Perhaps it's time we punitively tax offshoring?

[Le Jacquelope]

If you want to make something go away, tax it, right? Isn't that what they say?

I say we punitively tax discrimination against workers of the Western world.

http://tech.yahoo.com/news/ap/20090325/ap_on_hi_te/ibm_layoffs

AP Source: IBM to lay off 5,000 US-based workers (AP)

SAN FRANCISCO - IBM Corp. plans to lay off about 5,000 U.S. employees in a new round of job cuts, the Associated Press has learned. The move reflects IBM's aggressiveness in shifting labor to lower-cost regions like India and keeping its profits aloft at a time when other technology companies' earnings are tumbling.

An IBM manager knowledgeable about the plans said the cuts will come from the services division and workers will be informed Thursday. The person spoke on condition of anonymity Wednesday because he was not authorized to discuss the plan publicly.

The layoffs were reported earlier by The Wall Street Journal.

The cuts will affect about 4 percent of IBM's U.S.-based work force, which totaled 115,000 at the end of 2008. In a sign of how quickly IBM is staffing up in emerging markets, last year IBM had nearly as many workers in Brazil, China, India and Russia — 113,000 — as it did in the U.S.

IBM now has about 400,000 employees worldwide.

Unlike many other tech companies that have recently announced layoffs, IBM has managed to become more profitable despite the recession. IBM's cost-cutting, global footprint, and focus on services and software, which are often more lucrative than hardware, are key reasons why. IBM's net income was up 18 percent last year to $12.3 billion.

In January, Armonk, N.Y.-based IBM cut thousands of U.S. jobs in sales, software and hardware. IBM didn't give the precise number, saying it fell below an amount that would require disclosure.

Other tech companies are also doing big layoffs.

Hewlett-Packard Co. is slashing 24,600 positions, 8 percent of its 320,000-employee work force, in a three-year restructuring as part of its acquisition of Electronic Data Systems Corp. HP paid $13.9 billion for EDS in a bid to compete better against IBM for technology-services contracts.

Microsoft Corp. said in January it was cutting 5,000 jobs, the first mass layoffs in the company's history, after profit in the latest quarter fell 11 percent to $4.17 billion.

IBM's shares ended Wednesday down 35 cents at $97.95.

 

[ishtat]

IBM stands for International Business Machines. Geddit!

 

[john-the-author]

LeJaque: I just don't think so. While it's certainly an appealing reactionary idea, I think it's not the right solution.

 

[Le Jacquelope]

IBM stands for International Business Machines. Geddit!

Uh huh. Any guesses as to what its original name was, where it was first established, and where it's currently headquartered?

 

[Le Jacquelope]

LeJaque: I just don't think so. While it's certainly an appealing reactionary idea, I think it's not the right solution.

The alternative is American and western workers will continue to be left behind as third world workers continue to get our jobs.

Meanwhile, they're not sending many jobs here to the US. Nor will they unless our wages become next to nothing, and we allow industries to pollute us to death like they do the cities in India and China.

Globalism has not benefited Western workers at all. Especially not Americans.

 

[ishtat]

Uh huh. Any guesses as to what its original name was, where it was first established, and where it's currently headquartered?

Yes I know those things. I also made myself aware of IBM's thoughts as to the likely developing as opposed to mature markets and even more importantly the likely sources of IBM's future capital needs. When Foreign entities supply capital they don't expect to see it all repatriated to the USA they want a proportion of it reinvested on the spot.

The exception to that of course is the Chinese government which because of its position as banker to the US government can dictate to Obama that he will not run a nationalistic policy. because of that alone your suggestion ain't going anywhere.

 

[JAMESBJOHNSON]

Not necessarily.

When I buy a Toyota my American Dollars dont get shipped to Japan. When I buy an HP computer my Dollars dont go to China.

The Dollars are spent here for stuff that gets shipped to Japan or China. Stuff like logs and technology and jobs.

And thats okay so long as what Japan and China makes stays in Japan and China, or they build factories here and employ Americans.

The problem comes when the technology and jobs go to Asia and the stuff they make comes back here for sale. The workers in Asia live in refrigerator boxes, eat rice beetles, and work for 10 cents an hour. American workers have much higher living standards. Higher living standards are expensive.

The other thing is, the politicians let American companies buy Asian stuff for 10 cents on the Dollar, re-sell the stuff to themselves at the Cayman Islands for 90 cents on the Dollar, and pay almost no income taxes here in America....because the 80 cents stays in a Cayman Island bank. This shit needs to stop.

 

[Pure]

notes,

from wiki Thomas J. Watson Sr. became General Manager of CTR in 1914 and President in 1915. In 1917, CTR entered the Canadian market under the name of International Business Machines Co., Limited. On February 14, 1924, CTR changed its name to International Business Machines Corporation, or IBM. At the helm during this period, Watson played a central role in establishing what would become the IBM organization and culture.

IBM, then, was as long as the original amalgamation, International Business Machines, althought at first that just meant Canada and US.

the idea of taxing 'off shoring', "moving jobs overseas" has a kind of surface appeal, but it difficult or impossible to work.

it's not unlike the problem of trying to induce a company to keep a plant open and pay a certain wage; cannot be done in the US system. indeed this situation indicates the simplest way for a company to fight against any gov attempt at control of its offshoring. simply close down and sell off the US component that makes the parts. THEN after 6 mos, go overseas and find a supplier!

the best bet for a US gov. to deal with all such problems is just what obama did in his budget: make it *profitable* for someone to do what you wish. e.g. pay the employer a subsidy on the US wages he pays (however you wish to label and finesse this situation.). in some areas, US states or Canadian provinces have made it 'worth the while' for Japanese plants [e.g. Honda] to set up shop; tax breaks etc.

i'm not pleased, in many ways, with the drift to 'free trade' so called, but there appears to be little to do to fight its effects. except perhaps 'go with the flow.' buy enough chinese stuff that there is enough to pay workers more, and try to ensure at some point that they can bargain collectively. IOW, global capitalism and its sweatshops has to be dealt with as the sweatshops of New York were, they become [at least in some areas!] obsolete or unnecessary; they aren't just shut down.

 

[WRJames]

I have a few things to say on the subject -- some of which may seem contradictory.

The first is that I don't think that long term the US can survive as an island of over consumption in a vast sea of abject poverty. The current situation where we are consuming such an astonishing proportion of the world's total output, while half the human population is living on a dollar or two a day, is unacceptable. So in that sense, offshoring represents a brutal form of social justice and wealth redistribution.

That being said, there are many flaws in what has been happening. The first is that shipping jobs to low cost countries is not nearly as cost effective as one would assume. There are many hidden costs which are not taken into account -- communications, infrastructure, language problems. In many cases, there are not adequate management structures in place to ensure that the offshore work is done on time and correctly. These problems get glossed over because so many executives have committed themselves to the process -- it has to work, or they no longer have a career.

The second is that offshoring tends to create little bubbles of relative prosperity in the third world countries, without doing a thing to help the masses in abject poverty. In some cases in may contribute to the destabilization of those countries.

Where is this going to end? Probably with somewhat lower wages in the US, at least in the short term, to reach a balance point with third world competition. And, there may be a backlash against poor quality of the outsourced products, similar to what we have been seeing with Chinese manufacturing.

 

[Le Jacquelope]

Yes I know those things. I also made myself aware of IBM's thoughts as to the likely developing as opposed to mature markets and even more importantly the likely sources of IBM's future capital needs. When Foreign entities supply capital they don't expect to see it all repatriated to the USA they want a proportion of it reinvested on the spot.

The exception to that of course is the Chinese government which because of its position as banker to the US government can dictate to Obama that he will not run a nationalistic policy. because of that alone your suggestion ain't going anywhere.

And the US citizens just drove 20 million Chinese people out of work by retaliating with frugal spending habits.

As for China bullying the US, Obama bends, he does not break. He knows that if they pull our plug, we pull theirs.

What happens if they bankrupt us and our consumers can't buy their stuff anymore? What happens to their exports then?

20 million Chinese out of work would just be the start of it. China doesn't want this. It's mutual assured destruction... except America is better at recovering from such things.

I have a few things to say on the subject -- some of which may seem contradictory.

The first is that I don't think that long term the US can survive as an island of over consumption in a vast sea of abject poverty. The current situation where we are consuming such an astonishing proportion of the world's total output, while half the human population is living on a dollar or two a day, is unacceptable. So in that sense, offshoring represents a brutal form of social justice and wealth redistribution.

And when Americans can no longer as easily afford those goods from abroad? Or we get mad and decide to buy American/Western?

We're on the cusp of the former now. The latter, will need more prodding.

The first hit that will come is the megabanks will lose clout and customers in favor of smaller, community banks that invest locally instead of internationally. That should be almost as scary as the end of offshoring.

That being said, there are many flaws in what has been happening. The first is that shipping jobs to low cost countries is not nearly as cost effective as one would assume. There are many hidden costs which are not taken into account -- communications, infrastructure, language problems. In many cases, there are not adequate management structures in place to ensure that the offshore work is done on time and correctly. These problems get glossed over because so many executives have committed themselves to the process -- it has to work, or they no longer have a career.

The second is that offshoring tends to create little bubbles of relative prosperity in the third world countries, without doing a thing to help the masses in abject poverty. In some cases in may contribute to the destabilization of those countries.

Where is this going to end? Probably with somewhat lower wages in the US, at least in the short term, to reach a balance point with third world competition. And, there may be a backlash against poor quality of the outsourced products, similar to what we have been seeing with Chinese manufacturing.

I'm hoping this ends with America's working class seizing power and turning the agenda in their favor.

Lower wages in the US means less buying power for those foreign goods. People are saving now instead of buying Chinese/third world stuff.

But most importantly, China has no power to stop a country whose citizens are driving up the demand for domestic-made goods. The third world stands to lose their ass if America simply wises up and decides to buy from Western democracies; no trade agreement in the world can stop that.

It's just that Americans are unaware of the power they can wield by consciously rejecting third world goods.

 

[WRJames]

But most importantly, China has no power to stop a country whose citizens are driving up the demand for domestic-made goods. The third world stands to lose their ass if America simply wises up and decides to buy from Western democracies; no trade agreement in the world can stop that.

It's just that Americans are unaware of the power they can wield by consciously rejecting third world goods.

Safety and health problems with Chinese made products are certainly making them less attractive. Horrible experiences with Indian customer service is making that a less attractive option. There probably will be a correction.

But, as I mentioned before, at lot of executives have their careers staked on moving jobs off shore. This is certainly true at IBM. Despite hard evidence that it wasn't any cheaper to develop in India, they have kept at it -- it is a strategy they are going to have to get to work. So unless there is a change in management, that isn't going to be different.

It's possible that a tide of public revulsion might have some impact. More positively, displaced workers might start up their own companies in competition, and make their case in the marketplace that they can compete with third world providers.

 

[ishtat]

20 million Chinese out of work would just be the start of it. China doesn't want this. It's mutual assured destruction... except America is better at recovering from such things.

.

"It's mutual assured destruction" With that phrase Jaq you have neatly skewered your own original proposition. No country, whatever the local Pollies tell their electorates can run an isolated economy.

 

[Le Jacquelope]

"It's mutual assured destruction" With that phrase Jaq you have neatly skewered your own original proposition. No country, whatever the local Pollies tell their electorates can run an isolated economy.

No, mutual assured destruction in this situation allows America to start over with a new economic system. It's not like launching real nukes; financial nukes you can recover from. And I never said we should be isolated. In fact I've said in many threads that we should have no trade barriers between Western democracies, where wages are higher, pollution is controlled and workplace safety is a standard, not an afterthought.

 

[Le Jacquelope]

Safety and health problems with Chinese made products are certainly making them less attractive. Horrible experiences with Indian customer service is making that a less attractive option. There probably will be a correction.

But, as I mentioned before, at lot of executives have their careers staked on moving jobs off shore. This is certainly true at IBM. Despite hard evidence that it wasn't any cheaper to develop in India, they have kept at it -- it is a strategy they are going to have to get to work. So unless there is a change in management, that isn't going to be different.

They're due a comeuppance from a different direction: Lower paid India CEOs will undercut their upper management/officer salaries.

Moreover, IBM is leaving itself open to the Toyota effect. Remember when the Big Three were invincibly huge and no one cared about those cheap little Toyotas? Well, they didn't even have Americans offshoring GM car production to them and yet they out-competed the Big Three.

IBM is actually growing a foreign base of innovators who have direct contact with IBM intellectual property as a major boost for them when they want to start their own businesses. Cheaper CEO salary overhead and cheap labor, plus knowledge of cutting edge IP and management styles, means their little companies will swarm up on IBM and eventually outcompete them locally. Then they'll conglomerate and sell to the US.

What IBM has to defend itself with now is name recognition. Fat lot of good that ultimately did for GM...

It's possible that a tide of public revulsion might have some impact. More positively, displaced workers might start up their own companies in competition, and make their case in the marketplace that they can compete with third world providers.

They need more than that - they need a cultural shift. People need to say "hey, this product is made by workers in the Western world, let's buy from them first."

This will drive up the demand for the products made by those displaced workers.

I would start by forcing importers to label made-in-China goods with "Chinese goods have been known to contain lead" or "These goods come from an undemocratic country known for its unsafe labor practices" or "these goods put Americans out of work" or something evil but totally factual like that. Yeah, I know, that's improbable, but this whole thread dwells on the improbable so there we go.

 

[SlickTony]

Safety and health problems with Chinese made products are certainly making them less attractive. Horrible experiences with Indian customer service is making that a less attractive option. There probably will be a correction.

This has already been coming on. My mother, for instance, will go to a good deal of trouble to avoid buying anything made in China. When she wanted to mail us some stuff, she even wanted to make her own boxes to put it in so as to avoid a Chinese-made one. But even the stuff the boxes were made out of was made in China, too.

A friend of mine who has worked in call centers and boiler rooms for years has said that in recent years, people have been more receptive to him, simply because they can tell he's an American.

 

[jeninflorida]

so if a company does not get their cost in line they go under. yep peppie! we need more GM's! after all america can't compete, so lets just put all american CEO's in jail and let obama take over every american company.... WFU, what is our tax rate today? what will it be in 3 years?

If you want to make something go away, tax it, right? Isn't that what they say?

I say we punitively tax discrimination against workers of the Western world.

http://tech.yahoo.com/news/ap/20090325/ap_on_hi_te/ibm_layoffs

AP Source: IBM to lay off 5,000 US-based workers (AP)

SAN FRANCISCO - IBM Corp. plans to lay off about 5,000 U.S. employees in a new round of job cuts, the Associated Press has learned. The move reflects IBM's aggressiveness in shifting labor to lower-cost regions like India and keeping its profits aloft at a time when other technology companies' earnings are tumbling.

An IBM manager knowledgeable about the plans said the cuts will come from the services division and workers will be informed Thursday. The person spoke on condition of anonymity Wednesday because he was not authorized to discuss the plan publicly.

The layoffs were reported earlier by The Wall Street Journal.

The cuts will affect about 4 percent of IBM's U.S.-based work force, which totaled 115,000 at the end of 2008. In a sign of how quickly IBM is staffing up in emerging markets, last year IBM had nearly as many workers in Brazil, China, India and Russia — 113,000 — as it did in the U.S.

IBM now has about 400,000 employees worldwide.

Unlike many other tech companies that have recently announced layoffs, IBM has managed to become more profitable despite the recession. IBM's cost-cutting, global footprint, and focus on services and software, which are often more lucrative than hardware, are key reasons why. IBM's net income was up 18 percent last year to $12.3 billion.

In January, Armonk, N.Y.-based IBM cut thousands of U.S. jobs in sales, software and hardware. IBM didn't give the precise number, saying it fell below an amount that would require disclosure.

Other tech companies are also doing big layoffs.

Hewlett-Packard Co. is slashing 24,600 positions, 8 percent of its 320,000-employee work force, in a three-year restructuring as part of its acquisition of Electronic Data Systems Corp. HP paid $13.9 billion for EDS in a bid to compete better against IBM for technology-services contracts.

Microsoft Corp. said in January it was cutting 5,000 jobs, the first mass layoffs in the company's history, after profit in the latest quarter fell 11 percent to $4.17 billion.

IBM's shares ended Wednesday down 35 cents at $97.95.

 

[jeninflorida]

so if a company does not get their cost in line they go under. yep peppie! we need more GM's! after all america can't compete, so lets just put all american CEO's in jail and let obama take over every american company.... WFU, what is our tax rate today? what will iour tax rate be in 3 years?

If you want to make something go away, tax it, right? Isn't that what they say?

I say we punitively tax discrimination against workers of the Western world.

http://tech.yahoo.com/news/ap/20090325/ap_on_hi_te/ibm_layoffs

AP Source: IBM to lay off 5,000 US-based workers (AP)

SAN FRANCISCO - IBM Corp. plans to lay off about 5,000 U.S. employees in a new round of job cuts, the Associated Press has learned. The move reflects IBM's aggressiveness in shifting labor to lower-cost regions like India and keeping its profits aloft at a time when other technology companies' earnings are tumbling.

An IBM manager knowledgeable about the plans said the cuts will come from the services division and workers will be informed Thursday. The person spoke on condition of anonymity Wednesday because he was not authorized to discuss the plan publicly.

The layoffs were reported earlier by The Wall Street Journal.

The cuts will affect about 4 percent of IBM's U.S.-based work force, which totaled 115,000 at the end of 2008. In a sign of how quickly IBM is staffing up in emerging markets, last year IBM had nearly as many workers in Brazil, China, India and Russia — 113,000 — as it did in the U.S.

IBM now has about 400,000 employees worldwide.

Unlike many other tech companies that have recently announced layoffs, IBM has managed to become more profitable despite the recession. IBM's cost-cutting, global footprint, and focus on services and software, which are often more lucrative than hardware, are key reasons why. IBM's net income was up 18 percent last year to $12.3 billion.

In January, Armonk, N.Y.-based IBM cut thousands of U.S. jobs in sales, software and hardware. IBM didn't give the precise number, saying it fell below an amount that would require disclosure.

Other tech companies are also doing big layoffs.

Hewlett-Packard Co. is slashing 24,600 positions, 8 percent of its 320,000-employee work force, in a three-year restructuring as part of its acquisition of Electronic Data Systems Corp. HP paid $13.9 billion for EDS in a bid to compete better against IBM for technology-services contracts.

Microsoft Corp. said in January it was cutting 5,000 jobs, the first mass layoffs in the company's history, after profit in the latest quarter fell 11 percent to $4.17 billion.

IBM's shares ended Wednesday down 35 cents at $97.95.