Many videos on off-shoring are simple news stories or long commentary. This is a cartoon that discusses the effects of off-shoring on American workers and the ethics of it. The plot goes like this: an astronaut returns to earth from a long journey into space and the first person he encounters is a man who has been laid off from his job due to off-shoring. The conversation gets interesting very quickly.
James Pilant
From the Times of India, an article by Rajat Pandit.
Apart from nuclear missile bases in Qinghai province which clearly target India, China has built five fully-operational airbases, an extensive rail network and over 58,000 km of roads in Tibetan Autonomous Region (TAR).
People’s Liberation Army is also rapidly upgrading several other airstrips in TAR as well as south China, to add to the five airbases from where Chinese Sukhoi-27UBK and Sukhoi-30MKK fighters have practised operations in recent times.
Moreover, with extensive road-rail links in TAR, PLA can amass upwards of two divisions (30,000 soldiers) at their “launch pads” along the border in just 20 days now compared to the over 90 days it took earlier.
Why do I have to go to the Times of India to read about the Chinese building up their forces on the border?
What does this say about the security of American manufacturing and investment in Communist China?
China is never going to be the number one economic power on earth. They have territorial ambitions and scores to settle dating back hundreds of years.
In ten years, Americans confronted with the Chinese military ambitions will look back in astonishment that China was held in awe by scores of business commentators, politicians and what we laughingly call pundits.
Can you imagine the awe of future Americans that businesses in the United States thought it was a good idea to shift American jobs to China. .. that Americans built manufacturing plants and share technology including their latest patents with the Chinese?
Our relationship is already fraying in consideration of Chinese currency controls, their treatment of dissidents and a naval build up largely aimed at the United States Navy.
We will be dealing with China in the future, less economically and more as a military problem.
James Pilant
Here’s an excerpt.
In an effort to foster growth in its outsourcing industry, China announced that the government will not be levying operating taxes on offshore service outsourcing business in 21 cities until 2013. The policy covers firms specializing in IT outsourcing, business process outsourcing and knowledge process outsourcing. The initiative is expected to boost China’s already robust growth in the industry, where the country enjoyed a 21 percent year-on-year increase to $23.6 billion in 2009.
So, the Chinese are pursuing a deliberate national policy of moving jobs to their country, jobs from the United States.
Don’t we have legislators and a government? Oh, I forgot, out sourcing is good for the financial industry. There is no concern for the rapidly dwindling middle class. It’s as if we had a government for and devoted to observing the flight of jobs in a thoroughly disinterested manner like a scientist examing microbes under a microscope. The middle class microbes have to be watched. They could interfere with profits.
James Pilant
A thought?
Here is a sample –
Meanwhile, the vast majority of U.S. workers, however devoted and skilled at their jobs, have missed out on the windfalls of this winner-take-most economy—or worse, found their savings, employers, or professions ravaged by the same forces that have enriched the plutocratic elite. The result of these divergent trends is a jaw-dropping surge in U.S. income inequality. According to the economists Emmanuel Saez of Berkeley and Thomas Piketty of the Paris School of Economics, between 2002 and 2007, 65 percent of all income growth in the United States went to the top 1 percent of the population. The financial crisis interrupted this trend temporarily, as incomes for the top 1 percent fell more than those of the rest of the population in 2008. But recent evidence suggests that, in the wake of the crisis, incomes at the summit are rebounding more quickly than those below. One example: after a down year in 2008, the top 25 hedge-fund managers were paid, on average, more than $1 billion each in 2009, quickly eclipsing the record they had set in pre-recession 2007.
The middle class is devastated and will continue to be. The difference between the middle class and the new class of the wealthy is so large as to be difficult to understand.
Try this example –
As an example, she described a conversation with a couple at a Manhattan dinner party: “They started saying, ‘If you’re going to buy all this stuff, life starts getting really expensive. If you’re going to do the NetJet thing’”—this is a service offering “fractional aircraft ownership” for those who do not wish to buy outright—“‘and if you’re going to have four houses, and you’re going to run the four houses, it’s like you start spending some money.’”
The clincher, Peterson says, came from the wife: “She turns to me and she goes, ‘You know, the thing about 20’”—by this, she meant $20 million a year—“‘is 20 is only 10 after taxes.’ And everyone at the table is nodding.”
Only ten million. Worse, this new elite is acquiring a global perspective. In other words, their attachment and loyalty to the people of America is becoming fragile indeed.
The good news—and the bad news—for America is that the nation’s own super-elite is rapidly adjusting to this more global perspective. The U.S.-based CEO of one of the world’s largest hedge funds told me that his firm’s investment committee often discusses the question of who wins and who loses in today’s economy. In a recent internal debate, he said, one of his senior colleagues had argued that the hollowing-out of the American middle class didn’t really matter. “His point was that if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade,” the CEO recalled.
I heard a similar sentiment from the Taiwanese-born, 30-something CFO of a U.S. Internet company. A gentle, unpretentious man who went from public school to Harvard, he’s nonetheless not terribly sympathetic to the complaints of the American middle class. “We demand a higher paycheck than the rest of the world,” he told me. “So if you’re going to demand 10 times the paycheck, you need to deliver 10 times the value. It sounds harsh, but maybe people in the middle class need to decide to take a pay cut.”
He’s right, it sounds harsh. He has all the qualities necessary in Bond villain.
At last summer’s Aspen Ideas Festival, Michael Splinter, CEO of the Silicon Valley green-tech firm Applied Materials, said that if he were starting from scratch, only 20 percent of his workforce would be domestic. “This year, almost 90 percent of our sales will be outside the U.S.,” he explained. “The pull to be close to the customers—most of them in Asia—is enormous.” Speaking at the same conference, Thomas Wilson, CEO of Allstate, also lamented this global reality: “I can get [workers] anywhere in the world. It is a problem for America, but it is not necessarily a problem for American business … American businesses will adapt.”
Why should they worry about American workers? They are virtuous and we just don’t understand. They don’t understand why we don’t understant. (I have serious doubts any of these individuals read my blog save for amusement.)
As a consequence of this disconnect, when business titans talk about the economy and their role in it, the notes they strike are often discordant: for example, Goldman Sachs CEO Lloyd Blankfein waving away public outrage in 2009 by saying he was “doing God’s work”; or the insistence by several top bankers after the immediate threat of the financial crisis receded that their institutions could have survived without TARP funding and that they had accepted it only because they had been strong-armed by Treasury Secretary Henry Paulson. Nor does this aloof disposition end at the water’s edge: think of BP CEO Tony Hayward, who complained of wanting to get his life back after the Gulf oil spill and then proceeded to do so by watching his yacht compete in a race off the Isle of Wight.
I want you to go and read the full article.
James Pilant
Pilant's Business Ethics Blog 
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