Archive for January, 2006

Here is an interesting article by McKinsey on what percentage of jobs, especially in the service sector, could potentially be offshored, and what effect that would have on wages in the US (and in the foreign country).

It also talks about a fact that I saw first hand: Only a very small percentage of foreign workers with the correct university degree for a given field are actually “employable” by multinational companies. 13% was the number they came up with. Interesting…even if there is no way to verify it.

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I don’t even think I need to add any clever comments to this one… stands on its own.

Raju Raghuvanshi was greeted with cries of “ghost” and neighbours locking doors when he returned from a short spell in jail to his village in Madhya Pradesh.

He had fallen ill in prison and was taken to hospital. Relatives heard he had died and performed his last rites.

“I have now to prove that I am alive,” he said. “But I will have them punished.”

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A split opinion about one of my favorite topics.

This topic is very dear to my heart as I understand well that a rising tide does not lift all boats (as the saying goes)…..a rising tide sinks those without the money to buy a boat.

Also, people deal poorly with inequality psychologically. They are not swayed by absolute wealth past persistence needs, but prefer to be better off than their neighbors rather they have everyone have a little more. That’s great for those with more, but as more and more goes to less and less, it creates more and more resentment, stress, and unhappiness for those left over (which is just about everyone).

There is a sin tax on beer and wine and such….I think it is reasonable to have an “unhappiness tax” acknowledging that earning grossly more than everyone else creates anxiety for society at large. While I’m on the topic of preventative taxes, I also think SUVs whose hood comes up to the windshield of normal sized cars should be taxed extra for making the roads more dangerous for the rest of us.

Working in India put a different spin on wages for me as I watched people do the same highly skilled job as me for 6 times less salary. The argument for why those in the bottom twenty percentile of earnings in the US have made negative real wage gains over the past twenty five years is immigration. Immigrants start at the bottom of our wage food chain and since immigration has accounted for almost all US population growth in recent years…..the argument is that there is an ample pool of cheap labor even though there seems like there shouldn’t be.

The lesson is that the supply of labor in a particular labor market greatly affects wages…regardless of the skill level needed to perform the job. So take a skilled job like computer programmer that is fairly well paid. It is paid so largely because there is a limited pool of labor that knows how to do it….not necessarily because the job is more productive than lower skill level jobs.

All things being equal (which I realize they never are), when supply of labor jumps the wages of the labor decreases. What this has to do with India and wage inequality is that outsourcing does cause us to lose jobs in certain cases (although in certain cases it just looks like that is what it is doing), but it also causes the average wage for that job here in the US to decrease. If an Indian computer programmer makes 10 chits an hour and a US computer programmer makes 100 chits an hour….and they are both suddenly thrown into a common labor pool (which technology has made possible), then eventually all programmers will make 55 chits an hour in my oversimplified model.

So we see the wages of the middle class, in skilled productive jobs, squeezed because the size of their labor pool has jumped…even if some of the pool is living on the other side of the planet. If you sit in front of a computer all day in your job, I wouldn’t expect your job to be around in 10 years (or sooner). If it is around, be certain that you won’t be making as much doing it.

There is always a fight between Labor and Capital for profits of work. The winner in all this is Capital….those who earn money through dividends, interest, and capital gains. They skim (not implying illegally) money from the difference between the old wages and the new. Business gets richer, the wage earner in the US gets squeezed, and on a side note for everyone who has a soft spot for third world or developing countries…the US essentially pays to develop the third world through increased profits stemming from decreased wages. Remember wages (in the US) are the single largest expense for most employers (greater than half of revenue goes to labor cost usually).

That is making no judgment about what development can destroy culturally or environmentally, but, as demand to immigrate to the US shows, most people would love a shot at our lifestyle. Forget the IMF, World Bank, UN, and all the other INGOs trying to end poverty….teach the third world to speak English, build them a communications infrastructure (which can be done wirelessly fairly cheaply), and show them how to use a computer……and US business will do the rest.

Actually, that doesn’t sound so easy. Perhaps better to bet on discovering oil and let corrupt politicians hoard and waste the money….hmm….that doesn’t work either.

Ok, obviously it is hard to end poverty and develop the third world, but a good start would be to let the US find ways to outsource more jobs. Then maybe we could become a third world country too and someone will be kind enough to outsource their jobs to back to us.

If there is a lesson here, which there doesn’t seem to be, it is to move from the Wages camp to the Capital camp. Wage earners seem to be screwed. Open a business and then YOU can exploit the advantages capital enjoys these days.

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I have been home less than a month….and it seems like I was never there. It is a very distant memory, outside af any timeline. I don’t think I’ve ever disconnected from a place quite so quickly.

I talked to Peter the other day about how disjointed my life feels….since Holland it has become a set of non-linear events…like pulling cards from a deck and trying to make a story out of them.

They are all compartmentalized in my head “6 months here”…”a year there”…”a bit of this”…and “a bit of that”….always different places, always different people. I could shuffle them if I like, changing people, tasks, and places….and it wouldn’t turn out much different really. Does it matter if it is study in Spain and work in India, or work in Spain and study in Turkey? Not really…after a while its the same. I could’ve just watched a TV show about it….or robbed a bank and sailed to the Seychelles.

I’ve always claimed that I am a good friend to have…loyal and trustworthy. I think that is true, but maybe the reason is that so little in my life has been constant that perhaps I am just reaching out for something. Of course, that does not cheapen the value of a good friend…whatever the motivations.

Anyway, I’ve done a lot of thinking lately about myself…moreso than usual, and for me it is a tired, beat subject to begin with since I’ve been doing just that and little else for the better part of a decade. I think its because I am “dating” someone I really like for the first time in…..well….a long time. I usually just think about myself….not myself and someone else. I am finding that I am not so well equipped to handle the pair.

So far I give myself like an “D+” maybe…at least based on what I would like. Based on my past behavior I think I’m doing ok….but as I am quick to tell people: no one should get credit for stuff they are supposed to do in the first place.

I think the only thing I can say for sure is that we are never too old to act like children, and that sometimes being an adult is simply the ability to detach yourself from something so as to put off those childish tendencies.

I guess I am in a plaintive mood tonight. I haven’t been home much since I got back and tonight I am alone in my room drinking Sam Adams by myself….writing and surfing the Internet for stuff that I am convinced will one day deliver me from myself. Oh well…the Internet is a big place. I’ll keep looking.

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