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 leaving, too.
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 Business Week (“The New
Global Job Shift”
Feb. 3) 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, Hewlett 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 ago.
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 four 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 $1,150,000,000 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 PhDs from U.S. universities at
U.S. taxpayers` expense.
Filipinos prepare Proctor & 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
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
who have never paid in. And it is American citizens,
downsized and outsourced, who are saddled with the
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 that the Bush administration is correct
and that we are not starting a 30-year war in the Middle
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
Before the U.S. can reconstruct the world, it must
cease deconstructing itself. For that task, the country
will need a champion.
Craig Roberts is the author with Lawrence M. Stratton of
The Tyranny of Good Intentions : How Prosecutors and
Bureaucrats Are Trampling the Constitution in the Name
of Justice. Click
here for Peter
Magazine interview with Roberts about the recent
epidemic of prosecutorial misconduct.