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Tuesday, April 25, 2006 

The Slippery Slope of Outsourcing or Why Trade Matters.

I stumbled upon this article on CNN Money. Basically the article is a propaganda piece about how great it is to send jobs to India. These kind of articles are trendy in business mags right now so - nothing too exciting - until I spotted this:
"Another key customer is Cisco (Research), a 10-year customer with whom HCL is now embracing another form of innovation - shared risk. Since February, HCL has been completely responsible for engineering one Cisco product..."
The competitive advantage of Cisco (and companies like Cisco) has always been their engineering. If they outsource their research and engineering, their "family jewel" then what will they have left? A brand and maybe some market clout? This example demonstrates that it is not just the low level jobs that are being outsourced to other countries - it is also high level, strategic stuff. Once you give this stuff up it is hard to get back and eventually the slippery slope might be the demise of the great Corporate America.

That is why trade is an important, if not sexy, issue. Senate candidate and Congressman Sherrod Brown stated on Lou Dobbs that 100's of thousands of Ohioans have lost jobs to outsourcing:
"...in the first part of the last decade, we saw continued job loss in manufacturing jobs.

And I remember during NAFTA in 1993 the debate that we were told over and over that, if you get more education to prepare for this, then we'll just ship out the low-skilled jobs, but there will be plenty of jobs for people as they get educated more. But we're seeing more and more that we're losing computer engineers. We're losing radiologists. We're losing all kinds of white-collar jobs, all kinds of jobs in addition to manufacturing jobs, which we're losing by the droves in my state.

We're losing all kinds of higher-tech jobs and all over the place."
He's right. Every year we lose a few more types of jobs - and everyone always thinks their job is safe. I don't think any of our jobs are really "safe". There has to be some kind of stopper put into place, something to level the playing field - where instead of workers all over the world competing against each other for less and less Corporations recognize the sacrifice of their employees and use profits to bring more and more people onto a higher ground - Not just creating golden parachutes and higher salaries for executives. A real American company would not be dismantling all of the labor standards we have worked so hard for in the US, but instead would be bringing some form of these rights to other populations. You know - spreading democracy. Wouldn't that be patriotic?

So what can be done to reverse the current trend of profits over people?

Economist Suzanne Berger at Massachusetts Institute of Technology believes that "outsourcing poses a real risk to employees; but ... a 'race to the bottom' can be avoided if companies accept that employing cheap labor is not the most effective way of responding to global competition."


Here in Ohio - we are lucky to have Senate Candidate Sherrod Brown. Not only does he have a Congressional record of voting against unfair trade agreements Sherrod Brown wrote the book on the Myths of Free Trade!
From Amazon review:
"Brown, a Democratic congressman from northeastern Ohio’s steel belt, is a veteran of legislative battles—described here in gory, arm-twisting detail—over NAFTA, GATT and other trade agreements, and in this impassioned polemic, he rebuts the usual rationales offered by free traders. Our current free trade agenda, Brown insists, is an un-American departure from a history of tariffs and government intervention aimed at developing the nation’s economy and protecting workers and the environment from the excesses of the market. He contends that free trade doesn’t promote growth in either developed or developing countries, but simply shifts well-paying American jobs to Third World sweatshops. There, miserably underpaid workers, denied workplace safety regulations or the right to unionize, can’t buy the products they make, which creates imbalances of supply over demand and thus contributes to global economic stagnation. Rather than spreading American values around the globe, he argues, free trade buttresses the power of authoritarian regimes like China’s. Indeed, in Brown’s view, no one benefits from unregulated trade except corporations and rich investors, eager to deploy their assets wherever labor and the environment are most profitably exploited. Although not systematically developed, Brown’s fact-filled argument is a cogent critique of American trade policies in a punchy left-populist style that is rarely heard in Washington these days."

His website offers up some solutions:
  • Revamp U.S. trade policy to reward corporations that create jobs at home.
  • Invest in small businesses that help build strong communities.
  • Pass fair trade initiatives that protect workers at home and abroad. Raising living standards in developing nations not only makes us more competitive and more secure, but gives foreign workers purchasing power to buy U.S. made goods.
So, although it might not be sexy - Trade does matter. The current Republican adminstration rewards corporations that give our jobs away, sacrificing the good ole American work ethic for common greed. If we are really interested in "spreading democracy" giving every worker basic rights would be a good start and looking out for the little guy wouldn't hurt either.

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I always wonder why critics of Brown are so anxious to write off the issue of trade. IT'S HUGE. It is one of the biggest factors in tearing apart our economy and it's ruining the lives of much of the Democratic base.

Hackett was the sexy candidate with the sexy issues, he's gone. Sherrod is the smart candidate with some smart issues, and he's still around.

I'm still hoping Sherrod does the right thing with net neutrality and I'm hoping he finds his voice to come speak out against the war.

You are right Andrew and it is ruining the lives of much of the Republican base too!

I crossposted this diary at Kos and there was a decent discussion there with many people who are personally involved and much more knowledgable than me. Here is the link if anyone is interested in hearing more about outsourcing and fair trade:



Thanks for the great post Cindy. Its interesting that Sleepy, Dopey, Grumpy et al over at BSB have not shown up to discuss this. It amazes me that they think that people losing their jobs is not important or "too hard to explain." I don't know if it is that they are elitist or just totally out of touch. Obviously this is crucially important, please keep bogging about it.

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