The Ten Myths of Job Outsourcing
Published April 02, 2004
As the political season continues to heat up, one of the major points of debate has been job creation here in the US, and the role that "outsourcing" plays in the loss of American jobs. It is a great point of contention, and the political spin from John F Kerry on this issue has been unending.
But the issue of job creation and outsourcing may be a dead duck before too much longer. Today, the Wall Street Journal reports that:
U.S. nonagricultural payrolls rose by 308,000 in March, the fastest pace in
four years, besting economists' consensus estimate for a rise of 120,000
jobs.
And this number may yet be adjusted upwards. It does appear that, finally, the long-awaited jobs boom has arrived.
But in this election season, where everything we see and hear from the media seems to have some rightward or leftward spin to it, what are the real facts behind outsourcing? Is this topic just a political fad destined to die on November 3 or is it a real long-term issue that must be dealt with?
To help answer this question, I thought it might be useful to post a WebMemo on the issue posted yesterday on Townhall.com by three researchers/economists. The article is a summary of their research and is entitled, Ten Myths about Jobs and Outsourcing.
According to the authors, the ten myths are as follows:
- Myth #1: America is losing jobs.
Fact: More Americans are employed than ever before.
- Myth #2: The low unemployment rate excludes many discouraged workers.
Fact: Unemployment is dropping, despite a surging labor force.
- Myth #3: Outsourcing will cause a net loss of 3.3 million jobs.
Fact: Outsourcing has little net impact, and represents less than 1 percent of gross job turnover.
- Myth #4: Free trade, free labor, and free capital harm the U.S. economy.
Fact: Economic freedom is necessary for economic growth, new jobs, and higher living standards.
- Myth #5: A job outsourced is a job lost.
Fact: Outsourcing means efficiency.
- Myth #6: Outsourcing is a one-way street.
Fact: Outsourcing works both ways.
- Myth #7: American manufacturing jobs are moving to poor nations, especially China.
Fact: Nations are losing manufacturing jobs worldwide, even China.
- Myth #8: Only greedy corporations benefit from outsourcing.
Fact: Everyone benefits from outsourcing.
- Myth #9: The government can protect American workers from outsourcing.
Fact: Protectionism is isolationism and has a history of failure.
- Myth #10: Unemployment benefits should be extended beyond 26 weeks.
Fact: Jobless benefits are already working
I encourage you to read the entire article and post your comments.
Regards,
David Flanagan
Viewpointjournal.com
- The Ten Myths of Job Outsourcing
- Published: April 02, 2004
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- Writer: David Flanagan
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Comments
Big job jump for March, over 300K new jobs - that should seal it for Bush
If only about 8.5 million Americans are out of work, how can John Kerry add 10 million new jobs?
he will breed them for work, like Saruman did in The Two Towers
This is what's going to happen now, on the heels of the job report: abortion banned, right wing judges on the Supreme Court, gay marriage stalled, a fiscal crisis used to dismantle Social Security; the abandonment of 20% of the population to poverty; a bloated military; massive tax increases to pay for it; health care privatized and beyond the reach of millions.
With veto-proof majorities for the GOP that will come this fall, there is absolutely no way these things can be stopped.
If I was a conservative, I'd be ecstatic. Over the past thirty years, they have sought to return this society to the brutal laizzes-faire pre-New Deal capitalism, and to immunize society against social liberalism.
They have now achieved complete victory. An honest congratulations. You have every right to gloat. The country is now yours.
Wow - that's so wrong in so many ways I don't know know where to begin.
Some of the problems are in the way terminology is used. Others are in the logic, or lack thereof. In many, perhaps most, the "fact" has nothing or little to do with the corresponding "myth."
I will come back to this later, in some detail, but it may be a few days as BC isn't the only thing going here for the next few days.
Interesting post, though.
Mike, are you a quitter? I can understand your apathy, but does that mean you just throw in the towel?
Is there no hope left in your soul? All is not lost until you stop breathing or give up entirely.
It's time to recognize facts. You can call that quitting; I call it being realistic.
The truth is that anyone to the left of Bush has to reconcile himself to living in a society that is overwhelmingly hostile. Hard right conservatives face this problem in Canada. Fundamentalist Christians and Muslims face this problem in France.
I always like being an American, but now I have to adjust to living in what is for me an essentially foreign country. It's a crushing prospect.
The jobs figure is great. Note though, that during March the number of part-time workers went from 4.4 million to 4.7 million.
And during this administration, the number of people not seeking work has risen by 5 million (up to 75 million now).
I'm not sure what this last actually means, though - maybe we have 5 million more millionaires, lottery winners and retirees. Does anyone have a link to more details on this classification? TIA.
It's solid across the board, although whether it's sustainable is anyone's guess. I suspect it is.
However, the general tilt of new jobs is to the lower income brackets; and of course, even people with good jobs face increasingly rising health care costs.
It's likely the jobs improvements will get Bush re-elected, but will otherwise be modest overall.
I'm not surprised at the jobs report, but I am stunned that Bush and Company will escape censure for the scandals, and that they will now be able to implement the unfinished parts of their agenda. It truly is hard to take.
The White House very much resembles a Leninist regime; many conservatives, like Grover Norquist, openly admire the strategies, although obviously not the politics, of Antonio Gramsci.
Gramsci instructed how a Communist Party could rule secretly as a dictatorship in an advanced democratic society. He would be turning in his grave to how discover that his instructions came to fruition in such a peverse way.
Again, congratulations to hard right conservatives. It really is their country now.
Paul Krugman, hardly a wild-eyed socialist, radical or political zealot of any stripe, agrees with Mike:
That's from the Introduction to his book The Great Unraveling: Losing Our Way in the New Century. He could have called it: The Second American Revolution: You Slept Through It.
"The young Kissinger had it right: people who have been accustomed to stability can't bring themselves to believe what is happening when faced with a revolutionary power, and are therefore ineffective in opposing it.
"I should admit at this point that I am not entirely sure why this is happening - why we are now faced with such a radical challenge to our political and social system. Rich people did very well in the 1990s; why this hatred of anything that looks remotely like income redistribution? Corporations have flourished; why this urge to strip away modest environmental regulation? Churches of all denominations have prospered; why this attack on the separation of church and state? American power and influence have never been greater; why this drive to destroy our alliances and embark on military adventures? Nonetheless, it's increasingly clear that the right wants to do all these things. How should those of us who don't agree with its goals respond? ...
"[Here] is a general principle for understanding what's happening: do some homework to find out what these people really want. I'm not talking about deeply hidden motives; usually the true goal is in the public domain. You just have to look at what the people pushing the policy said before they were trying to sell it to the broader public. When you learn that the official now in charge of forest policy is a former timber industry lobbyist, you can surmise that the "healthy forests" initiative, under which logging companies will be allowed to cut down more trees, isn't about preventing forest fires. When you learn that the House majority leader has said that his purpose in office is to promote a "biblical worldview," you can surmise that "faith-based" initiatives aren't mainly about delivering social services more effectively. When you learn that the architects of the Iraq war have wanted to topple Saddam Hussein for a decade, you can surmise that the war has nothing to do with responding to September 11.
"Again, this is hard for journalists to deal with: they don't want to sound like crazy conspiracy theorists. But there's nothing crazy about ferreting out the real goals of the right wing; on the contrary, it's unrealistic to pretend that there isn't a sort of conspiracy here, albeit one whose organization and goals are pretty much out in the open." Paul Krugman.
Something that just shocked me to learn is that Canada is the second biggest beneficiary of U.S. IT outsourcing, despite its high wages. A major reason for this is almost certainly the country's single payer health system, which makes hiring there very cost-effective for U.S. businesses.
Had the U.S. adopted single payer, as it nearly did in the late 30s and then the early 70s, it may not have found itself in the dilemna it is now.
http://www.theglobeandmail.com/servlet/story/RTGAM.20040401.wofff0401/BNStory/Business/
The reason why American businesses outsource to Canada and other countries in such large numbers is because the federal government in this country taxes corporations at rates between 35 and 40 percent and because the cost of litigation in this country is far higher than in other countries.
Most other countries, with the exception of Japan I believe, do not tax corporation at anything near the rate that we do in the US. Instead, indivdual citizens pay most of the cost of their health services through very high individual taxes.
Here is a summary of the kinds of tax breaks that Canada offers:
Summary
Large- and medium-sized businesses: The average corporate tax rate in Canada is now below the average U.S. tax rate, and will be more than 6 percentage points lower by 2008.
Small businesses: Significantly lower corporate tax rates in Canada than in the U.S. on annual income above C$75,000. Similar corporate tax rates in Canada and the U.S. on income below C$75,000.
Capital gains: A $500,000 lifetime capital gains exemption for small business shares that has no equivalent in the U.S.
Research and development: A 20-per-cent research and development (R&D) tax credit in Canada for all R&D expenditures compared to the U.S. 20-per-cent credit for incremental R&D.
A 35-per-cent refundable
Here are combined personal income tax rates for anyone earning over $8012.00:
INCOME - 2004 RATE
first $29,590 24.79%
over $29,590 up to $35,000 29.58%
over $35,000 up to $59,180 35.58%
over $59,180 up to $70,000 37.17%
over $70,000 up to $113,804 41.17%
over $113,804 44.17%
Of course, there are also surtaxes and other sales taxes in Canada as well.
In England, which also has a single-payer system, there is a 17.5% sales tax on goods and services I believe which pays for their system above and beyond their other taxes.
Hope this helps.
Thanks.
David
The statistics on corporate taxes are meaningless in and of themselves because corporations in this country often pay far less in taxes than the official rate because of tax dodges and creative hedging strategies.
Corporations don't pay ANY taxes. You and I do, in the form of higher prices. I think corporations should not pay any taxes.
Single payer is expensive, absolutely, but it pays off in healthier citizens and lower health care costs.
IT ALSO ENCOURAGES PEOPLE TO FORM SMALL BUSINESSES AND WORK FOR SMALLER COMPANIES. In Canada, you can walk off the job and start your own company without worrying about health insurance. When single payer was first introducted in Canada, there was a huge spike in small business employment.
Single payer is amazingly efficient from an economic perspective, a huge spur to capitalism.
By the way, England is not single payer. It's socialized medicine, which is far different.
England is not single payer. It's socialized medicine, which is far different.
not in the minds of most amerian conservatives it ain't.
cover your ears, "commie" and "pinko" cries are soon to follow.
Most people here don't understand the UK or Europe in general. If they can't understand the people, how do you expect them to understand how they do health care??
By the way, England is not single payer. It's socialized medicine, which is far different.
Sorry, I don't know enough about the issue to comment more than I have. I will say that the thought of a single-payer system is enticing, though, I worry about supply and demand and the ability to have my kids treated quickly if they get sick.
Knowing how kooky we can get in this country, I wonder if we might develop a single-payer system but then have other medical centers which offer services at a rate for those who want "priority" care.
I don't say that I would never want to see such a system, I just don't want to pay oodles of money for it.
David
Socialized medicine means the state owns virtually the entire health care system; all doctors and nurses are salaried employees of the government. It is grossly inefficient and generates inferior care.
Single payer means the state pays for health services from public taxes, but doctors remain private practitioners. A single payer system is very decentralized in its provision of services. Its entrepreneural emphasis accounts in part for its fierce efficiency.
The United States is too cruel a society to ever have single payer.
"This is what's going to happen now, on the heels of the job report: abortion banned,"
Please. No Republican politician actually wants this. This would merely inflame their opposition and ensure their defeat in the next election.
They want the issue. And they will always have it, because they will never ban abortion.
"right wing judges on the Supreme Court,"
Well, I'm sure that a Republican-dominated Senate would allow this to occur. But I doubt the Dems are going to be below 40 Senate seats after November. And all you need is 40 seats for a filibuster...
Bush will likely nominate right-of-center justices, if given the chance. Think Justice Kennedy, not Justice Scalia.
"gay marriage stalled,"
Good.
"a fiscal crisis used to dismantle Social Security;"
The fiscal crisis is Social Security. Some party is going to have to deal with this fact.
"the abandonment of 20% of the population to poverty;"
LOL...
"a bloated military;"
I thought we were already over-stretched?
"massive tax increases to pay for it;"
Unlikely in a Bush Presidency. He'll leave the needed tax hikes to his successor.
"health care privatized and beyond the reach of millions."
LOL. Show up at a hospital some time with, say, a hang-nail. You'll get treated, and they won't really expect you to pay for it...
"With veto-proof majorities for the GOP that will come this fall,"
Not a chance.
"there is absolutely no way these things can be stopped."
In your delusional nightmare...
"If I was a conservative, I'd be ecstatic. Over the past thirty years, they have sought to return this society to the brutal laizzes-faire pre-New Deal capitalism, and to immunize society against social liberalism."
Republicans, in power, probably spend more than Democrats. This is a sad fact.
"They have now achieved complete victory. An honest congratulations. You have every right to gloat. The country is now yours."
Gimme a break. This country is for everyone. Just because your side loses a few elections, you wanna throw in the hat? What a pussy...
As I said, the original post was so wrong in so many ways, it was hard to know where to begin.
Heritage Foundation claims and conclusions should never, ever be taken to be factual or true (although some may be, of course) without first examining them closely if you value your credibility. I looked at the HF page repeated here, and have comments posted as De-mythifying the Heritage Foundation's 10 Jobs Myths
Check it out.
bullshit
digiBlitz Technologies, a total IT solutions provider having its Corporate Head Quarters in Virginia, USA and having offices in Chennai India.
reasons outsourcing is BAD!
dispelling the MYTHs
1: Small business starts going way down because they cannot compete with large business getting cheap labor overseas.
2: Technical people who make up a large part of the middle class cannot afford to live on there newly aquired job at WalMart.
3: Since all the low-level technical type jobs are moving to Bangladore India. There will be no one to replace those doing the higher level jobs that retire in the US. It takes years of experience to become a high level engineer. Eventually the expertise will be gone and America will be out all of these jobs.
4: Globalization is a Pnadora's box. Once opened, America's economy will never be the same we are facing the elimination of the middle class. I belive the new slogan of the american worker will soon be "welome to wallmart! Would you like a basket?"






CaptialistCatechism classes are are out for the day boys and girls!
now, let's all change into our play clothes and have a rousing game of kickball!
yay!!