I thought I would share with you my impressions of last night's debate between The Nation and The Economist on "Outsourcing" held at the New York Society for Ethical Culture
http://www.nysec.org
on the Upper West Side of Manhattan (64th St and Central Park West).
See The Economist's website for more details:
http://www.economist.com/events/outsourcing/
The list of panelists was as follows:
- Clive Crook (Deputy Editor, The Economist)
- Ben Edwards (US Business Editor, The Economist)
- William Greider (National Affairs Correspondent, The Nation)
- Lori Wallach (Director of Public Citizen's Global Trade Watch and author of "Whose Trade Organization?: A Comprehensive Guide to the World Trade Organization", Second Edition)
It was hosted by Brian Lehrer (Host of The Brian Lehrer Show, WNYC).
Since I didn't take notes, the following will be a bit free-form and probably not very chronological.
Brian opened with a few questions to the audience, which we answered by raising our hands. Here were the most interesting:
- How many of you identify more with the Nation?
50%
- How many of you identify more with the Economist?
40%
- How many of you voted for Bush?
About 3 brave souls (everyone was laughing)
- Who thinks outsourcing is good?
About 10%
- Who thinks outsourcing is bad?
About 10%
- Who isn't really sure either way?
About 20% (including me)
Finally, and with a wry smile on his face, Brian asked:
- How many of you think Bush stole the election in OH?
About 10% (including me, of course, but everyone is laughing at this point)
Each of the panelists had 6 minutes for their opening statements.
Clive spoke about the "moral" argument for free trade (a good tactic, given the audience). Basically, just that opening up jobs in the developing world could only be beneficial for the people there. There would be some temporary job loss in the developed world, but the balance would quickly be regained by new (and different) job creation in the developed world.
William, who came off like a wizened Jedi knight( he received a lot of applause), spoke about the trade deficit and the overall fiscal insanity being pursued by the Bush administration. He believes the weakening dollar is only the first sign of a downward spiral. The median American income has stagnated since the early 70's. Americans have since had to work multiple jobs. They have leveraged themselves into great debt. Eventually this has to lead to fiscal catastrophe (especially as more and more jobs are lost to outsourcing). He quixotically suggested an "emergency tariff" applied equally to all goods to slow the outsourcing and fend off this impending catastrophe. In the meanwhile we could go back to the table with the rest of the world and rewrite the trade laws to include labor and environmental protections (sounds a lot like Dean here). William joked that mentioning the word "tariff" to a free trader is like "waving a crucifix in front of a vampire."
Ben spoke exclusively about his experience in India. He had worked there as a journalist over a decade ago earning $40/week in an office room (12 feet on each side) with about a dozen Indian journalists. In recent years, he has gone to India to view the new "call centers" with their industrial parks, "one-hole golf courses", etc. He also went for the "moral" argument, saying that we need to suffer a little here (but only temporarily!) so that the developing world can do better.
Finally, Lori spoke about the "Apples and Oranges" problem (this seemed to plague the entire evening). Basically, the examples being considered by both sides shouldn't be so blindly compared with each other. She said that the India "call center" example is but a small perturbation, and does little to help the billion plus people who don't have the good fortune of working there. She said she didn't quite agree with William about the need for an "emergency tariff", but did believe that we need to sit back down at the table and look at the rules that exist. To her, it seemed, we should stop talking about this lofty notion of "free trade" and instead examine the actual rules that were written by the WTO and World Bank exclusively by the developed nations and their corporate paymasters.
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Now, here are some scattered memories of the debate. Brian asked several questions, then he selected random questions (written down by audience members).
At one point, Brian reminded everyone that the Economist had endorsed John Kerry, calling him a fiscal conservative. Brian was interested to hear the Economist representatives address this. Clive seemed to agree with the Economist's editorial, with the one caveat of his troubling comments about outsourcing.
The debate seemed to turn on a single question. This is where The Economist basically lost the debate. Brian directed the following audience question to them (which they had been avoiding all evening):
"If the IT jobs are now going to India. What new jobs will replace those? What can Americans be trained to do that Indians and Chinese can't do?"
William blurted out that we should all move to California, where Arnie would finance us to work on stem cells. (However, as I'm typing this from a biology lab myself, I think we'd get blown away by the Chinese in that field as well.)
Basically, Clive and Ben said that a hundred years ago no one knew what jobs were going to replace the manual, industrial jobs before either. (But, no one really bought this argument.) Here, Brian repeated a characterization he had heard somewhere of "free trade" as "faith-based economics": We all just have to hope and pray that some new jobs come along to replace our old ones, but no one really knows if that will be true this time around.
Lori brought up the fact that even one of the grand prophets of free trade is now a turncoat (JUDAS!). Paul Samuelson, nobel prize winning economist at MIT, now believes that the central tenet of free trade, beneficence for all, could now be untenable. Developed nations may actually be losing out. This has, according to Lori, sent a shockwave through the economics world (paradigm shift, anyone?). Here is an interview of Paul Samuelson you might want to check out:
http://www.onpointradio.org/shows/2004/09/20040927_b_main.asp
Lori was very impressive. However, she refused to concede that the Indian "call centers" were a good development for India. Ben called her out on that, saying that India is growing by leaps and bounds and China is too. I only partially agree with Ben because he seemed to be implying that that growth is mostly due to the new "free trade" and outsourcing, but I think it could just be that those countries are now finally ready to join modernity (possibly some more "apples and oranges" here).
Here is what I think Lori was trying to say (but I may be wrong). The "call centers" are one example (and, yes, they are beneficial to Indians and India), but the overriding policies are what are deeply flawed. She mentioned throughout the practice of "wage arbitrage", which is the true way of looking at "outsourcing". Wage arbitrage simply means companies centered in the developed world outsource their jobs to the undeveloped world and pocket the profit. Direct investment of corporations in the infrastructure and economies of the developing world is a different matter. Many companies do this as well, and it is often a good thing. However, what she is against is the "wage arbitrage" that seeks to keep in place a system of depressed wages for the developing world (by keeping in place the lack of any labor/environmental standards). The profits from this accrue to the top earners in the developed world, and, unless you buy "trickle down", pretty much stay there with the rich. They lead to stagnant or falling wages for everybody else in the developed world. Developing nations' economies may rise somewhat, but they will ultimately be stopped short of what many of us would consider "fair" reimbursement for their labor.
At the end, Brian asked the audience:
- Who thought outsourcing is better than they thought before?
About 5%
- Who thinks it's worse?
About 5%
- Who is still confused?
About 20%
And, finally, the million-dollar question, one more time:
- Who thinks Bush stole the election in OH?
15% (I think a few more people raised their hands!)
My general thoughts (btw, I'm no economist):
- Why do we tax our own labor through payroll taxes (and income tax) and not outsourced labor? Couldn't we level that playing field in the interest of "free trade"? I imagine this is (part of?) what Kerry meant by "rewarding" companies for outsourcing (though there may have been even more direct assistance). I believe all of this talk about trade has to be coupled with discussion of tax policy as well to make any sense.
- What's wrong with requiring American-owned businesses to comply with certain basic labor standards when outsourcing their jobs to foreign workforces? We require them to do that here, so why not in the rest of the world? Or, are we supposed to remove all of those protections in order to better "compete"? Are the "free traders" therefore for the removal of the minimum wage, 40-hour work week, child labor protections, right to organize, environmental protections, etc. If not, then I suggest they join with the Lori Wallach's of the world to demand better labor and environmental standards around the world.
- Having a lot of relatives in India myself, I am certainly not one to argue for protectionism. I just hope that we can get some sort of true level playing ground. The sooner, the better. I also think we can get "free traders" on our side if we frame the issue properly. We have to first convince them no true competition-based "free trade" will rise out of the exclusive partnership of governments with large, monopolistic corporations.
- As a bit of an aside: I went to another talk yesterday by Michael Oppenheimer (Princeton Geoscience professor) about global warming. This just brought to mind how silly all this talk of "free trade" really is. The world is about to go through the greatest "Tragedy of the Commons" ever, and we're the cause. We have to cooperate or lose a great deal of what we take for granted. This cannot be accomplished in a laissez faire world, but only in a heavily regulated one. In the future, there should still be corporations (though many more, hopefully, to avoid the present virtual monopolies) and the innovation that comes with a "free market", but it should all be under the same set of rigid, enforceable laws, which are created by governments alone (not corporations). The stakes are simply too high.
"Long Time Lurker. First Time Diarist."