6 ms·

Global labor arbitrage marches ever onward.

by hew 11y ago

joelrunyon 11y ago
I'm not sure why more people don't bring this up. People love to talk about people outsourcing jobs as if it's "unfair", when it's a growing reality that we really need to face & look at the consequences (as the global pool of talent get bigger & more competitive).
- davesque 11y ago
  True, though there need to be controls on this sort of change. That's why we have things like tariffs. If you just open the flood gates on cheap imported labor, you'll decimate the domestic economy and then everyone loses. It's like over-cutting wood for fuel. If you impose restrictions, then forests have time to recover and you have more wood in the long run. If you don't, then forests die out and no one gets any wood. The "wood", in this case, is the money large companies are taking from domestic workers and giving to foreign workers (which they then go and spend in foreign economies i.e. the money is not spent in the economy that supports the large company and said arbitrage bites them in the butt).
- crdoconnor 11y ago
  If this specific attack on the power of labor were matched with a corresponding attack on the power of capital, it wouldn't be such a problem. Unfortunately, intellectual property rights are only getting stronger. Land rights are only getting stronger. Taxes on wealth and unearned income are only getting lower. Employee and union rights are only getting weaker. Thus the effect of immigration on the downward pressure on wages is magnified.
- wfo 11y ago
  Because it is unfair -- we require companies to treat their workers like human beings and ban certain forms of exploitation, abuse, etc. Facing reality and accepting that if workers can be abused, they will be abused so we might as well be the abusers is one way to deal with this fact. Another would be, for example, to ban all imports made under conditions which don't meet U.S. human rights standards and remove the economic inventive, but instead we go the opposite direction, the direction of "free trade" which is great for people who can afford to spend capital and move operations to countries where they can abuse workers, but not so great for American workers -- we aren't even allowed the opportunity to be abused and exploited.
  - chronic40 11y ago
    No one said life (or laws) had to be fair.
  - mc32 11y ago
    I think you have a point with > "Another would be, for example, to ban all imports made under conditions which don't meet U.S. human rights standards" but it can be interpreted as a "trade barrier, if it's unilateral --you'd need a global enforceable framework, for it to work. Still, even with that, there'd be offshoring just because cost of living can be much cheaper... And people in third world economies still deserve to have a job. If the fist world monopolized good jobs, we would not bee seeing the record reductions in abject poverty world-wide. Yes, a side effect is the first world will see some loss in income but not as much as gained by the third world economies. Without some of this offshoring, first world economies would see much larger waves of economic refugees.
  - wcummings 11y ago
    The alternative to being "abused and exploitive" is an agrarian economy with an even lower quality of life. People work in sweatshops because it's their best option. As their economy develops they'll improve working conditions. How does sanctioning them help them improve their lot?
    - zaccus 11y ago
      I care about other Americans more than I care about Indians, and I don't see anything wrong with that. Let Indians worry about improving their lot. We need to get over this White Man's Burden bullshit. It's condescending, paternalistic, and subtly racist.
      - wcummings 11y ago
        Free trade is condescending and racist? The only thing racist here is your comment.
        11y ago
- stalcottsmith 11y ago
  More attention to production and productive activity rather than consumption would help. Industry and thrift is what lifts people's fortunes. Not consumption and debt. The U.S. has many factors contributing to economic competitiveness but also some serious drags: difficulty accumulating capital savings among the middle and lower classes, inefficient cities and suburbs, housing that is too extravagant and expensive for people of modest means, mortgages still underwater, high cost education and a very expensive health care system riddled with fraud. Most of these are due to unwise policies anchored on the public and private accumulation of debt. All of them are solvable with a proper understanding of the issues. The complaints about the 1% or 0.1 or 0.01% largely can be traced to the architecture of this system which is anything but a free market. It guarantees large cash flows for favored groups who naturally support it. Refactoring all this will require a great deal of capital spending, internal migration and a shift in incomes away from sectors that have been supported by policy such as finance, gov, education, entitlements, war, retail and healthcare in favor of redesigning the American lifestyle along leaner, more competitive lines. Think smaller homes closer to work and more sharing. Yes it will look more like other more competitive parts of the world do today. It may be called a depression 20-30 years from now but it's better to think of it as cleanup and refactoring-- a clearing out and reckoning of all the bad decisions and policy driven malinvestments of decades. The biggest thing many people really have control over is their own lifestyle expectations and location. Naturally young people sense this and are cutting back accordingly. Not sure how many are willing to relocate for opportunity. For average joes in the U.S. the high water mark was probably the 70s and 80s. The stuff that led to America #1 occurred between 1870 and 1960. We've been coasting for a while pretending we still have a beast under the hood and gas in the tank. It's just now becoming ever more difficult to paper over the situation with more debt. The U.S. still has amazing positive attributes and strengths. Labor force mobility, the most efficient system for consumer goods distribution in the world, generally high quality building and housing stock (albeit inefficiently spread out), generally high knowledge and expectations of service and quality, etc. The list is actually long and the cultures ability to adapt and reinvent itself is a strong reason not to bet against the U.S. We could opt for a basic income but not at anywhere near the levels of currently expected individual prosperity. We'd have to redefine poverty to something more along the lines of what the rest of the world considers poverty and say, we can help you avoid that. America is not presently designed to support a "middle class" life at $10-20 a day. Some other counties are.
- yummyfajitas 11y ago
  The consequences are a massive drop in poverty. http://ourworldindata.org/data/growth-and-distribution-of-prosperity/world-poverty/ http://ourworldindata.org/data/growth-and-distribution-of-pr... Also a massive drop in inequality, if that's the sort of thing you care about. http://www.maxroser.com/economic-world-history-in-one-chart/ http://www.maxroser.com/economic-world-history-in-one-chart/
crdoconnor 11y ago
Harvard School of Economics kindly requests that you blame it on robots rather than trade pacts made by their friends.
- FD3SA 11y ago
  Why does it have to be either/or?
  - crdoconnor 11y ago
    There has been steady progress in automation since the industrial revolution. It both created and destroyed jobs. The overall level of unemployment has never been dictated by automation, only by aggregate demand. When wealth pools at the top, demand is kept artificially low.
    - keithnoizu 11y ago
      There has been steady progress in our ability to offshore work traditionally constrained to localized locations. Chickens being shipped to china for butchering and then shipped back to the states for sale being an example of a job not historically offshore-able. FD3SA has a point. There are multiple factors involved in changes to labor supply and demand.
      - marincounty 11y ago
        We can argue about automation, and the cheapest way to make process a product, but there's a limit. America crossed that line awhile ago--in my world. It's time for tariffs, and making it a little harder for Americans to do business overseas? And visa versa? (If you're not an American citizen; you shouldn't be able to buy real-estate here--period--put this into effect today?). What do we gave to lose at this point? The 1 percenter's have a lot to fear if we came to our senses? I happen to know a few multimillionaire's who have exploited labor/materials/environment of developing countries for the last 20 years; I guarantee you couldn't stomach just what they do with the money they saved by being Greedy. I am tempted to call them out? One day maybe? I know this; their kids usually end up despising mommy, and daddy once they figure out just how they ended up so wealthy. (Shipping chickens overseas to save on processing costs sounds like a myth? I really hope it's not true?)
jpatokal 11y ago
Good. Every $1 paid to an Indian worker instead of an American one reduces global income equality and goes a much longer way there (3x or so, according to most PPP measures of India vs US).
- davesque 11y ago
  That may be true in the short run, but it's a more complex question in the long run. What if uncapped arbitrage has an adverse effect on the American economy? Then there won't be as much money left to export to India.
  - chii 11y ago
    Or, by off shoring, goods become cheaper, and now you can have more goods and services for the same price. At least that's the promise.
    - collyw 11y ago
      But you have no job to earn money to buy those products.
      - chii 11y ago
        that's true only if you are unwilling to do something new of value. I m not saying everyone is objectively better off, but i would say on the aggregate, society will have more wealth due to offshoring.
- jimmaswell 11y ago
  Did you mean inequality?

Global labor arbitrage marches ever onward.

by hew 11y ago

Global labor arbitrage marches ever onward.

I'm not sure why more people don't bring this up. People love to talk about people outsourcing jobs as if it's "unfair", when it's a growing reality that we really need to face & look at the consequences (as the global pool of talent get bigger & more competitive).

davesque 11y ago
True, though there need to be controls on this sort of change. That's why we have things like tariffs. If you just open the flood gates on cheap imported labor, you'll decimate the domestic economy and then everyone loses. It's like over-cutting wood for fuel. If you impose restrictions, then forests have time to recover and you have more wood in the long run. If you don't, then forests die out and no one gets any wood. The "wood", in this case, is the money large companies are taking from domestic workers and giving to foreign workers (which they then go and spend in foreign economies i.e. the money is not spent in the economy that supports the large company and said arbitrage bites them in the butt).
crdoconnor 11y ago
If this specific attack on the power of labor were matched with a corresponding attack on the power of capital, it wouldn't be such a problem. Unfortunately, intellectual property rights are only getting stronger. Land rights are only getting stronger. Taxes on wealth and unearned income are only getting lower. Employee and union rights are only getting weaker. Thus the effect of immigration on the downward pressure on wages is magnified.
wfo 11y ago
Because it is unfair -- we require companies to treat their workers like human beings and ban certain forms of exploitation, abuse, etc. Facing reality and accepting that if workers can be abused, they will be abused so we might as well be the abusers is one way to deal with this fact. Another would be, for example, to ban all imports made under conditions which don't meet U.S. human rights standards and remove the economic inventive, but instead we go the opposite direction, the direction of "free trade" which is great for people who can afford to spend capital and move operations to countries where they can abuse workers, but not so great for American workers -- we aren't even allowed the opportunity to be abused and exploited.
- chronic40 11y ago
  No one said life (or laws) had to be fair.
- mc32 11y ago
  I think you have a point with > "Another would be, for example, to ban all imports made under conditions which don't meet U.S. human rights standards" but it can be interpreted as a "trade barrier, if it's unilateral --you'd need a global enforceable framework, for it to work. Still, even with that, there'd be offshoring just because cost of living can be much cheaper... And people in third world economies still deserve to have a job. If the fist world monopolized good jobs, we would not bee seeing the record reductions in abject poverty world-wide. Yes, a side effect is the first world will see some loss in income but not as much as gained by the third world economies. Without some of this offshoring, first world economies would see much larger waves of economic refugees.
- wcummings 11y ago
  The alternative to being "abused and exploitive" is an agrarian economy with an even lower quality of life. People work in sweatshops because it's their best option. As their economy develops they'll improve working conditions. How does sanctioning them help them improve their lot?
  - zaccus 11y ago
    I care about other Americans more than I care about Indians, and I don't see anything wrong with that. Let Indians worry about improving their lot. We need to get over this White Man's Burden bullshit. It's condescending, paternalistic, and subtly racist.
    - wcummings 11y ago
      Free trade is condescending and racist? The only thing racist here is your comment.
      - 11y ago
stalcottsmith 11y ago
More attention to production and productive activity rather than consumption would help. Industry and thrift is what lifts people's fortunes. Not consumption and debt. The U.S. has many factors contributing to economic competitiveness but also some serious drags: difficulty accumulating capital savings among the middle and lower classes, inefficient cities and suburbs, housing that is too extravagant and expensive for people of modest means, mortgages still underwater, high cost education and a very expensive health care system riddled with fraud. Most of these are due to unwise policies anchored on the public and private accumulation of debt. All of them are solvable with a proper understanding of the issues. The complaints about the 1% or 0.1 or 0.01% largely can be traced to the architecture of this system which is anything but a free market. It guarantees large cash flows for favored groups who naturally support it. Refactoring all this will require a great deal of capital spending, internal migration and a shift in incomes away from sectors that have been supported by policy such as finance, gov, education, entitlements, war, retail and healthcare in favor of redesigning the American lifestyle along leaner, more competitive lines. Think smaller homes closer to work and more sharing. Yes it will look more like other more competitive parts of the world do today. It may be called a depression 20-30 years from now but it's better to think of it as cleanup and refactoring-- a clearing out and reckoning of all the bad decisions and policy driven malinvestments of decades. The biggest thing many people really have control over is their own lifestyle expectations and location. Naturally young people sense this and are cutting back accordingly. Not sure how many are willing to relocate for opportunity. For average joes in the U.S. the high water mark was probably the 70s and 80s. The stuff that led to America #1 occurred between 1870 and 1960. We've been coasting for a while pretending we still have a beast under the hood and gas in the tank. It's just now becoming ever more difficult to paper over the situation with more debt. The U.S. still has amazing positive attributes and strengths. Labor force mobility, the most efficient system for consumer goods distribution in the world, generally high quality building and housing stock (albeit inefficiently spread out), generally high knowledge and expectations of service and quality, etc. The list is actually long and the cultures ability to adapt and reinvent itself is a strong reason not to bet against the U.S. We could opt for a basic income but not at anywhere near the levels of currently expected individual prosperity. We'd have to redefine poverty to something more along the lines of what the rest of the world considers poverty and say, we can help you avoid that. America is not presently designed to support a "middle class" life at $10-20 a day. Some other counties are.
yummyfajitas 11y ago
The consequences are a massive drop in poverty. http://ourworldindata.org/data/growth-and-distribution-of-prosperity/world-poverty/ http://ourworldindata.org/data/growth-and-distribution-of-pr... Also a massive drop in inequality, if that's the sort of thing you care about. http://www.maxroser.com/economic-world-history-in-one-chart/ http://www.maxroser.com/economic-world-history-in-one-chart/

crdoconnor 11y ago

Harvard School of Economics kindly requests that you blame it on robots rather than trade pacts made by their friends.

FD3SA 11y ago
Why does it have to be either/or?
- crdoconnor 11y ago
  There has been steady progress in automation since the industrial revolution. It both created and destroyed jobs. The overall level of unemployment has never been dictated by automation, only by aggregate demand. When wealth pools at the top, demand is kept artificially low.
  - keithnoizu 11y ago
    There has been steady progress in our ability to offshore work traditionally constrained to localized locations. Chickens being shipped to china for butchering and then shipped back to the states for sale being an example of a job not historically offshore-able. FD3SA has a point. There are multiple factors involved in changes to labor supply and demand.
    - marincounty 11y ago
      We can argue about automation, and the cheapest way to make process a product, but there's a limit. America crossed that line awhile ago--in my world. It's time for tariffs, and making it a little harder for Americans to do business overseas? And visa versa? (If you're not an American citizen; you shouldn't be able to buy real-estate here--period--put this into effect today?). What do we gave to lose at this point? The 1 percenter's have a lot to fear if we came to our senses? I happen to know a few multimillionaire's who have exploited labor/materials/environment of developing countries for the last 20 years; I guarantee you couldn't stomach just what they do with the money they saved by being Greedy. I am tempted to call them out? One day maybe? I know this; their kids usually end up despising mommy, and daddy once they figure out just how they ended up so wealthy. (Shipping chickens overseas to save on processing costs sounds like a myth? I really hope it's not true?)

jpatokal 11y ago

Good. Every $1 paid to an Indian worker instead of an American one reduces global income equality and goes a much longer way there (3x or so, according to most PPP measures of India vs US).

davesque 11y ago
That may be true in the short run, but it's a more complex question in the long run. What if uncapped arbitrage has an adverse effect on the American economy? Then there won't be as much money left to export to India.
- chii 11y ago
  Or, by off shoring, goods become cheaper, and now you can have more goods and services for the same price. At least that's the promise.
  - collyw 11y ago
    But you have no job to earn money to buy those products.
    - chii 11y ago
      that's true only if you are unwilling to do something new of value. I m not saying everyone is objectively better off, but i would say on the aggregate, society will have more wealth due to offshoring.
jimmaswell 11y ago
Did you mean inequality?