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Corporatist Blackmail (and Whining)

Shorter Bill Gates: "The failure of the Congress to grant permission to my company to subvert the professional middle classes by importing cheaper labour only means that I have to subvert the professional middle classes by outsourcing their jobs. Heads, I win; tails, they lose. But having to outsource their labour looks overly penurious, while importing foreign programmers looks so progressive and cosmopolitan. So can we please shaft the American people my way?"

Globalization: recreating the sociology and socio-economic stratification of the Third World in the First World, courtesy of the plutocracy and its running dogs.

Comments (18)

The best part; the American worker will get to ratify the policies leading to his own impoversihment in this year's election. Yep, this being done with our consent.

Hmm....that "new" set of deadly sins, particularly accumulation of too much wealth, is not looking so silly after all....


Of course computer programming is such an awesome skill that only budding Einsteins in India or the Phillipines with their SAMS Teach yourself books are up to the task. You don't have to pay them much either and as a bonus they'll stay up all week to get the job done.

Gates is absolutely right. If you won't allow foreigns to take jobs in America that doesn't mean the job won't still go to a foreigner, it might well mean the job is just performed overseas. One can rage all they want about how this "subverts" the professional middle class. Doesn't make it any less true.

Yes, the jobs might be performed overseas, by foreigners, obviously, precisely because executives like Gates elect to send those jobs overseas. That is the problem with this scenario.

For the record, I thought that a critical element of the conservative critique of communism, socialism, and other leftisms was that they were predicated upon a philosophy of economic determinism. Now, it is the conservatives who embrace a tacit doctrine of economic determinism, forgetting that political economy is artifactual, and not a sphere of rigid necessity. Who knew that when Cold War-era conservatives railed against the cold, cruel determinism of the left, that they meant to impose their own? Who? Whom? Indeed.

It's not clear to me why having a particular job performed by a foreigner is supposed to be a problem. In any event, if belief in economic law, the "invisible hand" and such things as that constitute "economic determinism," then criticism of economic determinism could not have really been central to the conservative critique of communism, since in *that* sense conservatives have been economic determinists for quite some time.

Speaking as a middle class professional myself, I'd sooner the job be shipped overseas than have an entire human being, with his family, his demands for social services, and his angry sons imported to do the same thing. Those additional costs aren't borne by the employer, but rather shifted to the government who essentially subsidises a reduction in his payroll costs. Importing cheap labor magnifies the damage done to the American worker many times over. Might as well be honest about it and just send his salary overseas, and spare us the externalities associated with a whole new brood of South-Asian-Americans.

It's not clear to me why having a particular job performed by a foreigner is supposed to be a problem.

It isn't, if you agree with folks like Will Wilkinson, who believe that nation-states are mythical and morally invidious, and that there are no levels of moral obligation intermediate between nuclear families (if even that much) and humanity-in-general.

And, as regards the old 'invisible hand', which neoliberals and neoconservatives (merely the American modulation of the former) have transformed into the visible and mailed fist, well, I've got to put in a good word for old Adam Smith. The theory of the invisible hand is not a sort of metaphysic; rather, it is more along the lines of a generalization, best captured by Smith's famous statement about our meats not coming from the benevolence of the butcher. In other words, the invisible hand only operates within a given framework - and here, one of the classical conditions of comparative advantage (which is the principle to which outsourcers always appeal, in one form or another) is that capital be precluded from crossing from high-wage to low-wage environments. Such arbitrage is not a comparative advantage in some productive capacity or excellence, but merely an absolute advantage in costs; all it signifies is that the expertise accumulated by a pre-existing competitive/comparative advantage in a developed nation like America will hemorrhage away to lower cost nations, as arbitrage-seekers simply transfer it away to avail themselves of cost advantages. But the simple-minded pursuit of cost advantages, like the pursuit of aggregate utility maximizations generally, is neither ethical, nor consistent with the common good. Furthermore, Smith allowed for - gasp! - protectionist measures in a variety of circumstances, one of which was as a means of equalizing economic burdens between foreign and domestic production, and vast disparities in the costs of labour would certainly fall under that heading.

In other words, freedom and unfreedom are inherent in the nature of things, and we can adjust the relative proportions.

SM, I agree with your observation. I just don't believe that either is truly necessary. Importing cheaper labour makes most of us poorer, and then transforms the culture and political climate in ways disadvantageous to, well, us; outsourcing just makes a lot of us poorer. Better to be poor than poor and culturally and politically dispossessed, certainly. Better still to be neither.

Gates is absolutely right. If you won't allow foreigns to take jobs in America that doesn't mean the job won't still go to a foreigner, it might well mean the job is just performed overseas. One can rage all they want about how this "subverts" the professional middle class. Doesn't make it any less true.

If one has no idea about job markets, H1B, outsourcing, etc., one could blab the corporate bot nonsense above.

In reality, the US has minimal wage law, most states have their own min wage above national, there are plenty of labor, environmental, etc. regulations.
Most, maybe virtually all, of these regulations and laws increase cost of doing business in the US.

The US also has many, many advantages over advanced technical paradises like India or Philippines: rule of law, especially enforceble contracts, reliable infrastructure (transportation, communications, utulities), highly educated and civilized population. Yes, Americans much more educated and smarter on average than, say, Indians, dispite the instant propaganda by the elites.
Also we have a very stable political system.

Now, one could argue that all of these advantages are being eroded by the hordes of immigrants and corrupt elites. I agree, but still we are not even near the state of thirld-world as far as these factors.

What it means is even if Gates dreams come true and he can import 2-3 million IT serfs into this country (currently there are 1-2 million IT workers in the USA), their wages would still be above, maybe slightly, min wages. Plus, possibly, some benefits. Plus one need offices built accordingly to US standards.
All in all, it is difficult to see how Bill's total labor cost per worker could be dropped below $30K/year.

And that is way above what Gates might spend on labor in Vietnam or Nigeria. Currently IT labor is more expensive than $30K/year in India. But it is very temporary situation.
India is rapidly ramping up production of IT-capable workers (dispite all the myths, 2 year degree after high school is sufficient for low and some middle level work in IT for many an intelligent teenager).

Once most of outsourcable IT work is tranferred to India and growth in demand slackens, new Indian graduates will flood the job market and wages will drop to about average wage of 4-year degreed worker in India, probably around $5-10K/year total.

It will still pay, at least on paper, for evil Gates to transfer jobs to India.

Even with 3 million new IT serfs in the USA.

And Gates and all corporate elites and bots know it.
The question is why so many allegedly informed intelligent people are buying his self-serving bulls*t.


The question is why so many allegedly informed intelligent people are buying his self-serving bulls*t.

Mythology, mostly, the cash value of which is that anything that augments returns to capital, while reducing the leverage labour holds in the market, will be considered sound economic doctrine - an overreaction to the excesses of the labour movement, among other aspects of post-war managed capitalism. Our species cannot really locate the golden mean, but forever oscillates between antipodal excesses.

Maximos,

Even assuming that all we cared about was the well being of Americans, it's still not clear why having a particular job performed by a foreigner is supposed to be a problem. A given job can either be done by a) an American, b) a machine, c) a foreigner, or d) nobody. If all we care about is the well being of Americans, then there is no functional difference between options b and c. Since the use of technology to increase productivity and deliver goods and services at lower cost is clearly a boon to society in terms of its own well being, it is not clear why the use of foreign workers to increase productivity and deliver goods and services at a lower cost would not likewise be a net benefit for society as a whole.

I would also add that to the extent things like the minimum wage, labor and environmental regulations, & etc. do increase the cost of doing certain jobs in the U.S., this only increases the benefit to America of having them done overseas. In many cases the best option would of course be to repeal the regulations, though I wouldn't hold my breath waiting for that to happen.

"The question is why so many allegedly informed intelligent people are buying his self-serving bulls*t."

This is actually a pretty good question. Economists are pretty close to being unanimous in supporting free trade. Presumably most economists aren't unaware about the cost of American regulation, or the effect of arbitrage, or any of the other effects mentioned in this thread. A great many of them at least are far more knowledgeable on the subject than any of us. You would think that if the case against free trade were so obvious, some of them might have noticed by now. Yet economists as a rule continue to support free trade. The question is why?

One possible answer, of course, is that they are right.

Since the use of technology to increase productivity and deliver goods and services at lower cost is clearly a boon to society in terms of its own well being, it is not clear why the use of foreign workers to increase productivity and deliver goods and services at a lower cost would not likewise be a net benefit for society as a whole.

Two reasons. First, the employment of foreign labour to decrease costs and increase productivity places strong downward pressures on wages; in fact, one often hears business reporters, discussing the monthly jobs and productivity reports, comment that when productivity increases while wage growth is held steady, this indicates strong fundamentals. Yeah, for capital. We're simply not better off with real wages declining or, at best, static when adjusted for inflation (which is understated, but that's for another occasion), especially when the inflationary climate is elevating prices, and imported/outsourced labour is a major contributing factor here. The ostensible aggregate benefits are inadequately specified; they accrue to capital, with labour left to scrounge for scraps.

Second, utilitarian measures of material prosperity are not the summum bonum of society, and the monomaniacal pursuit of lower costs both reflects such a reductionism, and has any number of deleterious effects upon the substantive, or qualitative, goods or society.

In many cases the best option would of course be to repeal the regulations, though I wouldn't hold my breath waiting for that to happen.

I'll pass on this programme, or at least the larger part thereof, for two reasons: a) I don't care for the Chinese business model, nor for the condition of the Chinese ecology, and b) this will either generate massive externalities and the socialization of costs, or result in further experiments in the illusion that everything can be monetized and privatized - this being one of the original errors of capitalism. Or, on this latter point, Thatcher was speaking nonsense when she said that there are only individuals, and that society is a myth. Quite the contrary.

As for the guild of economists, well they are mainly political theorists practicing their craft with statistical models, some math, and a few simple principles. They could be implicit utopian ideologues, who merely have to some degree inverted the ideological pretensions of Marxism, or they could simply be mistaken. The Psalmist wrote that we ought not put our trust in princes; I'll not put my trust in the mythical impartiality of economists, either.

Maximos,

The two reasons you cite are equally applicable to the use of technology and automation to increase productivity. If outsourcing certain jobs places a downward pressure on wages (because the Americans formerly employed at those jobs will have to find new work, thus increasing the competition for the remaining jobs), then automating certain jobs or using technology to increase productive capacity to the point that certain tasks can be completed using far fewer employees will have the same downward pressure on wages. That inflation-adjusted wages have tended to rise (particularly relative to the price of goods and services), tends to show that such pressures, to the extent they exist, are outweighed by the benefits trade and technology bring, but nevertheless the same pressure is present in both cases and for the same basic reason.

Likewise, if concern for cost-cutting and increasing productivity were somehow indicative of a reductionist way of seeing the world, then it is hard to see why cost cutting and increased productivity through the use of technology would be any better than cost cutting and increased productivity through the use of foreign labor.

I would also add that to the extent things like the minimum wage, labor and environmental regulations, & etc. do increase the cost of doing certain jobs in the U.S., this only increases the benefit to America of having them done overseas.

Did it occur to you that labor and enviromental regulation increase the cost of doing business in the USA to corporations
but benefit whole society?

Probably it did not occur to you. It appears that you have never been to any thirld world country.
Too bad.

You would have seen for yourself what wonders lack of labor and enviromental standards does to a country.

You might start with asking your more wordly friends who have gone to Thailand how wonderful lack of child labor laws works for child prostitution. Pure free market. Supply and demand. Small supply of 7 year old boys, high prices paid for sex with said boys. Benefits poor families tremendously.
I'm sure you should approve of freedoms they have in Thailand.

Also take a very reasonably priced tour of scenic Chernobyl. See for yourself how great total lack of envir regulations is for the people.

This is not to imply that some (many?) regulation do more harm than positive. In fact they may have been put in place by rent seekers (see sugar trade in the USA).
But it is not smart to throw baby with bath water.


A given job can either be done by a) an American, b) a machine, c) a foreigner, or d) nobody. If all we care about is the well being of Americans, then there is no functional difference between options b and c.


There is a large difference between b and c.
It is called externalities.

Designing, building, evaluating, operating and maintaining machine are higher value activities with significantly more benefit to society than just purchasing goods from a remote foreigner.

Do you seriously think that purchasing PC mother boards from China is the same as producing them on fully high tech automated production line?

Only tenured foolish economics professor could believe that.

Economists are pretty close to being unanimous in supporting free trade.

Yes, today. But significant cracks have appeared, even some most notable (Krugman, Samuelson, Rodrik, Borjas) express some doubts.
I bet in 10 years a significant minority will be against Free Trade as is practised by China, India and Japan.

And 50 years ago many, if not majority of economists were not for Free Trade or Free Markets.
Check out economic advisors to Libor goverments in UK in late forties up to sixties. Some of the most brilliant economists of the time were all for liberal capitalism tightly controlled and guided by the all knowing state.

Presumably most economists aren't unaware about the cost of American regulation, or the effect of arbitrage, or any of the other effects mentioned in this thread. A great many of them at least are far more knowledgeable on the subject than any of us.

If you would have done any study of modern economics you would have realized that most economists are political scientists (ie hacks) with knowledge of mathematics. That means that you and I may have much better understanding of a particular area of industry, society or country than all high falutin tenured econ professors.

In a few, very narrow and limited areas, economics reached level of science, ie the could predict what will happen based on their calculations. Like physicists and astronomers could do for 2 thousand years.

But in general? Ask economists to compute what mortgage rates will be in 3 weeks and see if they could come up with a good result.


You would think that if the case against free trade were so obvious, some of them might have noticed by now. Yet economists as a rule continue to support free trade. The question is why?

If the case against communism was so obvious, how come most of academics, including economists, though that Soviet Union model was a way to go?

And check out Harvard prof Dani Rodrik blog, for information and links to other relevant Free Trade Sceptics work: http://rodrik.typepad.com/

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