It is just amazing to me these high-falutin senators and congressmen and wanna-be presidents do not have the basic understanding of macroeconomics. Imagine if the chairman of the NIH did not understand the law of conservation of energy! Hillary, who wants to be president, does not understand the theory of comparative advantage, which shows that free trade is beneficial to all countries, irrespective of wage or economic level. This theory, which is the equivalent of law of conservation of energy in science, was enunciated by David Ricardo way back in 1817. There is no evidence whatsoever that software engineers in India hurt americans. On the contrary, everything that we understand about economics teaches us that they helps americans. The boom in the tech sector since 2002 has, in part, been fueled by the explosive growth of the Indian software industry. Economists are predicting that the growth of the american economy over the next 20-30 years will be partly driven by the growth of India and China. While everyday americans in different walks of life may not understand this, a senator running for president and who has a lot to say in formulating public policy, has no excuse whatsoever for not understanding basic macroeconomics. It is supremely ironic that Bush, who actually understands comparative advantage (his harvard MBA helps I am sure), and hence does not demagogue Indian software engineers, is widely derided as a dunce.
RE:Outsourcing helps the US
by Valley Report on Jul 10, 2007 12:28 AM Permalink
What boom in the technology sector? The boom is in India since 2002. While in USA thousands and thousands of technology jobs are lost. Thousands of Indians had to either go back or settle for much lower jobs.
The only jobs that are left are consulting jobs for which too TCS, Wipro and other vultures are pouncing on. TCS has more than 10,000 people in USA at any time how?
In universities the biggest drop in enrollment is in computer science.
Voters will speak this time and the outsourcing lickers will be thrown out. There will be investigations on TCS and Wipro.
RE:Outsourcing helps the US
by Natarajan Vijay on Jul 10, 2007 02:32 AM Permalink
The GDP of the US in 2002 was 10 trillion dollars. Now it is nearly 13 trillion dollars. Information technology accounted for 476 billion dollars. In 2005, it is 578 billion dollars. (You can find all this information at the website of the statistical abstracts fo the US). To look at the economy in general, the DOW was at 8600 in 2002, today it is at 13600. To look at technology sector, NASDAQ was at 1373 in 2002, today it is at 2600.
I am not aware of any computer engineer in the United States, who knows SAP, C etc etc. who is unemployed. The US unemployment level is at 4.5%, which is considered as "full employment" by economists. On other hand, there are plenty of us, who feel that we are not paid enough. But then who feels that he is well compensated?
If US closes its borders to trade, it is hurting itself!
RE:Outsourcing helps the US
by Valley Report on Jul 10, 2007 08:22 AM Permalink
Software is a people intensive job so more people generating relatively lesser revenue than the manufacturing jobs.
SAP, Microsoft, Oracle all have huge development centers in India. Try and talk to people in SAP, Oracle etc. their hardcore development jobs are diminishing.
People with SAP, %u2018C%u2019 Java yes they do have a job but mostly they run around customer to customer on hourly consulting work. Or settle down with 20-40% drop in their compensation as compared to what they earned in late 90s. Again being eyed upon by TCSs and Wipros.
You have absolutely no idea of the computer industry in the US right? Those people who had 'great' jobs have settled for mediocre jobs. Many have already left or switched their profession. And those unfortunate Indians who had to have gone back.
Drop in University enrollment between 2004-2005-2006 is a clear indication as announced by the universities. You are like that Republican who flaunts the stock market for all the junk that is under your rug.
RE:Outsourcing helps the US
by Natarajan Vijay on Jul 10, 2007 09:56 PM Permalink
The only thing that is constant is capitalism is change. In 1900, 75% of the US workforce was employed in agriculture. Today, it is less than 5%. This happened because of increased productivity in agriculture which led to reduced prices for foods. This ultimately leads to increased prosperity for all americans. Now, that does not mean that it was easy for all these farmers and families who were in agriculture in 1900 to move over to other sectors. It was damn diffucult. But, the country as a whole benifited over the long run. In capitalist country, money is always chasing higher returns. This means the both labor and capital are constantly being shunted around for their most efficient use. Ultimately, this leads to greater output, but definitley it also leads to greater hardship for those in transition. If software engineers are paid less now, it is indeed hard for them, but it is to the benifit of all other americans who benefit from cheap software.
If you dont like it, you can look at India before 1980. Nobody who ever had a job lost his job! Promotions was automatic and based on seniority. No transitions, no worries. The net result : One of the poorest countries in the world.
I repeat : there is no evidence whatsoever that software engineers in India hurt americans. On the contrary, everything that we understand about economics teaches us that they help americans.
RE:RE:Outsourcing helps the US
by Valley Report on Jul 15, 2007 11:34 AM Permalink
You seem to be an economist
Economist are the magicians who ask you to focus on their one hand while their other hand does the trick.
Now imagine a scenario. All the US software jobs are still in the US. Kingfisher airlines will still need the jets so they will go ahead and buy $$ from the market and buy the jets.
India does not get the free jobs from US so they become more innovative and competitive in many other areas as also in Software. The country grows in a real free market scenario.
While if TCS and Wipro get the $$ then they will make 5 lacs out of an employee per month pay the employee 30K to 40K a month and pocket the remaining amount.
You can repeat as much as you like there is a clear evidence everywhere as to how many people lost jobs and are still losing. How many people have to settle for lower jobs and lower standard of living just because their jobs have gone to India.
RE:Outsourcing helps the US
by Natarajan Vijay on Jul 12, 2007 02:49 AM Permalink
You are listening too much to the Democrats who beleive that "exports are good, imports are bad". This is the old merchatilist philosophy of the East India Company which has been discredited many times over. It was first discredited by Adam smith in 1776 in his pathbreaking book "The wealth of nations". Lets follow the dollar. Lets say an american client is buying software services from TCS or WIPRO instead of some american company. Yes, as you say, "jobs get shifted" from this american company to TCS or WIPRO in India. This american client will pay $$ to TCS to get this software. What happens to this $$? TCS cannot pay its employees in India with $$ or buy other services in India for $$ because the indian currency is the Rupee. TCS has to exchange $$ for Re. But who buys this $$ from TCS? It has to be someone who wants to buy american goods/services or assets (stocks, bonds, real estate etc.) because that is the only use of the $$. So this person who acqurires $$ from TCS could be Kingfisher airlines which wants to buy Boeing jets. This would lead to more jet production at Boeing and more jobs for americans. If the US govt. were to limit software imports fron India, it would correspondingly limit Boeing jet sales to India. This might lead to loss of jobs at Boeing, eventhough it might mean a payraise for software engineers! America's resources which are better spent in making Boeing jets are used for making software, which could be made cheaper in India!!
RE:Outsourcing helps the US
by Natarajan Vijay on Jul 15, 2007 09:29 PM Permalink
My friend, You arguments are anecdotal while mine are based on macroeconomic theory and data from the last 250 years. If US does not import software from India, then the price of $$ in terms of rupees will increase to say 70 Re/$$ instead of the 40 now. This is simply because of the scarcity of dollars in India because India is not selling software to the US. This increased price will create a disincentive for Kingfisher to buy Jets from the US, they would rather buy from Airbus in Europe, which would mean that Airline manufacturing jobs will "get shifted" from US to Europe. The tragedy of it will be that Boening employees, who lose their jobs, wont even know that they lost their jobs because the US govt. was restricting software imports from India to "protect" software engineers. A more broader way to think about this is as follows. Countries are engaged in trade of goods, services and assets. So, if one country reduces its imports from another it also has to reduce its exports. You only get what you pay for.
RE:Outsourcing helps the US
by Vaaly Report on Jul 11, 2007 10:37 PM Permalink
Your example is inappropriate. US did not export farming. Farming got more efficient. On the other hand Software development BPO etc. going to India Over long run is detrimental to the country.
In car industry Toyota and Honda opened up number of factories in US bringing new jobs compensating for loss of jobs at GM and Ford.
While in India it is just one-way traffic. Get all jobs to India; If people are required in US then get them on twisted routes like L1.
You can't compare the growth and evolution in other industries with what India is doing to the software industry. Because Indian companies do not play with level playing field.
