Business Week runs a long, balanced article on India’s economy and its relationship to the United States.
For all its R&D labs, India remains visibly Third World. IT service exports employ less than 1% of the workforce. Per-capita income is just $460, and 300 million Indians subsist on $1 a day or less. Lethargic courts can take 20 years to resolve contract disputes. And what pass for highways in Bombay are choked, crumbling roads lined with slums, garbage heaps, and homeless migrants sleeping on bare pavement. More than a third of India’s 1 billion citizens are illiterate, and just 60% of homes have electricity. Most bureaucracies are bloated, corrupt, and dysfunctional…
If India manages growth well, its huge population could prove an asset. By 2020, 47% of Indians will be between 15 and 59, compared with 35% now. The working-age populations of the U.S. and China are projected to shrink. So India is destined to have the world’s largest population of workers and consumers. That’s a big reason why Goldman, Sachs & Co. (GS ) thinks India will be able to sustain 7.5% annual growth after 2005.
For Discussion. Is American education in math, science, and engineering strong enough to enable future workers to compete with those from India?
READER COMMENTS
Mcwop
Dec 1 2003 at 8:06am
For Discussion. Is American education in math, science, and engineering strong enough to enable future workers to compete with those from India?
Yes and no. There are people strong in these areas, but not enough produced in this country. The U.S. labor market imports much of the talent strong in these areas. This will not change until public schools make these subjects a focus, which will require paying math and science teachers more than say a phys ed teacher. Today, the phys ed teacher with more seniority gets paid more than a math teacher with less seniority. I wonder, which subject is harder?
Steve
Dec 1 2003 at 8:49am
If the jobs paid well, there would be Americans to fill them.
If you could expect a rewarding job as a programmer/math teacher/chemist that wouldn’t be immediately sent to India when upper management felt the time was right for a bonus (for themselves), people would stop spending $50k on getting a degree in marketting and start studying the hard sciences.
No offense inteded to marketting majors, just an observation.
Eric Krieg
Dec 1 2003 at 10:18am
>>If the jobs paid well, there would be Americans to fill them.
Not necessarily. I don’t know how much math you need to know to be a programmer (I assume nothing more than algebra), but just get into engineering school and survive, you need to have a solid foundaton right up to and including trigonometry. And engineering itself requires calculus and differential equations.
I don’t think that your average American high school graduate has such an education. Maybe the white kids in the ‘burbs do, but I know for a fact that the black and hispanic kids in the cities do not get that kind of education. I don’t see how America can thrive if non-whites aren’t getting the right kind of education.
I think that there is an consesnus developing among economists that the 1990’s tech boom was built on the back of foreign engineers. If these foreign engineers can make a good living in their own countries, why would they come here?
And then on the other hand you have the fact that China alone graduates 600,000 new engineers per year (that isn’t a typo, the number really is 600,000). They certainly have the engineering muscle to sustain their capacity for high tech.
Steve
Dec 1 2003 at 10:43am
I took Calc I, II, III, Linear algebra, engineering statistics, and differential equations. As much math as any engineer. I really resent “real engineers” thinking that computer science isn’t a science. Thanks for reinforcing that belief.
600,000 paper tigers/year does not impress me.
Lawrance George Lux
Dec 1 2003 at 11:54am
India is not the problem for the American Worker, China is. Indian cluture derives from a Family-friendly inclusiveness. Chinese culture, on the other hand, is far more directed to survival of the Fit. Indian workers will slow down, as Population and Family members increase in number; Chinese will get more ruthless, even resorting to criminal practice to eliminate Income threats. lgl
Steve
Dec 1 2003 at 12:51pm
–> Chinese will get more ruthless, even resorting to criminal practice to eliminate Income threats.
Eric Krieg
Dec 1 2003 at 2:22pm
>>I took Calc I, II, III, Linear algebra, engineering statistics, and differential equations. As much math as any engineer.
Good for you. But what math was actually required?
>>I really resent “real engineers” thinking that computer science isn’t a science.
You know why engineers think that way? Resentment!
We resent all the guys who dropped out of engineering, went into CS, got great grades while working MUCH less, and then got starting salaries DOUBLE that of engineers.
The way we deal with that frustration is by bad mouthing computer science.
Oh, and the licensed professional engineer in me reminds you that the word “engineer” means something legally. Programming does not fall under that meaning, so legally programmers are not engineers.
Of course, this never stopped Microsoft from creating the famed “Miscrosoft Certified Sysytems Engineer”. If you have enough money, you can call yourself whatever you want.
Eric Krieg
Dec 1 2003 at 2:27pm
>>600,000 paper tigers/year does not impress me.
?
I have no idea what the quality of those graduates is, but the shear number ensures that a large number of good (enough) engineers are being thrown into the workplace every year. It is enough to make China VERY competitive.
And that’s the main point: China doesn’t need to be the best at manufacturing. That’s the Germans. They just need to be good enough, and very cheap.
Engineers in China average about $23,000 per year in salary and benefits. That’s cheap. I’d be willing to bet that the Chinese engineers’ skills are good enough for most items.
Steve
Dec 1 2003 at 2:52pm
–>We resent all the guys who dropped out of engineering, went into CS, got great grades while working MUCH less, and then got starting salaries DOUBLE
that of engineers.I have no idea what the quality of those graduates is, but the shear number ensures that a large number of good (enough) engineers are being thrown
into the workplace every year. It is enough to make China VERY competitive.
Steve
Dec 1 2003 at 3:07pm
…and another thing…according to IEEE, the average LPE makes 101K/year. I’d have to make more than the prez of my company to make “double what engineers make”.
Also, where does this BS about being a programmer is “easy” come from? I could say that playing around with Mentor Graphics, mathmatica, or Autocad all day (what we picture you guys doing) is easy, too.
Yes, all that math is required for being a CS graduate. Check your own school for details, Eric.
so you realize the danger that the Asians are putting us in, yet you are STILL pro-free trade in service labor. Silly..
Eric Krieg
Dec 1 2003 at 4:39pm
>>…and another thing…according to IEEE, the average LPE makes 101K/year. I’d have to make more than the prez of my company to make “double what engineers make”.
I’m talking about starting salary. An LPE is someone who has 4 years of experience, minimum just to take the test. Most LPE’s have a lot more experience than that, which raises the average.
And electrical engineers in general make more than the engineering average.
I was thinking that the starting salary for engineers was in the $35k range (maybe a little low).
Eric Krieg
Dec 1 2003 at 4:41pm
>>Also, where does this BS about being a programmer is “easy” come from?
Look, I’m just telling you what my buddies who switched said. It’s easier.
Of course, I’m not talking about working as an actual engineer vs. as a programmer. I’m just talking about the schooling.
Steve
Dec 1 2003 at 4:45pm
…and starting salary for programmers is roughly $5k in India and 40k here. A programmer with 4-5 years experience here has dreams of someday making 1/2 of the 100k LPEs enjoy. I guess you’re wrong (again).
Eric Krieg
Dec 1 2003 at 4:49pm
>>Yep, and the Chinese protect their own unlike the Americans. Ever heard of a Chinese engineer losing his job to any other nationality?
I don’t know where you are getting your info from, but you are misinformed.
The Chinese, being Communists, have a huge, inefficient state owned sector. But they realize the folly that is Communism, and are slowly but surely liquidating their state sector and moving towards capitalism.
In doing so, these companies are shedding workers in massive numbers. Manchuria has more labor strife than anywhere in America. More unemployment too, which is bad because there is no social insurance system in China.
Are the Chinese protectionist? Well, they’re a lot less so than the Japanese are! The Japanese are about as mercantalist as a country can be. The Chinese are a lot less so. The barriers to entry to their market seem pretty trivial to me.
Eric Krieg
Dec 1 2003 at 4:51pm
So you’re saying that a CS grad with 4-5 years experience makes 40K?
I don’t believe it.
Eric Krieg
Dec 1 2003 at 4:52pm
>>They have the highest tarrifs on the planet, and we wonder why they are eating our lunches.
Really? What level of tarrif would that be?
Steve
Dec 1 2003 at 5:06pm
No, I make a lot more than 40k and have more than 5 years of experience. The difference is that after this round of globalization, I will not make more than 40k unless I jump fields, while the LPE will still make over 100k. Quit putting down computer science majors. We’re in this global war for our existance together, okay?
The Chinese have a 100% tariff on cars imported from America for starters. If you don’t build it in China, you cannot sell it in China (as a rule). Yes, why is it okay for Japan to be Mercantilistic, but not for us? Oh, sure, Smith says “Mericantillism–BAD”, guess what? Smith died two centuries ago.
Eric Krieg
Dec 1 2003 at 5:13pm
>>A programmer with 4-5 years experience here has dreams of someday making 1/2 of the 100k LPEs enjoy.
An EE LPE with maybe 15 years experience might make $100k.
This LPE, with 8 years experience, makes a little over half that 100k.
Maybe my perspective is warped because all the IT and programmer guys I know make a lot more than I do.
Steve
Dec 1 2003 at 5:20pm
Maybe because we have the schooling and are qualified to do what we do, while you’re still in school. I don’t know why you make so little, perhaps you should find another company to work for.
…or perhaps the white collar people of the US should unite in, oh gosh, I don’t know a, “gathering” where a group of likeminded individuals put an end to the relentless offshoring of our jobs. I’d rather not use the “u” word on a libertarian website, it might just delete my post automatically, but you ought to get my point. If it wasn’t for these “gatherings” 40 years ago, there would be no employment left in manufacturing, and none of us would have 40 hour work weeks.
Eric Krieg
Dec 1 2003 at 5:22pm
>>The Chinese have a 100% tariff on cars imported from America for starters.
That is outdated information. The Chinese just cut a deal to buy boatloads of US built Fords.
It is NOT okay for the Japanese to be mercantalistic. In the 1980s, Japanese mercantalism was a big issue. It is not even mentioned anymore. Why is that?
I take the hysteria about China and India with a grain of salt. The same things were said about the Japanese in the 1980s and the Mexicans in the 1990s.
Also, I don’t think that Chinese and Indian gains in manufacturing and IT are sustainable without some major infrastructure investment on their part (it is hard to program a computer when there is no electricity!).
There are huge opportunities for engineers in the electric power and oil refining fields in these countries. I’m working on a project for Reliance and the Indian Oil Company in India as we speak.
BTW, the Indians must have INVENTED protectionism! It is very difficult to work in that country, with lots of minimum Indian content laws. My company is very savvy, and we routinely get around such laws with creative accounting (for example, who is to say where an Autocad drawing is produced. We do the drawings here, and print them in India. We count that as 100% Indian content!).
Steve
Dec 1 2003 at 5:27pm
SEE! India protects its own people, and so does Japan! Why don’t WE do the same? It’s because big business owns congress and the White House, plus they only listen to the free traders while everyone else suffers. Do you REALLY think that NAFTA lowered prices and raised living standards in the US? I’ve got a bridge to sell you if you do believe this.
The only thing that will fix this is a Paki vs India showdown over Kashmir. It’ll get all the CEOs nervous and they’ll pull everything out as soon as the first bomb drops. It’ll be great.
Eric Krieg
Dec 1 2003 at 5:34pm
>>Maybe because we have the schooling and are qualified to do what we do, while you’re still in school.
Nope. The masters degree is nothing more than continuing education.
>>I don’t know why you make so little, perhaps you should find another company to work for.
True enough, and good advice for anyone (including you!). My hope is that the next boom in the global economy and US employment will coincide with a boom in global demand for oil refining and power production, and my skills in these fields will be in great demand.
Believe me, I will be one of the first out the door of my company when the economy improves. A higher salary will be at the top of my list (although you HAVE to love the internet usage policy here!).
Eric Krieg
Dec 1 2003 at 5:38pm
I don’t see India’s protectionism as a model for anyone, much less the US. India has been poor for so long (stagnating, really) because they are protectionist.
India has only begun to grow economically since they have become LESS protectionist.
One reason that Japan has stagnated for more than a decade is because of their unwillingness to change. Protectionism goes right along with that, protecting domestic, sunsetting industries at the expense of new industry.
Eric Krieg
Dec 1 2003 at 5:40pm
Steve, you need to read about the tariff issue during the 19th Century. It is one of the reasons that the Civil War was fought.
At that time, it was Big Business that was for the tariff. But now it is Big Business that is for free trade?
Somehow, I think that there are MANY Big Businesses (how about the Big Three) that would welcome protectionism.
Eric Krieg
Dec 1 2003 at 5:43pm
>>I’d rather not use the “u” word on a libertarian website, it might just delete my post automatically, but you ought to get my point.
Hey, Boeing’s engineers are unionized. Stranger things have happened. It is not unprecedented (teachers used to be professionals, but now are nothing more than union hacks).
Steve
Dec 1 2003 at 6:09pm
Of course big business is for free trade! That’s the only way they can get cheap labor, which is what the republican party is all about.
All unwanted babies shall be born–source of CHEAP labor when they grow up
Open the borders! NEAR FREE LABOR!
Free trade with China–Literal slave labor in many parts!
A vote for the GOP is a vote for cheap labor.
Steve
Dec 1 2003 at 6:12pm
How does a know-nothing programmer learn about power generation? What kinds of Master degree programs would qualify one to become an LPE?
Sounds like a very useful field to me. Still not globalization-proof though.
Dan
Dec 1 2003 at 7:27pm
I understand why someone would feel angry when his interests are threatened by trade. But is it really so hard to admit that it may just be the case that a correct understanding of trade lends supports to policies that are contrary to one’s own interests?
Espousing mercantilism should be as impossible as believing in a flat earth for anyone with a coherent mind and a little knowledge. Smith didn’t just ‘say’ that mercantilism was ‘bad’. Never mind good or bad – he and others after him showed that it was wrong, untrue, based on fallacious reasoning. Is it really easier to believe in a palpably false theory than to truthfully say ‘despite the fact that free trade in XYZ is good for the country, it is bad for me personally and so I’m going to oppose it unless I’m compensated for my losses’?
N.B. Of course there are arguments against free trade that do not rely on mercantilist fallacies, but I haven’t seen any of them aired here.
Steve
Dec 2 2003 at 12:11am
Dan–
It’s bad for 60% of our working population. Read the rest of the article quoted (it’s in business week this week). Indians are proclaiming loudly how proud they are that they are going to contribulte to OUTRIGHT DEFLATION in the ENTIRE SERVICES INDUSTRY (60% of our working population).
Tack onto that the deflation caused by China which is destroying our manufacturing employment (14% of the working population there) and you’re talking about a HUGE majority of people who won’t be able to service their mortgages and car loans.
Don’t know about you, but when nearly 80% of the people are in jobs with deflating salaries and mortgages that don’t deflate, we’re in a WORLD of hurt, regardless of whether I think free trade is good or not.
Just wait, your job is next, dan-o…
Eric Krieg
Dec 2 2003 at 9:23am
>>What kinds of Master degree programs would qualify one to become an LPE?
The first step to licensure is a degree in ENGINEERING from an ABET (the accredidation organization for engineering schools) accredited school.
So, most probably, a masters degree in computer engineering would be possible for a person with a CS degree. You might need to take some remedial courses in engineering, some of the basics like circuit design.
Next, when you graduate, there is a 4 hour test of “the basics of engineering” called the Fundamentals of Engineering exam. You need to pass this test, which has a failure rate of about 30%.
Next, you need 4 years of experience under the supervision of a licensed engineer.
Finally, you need to take an 8 hour exam in your specialty of engineering. The pass rate on this test for people taking it the first time is very low. I’ve heard as low as 10% (it varies by state and by subject).
So, you see, it isn’t easy to get licensed. Only a very small subset of engineers obtain licensure. I speculate that it is only the engineers with the highest IQs that are smart enough to pass the exams. Since IQ and salary are highly correlated, this explains that (almost obscene) salary that IEEE posted on their website.
Eric Krieg
Dec 2 2003 at 9:39am
This is what I am talking about with regards to India. It is going to take them a lot of work and restructuring if they expect to grow much from here.
http://www.businessweek.com/bwdaily/dnflash/dec2003/nf2003122_2404_db010.htm
Steve
Dec 2 2003 at 11:05am
And THIS is what I’m talking about for why we need tariffs on services:
http://www.conference-board.org/economics/press.cfm?press_ID=2278
Gosh, it says the 60s had much higher growth rates than the 90s! And to think, we had high tariffs and people could count on having a job for life. We didn’t have NAFTA, GAAT, or WTO!
Eric Krieg
Dec 2 2003 at 11:59am
I completely agree with your link. The world ISN’T growing fast enough. But it isn’t the fault of the Chinese or Indians!
It is the fault of the Japanese and the Europeans and all the other countries that have corrupt, Democrat party type elites that resist Ronald Reagan style restructuring of their stagnating economies.
If we could clone a Japanese, French, and German Ronald Reagan, we could get the worldwide economic growth needed to create “enough” jobs.
Steve
Dec 2 2003 at 1:21pm
Reagans policies were trojan horses used to mask the fact that he was giving more money to the already rich. They did nothing to spur job growth.
If Reagan’s policies worked so well, and tax cuts cure all that ills us, why did the tax increases implemented by clinton (and 51st vote cast by Gore!) spark the greatest economic expansion in history?
Why do supply siders always think we’re on the right hand side of the laffer curve? Why do they think it’s shaped like a bell? Why couldn’t it look like a sin(x) curve that happens to hit $0 at 100% and 0%?
If you honestly believe that it is the Japanese and Europeans holding us back, why don’t we kick them out of the WTO? Why do we continue to let them ravage our labor markets with their cheap labor/goods?
Eric Krieg
Dec 2 2003 at 2:04pm
>>If you honestly believe that it is the Japanese and Europeans holding us back, why don’t we kick them out of the WTO? Why do we continue to let them ravage our labor markets with their cheap labor/goods?
They’re NOT cheap. But it has nothing to do with what they sell us here, or what they buy there. It has to do with them not growing, because their economies are inefficent.
In Japan, they are saddled with bad debts.
In Europe, it is a welfare state that makes them inefficient.
In any case, what is needed is restructuring. In Japan, the banking system needs reform, and bankrupt companies need to be allowed to go bankrupt.
In Europe, they need a Margaret Thatcher (since you don’t like Reagan) like person to take on the unions and pare back the welfare state.
As for Reagan, he did a lot more than cut taxes. While the tax cuts were the most important thing he did (the top rate was 70%!!! when he took office), deregulation was almost just as important.
Eric Krieg
Dec 2 2003 at 2:10pm
>>If Reagan’s policies worked so well, and tax cuts cure all that ills us, why did the tax increases implemented by clinton (and 51st vote cast by Gore!) spark the greatest economic expansion in history?
They didn’t. If tax increases are so good, why didn’t the economy boom in 1991, when George H.W. Bush raised taxes? Why was the economy so weak in 1993 and 1994?
I don’t see how a booming economy in 1997 through 1999 can be laid at the feet of a tax increase in 1993. Explain it to me.
And if the 1990s were the greatest economy ever, that’s really too bad. It was a bubble economy, and completely unsustainable.
Sorry, I don’t think a bunch of programmers starting Internet companies that did nothing more than waste the capital that was invested in them, and that never made a buck, was a productive use of ANYONES’ time.
The 1990’s were an illusion. There were a lot of jobs, but they were for firms that weren’t real. Thus, in fact, the jobs weren’t real, and we shouldn’t be surprised that it has taken so long for the economy to recover.
Steve
Dec 2 2003 at 4:05pm
I forgot…you’re a supply-sider.
The new definition of a supply-sider is someone who prefers the entire workforce to be on Paxil because they’re scared to death that the Indians and Chinese are going to wreck their standard of living rather than having an optimistic and naturally happy workforce who can find jobs around every corner.
Forgive my ignorance.
Eric Krieg
Dec 2 2003 at 4:12pm
I prefer Zoloft.
I am sure that there is SOME psychoactive drug that will cure me of this Internet addiction.
Eric Krieg
Dec 2 2003 at 4:34pm
This is for the whinny babies like Steve who think that Americans can’t compete with Indians or Chinese.
http://home.comcast.net/~dakriegs/Doc031203.pdf
Steve
Dec 2 2003 at 4:42pm
Read his conclusion paragraph one more time and tell me again that we can still compete? It is quite obvious that we cannot compete and this article agrees.
Steve
Dec 2 2003 at 4:50pm
LEARN A 2ND LANGUAGE? Preferably CHINESE?!!??
And when does he think we can immerse ourselves in 24 hr/day language learning that it would take to learn such a thing??
“Shorten development time”??? If that were possible, wouldn’t we already do it?!?!
I’ve read this thing 3 times now and am more convinced now that we can’t compete as engineers than I was a minute ago! Tell me how this guy gives us any hope!?!?
Eric Krieg
Dec 2 2003 at 5:01pm
Steve, you need to work on your reading comprehension.
The point of the article is that we can’t do business the way we have always done business. We can’t go about projects in a brute force manner and compete with the Indians, because our labor is too expensive.
But if we work smarter, and are way more effective, and thus productive, we CAN compete.
The Indians don’t work effectively, I can tell you that from personal experience. They use 10 people for a job that could be done better by one. That is the nature of cheap labor, in many ways it is wasted.
Look at it this way. Would you rather drive a Hyundai or a BMW? The Hyundai is a fraction of the cost of the BMW. By all rights, Hyundai should be cleaning up, just taking over the US auto market.
But, in fact, it is BMW that is ascendant. It is by far the most profitable car company operating in America (on a per unit basis). People gladly pay the premium that it costs to own a BMW.
Why is that? Because cost is not everything! There are other attributes of products and services that people desire (such as getting projects done on time!!! and on budget!!!).
If you can’t compete with the Indians on price, then you have to find some other way to compete with them.
Eric Krieg
Dec 2 2003 at 5:04pm
I had a Chinese girlfriend who insisted that to get along in China you needed to know only 500 words.
I’m sorry, I didn’t date her long enough to find out if it was true or not.
Clearly, Americans’ inability to speak foreign languages, or even English very well, is a huge problem. I don’t expect high school grads to be fluent in Chinese, but I do expect a good knowledge of Spanish, as well as ENGLISH!!!
Steve
Dec 2 2003 at 5:14pm
I’ve actually read that Porsche is the most profitable auto mfg’er on the planet, but your point is well taken.
500 words, eh? How do you say “will code for food” in Mandarin?
Eric Krieg
Dec 2 2003 at 5:17pm
>>500 words, eh? How do you say “will code for food” in Mandarin?
Man, I wish I could ask her for you. She was a NICE girl.
Steve
Dec 2 2003 at 5:20pm
Oh, yeah, and my source was a Trival Pursuit question from a few years ago, so who knows how accurate it is. 🙂
Eric Krieg
Dec 2 2003 at 5:29pm
The problem occurs when the Indians and Chinese read my article and follows the advice better than we do.
Remeber that the Japanese used to be as cheap as the Chinese. But they implemented a program very similar to the one outlined in my column.
This is how Toyota and Honda went from nothing to simply dominating the US auto market.
Steve
Dec 2 2003 at 6:40pm
Well, currency manipulation by their government, free government loans, and banks that forgive debt didn’t hurt Toyota and Honda, either…
Your article also says nothing about the folks who are about to graduate with zero experience (or folks like me who want a career change). How can we implement your plan without any experience to start with?
Something that keeps me up at night regarding the Indians: the speed that software is written at cannot (I repeat CANNOT) be sped up by adding more people like an assemply line can. Yet, the Indians are still able to outproduce us by simply adding more people. Either CEOs are lying about thier success rate to scare current employees into submission, or the Indians are more than just “lots and lots of programmers in a room pounding out code all day”. I sure hope it’s the first one, because that is something we can all deal with if the job market ever turns around.
Eric Krieg
Dec 3 2003 at 9:49am
>>Well, currency manipulation by their government, free government loans, and banks that forgive debt didn’t hurt Toyota and Honda, either…
Of course these foolish policies have hurt Toyota and Honda!
Look, both companies would LOVE to make more money in Japan. But they can’t, because the Japanese market is in its 12th year (12th!) of recession.
The reason the Japanese are in a recession from which they cannot escape is because of very foolish fiscal and monetary policies, including the manipulation of the yen and their inability to clean up their banking system.
Once again, my solution is regime change! Oh, what CAN’T the US Marines do?
Seriously, currency manipulation is a double edged sword. Ask the Canadians. While their girly man dollar has come back some recently, it is still very cheap relative to the dollar (back in the 1970s it was worth MORE than 1 USD! Last year it was worth something like 65 cents),
A cheap Canadian dollar does make Canadian exports cheaper, no doubt. But it also makes importing US technology much more expensive. As a result, the Candians use much more labor than we do, they are much less productive, AND THEY ARE POOR!
Eric Krieg
Dec 3 2003 at 10:05am
>>>Either CEOs are lying about thier success rate to scare current employees into submission, or the Indians are more than just “lots and lots of programmers in a room pounding out code all day”. I sure hope it’s the first one, because that is something we can all deal with if the job market ever turns around.
Dude, there is SO MUCH BS going around about the Indians. It is nothing more than the latest management fad, and like all management fads it has not been well thought out, and will not be well executed.
Some companies are going to lose some serious money by outsourcing to India, mark my words. They are going to LOSE MONEY, not save it.
Steve
Dec 3 2003 at 10:21am
I hope you’re right about the outsourcing thing. It’s hard to argue with Jack Welch’s success at screwing the white collars in America, but I guess not everyone will be so successful.
Re: Japan–5.5% unemployment rate. Nearly the same in Canada. Our’s is nearly 10% when you include discouraged workers. ‘Nuff said.
Eric Krieg
Dec 3 2003 at 11:16am
>>Re: Japan–5.5% unemployment rate. Nearly the same in Canada. Our’s is nearly 10% when you include discouraged workers. ‘Nuff said.
Come on, man. You have to compate apples to apples. If you want to look at discouraged workers in the US, you need to look at the situation up north and in Japan similarly.
How many people in Japan are working at technically bankrupt corporations that would be liquidated if they were here in America? Those people only have “jobs” because Japanese politicians won’t let the companies fail. In reality, they are not employed anymore than someone on welfare (or workfare) is employed.
The Canadian unemployment rate is not 5.5%. It is above ours. And they have a bigger welfare state, and thus, a bigger pool of “discouraged” workers than we do.
A big deal of the difference between Canadian and US enemployment rates is due to nothing more than the differences between our unemployment insurance systems. Ronald Reagan, bless him as the god that he is, reformed our unemployement insurance system. Among other things, he drastically shortened the amount of time people could stay on unempolyment.
The Canadians have a system right out of the 1970s. You can basically work for 6 months and take 6 months off. As a result, there isn’t as much of an incentive for the laid off to find new work, and they stay unemployed longer.
Steve
Dec 3 2003 at 1:29pm
Does the fact that their companies should be liquidated make the jobs any less real? Is the money any less real? Also, the companies compete against OUR companies and are able to undercut OUR prices by currency manipulation AND free subsidies by the govn’t and the banks!
I don’t feel sorry for Honda or Toyota. You’re going to trumpet the fact that they have some plants in Mississippi or something, but I guess I should remind you that they are only building here because of a REAGAN-ERA tariff on cars and trucks that was just lifted within the last 5 years or so.
Why do we get so LITTLE in unemployment insurance? It keeps us from taking any risks because we know the most we can get is $250/week. Here’s a riddle for you:
We all pay in 3% of our salaries (and it’s matched by employers, so it’s really 6%), our unemployment rate is 6%ish, right? Why don’t we get our full salaries while we’re unemployed, then? Where does it all go?
Eric Krieg
Dec 3 2003 at 2:04pm
>>Does the fact that their companies should be liquidated make the jobs any less real? Is the money any less real?
YES! Of course it isn’t real.
The only reason that the companies survive is that the banks don’t call the loans. In order to meet payroll the companies continue to borrow, soaking up capital that could be better used elsewhere.
New businesses, ones that MIGHT generate some REAL JOBS, are thus starved of capital despite the legendary Japanese savings rate. The Japanese do save a lot, but that savings is largely squandered by Japanese banks on bad loans.
To add insult to injury, it isn’t even that the Japanese are using their banking system as a substitute for a welfare state. The top marginal tax rate in Japan is a staggering 60%.
One wonders how long this nonsense can go on. You should check out econopundit.com and the discussion about where the US dollar is going. A steady fall is forcasted because of our trade deficit (a market response). The analysis is the dollar vs. the Euro, but I am sure that there is similar pressure on the yen. Personally, I don’t think that the BOJ can print enough money to keep the yen from falling.
Steve
Dec 3 2003 at 5:12pm
Eric–
The goal of currency manipulation is for your currency to fall, not rise. And printing money will cause this to happen. Of course the BOJ will continue to print money.
The “fake” jobs still pay REAL money! How do I know MY job is real and not fake? It pays REAL money, too! It’s like the matrix in a way, eh?
The “nonsense” can go on FOREVER as long as we let it. They will continue to subsidize all their industries while ours simple wither away to nothing. I guess it could (in theory) end when the yen is so cheap that they can’t buy paper to print on it. They’ll have 0% unemployment, Hondas will cost $5,000, but they’ll have no way to print currency. It happened to the South during the civil war.
Eric Krieg
Dec 3 2003 at 9:09pm
>>The goal of currency manipulation is for your currency to fall, not rise. And printing money will cause this to happen. Of course the BOJ will continue to print money.
Sorry, let’s get our terms straight.
By “rise”, I mean that the BOJ wants the yen to go in the direction of 120 yen to the dollar from its current level of less than 110.
By “fall”, I mean that our trade deficit is pushing the yen in the opposite direction, towards 100 yen to the dollar or even less.
The FAIR model used at econopundit.com is showing that, against the Euro, the dollar is going to fall and the Euro is going to rise. Just today the Euro hit a record price.
The same pressure is on the Yen, but the BOJ manipulates its currency on the open market, so it hasn’t risen as much.
But manipulating the currency isn’t a free lunch. It costs the BOJ to implement. They can’t do it forever, and in the end, their actions may be just like pissing in the ocean. It doesn’t have much of an effect. The tides are just too great.
Eric Krieg
Dec 3 2003 at 9:12pm
>>The “fake” jobs still pay REAL money! How do I know MY job is real and not fake? It pays REAL money, too! It’s like the matrix in a way, eh?
Yeah, but that job isn’t stable over the long term. Like all those dot bomb jobs, they were nice while they lasted, but in the end you have nothing to show for it.
And the hangover from all that mis-allocated capital is a bitch to overcome! That’s why this recession has lasted so long, and that’s why the Japanese have yet to get out of a recession that, for them started in 1991!!!!
Eric Krieg
Dec 3 2003 at 9:17pm
>>The “nonsense” can go on FOREVER as long as we let it.
I don’t think so. There has to be a reckoning at some point. Insolvency on that level cannot go on forever. Where will the money come from? Toyota and Honda are profitable companies, but they can’t support the Japanese economy on their own. It is domestic Japanese companies that are riddled with debt.
Say what you want about Americans, that we are short term focused or whatever. But when we FINALLY acknowledge that we have a problem (say, the S&L crisis), we DO SOMETHING ABOUT IT!
One reason I REALLY dislike the Europeans and the Japanese is that they don’t admit that they have problems and even if they do, they don’t so anything about it! Whether it is a creaky economy or Sadaam Hussein, they are content with just muddling along.
Steve
Dec 3 2003 at 10:27pm
Ok, we’re straight on terms then.
So do you think we’re heading into a time of prosperity or a time of Japan-like deflation or 70s-esque stagflation?
Friday will give another big hint. I hope we see some serious employment growth.
Honestly, Eric, I could care less if G.W. wins or not (I’m voting for Richard Gebhart, either way), what I care about is that every American makes a good living and has a stable job. Even if that means some people make 450 times the average worker, I’m okay with that. I just see supply side economics as a myth, like the tooth fairy, santa, and well made French automobiles.
Keynsian Economics has never failed us. Why should we switch horses in mid-race? Supply-side is just wealth transfer to the rich from the middle and lower classes.
Prashant P Kothari
Dec 4 2003 at 12:15am
Steve: “We’re selling out our young people by exporting our jobs to India. What will be left?”
Steve, I would encourage you to reread the BW article. India’s total IT services exports to the US in 2003 are less than $7 billion, out of a total American market = 3% market share.
Software products revenues from India are minimal — a few hundred million dollars at best.
Point of comparison:
IBM Global Services revenues are $35 billion dollars = one company has 5 times the revenue of ALL of India.
MSFT has $60 billion in cash, that’s 100 times India’s software products revenues.
Back in 1999, the chatteratic said “ALL OFFLINE STORES ARE DEAD, SINCE EVERYONE WILL BUY FROM THE WEB”. Does anyone still believe this crap any more?
Similarly, all these alarmist fears about India TAKING OVER will subside once the economy improves.
FYI, Wal-mart’s sales in 2003, four years after then, are many times as much ALL online stores COMBINED
Full disclosure: I am the head of a company that offers white collar services from India (http://www.stringinfo.com) — back-office processing for mortgage companies/ publishers and such like.
Steve
Dec 4 2003 at 8:51am
Prashant–
Tell that to the millions of highly-paid IT pros who have lost their jobs because of your government subsidizing the oversupply of IT labor through free schooling. I don’t blame your population, really it falls in the lap of GREEDY CEOs in America and their henchmen in Washington.
All the numbers you spouted only say one thing: “INDIAN IT WORKERS ARE CHEAP”. You can screw a lot more Americans on a “few hundred million dollars” than you’d think.
I thought globalization was supposed to bring countries together. All it does is cause people to hate other cultures that they would not have hated 10 years ago. I used to have lots of Indian friends when I was in college, then a few years ago I realized that they are the reason my income will never be stable again.
Thanks a lot, globalizers.
Eric Krieg
Dec 4 2003 at 10:19am
>>Keynsian Economics has never failed us.
HAAAAAAAAAAA!
You’re kidding, right?
Steve, you MUST have been born after 1980. Only someone who grew up after Reagan took office could say something like that.
Keynsians had no answer for stagflation.
Eric Krieg
Dec 4 2003 at 10:22am
>>So do you think we’re heading into a time of prosperity or a time of Japan-like deflation or 70s-esque stagflation?
Well, a drop in the dollar will fuel inflation to some extent. I guess the question you really need to ask is, does Greenspan care about a strong dollar? Would he take inflation due to a weakening dollar as a sign that interest rates need to be raised?
If so, yeah, we’re heading towards stagflation for a time. But I don’t think that that is going to be Greenspan’s response. I think interest rates are going to stay low for quite a while, even as the dollar falls and import prices increase.
Eric Krieg
Dec 4 2003 at 10:25am
>>I used to have lots of Indian friends when I was in college, then a few years ago I realized that they are the reason my income will never be stable again.
You could really say that about all your fellow IT workers, American, Indian, or whatever.
I mean, were you one of those really cutthroat people in college, stealing exams and things like that? Anything to stay ahead, and maintain that precious income, right?
Steve
Dec 4 2003 at 10:45am
Please, Eric.. I had no reason to steal exams. Unlike my engineering friends, I didn’t party every night.
Re: 70s and Keynsianism:
Inflation too high, must shrink money supply, raise interest rates. 70s
Inflation too low, must increase money supply, lower interest rates. 30s & 2001
They traded a major recession for lower inflation in the 70s. Pure Keynsian Economics. How can you disagree?
Eric Krieg
Dec 4 2003 at 10:51am
>>They traded a major recession for lower inflation in the 70s. Pure Keynsian Economics. How can you disagree?
Because they had recessions at the same time that inflation was high and increasing. That isn’t supposed to happen according to Keysians.
In the 1970s, recessions didn’t cure inflation (that’s why they invented the misery index, the inflation rate plus the unemplyment rate).
And in the 1980s and 1990s, economic growth did not lead to inflation. We proved that the Phillips Curve is dead. So is Keysianism.
Eric Krieg
Dec 4 2003 at 10:57am
You know, do you think that it is a coincidence that the economic growth we are enjoying right this second camse shortly after a MAJOR tax cut?
Let’s see, taxes were cut in the 1920’s, and the economy boomed.
Taxes were cut in the 1960’s, and the economy boomed.
Taxes were cut in the 1980’s, and the economy boomed.
Taxes were cut last year and this, and economy is booming.
Now, you can say that taxes were raised in the 1990s and the economy boomed, but you would be wrong. Taxes were raised in 1991 and 1994. It was like ’96 or ’97 that the economy took off. So you are telling me that it takes 3 years or more for tax increased to economically kick in, but only 6 months for tax cuts to economically kick in?
Eric Krieg
Dec 4 2003 at 11:01am
Prashant,
What do you see India doing to become more competitive? Is it lowering trade barriers? Cutting taxes? Building infrastructure? Cutting government?
Do you see the things China is doing, especially infrastructure wise, as motivating India to change as well?
Steve
Dec 4 2003 at 11:48am
You think that the tax cut lead to the 8.2% growth, but you ignore the $500 BILLION Keynsian special that Bush ordered up on the budget, not to mention the exploding money supply?
Ah…We’re all Keynsians now
Eric Krieg
Dec 4 2003 at 12:26pm
>>You think that the tax cut lead to the 8.2% growth, but you ignore the $500 BILLION Keynsian special that Bush ordered up on the budget, not to mention the exploding money supply?
Where is the inflation, then?
I don’t deny that there is a ton of Keynsian style stimulus out there (although I beleive that Keynes never addressed monetary policy). I just don’t think that you can explain the current inflationless economic growth in a Keynsian way.
Which is why so many neo-Keynsians like Paul Krugman are so confused. And their predictions have been so wrong.
Steve
Dec 4 2003 at 12:28pm
So you’re asking where the inflation went? It’s ALL AROUND us. Housing, Education, commidities, movie tickets, gasoline.
Just because the indexes aren’t showing it doesn’t mean it isn’t here.
Eric Krieg
Dec 4 2003 at 2:09pm
>>So you’re asking where the inflation went? It’s ALL AROUND us. Housing, Education, commidities, movie tickets, gasoline.
Housing inflation is a function of low interest rates and the fact that immigration is driving the creation of new households (and thus, demand for housing), but there isn’t enough new building to soak up that demand.
Education inflation is not as bad as the media makes it out to be. The “list price” of tuition has very little to do with what people actually pay. What they actually pay hasn’t risen by much, if anything.
Movie tickets? Why would anyone go to the movies?
What did it cost you the last time you went to the movies? It cost me nothing. I got a coupon over the internet, I think for buying something at Walgreens. Do discounts factor into your assertion that movie tickets are inflated?
Gasoline? I just paid $1.50 a gallon. That’s down over 25 cents from a few weeks ago.
The indices are right. There is no inflation.
Steve
Dec 4 2003 at 5:21pm
Inflation is with us
http://money.cnn.com/2003/12/04/markets/scrapsteel/index.htm
Eric Krieg
Dec 4 2003 at 10:37pm
I don’t believe it.
It’s 1997 all over again. Right before the Asian crisis, the price of all kinds of commodities were being bid up by “The Asian Tigers”. Countries like Malasyia and Indonesia, that were rapidly industrializing, were sucking down all kinds of commodities.
Let me tell you, it was a great time to be in the oil business! I worked on a couple of big refinery projects in Indonesia.
And it all ended in 1997, when the currecy bubbles in those countries burst. They’ve got entire refineries over there that were just abandoned, because they were built on speculation, and the demand just wasn’t (and still isn’t) there.
Now, instead of Indonesia and Malaysia, its China that has an undervalued currency, a hot economy, and is bidding up the price of commodities all over the place.
All this tells me is that China is setting itself up for a fall. It is paying (foolish) premium prices for commodities in an effort at breakneck industrialization, due to its undervalued currency.
Like the Asian Tigers, there are tons of investment going into plants that are simply not warranted by demand, now or in the next 10 years. In the end, China is going to have its own currency crisis, and end up just like the Asian Tigers, which STILL haven’t recovered fully from the ’97 crisis.
Ford says that in a couple of years, China will have millions of cars worth of overcapacity (this, in a world that already has millions of cars worth of overcapacity). Like I said, there is a lot of foolishness when it comes to China, and it smells a lot like Indonesia circa 1997.
Anyway, the point is that we didn’t have an inflation problem here in 1997, and we aren’t going to have one in 2004. The price of commodities is a small percentage of the price of goods and services. Strong productivity growth can bridge the gap.
Steve
Dec 5 2003 at 8:55am
I was just playing devil’s advocate. With 1/2 billion unemployed in China and India, we’re never going to see wage inflation (and therefore, any other form of inflation) for at least 50 years. We’ll be damned lucky if we don’t see a long period of spiralling deflation because the chinese have so much overcapacity in labor, food (and it’s protected by tariffs!), steel (and it’s protected by tariffs!), autos (and it’s protected by tariffs!), and a “Free-as-in-beer market” in illegally priated software (which is the only thing our country is able to sell anymore).
Prashant P Kothari
Dec 5 2003 at 12:28pm
Steve
“Prashant–
Tell that to the millions of highly-paid IT pros who have lost their jobs because of your government subsidizing the oversupply of IT labor through free schooling.”
Huh? India in 2003 has about 500,000 people in the entire IT industry. So where does the millions number come from?
“All the numbers you spouted only say one thing: “INDIAN IT WORKERS ARE CHEAP”. You can screw a lot more Americans on a “few hundred million dollars” than you’d think.”
Yes, they are cheap. But is that all it takes? How come less than 1% of the revenues of the worldwide IT servics & software (about $700 billion) is coming from India?
“I thought globalization was supposed to bring countries together. All it does is cause people to hate other cultures that they would not have hated 10 years ago. I used to have lots of Indian friends when I was in college, then a few years ago I realized that they are the reason my income will never be stable again.”
Steve, I’m not sure what your personal experience is but I think you’re extrapolating that into the macro level (just like the shoppers on Amazon.com thought it was going to conquer the world).
Prashant P Kothari
Dec 5 2003 at 12:33pm
“Prashant,
What do you see India doing to become more competitive? Is it lowering trade barriers? Cutting taxes? Building infrastructure? Cutting government?”
A little bit of all of the above, but still woefully inadequate. India has a long way to go
“Do you see the things China is doing, especially infrastructure wise, as motivating India to change as well?”
Some, but not enough. It’s happening very erratically.
I’m skeptical about China’s prospects. The current fascination / fear that outsiders have with China’s economic “miracle” is reminiscent of the hype about the South-East Asian miracle in the mid-90s, and the Japanese miracle in the mid-80s. We all know how that ended. China will implode at some point in this decade — their banking system is absolutely bankrupt. Read Studwell’s “The China Dream” for more.
A shill here: I’m part of a group that maintains a blog about the Indian economy at http://indiaeconomywatch.blogspot.com/
Eric Krieg
Dec 5 2003 at 3:28pm
>>China will implode at some point in this decade — their banking system is absolutely bankrupt. Read Studwell’s “The China Dream” for more.
Yeah. I can see those arguments. But on the other hand, the Chinese government seems to be more cognizant than most about its problems, and actually seems to be doing something about them. I think that they will fix their banking system, for example, not let it fester like the Japanese have.
The Chinese are investing in infrastructure. They are actually building an interstate highway system, for example.
They seem to be taking care of the state sector, moving the companies towards privatization.
Steve
Dec 5 2003 at 4:06pm
500,000, huh? Then why are 8 million or more of my friends out on the street here in America while companies are reporting record profits?
(obligitory reference to offshore shill..rrr..Forrester research)
Why is Forrester research reporting that 3.3 million software jobs will be sent offshore in the next 5 years?
Japan didn’t have 1.3 billion in population.
Japan didn’t have 1.3 billion in population.
Japan didn’t have 1.3 billion in population.
Japan didn’t have 1.3 billion in population.
Japan didn’t have 1.3 billion in population.
Japan didn’t have 1.3 billion in population.
Did I say it enough?
India has 200,000,000 unemployed people who have access to free IT schooling. America barely has 200 million in ENTIRE POPULATION. I see no end to the bloodshed in the American IT industry.
Eric Krieg
Dec 5 2003 at 4:35pm
>>India has 200,000,000 unemployed people who have access to free IT schooling.
Which does people in shantytowns a lot of good.
Steve
Dec 5 2003 at 4:42pm
Perhaps not, but they can travel to the “big city” on railcars created by capital provided by US companies to go to their free universities.
Any Indian who is crying about being poor gets zero sympathy from me. They get free COLLEGE education and Western companies are falling all over eachother to try to employ them. All it takes is a little hard work in India and you can live like a king. In America, it takes a little bit of luck, a last name like “Bush” or “Kennedy”, and THEN you can live like a king.
Don’t tell me to move to India. I already tried. They are less-than-freindly to westerners who want to take THEIR jobs.
Prashant P Kothari
Dec 5 2003 at 4:55pm
Steve says “500,000, huh? Then why are 8 million or more of my friends out on the street here in America while companies are reporting record profits?”
So, it’s all India’s fault, is it? Nothing to do with the recession, changes in technology, improvements in productivyt or whatever. 500,000 Indian professionals who have rendered 8 mm Americans jobless.
Steve — you said you’d done a lot of math.
How can Indians be earning 1/4th of an American salary, and be 16 times more productive? I’d like to meet some of these super men/ women Indians.
Prashant P Kothari
Dec 5 2003 at 4:59pm
Steve “Any Indian who is crying about being poor gets zero sympathy from me. They get free COLLEGE education and Western companies are falling all over eachother to try to employ them. All it takes is a little hard work in India and you can live like a king.”
There we go again. A few isolated anecdotes does not lend itself to sweeping generalizations. The people that Steve is referring to constitute a tiny minority — a couple of hundred thousand, at most. In a country of 1 billion, that’s a rounding error.
“All it takes is a little hard work in India and you can live like a king.”
Guess the poor in India (over 200 mm of them) somehow missed this point 😉
Steve
Dec 5 2003 at 5:02pm
Prashant–
Because you can get an entire meal in Bangalore for less than $1 US, whereas it would cost at least 10x that in America. It’s about cost of living, not productivity.
No, it’s not India’s fault, nor the Indians fault. It’s greed and not caring about the fellow down the hall from you (American traits) that causes this.
1/4th the American salary? That’s not what has been crammed down our throats for the last 3 years. We’ve been told 1/10th. I can compete with 1/4th on a productivity-adjusted basis, but 1/10th I cannot.
Of course you guys are nearly as productive as we are. Sure, the electricity goes out over there once in a while, but you’ve got UPSs and generators, sure the Internet connection goes out once in a while, but who cares? Your folks are eating our lunch for good reason: your cost of living is nearly zero and there are 1.3 billion of you!
I’m just scared, as are 3.3 million of my employed friends who won’t be in 5 years along with the 8 million who are still unemployed.
Steve
Dec 5 2003 at 5:06pm
Why is it only a few hundred million? You’re being offered FREE UNIVERSITY TUITION. FREE! There would be a stampede into our universities if we offered something so great, and there would be a flood of new graduates coming out 4 years from now.
…and you think reports like Forrester and Gartner are just simple anecdotes that American companies are slobbering all over eachother to get at Indian college grads? I know it’s true because our unemployment rate for SOFTWARE ENGINEERS is nearing 6% and our salaries are declining, while unemployemnt for software engineers is less than 1% and in some reports salaries are actually rising (albeit slightly).
Eric Krieg
Dec 5 2003 at 10:17pm
>>FREE UNIVERSITY TUITION. FREE!
Steve, you need to go back and look a little harder.
It may be free, but only for the top 1/10th of 1% of Indian society. It is very competitive to get into University. It isn’t the old Cal State system or anything.
Prashant, what do you think about this idea? My son is two years old. I think it would be pretty cool if he got into the Indian Institute of Technology. How’s that for an American parent’s aspiration?
Needless to say, he isn’t going anywhere near a US public school!
His parents are both engineers. My wife is more brilliant than I am. I’d say that my son has a pretty good shot.
Eric Krieg
Dec 5 2003 at 10:21pm
>>Sure, the electricity goes out over there once in a while, but you’ve got UPSs and generators,
Do you know what the cost of electricity out of a diesel generator is? It’s an order of magnitude more per kWhr that from the grid.
Don’t discount the advantage that the First World has because of things like the interstate highway system and the electric grid. India is not going to get very far until they start building the infrastructure that you just take for granted.
Steve
Dec 6 2003 at 12:18am
US Public schools are just fine. How boring would it be if your child only saw the white, catholic, and rich people who go to private schools. What culture shock it will be when he works for someone from India that has even the slightest accent.
I wouldn’t trade my public street-smart schooling for anything. Besides, Indians don’t want us coming in there and taking their precious school slots and jobs. We could learn a lot from that alone.
Eric Krieg
Dec 6 2003 at 3:07pm
>>US Public schools are just fine.
Accoridng to whom?
I’d rather my son actually learn something in school, rather than just waste his time with political correctness and whatnot.
You’re the one who is afraid of foreign competition, but you are satisfied with the (lack of) results from public schools?
My local public school administrators can’t even spell “Indian”. They are so caught up in the self esteem movement and political correctness, they don’t have any idea the global competition that their graduates are in. If they were, the wouldn’t coddle the kids as much, and would challenge them more.
Shrini
Dec 8 2003 at 1:53am
Outsourcing has always been a practise throughout the American Industrial history. Earlier parts of the job went to the next county, next state and the next country. Now because of the Internet and the jet age it is going to far off places…
India used to be the richest land before the Brits occupied it. They left it as one of the poorest.
India is a big market for American goods. Why can’t anyone see this? Millions of cars made my GM and Ford are sold here. Billions of Coke cans get sold, not to talk of a variety of other goods. Where is all the money going to?
It is trade. India sells services and buys goods from America.
Steve
Dec 8 2003 at 8:43am
Shrini–
Perhaps we’d be more happy about you guys taking our jobs if India actually IMPORTED the American goods you speak of. They play a game called “if you sell it here, you must produce it here”.
Plus your government places other non-tariff barriers like saying there are PESTICIDES in Coke! Do you know how sick you people are to slander a great company and a great product in such a way?
Eric–
I’m not scared of foreign competition. I am scared of governments that use currency manipulation, tariffs, hidden subsidies, banks that need not make a profit, etc that these countries are using to break us.
You should have learned by now that High School is about learning how to be a social human being, and that socializing (read: being a CEO, marketting weenie, etc) is the only way you’ll be able to get/keep a job in the near future. Science-type jobs will all be done in Russia, India, and China.
Shrini
Dec 9 2003 at 4:02am
Steve,
Not for argument but Coke did have traces of pesticides. Do you know when it comes to manufacturing in a third world country, the quality control goes out of the window? Is the quality of coke available in the US same as in India?
Do you know about Union Corbide? Do you know one day the factory let out poisonous gas which instantly killed more than 3000 people in one day? And do you know how much compensation the ‘great’ multinational paid? About 460 mill. In the US about 10 people would have gotten that much for an accident of this magnitude.
My heart goes out for a great company like Coke. But if it kills a few thousands because of pesticides it is a small thing. It is a great company which can pay about 500 mill in compensations and business goes on. Right?
There is nothing wrong in taking preventive measures when lives are at stake. Even against a great corporation like Coca-Cola.
Lives in the third world do matter.
About importing American goods. A lot of them are imported directly from there. Walk into any departmental store in India and you will be surprised to see a lot of ‘Made in the USA’ labels. And as for producting here, it is the decision of your business leaders. No one compelled you to come and produce here. It is seen as a business advantage…
Do you know anything about Enron’s Dhabol’s project? Do you know much the Indian government had to pay to get a unit of electricity this great corporation produced? It paid double the price of what is produced here. I don’t think any other country would have been this stupid. Enron initiative was exploitative. We have the experience of being exploited and so we have some safe guards to protect ourselves from `great’ corporations. Whats wrong in it?
Protection comes when there are double standards.
Shrini
Dec 9 2003 at 4:16am
On Coke
A good number of local soft drinks manufacturers went under to make way for the great drink.
Try telling to any 10 people that Coke is a great drink and you will be surprised at the replies.
Or better still, try drinking a can of coke everyday for a year. Your doctor will tell you how great a drink it is.
Coconut farmers here are going without food because of this great drink. And you can never dispute that coconut drink is a great drink and a lot less damaging than Coke.
The point I am trying to make is, America’s loss is not exactly India’s gain. We are also losing jobs in sectors which are lot less glamorous than IT. Only you guys don’t come to know of it because the media doesn’t report on those.
Steve
Dec 9 2003 at 9:08am
If there were pesticides in Coke, American citizens would be up in arms over it and the lawyers would be crawling all over Coke.
Union Carbide. Yes, I know, bad stuff on trains passing by cities. Perhaps if your country had some sort of laws about pollution, this wouldn’t happen. Of course, it would cause unemployment to go up because American companies would no longer see India as a good place to offshore its workforce to.
You overpaid for electricity because your country, like China and Japan, manipulates its currency to keep people in IT and other industries employed while unemploying my country.
You have ‘Made in America’ tags in your stores? I haven’t seen one in months. I think you’re making that up.
Shrini
Dec 10 2003 at 4:51am
“If there were pesticides in Coke, American citizens would be up in arms over it and the lawyers would be crawling all over Coke.”
Maybe this will happen in America. I said the quality standards are not global. Some how the so called great corporations become lethargic when it comes to quality in third world countries.
“Union Carbide. Yes, I know, bad stuff on trains passing by cities.”
This is an uninformed remark. This didn’t happen in some train. There was a gas leak from Union Carbide’s plant in Bhopal which killed 3000 odd people instantly. What happened to quality parameters and hazard management?
“Perhaps if your country had some sort of laws about pollution,..”
We do have laws on pollution but in this context we are not talking about a ‘pollution’. We are talking about a poisonous gas emission. There is a difference, you see. Read Dominique Lappiere’s 5 Past Midnight to know more about this.
“You overpaid for electricity because your country, like China and Japan, manipulates its currency to keep people in IT and other industries employed while unemploying my country.”
Again this is uninformed. Over payment had nothing to do with currency manipulation. Logically speaking such currency manipulation would have brought down the price and not hiked it. However, this overpayment happened because of a futuristic agreement which didn’t take into account the future world prices of Naphta and other allied things which Enron failed to disclose to the government. Enron also breached agreement by going over the ceiling price.
As for Made in America tags I am not making it up. I have no reason to. If you want I can provide you with a complete list.
No one is unemploying your country. You people are superior in Marketing while some Asian countries have technical capabilities which can be leveraged with lower costs. Thats why the shift…
And know something Steve, though jobs get outsourced to India they are those which were only on the lowest end of the value chain. Earlier in production, machines took over the lower end jobs and now in IT they are getting transferred. If you were around in the last century you would have been mad at
production line mechanization.
BamH1usa
Jan 16 2004 at 2:47pm
Here are a few thoughts about India form an Indian immigrant…
1) China wants to corner the cheap production jobs…let them have those jobs. We know what happens in the long run…look at the rust belt.
2) India should focus on hi-tech, high-value jobs. Next frontier….biotechnology. The US lawmakers and general public freak out anytime words such as genetically modified crops or cloning are uttered. Believe it or not, most Indian policy makers are highly evolved thinkers who get to the bottom of the issues. As US and other developed nations get older, look for India to make huge inroads into areas such as tissue engineering and transplant biology.
2) The Indian Governement needs to spend heavily in the areas of infrastructure and provide seed-level funding to nascent companies. Some progressive states within India such as AP and Gujrat are already doing these in a regional stage.
3) Here is the driving paradigm…. the only thing a government must think about is providing a climate that aids industry and all other problems will disappear as prosperity will fuel progress and development. FOSTER competition and the country will prosper.
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