Article 43


Monday, October 10, 2005

When Outsourcing Takes Your Job

When Outsourcing Takes Your Job, Then It Will Matter

By Leo Hindery Jr.
San Jose Mercury News
August 5, 2004

A recession is when someone else loses his or her job; a depression is when you lose your job. I was reminded of this adage when a recent report by three Bay Area groups said we shouldn’t worry about outsourcing of good jobs to other countries. Those losing their jobs would beg to differ.

Throwing in the towel, one of the report’s sponsors said, “Offshoring is here to stay.’’ That’s particularly troubling when a UC-Berkeley analysis found that one-in-six jobs are at risk of being exported from Silicon Valley.

But voters aren’t buying the lines coming from think tanks and Washington. First, they were told that the few jobs lost would be quickly replaced. They weren’t. Then President Bush’s economic adviser said outsourcing jobs was actually good in the long run. Displaced workers know better. And now, it seems, the new line is that nothing should be done. Voters don’t buy inaction, either.

Offshoring of jobs is not inevitable. There’s much government can do, and it should act before more good jobs disappear and the middle class shrinks even more.

First, we must ensure that free trade is also fair trade. How can we keep manufacturing jobs in America when foreign competitors often employ children, pay pennies, provide little or no benefits and ignore environmental standards? Likewise, how can we keep high-quality customer and technical-service jobs here when employees in Bangalore, India, earn $200 to $300 a month for jobs that pay Americans $2,000-3,000?

America has a responsibility to the rest of the world, especially developing countries, to foster responsible free trade. But we can no longer condone - or support - practices that pay subsistence wages, violate child labor standards and degrade the environment.

Second, we must responsibly use our nation’s corporate tax laws to provide incentives for American businesses to keep high-quality jobs here. Today, corporations take advantage of tax benefits by shipping operations overseas, shielding profits earned there. Sen. John Kerry has rightly proposed eliminating that loophole, which is a glaring incentive to move operations overseas and keep them abroad by reinvesting profits there.

We should also adopt a levy on corporations that use loopholes to escape taxation. That would help redress the imbalance between job retention and untaxed overseas profits, and aid workers who lose jobs in part because of skewed tax policies.

Part of the bargain that was supposed to accompany “free trade’’ was help for workers who lose their livelihood through no fault of their own. Workers need retraining for new careers when industries disappear. They need unemployment benefits and medical benefits.

Action on outsourcing would be far less urgent if enough jobs were being created here at home. But today’s lukewarm economic recovery provides no place for laid-off workers to go. None of this is “protectionism,’’ except that it will protect foreign workers and nations from exploitation, the U.S. tax code from encouraging companies to offshore jobs, and American workers from the unchecked whims of globalization.

Corporate leaders need to work smarter. Having served as a CEO, I know the pressures to outsource can be intense. But business executives must look beyond the short-term, cost-cutting gains that outsourcing sometimes provides and focus instead on the long-term costs and devastation to employees and our national economy.

And political candidates will have to show they understand the voters’ call for action. Because this election should be about getting the economy moving and about who will best protect the middle class and those striving to join it.

LEO HINDERY JR., chairman of the YES Network, is a former CEO of TCI and AT&T Broadband and has long been active in Democratic Party politics. He wrote this column for the Mercury News.


From Lou Dobbs Tonight
Aired October 10, 2005

What’s the number one thing, gentlemen, needed to save American jobs, Leo?

LEO HINDERY, FRM. CEO TCI: Well, I think, Lou, it’s pretty simple. The first thing is simply enforce with conviction and vigor the trade agreements we have in place. It’s very clear that unaccounted for subsidy is digging this hole ever deeper and we’re finding the subsidy much more even than the wage differential is causing the problems that are causing our jobs to be lost offshore. We’re looking at a service and I.T. job disaster in the offing, in my opinion.

DOBBS: Senator Dorgan, you’ve worked on this issue for a very long time. You’re more often than not called a projectionist. How do you respond to that?

SEN. BYRON DORGAN, (D) NORTH DAKOTA: Let me plead guilty for wanting to protect the economic interests of this great country. But I heard Secretary Snow and his comments. You know, look, that’s all uninformed blather about this negotiation.

The fact is, we’re being taken to the cleaners. The fact is, we have $2 billion a day that we’re buying from abroad more than we’re sending abroad. We have this giant deficit which means an export in American jobs.

And Lou, one interesting thing, I’ve tried I think now three times in the United States Senate to take the first baby step in the right direction, and that is to shut down the tax break that actually incentivize companies to move their jobs overseas.

Move your job overseas, we’ll give a big fat tax break. What an unbelievably bad thing to do. And I can’t get it done in the Senate by repealing that tax break.

DOBBS: Well Leo, as you know, the repatriation, estimated $200 billion expected to come back to U.S. multinationals from their overseas operations. Just a very light survey shows most of those companies aren’t going to use that repatriated capital to create jobs, and in some cases they’re going to use it to shut down jobs.

HINDERY: That’s where Senator Dorgan has been on the forefront, Lou. Not only are we irresponsible in the tax policies that kept these profits offshore, encouraged the movement of jobs offshore, but then when we had the chance to bring the profits back home, we didn’t link it with job creation here. So, we sort of shot both feet off.

And you are truly looking at a loss—permanent loss of 10 to 15 percent of the existing job base over the next ten years. 10 percent conservatively, 15 percent by a lot of our estimations. That’s something on 14 to 20 million jobs are going to be lost here in the next ten years.

DOBBS: Senator Dorgan, what happened to your party? Your party once stood up for the American worker. Working man and woman trying to family—hold a family together, get their kids well educated. The Democrats backed away. One almost can say history, cursing the side of the Republicans are more interested in business. But the Democrats are falling the same path as the Republicans.

DORGAN: Well not—look, about two-thirds of the Democratic caucus in the Senate vote with me on the issues, a third don’t. But virtually all the Republicans vote on the other side. When you ask what’s necessary, I’d say first of all, for a country to get a back bone here to be willing to stand up for its own economic interest and say to China and other countries, either have you open markets and we have fair trade between us or else go sell all your products in Zambia and see how quickly it sells.

DOBBS: Leo, respected CEO, you’ve run some of the country’s biggest businesses in telecommunications and communications. What’s happening with business that CEOs don’t have the strength, the integrity to drive good public policy and talk about things called the common good?

HINDERY: I think it goes back to a shocking sort of abdication of responsibility to employees, and communities and to the nation as well as to shareholders. Right now, it’s shareholders and management only in so many cases, Lou, that the kind of debate that the senator is calling for the which focuses back on employees, on communities, on the nation, these CEOs are so fixated on the management class in some cases and shareholders in another, that we’re not getting the debate.

But you have got to give the senator all the credit in the world, protecting jobs is not protectionism. That’s all we’re talking about here.

DOBBS: Leo Hindery, Senator Byron Dorgan, we thank you both. And if you are going to protect something, this country seems like a pretty good thing to protect. Thank you very much, Lou. Senator, thank you.


Posted by Elvis on 10/10/05 •
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