearly, they didn't.
Ryan
I bash Bush over his job-creation "performance" simply because that's how he sold his tax cuts -- that they would create millions of jobs quickly. Clearly, they didn't.
Ryan
RQOTW: "I'll make sure that our future is defined not by the letters ACLU, but by the letters USA." -- Mitt Romney
More from Lou Dobbs. I find some of the comments from the Netscape guy riotously funny. Bolding by me.
Once again, the pro offshoring argument looks like this:
1) "Look, Honda and Nissan are offshoring here! They have plants in Ohio and Tennessee!" This is part of the discussion that is lost in the transcript during crosstalk. Lou quickly points out that there is a difference between moving a plant into a country to create a product for the local market, and sending jobs offshore that provide services back in the U.S.
2) "We're creating this wonderful middle class in India! They buy Americans goods." Basically, the same argument espoused above and Ryan's comments still hold. Where are those jeans made? The iPods? How does this benefit American workers?
And as if it's not enough of a problem to be sending financial data overseas to India, what we *really* need to do is start sending that stuff to the Middle East.
DOBBS: In a moment, I'll be talking with a California lawmaker who says outsourcing has devastated her constituents in Silicon Valley. I'll be joined by State Senator Liz Figueroa. But, first, Marc Andreessen is an Internet pioneer. He co- founded a Silicon Valley firm that helps companies outsource work overseas. He's the chairman of the company Opsware. He also, of course, co-founded Netscape.
Marc Andreessen joins us tonight from Mountain View, California.
Marc, good to have you here.
MARC ANDREESSEN, CHAIRMAN & CO-FOUNDER, OPSWARE INC.: Great. Thanks, Lou.
DOBBS: There are very few issues right now that are more difficult for corporate America to deal with than the issue of outsourcing. You support it. You support it vigorously. Why?
ANDREESSEN: Yes.
I think it's purely good for the American company and it's good for American workers. It's part of the natural process of creating new jobs. I think job destruction and job creation go hand in hand. In the last 10 years, this economy has destroyed 325 million jobs and created 342 million new jobs. And, in general, those news jobs are better jobs than the ones that were destroyed.
And I think, in the next 10 years, we're going to destroy another 400 million, create another 430, 450 million new jobs, and those jobs will be better. I think it's blue skies.
DOBBS: Mark, I quite appreciate job destruction, job creation and the net effect. And that argument is advanced considerably. But that argument doesn't really work if the net result is not a higher value job and that has not occurred in this country now for three years, and perhaps more, actually.
That being the case, why should we accept it as a matter of faith that we can destroy lives -- and it is looking as though -- some estimates range as high as three million jobs have been outsourced now to cheap overseas labor markets.
ANDREESSEN: Right.
DOBBS: Why should we take it as an article of faith that that kind of pain results in better jobs, when we're not seeing it demonstrated in any of the data anywhere?
ANDREESSEN: Right. So, first of all, nobody cares more about the pain caused by job destruction than I do.
I grew up in Wisconsin. And, as you know, in Wisconsin, there have just been a huge number of jobs lost over the last 80, 90 years from agriculture. And when I was growing up, that process was continuing. The flip side of that is, new jobs were created and in general people in Wisconsin have a higher standard of living and higher per capita income now.
(CROSSTALK)
DOBBS: I understand that, Marc.
(CROSSTALK)
ANDREESSEN: That exact same thing...
DOBBS: But what I'm asking you for, why should we take it as an article of faith when we have not seen this happen for four -- nearly four years?
ANDREESSEN: Right, because, for four years, we've been in a recession. If you look at the impact of the recession, it's almost entirely responsible for what is going on.
So let me give you a couple other numbers. In the last 15 years, the number of Americans employed by foreign companies has gone up from 2.5 million to 6.5 million. Offset against that is, yes, American companies now employ 10 million people overseas. But do you think we pay overseas people more or less than foreign companies are paying the American workers?
(CROSSTALK)
DOBBS: That's a different issue, Marc.
(CROSSTALK)
DOBBS: I have got to interrupt you, Marc.
ANDREESSEN: OK.
DOBBS: That is not outsourcing. That is not exporting jobs overseas.
ANDREESSEN: Sure, it is.
DOBBS: If I may finish, then I'll
(CROSSTALK)
ANDREESSEN: Cars are now being manufactured in the United States by Japanese car companies like Toyota. They're outsourcing to us all over the place. There's all kinds of jobs. Siemens is manufacturing new jobs to the United States.
(CROSSTALK)
DOBBS: Are they doing that, Marc, to produce products for this market?
ANDREESSEN: Sure, absolutely, they are doing that.
(CROSSTALK)
DOBBS: That's right. And that's the distinction. And that's the distinction here.
The service jobs, the high-value jobs that are being exported to various countries around the world are not being exported so -- for entry to those markets of those countries, but rather for the return of those services and products to this market. That is the distinction in outsourcing, Marc.
(CROSSTALK)
ANDREESSEN: Actually, that's not entirely true.
(CROSSTALK)
DOBBS: Well, no, it's actually -- it's entirely true.
ANDREESSEN: Well, the data doesn't actually show that. So, for example, let's look at it a different way.
DOBBS: What data? I would like to know.
ANDREESSEN: It doesn't make any economic sense.
So, for example, I guess the implication is, we're shipping dollars overseas and those dollars are staying overseas and they're never coming back. We're creating economic growth in the U.S. We're creating economic growth overseas. When we put jobs in India, we're paying Indians in U.S. dollars. Those dollars are being turned around and spent on American goods and services. The new middle class in India that's emerging as a result of the I.P. offshoring...
(CROSSTALK)
DOBBS: Oh, I assure you..
ANDREESSEN: They're buying Levi's jeans. They're buying Nike shoes. They're buying Apple iPods. They're buying Merrill Lynch financial services. We are creating new markets all over the world as a process in doing this.
DOBBS: It's -- that is absolutely true. Markets are being created. Middle-class jobs are being created in India, as you suggest.
ANDREESSEN: Yes.
DOBBS: There is just one problem with that.
ANDREESSEN: And those -- and those people are consuming American products and services.
DOBBS: They are assuming about half what we're buying from them right now.
ANDEREESSEN: Actually that's not true.
DOBBS: Actually it is exactly true. The deficit with India is -- for this instance is precisely twice.
ANDEREESSEN: For manufactured products that's true. Look at services.
Do you think we run a services deficit or surplus?
DOBBS: Marc, you were saying what?
ANDEREESSEN: We run...
DOBBS: Were you not talking about buying products?
ANDEREESSEN: Products and services. We run a deficit on products. The difference in the dollar comes back in investing America. We run a surplus in services. Lou, we run a $75 billion a year services surplus. $75 billion...
DOBBS: Are you talking about globally, Marc.
ANDEREESSEN: Yes, globally.
DOBBS: Oh, absolutely not, Marc. We have $550 billion current account deficit in this country.
ANDEREESSEN: Right, I'm telling you...
DOBBS: That is services that is products in -- I mean, Marc, let's -- let's go back to the issue of outsourcing. If you prefer.
ANDEREESSEN: Well, hold on a second. The president's economic report that just came out in 2002 we ran a $75 billion surplus in services.
DOBBS: In 2002?
ANDEREESSEN: We benefited services trade.
DOBBS: In 2002?
ANDEREESSEN: In 2002.
DOBBS: Do you release...
(CROSSTALK)
DOBBS: Marc, we can sit here and not really edify anyone including ourselves by trading statistics. The fact is it is 2004, the fact is in the most event report on trade we show for the first time negative numbers in the area in which you live, that is technology which is supposed to be bringing us all of these wonderful jobs that so far are not materializing.
ANDEREESSEN: Look, technology took a big hit in the last four years due to recession. When I was involved in creating the first Internet browser in 1993, I can tell how many Internet jobs there were, there were 200. I can tell you how many there are now, there's two million now. We created new jobs in the next 10 years. I'll tell you what, we're going to create a huge number of new jobs in the next 10 years.
DOBBS: I expect you to do so. What I don't expect you to understand is that there is no one listening to us that should take -- has any reason to take as you an article of faith that by moving jobs overseas simply to acquire cheap labor that in any way adds to innovation to this country.
ANDEREESSEN: Absolutely it does. It compounds innovation, allows American companies to invest both overseas and the U.S. It allows American companies to hire more people in the U.S. It allows American companies to sell their products and services into a larger global market. I tell you another thing, it encourages peace and stability worldwide. The best thing that can happen to us from a national security standpoint we determine to develop the middle classes in India and China. And in fact the really best thing we could do is to start offshoring to the Middle East.
If you want to systematicly go after global security and peace, figure out how to bring everybody into this world of increasing returns from economic, increasing returns from trade...
DOBBS: Marc, you surely not suggesting that we create a middle class anywhere in the world at the expense of our own?
ANDEREESSEN: Of course not. It's not at the expense of our own.
DOBBS: That's precisely the effect of what is happening.
ANDEREESSEN: No it's not.
DOBBS: No, sir, it is.
ANDEREESSEN: Trade has been win-win for 200 years.
DOBBS: Win-win. Marc, you are too smart for this. You are absolutely too smart for this. When you hear win-win, what do you think of, a software salesman, right?
ANDEREESSEN: Not at all.
DOBBS: Come on. If it's -- thank you. I also have a sense of humor like you do, Marc. You know what, I don't think we should have too much a sense of humor about what we're doing to hardworking men and women in this country. Please, would you take as an article of faith if you were sitting there driving code that you are going to get to a result or would you want to empiricly be able to demonstrate it?
ANDEREESSEN: Absolutely.
DOBBS: Here are the empirical demonstrations of what we're dealing with right now.
We have a half trillion dollar trade deficit. I'm sorry, go ahead.
ANDEREESSEN: Empirical demonstration is over 200 years of standard of living has risen massively. We created 140 million net jobs. They say we created 342 million jobs in the last 10 years alone.
DOBBS: You do understand we have to talk in net terms.
ANDEREESSEN: Per capita income. We're up 17 million net new jobs in the 10 years, including the impact of the recession.
DOBBS: The last 10 years.
ANDEREESSEN: The last 20 years we're up 38 million net jobs. And those jobs per capita income, in that period of time, since World War II to today, per capita income is up. Everybody is better off.
DOBBS: By the way, if you are trying to convince me, our viewers, that it's good to live in America, that really isn't the issue. The fact is how do we preserve and improve on the quality of life for our middle class, for all Americans.
ANDEREESSEN: Economic growth is the key.
Would we agree economic growth is the key?
DOBBS: We -- I would agree absolutely that economic growth is the key.
ANDEREESSEN: We agree job creation is the key?
DOBBS: Absolutely.
ANDEREESSEN: Right, and this is what happens. We create jobs, grow, innovate, exploit new markets, we develop new markets.
DOBBS: But you haven't accounted for the experience of the past four years nor the failure of this economy through two and a half years since the recession ended to generate jobs and that is the critical issue, Marc.
ANDEREESSEN: Let's separate out. No. 1 in IT we had a big recession, right. We had a big bubble. We had a dotcom bubble.
DOBBS: Marc, I got to be honest with you. We have taken far more time than we should have. Come back, we're going to argue some more, do me a favor -- watch that, you know, faith based economics, will you?
hit's dangerous stuff, macro economics as well as it is in technology. You can reciprocate with counsel to me as well, Marc. You get the last word.
ANDEREESSEN: I reciprocate to you with exactly the same counsel, for 200 years the standard of living in this country has risen. and it's going to continue rising for the next hundred, I don't think there's any question about that.
DOBBS: I admire your faith and we appreciate your time.
ANDEREESSEN: Thank you.
Once again, the pro offshoring argument looks like this:
1) "Look, Honda and Nissan are offshoring here! They have plants in Ohio and Tennessee!" This is part of the discussion that is lost in the transcript during crosstalk. Lou quickly points out that there is a difference between moving a plant into a country to create a product for the local market, and sending jobs offshore that provide services back in the U.S.
2) "We're creating this wonderful middle class in India! They buy Americans goods." Basically, the same argument espoused above and Ryan's comments still hold. Where are those jeans made? The iPods? How does this benefit American workers?
And as if it's not enough of a problem to be sending financial data overseas to India, what we *really* need to do is start sending that stuff to the Middle East.
DOBBS: In a moment, I'll be talking with a California lawmaker who says outsourcing has devastated her constituents in Silicon Valley. I'll be joined by State Senator Liz Figueroa. But, first, Marc Andreessen is an Internet pioneer. He co- founded a Silicon Valley firm that helps companies outsource work overseas. He's the chairman of the company Opsware. He also, of course, co-founded Netscape.
Marc Andreessen joins us tonight from Mountain View, California.
Marc, good to have you here.
MARC ANDREESSEN, CHAIRMAN & CO-FOUNDER, OPSWARE INC.: Great. Thanks, Lou.
DOBBS: There are very few issues right now that are more difficult for corporate America to deal with than the issue of outsourcing. You support it. You support it vigorously. Why?
ANDREESSEN: Yes.
I think it's purely good for the American company and it's good for American workers. It's part of the natural process of creating new jobs. I think job destruction and job creation go hand in hand. In the last 10 years, this economy has destroyed 325 million jobs and created 342 million new jobs. And, in general, those news jobs are better jobs than the ones that were destroyed.
And I think, in the next 10 years, we're going to destroy another 400 million, create another 430, 450 million new jobs, and those jobs will be better. I think it's blue skies.
DOBBS: Mark, I quite appreciate job destruction, job creation and the net effect. And that argument is advanced considerably. But that argument doesn't really work if the net result is not a higher value job and that has not occurred in this country now for three years, and perhaps more, actually.
That being the case, why should we accept it as a matter of faith that we can destroy lives -- and it is looking as though -- some estimates range as high as three million jobs have been outsourced now to cheap overseas labor markets.
ANDREESSEN: Right.
DOBBS: Why should we take it as an article of faith that that kind of pain results in better jobs, when we're not seeing it demonstrated in any of the data anywhere?
ANDREESSEN: Right. So, first of all, nobody cares more about the pain caused by job destruction than I do.
I grew up in Wisconsin. And, as you know, in Wisconsin, there have just been a huge number of jobs lost over the last 80, 90 years from agriculture. And when I was growing up, that process was continuing. The flip side of that is, new jobs were created and in general people in Wisconsin have a higher standard of living and higher per capita income now.
(CROSSTALK)
DOBBS: I understand that, Marc.
(CROSSTALK)
ANDREESSEN: That exact same thing...
DOBBS: But what I'm asking you for, why should we take it as an article of faith when we have not seen this happen for four -- nearly four years?
ANDREESSEN: Right, because, for four years, we've been in a recession. If you look at the impact of the recession, it's almost entirely responsible for what is going on.
So let me give you a couple other numbers. In the last 15 years, the number of Americans employed by foreign companies has gone up from 2.5 million to 6.5 million. Offset against that is, yes, American companies now employ 10 million people overseas. But do you think we pay overseas people more or less than foreign companies are paying the American workers?
(CROSSTALK)
DOBBS: That's a different issue, Marc.
(CROSSTALK)
DOBBS: I have got to interrupt you, Marc.
ANDREESSEN: OK.
DOBBS: That is not outsourcing. That is not exporting jobs overseas.
ANDREESSEN: Sure, it is.
DOBBS: If I may finish, then I'll
(CROSSTALK)
ANDREESSEN: Cars are now being manufactured in the United States by Japanese car companies like Toyota. They're outsourcing to us all over the place. There's all kinds of jobs. Siemens is manufacturing new jobs to the United States.
(CROSSTALK)
DOBBS: Are they doing that, Marc, to produce products for this market?
ANDREESSEN: Sure, absolutely, they are doing that.
(CROSSTALK)
DOBBS: That's right. And that's the distinction. And that's the distinction here.
The service jobs, the high-value jobs that are being exported to various countries around the world are not being exported so -- for entry to those markets of those countries, but rather for the return of those services and products to this market. That is the distinction in outsourcing, Marc.
(CROSSTALK)
ANDREESSEN: Actually, that's not entirely true.
(CROSSTALK)
DOBBS: Well, no, it's actually -- it's entirely true.
ANDREESSEN: Well, the data doesn't actually show that. So, for example, let's look at it a different way.
DOBBS: What data? I would like to know.
ANDREESSEN: It doesn't make any economic sense.
So, for example, I guess the implication is, we're shipping dollars overseas and those dollars are staying overseas and they're never coming back. We're creating economic growth in the U.S. We're creating economic growth overseas. When we put jobs in India, we're paying Indians in U.S. dollars. Those dollars are being turned around and spent on American goods and services. The new middle class in India that's emerging as a result of the I.P. offshoring...
(CROSSTALK)
DOBBS: Oh, I assure you..
ANDREESSEN: They're buying Levi's jeans. They're buying Nike shoes. They're buying Apple iPods. They're buying Merrill Lynch financial services. We are creating new markets all over the world as a process in doing this.
DOBBS: It's -- that is absolutely true. Markets are being created. Middle-class jobs are being created in India, as you suggest.
ANDREESSEN: Yes.
DOBBS: There is just one problem with that.
ANDREESSEN: And those -- and those people are consuming American products and services.
DOBBS: They are assuming about half what we're buying from them right now.
ANDEREESSEN: Actually that's not true.
DOBBS: Actually it is exactly true. The deficit with India is -- for this instance is precisely twice.
ANDEREESSEN: For manufactured products that's true. Look at services.
Do you think we run a services deficit or surplus?
DOBBS: Marc, you were saying what?
ANDEREESSEN: We run...
DOBBS: Were you not talking about buying products?
ANDEREESSEN: Products and services. We run a deficit on products. The difference in the dollar comes back in investing America. We run a surplus in services. Lou, we run a $75 billion a year services surplus. $75 billion...
DOBBS: Are you talking about globally, Marc.
ANDEREESSEN: Yes, globally.
DOBBS: Oh, absolutely not, Marc. We have $550 billion current account deficit in this country.
ANDEREESSEN: Right, I'm telling you...
DOBBS: That is services that is products in -- I mean, Marc, let's -- let's go back to the issue of outsourcing. If you prefer.
ANDEREESSEN: Well, hold on a second. The president's economic report that just came out in 2002 we ran a $75 billion surplus in services.
DOBBS: In 2002?
ANDEREESSEN: We benefited services trade.
DOBBS: In 2002?
ANDEREESSEN: In 2002.
DOBBS: Do you release...
(CROSSTALK)
DOBBS: Marc, we can sit here and not really edify anyone including ourselves by trading statistics. The fact is it is 2004, the fact is in the most event report on trade we show for the first time negative numbers in the area in which you live, that is technology which is supposed to be bringing us all of these wonderful jobs that so far are not materializing.
ANDEREESSEN: Look, technology took a big hit in the last four years due to recession. When I was involved in creating the first Internet browser in 1993, I can tell how many Internet jobs there were, there were 200. I can tell you how many there are now, there's two million now. We created new jobs in the next 10 years. I'll tell you what, we're going to create a huge number of new jobs in the next 10 years.
DOBBS: I expect you to do so. What I don't expect you to understand is that there is no one listening to us that should take -- has any reason to take as you an article of faith that by moving jobs overseas simply to acquire cheap labor that in any way adds to innovation to this country.
ANDEREESSEN: Absolutely it does. It compounds innovation, allows American companies to invest both overseas and the U.S. It allows American companies to hire more people in the U.S. It allows American companies to sell their products and services into a larger global market. I tell you another thing, it encourages peace and stability worldwide. The best thing that can happen to us from a national security standpoint we determine to develop the middle classes in India and China. And in fact the really best thing we could do is to start offshoring to the Middle East.
If you want to systematicly go after global security and peace, figure out how to bring everybody into this world of increasing returns from economic, increasing returns from trade...
DOBBS: Marc, you surely not suggesting that we create a middle class anywhere in the world at the expense of our own?
ANDEREESSEN: Of course not. It's not at the expense of our own.
DOBBS: That's precisely the effect of what is happening.
ANDEREESSEN: No it's not.
DOBBS: No, sir, it is.
ANDEREESSEN: Trade has been win-win for 200 years.
DOBBS: Win-win. Marc, you are too smart for this. You are absolutely too smart for this. When you hear win-win, what do you think of, a software salesman, right?
ANDEREESSEN: Not at all.
DOBBS: Come on. If it's -- thank you. I also have a sense of humor like you do, Marc. You know what, I don't think we should have too much a sense of humor about what we're doing to hardworking men and women in this country. Please, would you take as an article of faith if you were sitting there driving code that you are going to get to a result or would you want to empiricly be able to demonstrate it?
ANDEREESSEN: Absolutely.
DOBBS: Here are the empirical demonstrations of what we're dealing with right now.
We have a half trillion dollar trade deficit. I'm sorry, go ahead.
ANDEREESSEN: Empirical demonstration is over 200 years of standard of living has risen massively. We created 140 million net jobs. They say we created 342 million jobs in the last 10 years alone.
DOBBS: You do understand we have to talk in net terms.
ANDEREESSEN: Per capita income. We're up 17 million net new jobs in the 10 years, including the impact of the recession.
DOBBS: The last 10 years.
ANDEREESSEN: The last 20 years we're up 38 million net jobs. And those jobs per capita income, in that period of time, since World War II to today, per capita income is up. Everybody is better off.
DOBBS: By the way, if you are trying to convince me, our viewers, that it's good to live in America, that really isn't the issue. The fact is how do we preserve and improve on the quality of life for our middle class, for all Americans.
ANDEREESSEN: Economic growth is the key.
Would we agree economic growth is the key?
DOBBS: We -- I would agree absolutely that economic growth is the key.
ANDEREESSEN: We agree job creation is the key?
DOBBS: Absolutely.
ANDEREESSEN: Right, and this is what happens. We create jobs, grow, innovate, exploit new markets, we develop new markets.
DOBBS: But you haven't accounted for the experience of the past four years nor the failure of this economy through two and a half years since the recession ended to generate jobs and that is the critical issue, Marc.
ANDEREESSEN: Let's separate out. No. 1 in IT we had a big recession, right. We had a big bubble. We had a dotcom bubble.
DOBBS: Marc, I got to be honest with you. We have taken far more time than we should have. Come back, we're going to argue some more, do me a favor -- watch that, you know, faith based economics, will you?
hit's dangerous stuff, macro economics as well as it is in technology. You can reciprocate with counsel to me as well, Marc. You get the last word.
ANDEREESSEN: I reciprocate to you with exactly the same counsel, for 200 years the standard of living in this country has risen. and it's going to continue rising for the next hundred, I don't think there's any question about that.
DOBBS: I admire your faith and we appreciate your time.
ANDEREESSEN: Thank you.
-
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Of course, the creation of the modern Internet, which Andreessen is as responsible for as any one person I can think of, is what's made much of the recent offshoring craze possible, as information transfer lag/cost to anywhere in the world has dropped to essentially zero.
You'd think he'd understand this.
Ryan
You'd think he'd understand this.
Ryan
RQOTW: "I'll make sure that our future is defined not by the letters ACLU, but by the letters USA." -- Mitt Romney
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You might want to read the rest of the show too, but this was pretty good:
http://www.cnn.com/TRANSCRIPTS/0403/10/ldt.00.html
DOBBS: Tonight the results of the first national poll on outsourcing show the American public is very concerned about jobs being exported overseas, this poll also suggests the issue will play a significant part in the presidential election. According to a CNN/"USA Today"/Gallup poll, 61 percent of Americans are concerned they will loose their job to a foreign country, 38 percent says they are not concerned.
My next guest says concerns about the exporting of American are well founded. Economist Paul Craig Roberts says the shipments of American jobs could turn this country into a third world country. Paul Craig Roberts, served during the Reagan administration and is here with us tonight, good to have you here.
PAUL CRAIG ROBERTS, ECONOMIST: Thank you, Lou.
DOBBS: This has become a remarkable issue in a number of economists are simply ignoring the issue or saying that they don't want to deal with it at this particular time because there's not enough data.
What's your reaction?
ROBERTS: Well, you see they think it's the beneficial workings of free trade what it really is a labor arbitrage (ph), a substitution of cheap labor for expensive labor. This wasn't possible until recently. It took the collapse of world socialism. It took the rise of the high speed Internet. Now they have a chance to simply put skilled, cheap, foreign labor in the role that was filled by American labor.
DOBBS: And within that -- there's a suggestion that if you are concerned about the American middle class, that you are really a trader of the precepts off free trade and sophisticated thought if there's any reason to be concerned about that. This economy, this country was built on a middle class who's jobs are being exported.
ROBERTS: Exactly. When you lose high value added jobs, you lose occupations. And we can already see the effect in enrollments. You know, this year, the enrollments in computer engineering jobs dropped 23 percent. In MIT announced the enrollment in the engineers has dropped 33 percent in the last two years.
And education. We are hearing from in particular the Bush administration, many private businessmen running public companies saying the issue is really just retrain everybody, everybody will be fine. Reeducate them for a new world.
How do you react?
ROBERTS: What you have to retrain them for is non-tradable service jobs. Because whatever incentive is operating because one product or service to leave will operate for the replacement. And so what you see happening, if you look at, for example, the Bureau of Labor statistics on February 11, released its 10 year projections for American job growth. And 7 of the 10 are these biggest areas of job growth are very menial, low paid service jobs. Hospital orderlies, none of them produce export goods or services.
DOBBS: The president today said be very careful talking about the issues because 20 percent of all the jobs in the country are related to trade. He talked about economic isolationism, defeatists, protectionists, who is talking about protectionism, who is talking about economic isolationism.
ROBERTS: There is no constituency for protectionism, all the big firms want to go offshore because the labor savings are large. I don't know who the protectionists are. There's no constituency.
DOBBS: The idea we have lost, the private sector jobs, it was reflected in the last unemployment report, 21,000 jobs created, 21,000 in government.
ROBERTS: In government.
DOBBS: The private sector has been hammered here and I don't think most people are aware that the job losses over the past three years are -- would even be greater if we pulled out the public sector jobs that have been added to the nation's payroll.
ROBERTS: Even worse, Lou, we've had now recovery for two years and a quarter despite the so-called economic recovery we lost another three quarter of a million jobs. This is unprecedented. And it's happened despite extremely low interest rates and very stimulated fiscal policy whether you measure it by tax cuts or deficit.
DOBBS: What is the solution, Paul? First I'm going to ask you the big questions. What's the solution on outsourcing? What's the solution on a trade deficit that -- we now have an accumulated trade deficit in debt of $3 trillion. The claims are mounting. 7 trillion in national debt?
ROBERTS: Lou, I'm afraid I don't have a solution. I'm trying to make people aware that there's a problem. And as you already noted, a lot of people are in denial and the real question is how long does it go on before the economists and the policy makers acknowledge that we do have a problem.
DOBBS: How many more jobs can our men and women lose in this country before somebody does something?
ROBERTS: How many more jobs will be lost? High value added. High productivity jobs. Middle class jobs. Jobs that were the ladders of mobility. Those are the jobs that it pays to outsource or hire over the Internet.
DOBBS: You are a terrific economist. How concerned are you about the trade deficit itself soaring now past half a trillion. Talking about 5 percent of GDP?
ROBERTS: Well, the way we finance it, Lou, we give foreigners ownership of our assets. The acquire ownership of our real estate, of our companies, of the corporate and government bonds so we lose all the future income streams that are associated with the assets when we lose the ownership. So it's a bad thing. And how it is going to come into balance, that's the real question because if you are -- if you can't close your trade deficit, with exports, the only other way is currency collapse.
DOBBS: And we haven't been able to run a trade surplus in this country of more that two decades.
ROBERTS: You can't run a trade surplus when you are producing offshore for your home markets.
DOBBS: Paul Craig Roberts, I was hoping you would come here with not only your great vision and illumination of the issue but also a solution. But I'm afraid that's going to have to wait for some policy makers.
ROBERTS: Going to take a lot of minds to think about it, Lou, and they better get busy thinking.
DOBBS: I sure join you in the hope that that picks up quickly. Paul Craig Roberts, thank you very much.
Turning now for a look at some of your thoughts, many of you wrote in about exporting America and what the president now calls economic isolationism.
Edward Jacques of Chicopee, Massachusetts. "Lou, I come from the time when we were told to buy American to support the United States. Now we're told that it's good for America to outsource jobs. What do we tell our workers when they lose their jobs?"
John Gamble, New York, New York. "I find it more than a little hypocritical of the current administration so strongly promotes American independence in regard to national defense while at the same time zealously supporting unregulated trade policies."
Mark Vernon of Houston, Texas. "As a nation, we are allowing the American dream to be sold to the lowest bidder. Even though this is an election year, I wish the president could see this issue as an opportunity to compromise his carved in granite policies for the welfare of the nation. Admitting one is sometimes on the wrong path is a sign of strength in leadership not weakness."
And Don Klinger of Cherry Hill, New Jersey wrote, "As to the recent series of attacks on you by the financial establishment, they bring to mind the quote from Gandhi. First they ignore you, then they ridicule you, and then they attack you, and then you win."
Well that, I certainly appreciate the association with Gandhi and certainly your support. Thank you very much. Please send us your thoughts to loudobbs@CNN.com.
http://www.cnn.com/TRANSCRIPTS/0403/10/ldt.00.html
DOBBS: Tonight the results of the first national poll on outsourcing show the American public is very concerned about jobs being exported overseas, this poll also suggests the issue will play a significant part in the presidential election. According to a CNN/"USA Today"/Gallup poll, 61 percent of Americans are concerned they will loose their job to a foreign country, 38 percent says they are not concerned.
My next guest says concerns about the exporting of American are well founded. Economist Paul Craig Roberts says the shipments of American jobs could turn this country into a third world country. Paul Craig Roberts, served during the Reagan administration and is here with us tonight, good to have you here.
PAUL CRAIG ROBERTS, ECONOMIST: Thank you, Lou.
DOBBS: This has become a remarkable issue in a number of economists are simply ignoring the issue or saying that they don't want to deal with it at this particular time because there's not enough data.
What's your reaction?
ROBERTS: Well, you see they think it's the beneficial workings of free trade what it really is a labor arbitrage (ph), a substitution of cheap labor for expensive labor. This wasn't possible until recently. It took the collapse of world socialism. It took the rise of the high speed Internet. Now they have a chance to simply put skilled, cheap, foreign labor in the role that was filled by American labor.
DOBBS: And within that -- there's a suggestion that if you are concerned about the American middle class, that you are really a trader of the precepts off free trade and sophisticated thought if there's any reason to be concerned about that. This economy, this country was built on a middle class who's jobs are being exported.
ROBERTS: Exactly. When you lose high value added jobs, you lose occupations. And we can already see the effect in enrollments. You know, this year, the enrollments in computer engineering jobs dropped 23 percent. In MIT announced the enrollment in the engineers has dropped 33 percent in the last two years.
And education. We are hearing from in particular the Bush administration, many private businessmen running public companies saying the issue is really just retrain everybody, everybody will be fine. Reeducate them for a new world.
How do you react?
ROBERTS: What you have to retrain them for is non-tradable service jobs. Because whatever incentive is operating because one product or service to leave will operate for the replacement. And so what you see happening, if you look at, for example, the Bureau of Labor statistics on February 11, released its 10 year projections for American job growth. And 7 of the 10 are these biggest areas of job growth are very menial, low paid service jobs. Hospital orderlies, none of them produce export goods or services.
DOBBS: The president today said be very careful talking about the issues because 20 percent of all the jobs in the country are related to trade. He talked about economic isolationism, defeatists, protectionists, who is talking about protectionism, who is talking about economic isolationism.
ROBERTS: There is no constituency for protectionism, all the big firms want to go offshore because the labor savings are large. I don't know who the protectionists are. There's no constituency.
DOBBS: The idea we have lost, the private sector jobs, it was reflected in the last unemployment report, 21,000 jobs created, 21,000 in government.
ROBERTS: In government.
DOBBS: The private sector has been hammered here and I don't think most people are aware that the job losses over the past three years are -- would even be greater if we pulled out the public sector jobs that have been added to the nation's payroll.
ROBERTS: Even worse, Lou, we've had now recovery for two years and a quarter despite the so-called economic recovery we lost another three quarter of a million jobs. This is unprecedented. And it's happened despite extremely low interest rates and very stimulated fiscal policy whether you measure it by tax cuts or deficit.
DOBBS: What is the solution, Paul? First I'm going to ask you the big questions. What's the solution on outsourcing? What's the solution on a trade deficit that -- we now have an accumulated trade deficit in debt of $3 trillion. The claims are mounting. 7 trillion in national debt?
ROBERTS: Lou, I'm afraid I don't have a solution. I'm trying to make people aware that there's a problem. And as you already noted, a lot of people are in denial and the real question is how long does it go on before the economists and the policy makers acknowledge that we do have a problem.
DOBBS: How many more jobs can our men and women lose in this country before somebody does something?
ROBERTS: How many more jobs will be lost? High value added. High productivity jobs. Middle class jobs. Jobs that were the ladders of mobility. Those are the jobs that it pays to outsource or hire over the Internet.
DOBBS: You are a terrific economist. How concerned are you about the trade deficit itself soaring now past half a trillion. Talking about 5 percent of GDP?
ROBERTS: Well, the way we finance it, Lou, we give foreigners ownership of our assets. The acquire ownership of our real estate, of our companies, of the corporate and government bonds so we lose all the future income streams that are associated with the assets when we lose the ownership. So it's a bad thing. And how it is going to come into balance, that's the real question because if you are -- if you can't close your trade deficit, with exports, the only other way is currency collapse.
DOBBS: And we haven't been able to run a trade surplus in this country of more that two decades.
ROBERTS: You can't run a trade surplus when you are producing offshore for your home markets.
DOBBS: Paul Craig Roberts, I was hoping you would come here with not only your great vision and illumination of the issue but also a solution. But I'm afraid that's going to have to wait for some policy makers.
ROBERTS: Going to take a lot of minds to think about it, Lou, and they better get busy thinking.
DOBBS: I sure join you in the hope that that picks up quickly. Paul Craig Roberts, thank you very much.
Turning now for a look at some of your thoughts, many of you wrote in about exporting America and what the president now calls economic isolationism.
Edward Jacques of Chicopee, Massachusetts. "Lou, I come from the time when we were told to buy American to support the United States. Now we're told that it's good for America to outsource jobs. What do we tell our workers when they lose their jobs?"
John Gamble, New York, New York. "I find it more than a little hypocritical of the current administration so strongly promotes American independence in regard to national defense while at the same time zealously supporting unregulated trade policies."
Mark Vernon of Houston, Texas. "As a nation, we are allowing the American dream to be sold to the lowest bidder. Even though this is an election year, I wish the president could see this issue as an opportunity to compromise his carved in granite policies for the welfare of the nation. Admitting one is sometimes on the wrong path is a sign of strength in leadership not weakness."
And Don Klinger of Cherry Hill, New Jersey wrote, "As to the recent series of attacks on you by the financial establishment, they bring to mind the quote from Gandhi. First they ignore you, then they ridicule you, and then they attack you, and then you win."
Well that, I certainly appreciate the association with Gandhi and certainly your support. Thank you very much. Please send us your thoughts to loudobbs@CNN.com.
"I know because it is impossible for a tape to hold the compression levels of these treble boosted MFSL's like Something/Anything. The metal particulate on the tape would shatter and all you'd hear is distortion if even that." - VD
Rspaight wrote:Of course, the creation of the modern Internet, which Andreessen is as responsible for as any one person I can think of, is what's made much of the recent offshoring craze possible, as information transfer lag/cost to anywhere in the world has dropped to essentially zero.
You'd think he'd understand this.
Ryan
What makes you think he *doesn't*? I'm sure he does, and would say it's a good thing.
Seems to me he's taking the long, and global, view. He wants to improve the *world*, not just the US. Move more people out of poverty in India or the Middle East and elsewhere, and you essentailly make them more conservative, less prone to things like *jihad*. You also tend to reduce population. There's good reason to believe these things, but it's not a foolproof prediction that the US will remain safe and preeminent as a result. Most of the 9/11 fuckheads were middle-class Saudis. China's and India's new middle class might one day help them conquer the US economically if not materially (I expect by that time our cultural conquest of the world will be complete, though). The thing about a socialist/one-world type vuew like this, is that it only really works if EVERYONE agrees to get along.
"I recommend that you delete the Rancid Snakepit" - Grant
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Rspaight
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Taking the long, global view is easy when you're financially independent like Marc.
Look, I don't doubt that the *long term* effects of all this will be ultimately beneficial. (Which is what the guy from the Administration was trying to say when he got blasted.) In the meantime, though, it's wreaking havoc. Just saying "retrain, retrain" over and over ain't good enough when you have to start over at the bottom of the career ladder, and the thing you're retraining for is the next thing to get outsourced.
Ryan
Look, I don't doubt that the *long term* effects of all this will be ultimately beneficial. (Which is what the guy from the Administration was trying to say when he got blasted.) In the meantime, though, it's wreaking havoc. Just saying "retrain, retrain" over and over ain't good enough when you have to start over at the bottom of the career ladder, and the thing you're retraining for is the next thing to get outsourced.
Ryan
RQOTW: "I'll make sure that our future is defined not by the letters ACLU, but by the letters USA." -- Mitt Romney
Retrain, you say? As timely as tonight's Lou Dobbs. The other person is James Glassman from the Washington Post. It looks like they want to spend $23 billion to retrain people for...uh, well, something.
<snip>
DOBBS: Well, the fact is I think that that's certainly part of it. I think the fact that we have are sending not only jobs, but intellectual capital overseas and we have policymakers refusing to take a look at it when we have more than 15 million people in this country who are either out of work, or discouraged or to the point that they are working...
GLASSMAN: Can I say unemployment, there are 8 million people unemployed. It's not 15. That's too many. But it's down from 9 million. It's not 15.
DOBBS: Including discouraged workers?
GLASSMAN: Discouraged workers are not counted -- you're using the same standard for a century now.
DOBBS: I'm sort of, even though I went to the same school you do, I'm still rooted in my country origins. There's still folks looking for work.
GLASSMAN: It's terrible that they are discouraged and we need to help those people.
DOBBS: Wouldn't it be nice to hear the president say that?
GLASSMAN: I think the president has been saying it. He's going to spend $23 billion, he proposes for training and retraining.
DOBBS: Yes. You want to tell me for what? What job should they be training for?
GLASSMAN: Well, I think for one thing, software engineers jobs are going to double by 2010 according to the Labor Department. One of the things about a dynamic economy is we don't know what the jobs are.
DOBBS: 25 percent of the training...
GLASSMAN: It's why you need to have continuing education to train. Absolutely.
DOBBS: We have reached a point where we have to agree to disagree. I think that we're getting closer and I'm delighted to hear you talking about the issues in terms of recognizing some of the other elements of the story. And I'm sure you're feeling better about my views. GLASSMAN: I feel terrific.
DOBBS: All right. Let's continue the discussion.
GLASSMAN: Thank you, Lou.
<snip>
DOBBS: Well, the fact is I think that that's certainly part of it. I think the fact that we have are sending not only jobs, but intellectual capital overseas and we have policymakers refusing to take a look at it when we have more than 15 million people in this country who are either out of work, or discouraged or to the point that they are working...
GLASSMAN: Can I say unemployment, there are 8 million people unemployed. It's not 15. That's too many. But it's down from 9 million. It's not 15.
DOBBS: Including discouraged workers?
GLASSMAN: Discouraged workers are not counted -- you're using the same standard for a century now.
DOBBS: I'm sort of, even though I went to the same school you do, I'm still rooted in my country origins. There's still folks looking for work.
GLASSMAN: It's terrible that they are discouraged and we need to help those people.
DOBBS: Wouldn't it be nice to hear the president say that?
GLASSMAN: I think the president has been saying it. He's going to spend $23 billion, he proposes for training and retraining.
DOBBS: Yes. You want to tell me for what? What job should they be training for?
GLASSMAN: Well, I think for one thing, software engineers jobs are going to double by 2010 according to the Labor Department. One of the things about a dynamic economy is we don't know what the jobs are.
DOBBS: 25 percent of the training...
GLASSMAN: It's why you need to have continuing education to train. Absolutely.
DOBBS: We have reached a point where we have to agree to disagree. I think that we're getting closer and I'm delighted to hear you talking about the issues in terms of recognizing some of the other elements of the story. And I'm sure you're feeling better about my views. GLASSMAN: I feel terrific.
DOBBS: All right. Let's continue the discussion.
GLASSMAN: Thank you, Lou.
Combining last night's Lou Dobbs:
With tonight's:
We see a self-fullfilling prophecy. People are not going to major in subjects where they don't think they'll have a job in 4 years. So there is a predicted shortfall in software engineers.
Fear not, we can just hire some more H1-Bs:
You know, this year, the enrollments in computer engineering jobs dropped 23 percent. In MIT announced the enrollment in the engineers has dropped 33 percent in the last two years.
With tonight's:
Well, I think for one thing, software engineers jobs are going to double by 2010 according to the Labor Department.
We see a self-fullfilling prophecy. People are not going to major in subjects where they don't think they'll have a job in 4 years. So there is a predicted shortfall in software engineers.
Fear not, we can just hire some more H1-Bs:
PETER VILES, CNN CORRESPONDENT (voice-over): With jobs shaping up as a huge election year issue business lobbies are running a long shot campaign of their own, pushing for permission to hire more foreign workers under the controversial H1-B Visa program. Under pressure from laid off Americans Congress scaled that program back dramatically from a peak of 195,000 visas per year to 65,000. But corporate America has already hit that limit this year and now wants a special exemption to hire foreign workers who were educated in the United States. A spokesman for the campaign says, "It is counter productive for the U.S. to train foreign scientist and engineers and then send them home to compete with American businesses." Another argument, shortages of American workers for some jobs, including math and science teachers, and some medical specialists. Advocates for American workers just aren't buying that.