Employment Big Picture Discussions

Moved From WhySympathizeWithTheUnemployed on March4, 2004

There is a lot of hype about outsourcing software jobs and the job losses due to it. It is just that HYPE. The entire outsourcing to India is not more than a fraction of the US market. If you are concerned about the software outsourcing only, but not of any other imports into the USA, it just shows the ignorance. How is that people dont recognize that by buying cars made outside the USA, you are losing jobs to people in Japan, Germany, etc. Why is there no outcry against this? Why is it that people dont make a big hue and cry that all your electronics goods and computer hardware comes from Japan, Taiwan and China and jobs are lost due to this?. That all your mobile phones (barring a few) come from Sweden, Finland, Japan, etc. That all of you like video games made in Japan. Is it because you have all become so accustomed to these? Or is it because these are better products? or is it because they are cheaper AND better than corresponding American ones? I dont know, but isn't it a point to think about. -- RaviKammaje

There was significant vocal opposition to importing cheap foreign goods (specifically cars and electronics) from the 1960s through the 1980s. People have accepted it as a fact of life. -- EH

Other "fully-developed" countries, such as Japan and much of Western Europe, pay wages and benefits similar to (and in some cases better than) the UnitedStates does; there isn't a flood of companies outsourcing to, say, France. (Indeed, some western European companies, due to the more stringent labor laws over there, view the UnitedStates as a lower-cost place to develop; as we don't have things like the 35-hour workweek (France), the mandatory 6-week paid vacation (Germany), and it's a lot easier to sack folks here.

Developing countries like India and China, on the other hand, have payscales an order of magnitude smaller; not to mention looser labor and environmental restrictions. Much of this is attributable to simple macro-economics. (Some anti-outsourcing activists will have you believe that overseas wages are "slave wages" and the the persons working in Chinese factories, etc. are being "exploited"; I can assure you that, at least in China, workers in foreign factories enjoy an above-average standard of living; certainly quite far from poverty or starvation).

Of course, exploitation of foreign workers does occur; many factories in Mexico are reportedly sweatshops. However, your average Indian IT worker is treated rather well.

People have been complaining about manufacturing loss. However, there was the underlying impression that there were plenty of other jobs that relatively low-skilled people could transfer to. You know the saying, "have less, lose less". However, it is not as easy to swap professions in the white-collar world. Add to that the fear that your replacement career may be globalized out of existence also. You are right in that it is only a few percent of IT jobs being offshored right now, however one's employment prospects once unemployed depend heavily on 'deltas (differences), not absolute numbers. It is like the game of musical chairs. One less chair can double the number of people who don't get a chair when the music stops again. -- AnonymousDonor

You're kidding, right? White-collar jobs, by definition, are filled by highly educated people who are much more adept at repurposing themselves to the economy if their current specialty becomes redundant or undervalued. You think it's easy for a working-class factory worker with a high school education to repurpose themselves once General Motors moves the factory to Saipan? Why don't you go down to Wal-Mart and ask those ex-factory workers how their new careers are working out? -- francis

[But be careful doing so. If they get caught answering such questions, Wal-Mart is likely to fire them without blinking]

More education seems to result in longer unemployment bouts, not shorter ones. I don't see how being a "professional" makes it easier to find alternative employment. For example, one cannot switch from computers to biology without going back to school for about 2 years, and even then one probably has to start out in entry-level biology jobs.

[Any well-paying job is likely to require a significant investment in training (whether a college education, a union apprenticeship, or other training program) which requires both time (time spent without a significant income) and money. When one is fresh out of high-school, the low-income college lifestyle is tractable. When one is married, has kids, and a mortgage, significant retraining becomes impossible for many.]

[Plus, when jobs are scarce, the jobs that do become available tend to go to workers with more experience in the profession. And I suspect that when employers are looking to fill entry-level positions, many of them would rather hire a fresh young college grad then a displaced, retrained old-fogey who has spent the last twenty years doing something completely unrelated to the job at hand. Rational? Probably not. Illegal discrimination? Maybe. But that often occurs.]

Being forced to switch careers by a shifting market isn't fun for anybody. But if it would take a college-educated computer programmer at least 2 years to get started in biology, how long would it take a former factory worker who never went to college?

[Maybe never. This sounds rather rude, but many blue-collar workers aren't cut out for college. Of course, there is much infrastructure repair work that needs to go on in the UnitedStates (and elsewhere), and unlike manufacturing these jobs cannot be outsourced. Unfortunately, construction work is frequently temporary, and the current public mood seems to be opposed to raising the necessary tax money to pay for such work.]

[And perhaps "cannot" is too strong a word. In every US port, unionized longshoremen load/unload ships crewed by non-union, poorly-paid sailors from poor countries such as the Philippines. The various shipping concerns have long wanted to extend the use of such foreign labor onto the dockside.]

As regarding downtime between jobs: Maybe the reason that laid-off white collar workers have longer downtimes is that they can afford to wait longer, or try more risky maneuvers, before financial hardship forces them to work waiting tables or cleaning hotel rooms. -- francis

I hate it when people interject in others' writing, since it is rude, and it is rude because you suggest that your own text is so important that you are willing to render theirs incoherent. But since I lack the brainpower at the moment to tease out the proper flow, I will reply here.

The argument that (many) blue collar workers cannot enter college, especially since roads still need to be made, is broken. First, movement between classes is possible, and work isn't necessarily classed. While many blue collars can enter college and be something else (as I witness around me all day long here at the University of Toronto), also many college graduates can do "blue collar" work. I know lots of people from my high school who went through university to end up as construction workers, and I know a lot more higher educated people serving me coffee at Starbucks. -- SunirShah

It is not so much about switching classes, but rather my response was about why more are edgy about jobs lost to globalism than in the past. -- AnonymousDonor

Perhaps this discussion has been derailed again. (Surprise!) I agree that class mobility - both upwards and downwards - is possible. Some of my good friends and close relatives are a testament to that. I'm simply trying to deflate the argument that getting laid off from a white-collar job is harder than getting laid off from a blue-collar job. When you're higher up, you can fall for longer before things get desperate.

I don't mean to sound callous to those who have lost their jobs; I'm just asking them to keep things in perspective. If you're feeling desperate and angry, maybe it's worth noting that this is what it felt like for those factory workers when their middle class jobs left the country not so long ago. (And when plenty of cushy professionals, secure in the knowledge that their jobs could never be outsourced to Bangladesh, reassured those newly unemployed to sit tight and burn a candle to the all-seeing wisdom of the Market.) You are not alone. In that fact, you may find power. -- francis

Francis, I gotta disagree with you can fall for longer since this is a function of cash burn vs income. When my job first disappeared, I was less than 45 days from the event horizon. I stayed afloat for a while by freelancing, but our cash burn rate was predicated on my "great job" which was now gone.

I can attest that prospective employers don't like the smell of desperation. Learning to present no hint of that while interviewing was something of an accomplishment. -- gh

But did anybody put a gun to your head and force you to live at a certain burn rate? No, you chose how expensive your life would be based on how stable you thought your employment was. What you're discussing is not a matter of absolutes, but personal expectation. If, on being fired, you left your apartment and moved way out to a dingy flat in a poor part of town, and sold your okay car for a beat-up car that broke down all the time, your severance and savings would've lasted a lot longer. Not that you would want to - I wouldn't - but it might be practical. And you would be living at the same standard of living that millions of Americans struggle at. Only they do it while they're working.

Why is it that we expect our employers to keep our jobs around, anyway? For most of human society the vast majority of people have lived with reasonable fear that some disaster - famine, pestilence, war - would turn the corner and force them to uproot their lives. Expectations of dependable employment might in fact be a momentary blip on the history of work, possibly a by-product of the post-WWII boom. If globalization were to continue, there's no reason for us to ever expect that sort of luxury again.

I suspect the picture is more complicated than that, though. You don't hear about it so much in the USian press, but in fact much of the developing world is becoming profoundly skeptical of the bitter pills offered by the Bretton Woods institutions. Globalization itself is getting a very bad rap in much of the rest of the world, and if other countries start to raise trade barriers to slow the pace of change, there's every reason to suspect that the U.S. will respond in kind ... -- francis

You married, Francis? When I was single, no family to support, no wife to please, no baggage accrued over years of affluence, I could survive for months on next to no income. No, nobody put a gun to my head, unless you count the "spouse factor" of living to fit the income. The fact that we were able to survive past 30 days - at all - was a credit to our ability to prioritize spending. The unrelenting crunch of the next 18 months, 9 of which were without employment, had its completely predictable end. We lost the house (can't really "give notice" on a house and move into an apartment and, as it was upside down, it wouldn't sell). The fact that I was "higher up" was not what made our extended survival possible. Without direct, aggressive intervention in our expenditures, we'd have been all gone in 30 days.

Did it have to be that way? Not at all. All I had to do was sell the wife on living at 80% of our income over a ten-year period. Unfortunately, she was "educated" in finance and economics in our post-secondary school system, and had "better" ideas, involving credit and stuff. The problem isn't one of "scaling back after bad things happen" but rather it's one of "scaling back before bad things happen" and being willing to live like you're making 60k when you're making 80k. But you must have buy-in from the spouse. -- gh

The masses are only kind to capitalism if capitalism is kind to them.

Capitalism doesn't care if the masses are kind to it. Neither does globalization. They are both inevitable for the same reasons. Any group that tries to resist them will find itself at a disadvantage compared to groups that embrace them. They are EvolutionarilyStableStrategies. -- EricHodges

Capitalism is inevitable? Funny, that's the same thing Marx said about Communism. -- francis

Marx didn't understand EvolutionarilyStableStrategies. -- EH

"Any group that tries to resist them will find itself at a disadvantage compared to groups that embrace them." When you say that, Eric, would you include the Asian Tigers - the East Asian countries that vaulted themselves into industrialization over the past few decades by resisting the ideologues at the IMF and pursuing a trade policy that included healthy doses of protectionism to protect budding local industries? -- francis

Yes. Export-driven economies thrive on cheap labor and materials, but eventually they reach parity with import driven economies. The west can't fund the east indefinitely. The nations that can trade most efficiently with the most partners hold the long term advantage. Protectionism hinders that efficiency. -- EH

Most countries seem to *settle* on a mix between socialism and capitalism.

Interesting. But I have noticed that every country, every government type, suffers most from a single factor: corruption. More supposedly-capitalistic countries have periodic or chronic economic failure due to widespread corruption than because of e.g. communist revolts.

The largest factor fighting corruption is following the rule of law in regard to business, just as following the rule of law in regard to civil liberties is the largest factor in guaranteeing human rights.

So it would seem that corruption is an ESS as is capitalism; capitalism rises in success with the decrease in corruption and increase in rule of law.

Side note: western countries suffer from plenty of corruption, but percentagewise much less so than most undeveloped countries, and struggling cases such as Russia highlight the issue. So does China, although different in detail.

Hmm, I wonder if, as percentages, as ESSes, if degree of corruption and success of capitalism sum to 1.0? Seems like it would take a lot of massaging of messy data to see, but that would be unusually simple and elegant.

-- DougMerritt

Corruption and capitalism are orthogonal. They sum to 2.0. -- EH

Are you saying that my observation that corruption is the biggest interference with capitalism in most countries is incorrect? Or are you agreeing with the observation but disagreeing with the algebra they follow? -- dm

I'm disagreeing that the "amount" of capitalism and the "amount" of corruption can be plotted on a single axis. Corruption can interfere with capitalism and vice versa, but their relationship is more complex than that. -- EH

Sorry, I'm not getting this. Capitalist economies go through cycles of boom and bust. In most first world countries, the government responds to the latter by pulling away from hard-core capitalism until the problems are alleviated. In most third world countries, capitalist economies simply collapse and the system remains shot until bailed or replaced. At the very least it isn't clear that they gain an advantage; Cuba is not doing worse than any other Carribean countries. On what grounds, then, is it argued that capitalism is an evolutionarily stable strategy?

Capitalism is an evolutionarily stable strategy because it performs better against itself than any other. Try thinking about groups of people instead of nations. Even within nations that claim they aren't capitalist, some groups of people are able to pool capital and invest it for proft. Those groups will be at an economic advantage compared to groups who can't or don't do the same. Nations that engage in more of that behavior than others are at an economic advantage over nations that engage in less of that behavior. Command economies try to limit that behavior to central planning bodies. They are less distributed, flexible, responsive than market economies, and therefore vulnerable to them. -- EH

Various things counter this. Market economies tend to be unstable, as any look through their history will show. They have worked well in America, Europe, and some other places, but in many third world countries have proved absolutely ruinous. More importantly, there are other forces at work in the world than simple economics. Countries, groups of people even more so, may choose to take a back seat in that arena in exchange for advancement elsewhere. It doesn't matter whether they gain an advantage or not, so long as they don't get destroyed.

Plus, it may be noted that when countries aren't destroying each other, they don't necessarily tend to competitive optima. Not everyone needs to go for an empire, just be able to maintain themselves against them. Otherwise, shouldn't totalitarianism be inevitable?

Everything tends to "competitive optima", if I understand your use of that phrase correctly. That's the inevitable outcome of competition. That's how evolution works. Totalitarianism isn't inevitable because it isn't an evolutionarily stable strategy. Other strategies outperform it. I don't see what it has to do with capitalism in this discussion. -- EH

Totalitarian governments are generally better in the military department, another important area of competition. The point is that competition forces designs to be good enough, not necessarily optimal. A look at natural evolution does a good job showing this. So, in saying capitalism is inevitable, you are distorting the nature of the market (it has periodic difficulties), the nature of evolution (it doesn't force optima), and the nature of competition (it's not all about economics). That makes your conclusion somewhat premature. Yes, Marx was overlooking far more.

Sorry, I don't follow your argument. How am I distorting the nature of the market, evolution and competition? -- EH

As described in the parentheticals? But your addendum above mitigates a good share of this.

I don't know how we came from the first statement to the last statement. I am lost. But I guess that the power of this new medium that I beginning to get acquainted. To come back to my initial view, I believe that if a country is against outsourcing, it should be against all imports, because outsourcing is just that - an import of a persons skill. I remember Ford laid off a lot of people about 2-3 years ago and at that time no one talked about stopping imports from Japan. Manufacturing sector was one of the worst affected sectors but no-one complained about the imported goods and no-one asked US to take steps to stop imports of goods. Is it because techies (me included) believe it is a right to have a job and are able to express out displeasure better and are more vocal about it?. -- RaviKammaje

I believe in BalancedTrade, not slash-and-burn trade. -- Anon

But people did ask us not to buy imports. They still do. There was a time in the US when a Japanese car wasn't safe in certain parts of Detroit. -- EH

As described above, if only say 10% of all jobs, and generally low-wage jobs are under attack, then people will generally decide that our economy should "move on". The "we are moving into the information age" mantra was widely accepted. However, now that even "high end" and "information worker" jobs are being attacked, in addition to manufacturing, the nervousness is spreading. In a democracy people may ignore 15 percent who complain, but not 50+ percent. I would also note that concessions were made with Japanese manufacturers to avoid politic backlashes in the 1980's. India and China may end up doing the same.

See CategoryBigPicture, CategoryEmployment

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