Teddy Kennedy's Ugly Legacy

[Glenn]

think it's disingenuous of you to imply that it's the government that creates a situation that wouldn't otherwise exist.

Not MY specific situation. That is very real.

Once again, you are assuming a causal relationship there Bill. Given the trends in corporate America, it could have happened either way.

Certainly, government mandates might make it more profitable to offshore jobs.

In this we agree.

and in a prior post

So government mandates make it unprofitable to employ Americans to compete in a global economy to do certain things, and then we're going to blame it on big, bad corporate America for engaging in a logical response, right?

This is true. Government mandates forced corporate America to provide livable wages, benefits, and safe work environments, enhancing international differentials that corporate America could then exploit once the technology, transportation, and management capabilities allowed it. If the U.S. had continued allowing sweatshop conditions and never allowed the formation of a middle class, offshoring might not be an issue.

And don't give me the corporate BS about global competition. My company was a U.S.-only insurance provider, had no global competition, has been experiencing record profit growth each year for over a decade, and has had an ever important growing Return On Investment (ROI). Offshoring was strictly a matter of further increasing profits at their employees' expense...and as a result increase the bonuses of the leaders, which is the true driver of offshoring.

It's no wonder the U.S. has dropped to being the second largest economy (in terms of Gross Domestic Product (GDP)) behind the European Union, which unlike the U.S. has limited offshoring. And it appears we'll soon drop to third place behind China. You cannot have a lasting thriving economy when all you do is import products and services and export jobs.

[Bill Glasheen]

think it's disingenuous of you to imply that it's the government that creates a situation that wouldn't otherwise exist.

Not MY specific situation. That is very real.

Once again, you are assuming a causal relationship there Bill. Given the trends in corporate America, it could have happened either way.

Once again, Glenn, there *IS* a causal relationship.

This is not a simple system. Consider economic activity like a complex system where there are multiple ways to get from point A to point B - kind of like an electric circuit. If suddenly you increase the resistance through Path 1, then more current (economic activity) will go through Path 2.

This is what happened in my company. With the Massachusetts legislation and with my company being a world leader in health risk assessment, nobody would know the consequences like we would. We also had the Massachusetts data, so... I mean really, Glenn, you're going to tell me you know better here?

Large economic systems are complex. Economic activity within a single company can be complex. At the end of the day, it's the job of the CEO to maximize profit. This is especially true if a company is in the process of going public, and has to make the revenue stream look good to potential buyers in an IPO. And let's not forget that customers want things at the lowest available price. That means the cost of operations (including healthcare) have to be as low as possible.

So you know what the cost of healthcare is, and you know the benefits inflation is going to be unprecedented, and you have an option of switching a major chunk of your business offshore and converting a portion of your staff to contractor status. Suddenly your costs have gone down while being able to maintain the revenue stream. It's a decision a monkey could make.

And yes... CAUSALITY!!!!! No ifs, ands, or buts about it. Nobody would know the consequence of MA universal health care like we would know. Nobody would understand how to adapt like our management would know.

When it was all going down, it reminded me of a conversation with a smoker physician I had years ago. He had just been diagnosed with lung cancer. As we were discussing his prognosis, I remember to this day a statement he made. "My problem is that I know too much." How very sad. He was dead 2 months later.

It similarly didn't take long for my company to adapt. It was abrupt, and it was brutal. And it is done.

Be careful what you vote for. There is NO free lunch in life. Ever.

- Bill

[Glenn]

The causal relationship you are arguing is in the timing of the action. As I have said previously, he Mass. legislation may have played a role in the specific timing of when you were made a contractor. But re-read what Justin said (emphasis added):

think it's disingenuous of you to imply that it's the government that creates a situation that wouldn't otherwise exist.

The situation of rampant outsourcing and offshoring pre-existed the Mass. legislation, and has been affecting millions of workers across the country for decades. All we can assume is that the specific legislation may have affected the timing of when you were outsourced. Given the economic trends, with an estimated 80% of service-sector jobs potentially being offshored before it is all over, it seems likely that you would have been made a contractor sooner or later. You yourself have repeatedly said no job is safe.

If we want to blame legislation for causing offshoring, we need to look at years of conservative-led deregulation and trade liberalization that made these processes possible. That your company decided to take advantage to legislation aimed at helping Americans to jump on the bandwagon of hurting Americans still puts the responsibility on the corporate leaders. Corporate America needs to find out how the EU can out-compete us without offshoring and actually make an effort to keep decent jobs here.

It similarly didn't take long for my company to adapt. It was abrupt, and it was brutal. And it is done.

That might apply to outsourcing you to contractor, but would not apply to your company's IT being offshored to Nepal. I know from experience that offshoring an IT department takes years of planning, negotiations, and laying the groundwork before it can become a reality.

[Bill Glasheen]

The causal relationship you are arguing is in the timing of the action. As I have said previously, he Mass. legislation may have played a role in the specific timing of when you were made a contractor. But re-read what Justin said (emphasis added):

think it's disingenuous of you to imply that it's the government that creates a situation that wouldn't otherwise exist.

I'm disagreeing with you both. And I have first-hand knowledge, which gives me the ability to use evidence (rather than conjecture) to support my claim.

It similarly didn't take long for my company to adapt. It was abrupt, and it was brutal. And it is done.

That might apply to outsourcing you to contractor, but would not apply to your company's IT being offshored to Nepal. I know from experience that offshoring an IT department takes years of planning, negotiations, and laying the groundwork before it can become a reality.

Hehehe... Oh but you are wrong, my friend.

You are the president of a division of a larger company. Your business model suddenly and abruptly changes while the parent company is trying to go public and look good to investors. You must respond, or you lose your job. Tell me how you can make this happen on a dime.



- Bill

[Valkenar]

I'm disagreeing with you both. And I have first-hand knowledge, which gives me the ability to use evidence (rather than conjecture) to support my claim.

Or allows you to use anecdotes rather than reason to support your claim.

If you really disagree that off-shoring exists primarily because of differences in living standards, I'm not sure it's worth discussing further. Out of curiosity, Bill... what do you think of laws concerning workplace conditions, safety, etc?

[Bill Glasheen]

Or allows you to use anecdotes rather than reason to support your claim.

Reason, expertise, professional experience, AND a first-hand anecdote is better than none or only some of the above.

If you really disagree that off-shoring exists primarily because of differences in living standards, I'm not sure it's worth discussing further.

Danger, Will Robinson, danger! Stawman at 12 o'clock!

Out of curiosity, Bill... what do you think of laws concerning workplace conditions, safety, etc?

We all need to work harder, safer, and smarter. That's as obvious as the fact that puppies and babies are cute, and sex sells. However we shouldn't be so risk averse that we are paralyzed in a global economy. When in survival mode, sacrifices are in order.

I paid my dues in my youth. I won't bore you with the details unless you insist. But I'm now in a better place because I worked within a system where incentives were properly aligned. That's the essence of capitalism, free markets, and a country that is a land of opportunity as opposed to entitlement.

It doesn't mean that sheet will never happen on an individual basis. Trust me... I know. But no matter how hard we try, sometimes "it" happens.

- Bill

[Valkenar]

If you really disagree that off-shoring exists primarily because of differences in living standards, I'm not sure it's worth discussing further.

Danger, Will Robinson, danger! Stawman at 12 o'clock!

Well I'm just confused. If that's not your position, then why does it sound so much like you're blaming government as the primary cause? My point is: government is not the primary cause of offshoring, and that you can't blame any instance of offshoring, even yours, on it. If your camel is broken-backed under a one-ton lead weight, and a straw, you don't blame the straw for the camel's plight. You probably aren't a casualty of Massachusetts' policy, Bill, you're a casualty of a nexus of factors, chief among them the basic wage disparity. It's like blaming pneumocystis pneumonia for the death of someone with aids. Sure, that fungus might be the final cause, but you're badly misguided if you think that means developing new treatments for pneumocystis is the way to address the problem.

We all need to work harder, safer, and smarter. That's as obvious as the fact that puppies and babies are cute, and sex sells. However we shouldn't be so risk averse that we are paralyzed in a global economy. When in survival mode, sacrifices are in order.

Okay, that's all very nice, but it's very non-specific and doesn't really answer the question. When you say we need to work harder, safer and smarter are you saying that we should repeal the labor laws and be safer and smarter as employees? Who is going to shoulder the burden of promoting workplace safety? Because it's been pretty clear that in a lot of cases, if you don't have federal mandates you have companies with an incentive to cut costs by cutting corners on safety, and the workers have to go along with it or they're out of a job.

[Bill Glasheen]

Justin

I say you are wrong; you say I am wrong. I am closer to the situation, have the knowledge and experience, etc.; you say I am wrong. It is what it is.

Next...

Okay, that's all very nice, but it's very non-specific and doesn't really answer the question. When you say we need to work harder, safer and smarter are you saying that we should repeal the labor laws and be safer and smarter as employees? Who is going to shoulder the burden of promoting workplace safety? Because it's been pretty clear that in a lot of cases, if you don't have federal mandates you have companies with an incentive to cut costs by cutting corners on safety, and the workers have to go along with it or they're out of a job.

Well, Justin, sometimes it matters not how you are out of a job if you are out of a job.

Here we have a difference in political views. You wax liberal; I wax libertarian. Intelligent people can differ on how the world should be run.

I happen to think I'm right and you suk.

But seriously... Good businesses operating in an environment with properly aligned incentives tend to do business the right way - in the long run. And it doesn't take a genius to see that there are many bad businesses out there which will fail for many reasons. Failure is part of what drives a capitalist economy. Failure is good if it weeds out bad business practices - for whatever reason.

The real issue is HOW to create the proper incentives and the open, full-disclosure environment. I happen to think that socially conscious business practices are good business practices. Companies which treat their workers well can market those traits, and attract business.

I USED to buy Levi jeans until they started making them abroad. I do not buy electric guitars not made in the United States. Oh and do you know that the country of origin makes a difference on the value of a used guitar of the very same make? (e.g. Fender Stratocaster) U.S. made models hold their value longer, and sell for more. Go figure...

Cars? I bought American until they started suking really bad. Companies driven by Big Labor will not get my business. Wow... that's where liberalism makes me take my dollars elsewhere. Where do you think my Saturn is after the 3rd engine failure in 50,000 miles? I'm not entirely sure, but I do know that I did the socially conscious thing - I donated it to The Kidney Foundation. And how is that Government Motors doing anyhow? I know one thing - they aren't getting my money. I don't like their business practices.

I once switched to Sprint. For an hour. I switched back after getting customer service somewhere deep in India. No thanks...

Last computer purchase for me? A Dell laptop. Customer service? Some guy living in Florida helped me rebuild the OS one time over the phone. My assistant here at home spent probably 4 total hours with him. Me likes.

Last computer purchase for my son? Apple (Macbook Pro). For similar reasons. I get free one-on-one education in the Apple store. And I was assured that "they are cute." Far be it for me to be sexist, but...

Am I communicating clearly enough? Or am I not properly seeing the world through the glasses you wish me to use?

- Bill

[Glenn]

You are the president of a division of a larger company. Your business model suddenly and abruptly changes while the parent company is trying to go public and look good to investors. You must respond, or you lose your job. Tell me how you can make this happen on a dime.

So the offshoring of IT to Nepal was not do to the Mass. legislation, but due to a rush decision to make the company look good to investors when going public. But OK, good point...let me rephrase: To offshore an IT department CORRECTLY takes years. If you simply want it done, it can be done on a dime. However I experienced an attempt to do it too hastily and it was not pretty (actually may have extended how long I was kept with the company). Given what is involved with IT infrastructure, data, and security, it takes time to do it correctly without putting your company in excess risk for failure or liability. And even if it is a rush decision caused by an immediate proximal factor like a company going public, that still does not get past the fact that the jump to offshore (outsource, etc) is a corporate mindset decades in the making that they are embrassing to the exclusion of other solutions.

One interesting factor in offshoring: The globalization of English as a lingua franca has also been a driving factor in the U.S. being a leader in offshoring. Non-English speaking developed countries generally have a harder time finding adequate underdeveloped countries that know their language to offshore too, while underdeveloped countries that do not have a broad-base English-speaking population (i.e., those that are not former British or American colonies) have a hard time attracting offshored jobs. British imperial pride has limited their participation in offshoring so far, even with all those English speakers in all their former colonies out there.

[Bill Glasheen]

Given what is involved with IT infrastructure, data, and security, it takes time to do it correctly without putting your company in excess risk for failure or liability.

Not true.

You are the president of a division of a larger company. Your business model suddenly and abruptly changes while the parent company is trying to go public and look good to investors. You must respond, or you lose your job. Tell me how you can make this happen on a dime...

...without putting your company in excess risk for failure or liability.



- Bill

[Glenn]

Last computer purchase for me? A Dell laptop. Customer service? Some guy living in Florida helped me rebuild the OS one time over the phone. My assistant here at home spent probably 4 total hours with him. Me likes.

Same here (an Acer laptop, which is a division of Dell) for the same reason. Nice to speak to someone who can understand me and who I can understand, and whose name might actually be "Mark".

Regarding guitars, cars, and "American made", good luck to anyone who tries to follow the "Buy American" mantra. Even if the final assembly is in the U.S., odds are the commodity chain of parts that went into the final assembly comes from many different countries. I am pretty loyal to Ford because of the good experiences with them for the past 20 years. The last Taurus I had (totaled a year ago) was assembled in Atlanta Georgia; the Five Hundred I have now was assembled in Illinois. But I have no way of knowing where all the parts came from for either vehicle.

Add to that the fact that many foreign car companies have factories in the U.S., such as a Toyota plant in Kentucky and a BMW plant in South Carolina, and "American made" is completely thrown for a curve. Buying a Toyota may employ more Americans than buying a Chevy.

The humorist Art Buchwald had a pretty good take on the reality of "Buy American"

"There is only one way the country is going to get on its feet," said Baleful.

"How's that?" I asked as we drank coffee in his office at the Baleful Refrigerator Company.

"The consumer has to start buying American," he said, slamming his fist down on the desk. "Every time an American buys a foreign refrigerator it costs one of my people his job. And every time one of my people is out of work it means he or she can't buy refrigerators."

"It's a vicious cycle," I said.

Baleful's secretary came in. "Mr. Thompson, the steel broker is on the phone." My friend grabbed the receiver. "Thompson, where is that steel shipment from Japan that was supposed to be in last weekend? I don't care about weather. We're almost out of steel, and I'll have to close down the refrigerator assembly line next week. If you can't deliver what you promise, I'll find myself another broker."

"You get your steel from Japan?" I asked Baleful.

"Even with shipping costs, their price is still lower than the steel made in Europe. We used to get all our sheets from Belgium, but the Japanese are now giving them a run for their money."

The buzzer on the phone alerted Baleful. He listened for a few moments and then said, "Excuse me, I have a call from Taiwan. Mark Four? Look R&D designed a new push button door handle and we're going to send the specs to you. Tell Mr. Chow if his people send us a sample of one and can make it for us at the same price as the old handle, we'll give his company the order."

A man came in with a plastic container and said, "Mr. Baleful, you said you wanted to see one of these before we ordered them. They are the containers for the ice maker in the refrigerator."

Beleful inspected it carefully and banged it on the floor a couple of times. "Whats the price?'

"Hong Kong can deliver it at $2 a tray, and Dong-Fu Plastics in South Korea said they can make it for $1.70."

"It's just a plastic tray. Take the South Korea bid. We'll let Hong Kong supply us with the shelves for the freezer. Any word on the motors?"

"There's a German company in Brazil that just came out with a new motor and it's passed all our tests, so Johnson has ordered 50,000."

"Call Cleveland Motors and tell them we're sorry but the price they quoted us was just too high."

"Yes sir," the man said and departed.

The secretary came in again and said, "Harry telephoned and wanted to let you know the defroster just arrived from Finland. They're unloading the box cars now."

"Good. Any word on the wooden crates from Singapore?"

"They're at the dock in Hoboken."

"Thank heaven. Cancel the order from Boise Cascade."

"What excuse should I give them?"

"Tell them we made a mistake in our inventory, or we're switching to plastic. I don't care what you tell them."

Baleful turned to me. "Where were we?"

"You were saying that if the consumer doesn't start buying American, this country is going to be in alot of trouble."

"Right. It's not only his patriotic duty, but his livelihood thats at stake. I'm going to Washington next week to tell the Senate Commerce Committee that if they don't get on the stick, there isn't going to be a domestic refrigerator left in this country. We're not going to stay in business for our health."

"Pour it to them," I said.

Baleful said, "Come out with me into the showroom."

I followed him. He went to his latest model and opened the door. "This is an American refrigerator made by the American worker, for the American consumer. What do you have to say to that?"

"It's beautiful," I said. "It pust foreign imports to shame."

[Bill Glasheen]

I have a garage full of vehicles of various ages now (some quite beat up).

• Two Mercury Villagers - with Nissan VQ engines.
• One Honda Civic - made in Ohio.
• One Subaru Forester - made in Japan but now built in Indiana.

I don't know how long I can hold out, but... I'd like to make either a diesel or an electric my next purchase. Be nice to get something like a Tesla Model S when/if the price goes down. Then I can kiss the gas station goodbye.

But time will tell. Economy must cooperate first.

- Bill

[Glenn]

Not true.

I don't know Bill, my 10+ years in IT, including actively involved in many projects that in retrospect assisted with putting me out of a job, tells me that VP would be very lucky to pull that one off. The only way I could see it working well is if your company had either already offshored a lot of the programming, or is only using standard commercial software packages and not any in-house proprietary systems. Otherwise the training alone can take 6 months +.

I suppose I should ask what timeframe you mean by "on a dime". The standard we used was that it would take 6-months for the offshore partners to adequately learn each of our proprietary systems from scratch, and they did not have the staffing to learn more than two at one time. The bottom line was a total of at least two years to be able to effectively take on support of all our in-house systems. And that was after about two years of planning, finding an offshore partner company, and negotiating the terms of the partnership. So if your company has a similar range of in-house systems but was able to find a large offshore firm with nothing else to do, then I'd put on a dime as a year preparation and a year execution.

But again, I am talking about doing it right, and not just doing it.

[Bill Glasheen]