- Do you remember those Information Technology (IT) jobs
that were going to take the place in the "new economy" of those
outsourced manufacturing jobs? Don't bother to retrain. The IT jobs are
- Knowledge work can be done anywhere there are educated
people. These days that's just about everywhere: the Philippines, India,
China, Russia, Eastern Europe, Costa Rica, and South Africa. Outsourcing
of "new economy" jobs is exploding.
- A recent article in the Feb. 3 Business Week describes
"dazzling new technology parks" on the outskirts of India's major
cities where U.S. companies such as Bank of America, Texas Instruments,
pharmaceutical companies, Intel, Lehman Brothers, Bear Stearns, Hewlet
Packard, American Express, Dell Computer, Eastman Kodak, IBM, GE, Microsoft,
Procter & Gamble, Fluor Corp, Electronic Data Services, Citibank, Boeing,
mortgage lenders, Massachusetts General Hospital, and even architectural
firms hire Indians to do knowledge jobs that Americans did three years
- In Bangalore, Indian radiologists interpret CT scans
for Massachusetts General Hospital, and Indian engineers design third-generation
mobile-phone chips for Texas Instruments. Other Indians process claims
for major U.S. insurance companies and home loans for U.S. mortgage companies.
Indian molecular biologists conduct research for pharmaceutical companies.
Indians analyze financial data for Wall Street, conduct R&D for U.S.
high-tech companies, and design software for Microsoft.
- The competition for U.S. knowledge workers is tough.
India has 520,000 IT engineers, and starting salaries are $5,000. Five
years from now, Indian service exports will add $57 billion annually to
the U.S. and European trade deficits, and 4 million IT jobs will have
been moved to India.
- The same thing is happening in China, a country with
which the U.S. is expected to have a $125 billion trade deficit this year
due largely to outsourcing. Microsoft alone is spending $1.15 billion
for R&D and outsourcing in India and China over the next three years.
In Microsoft's Beijing research facility, one-third of the Chinese programmers
have Ph.D.s from U.S. universities at U.S. taxpayers' expense.
- Filipinos prepare Procter & Gamble's tax returns
and crunch numbers for audits conducted by U.S. accounting firms. Architectural
work ranging from home design to multibillion-dollar petrochemical plants
is outsourced to Hungary, India, and the Philippines.
- The U.S. gave away its agricultural knowledge, its education,
its technology, its manufacturing jobs and is now giving away its IT jobs.
The displaced manufacturing workers did not move to the promised greener
pastures. What reason is there to believe that the displaced engineers,
Wall Street analysts, accountants, scientists, and other knowledge workers
will do any better when their careers are outsourced?
- Business Week asked Harvard University globalist advocate
Robert Lawrence what happens if America loses its knowledge jobs on top
of its manufacturing jobs. His answer was not reassuring. He has no evidence
- just faith - that globalization will make us better off.
- What is going on when American policymakers and elites
gamble with the livelihoods of tens of millions of Americans on faith?
Business Week is correct when it says "economists haven't begun to
fathom the implications" for America of globalization. But it is
already obvious who the winners and losers are.
- The winners are the foreigners with IT educations who
live in countries where both the standard and cost of living are very low.
The losers are IT employees in the U.S. where both the standard and cost
of living is >> very high. Filipino engineers working for American
firms at salaries of $3,000 annually, and Chinese and Indians working for
$5,000 to $10,000 annually are unbeatable competition. For American university
students struggling to prepare for high-tech careers, the good times are
over before they begin.
- While jobs leave America and incomes fall, the eligibility
of illegal aliens for U.S. Social Security and Medicaid benefits is a
powerful magnet pulling in poor foreigners by the droves. The 1996 Welfare
Reform Act did not end benefits for PRUCOL aliens, those who entered illegally
and "permanently reside under color of law." People collect benefits
who have never paid in. And it is American citizens, downsized and outsourced,
who are saddled with the burden.
- As most everyone knows, Social Security is in dire straits.
But its funding problem has not deterred the Bush administration from
drafting a treaty with Mexico that will give the Mexican government $345
billion in Social Security payments for Mexicans who have worked legally
and illegally in the U.S.
- Let's hope the Bush administration is correct and that
we are not starting a 30-year war in the Middle East by invading Iraq.
Otherwise, the combination of war, job and income loss, unprecedented
trade deficits, and the creation of Social Security entitlements for foreign
nationals will break the U.S. long before another generation passes.
- Before the U.S. can reconstruct the world, it must cease
deconstructing >> itself. For that task, the country will need a
champion. >> Paul Craig Roberts is a nationaly syndicated columnist.