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LQD Paul Craig Roberts on outsourcing

by melo Tue Dec 18th, 2007 at 06:45:44 AM EST


Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He was Associate Editor of the Wall Street Journal editorial page and Contributing Editor of National Review. He is coauthor of The Tyranny of Good Intentions.

Here's an interesting breakdown of how the game works in the USA, who profits, and how they keep it that way.

Loser: The young and gullible

Caveat Emptor

Last June a revealing marketing video from the law firm, Cohen & Grigsby appeared on the Internet. The video demonstrated the law firm's techniques for getting around US law governing work visas in order to enable corporate clients to replace their American employees with foreigners who work for less. The law firm's marketing manager, Lawrence Lebowitz, is upfront with interested clients: "our goal is clearly not to find a qualified and interested US worker."

more below...

If an American somehow survives the weeding out process, "have the manager of that specific position step in and go through the whole process to find a legal basis to disqualify them for this position--in most cases there doesn't seem to be a problem."

(Ed: Wha?)

No problem for the employer he means, only for the expensively educated American university graduate who is displaced by a foreigner imported on a work visa justified by a nonexistent shortage of trained and qualified Americans.

The Cohen & Grigsby video was a short-term sensation as it undermined the business propaganda that no American employee was being displaced by foreigners on H-1b or L-1 work visas. Soon, however, business organizations and their shills were back in gear lying to Congress and the public about the amazing shortage of qualified Americans for literally every technical and professional occupation, especially IT and software engineering.

Everywhere we hear the same droning lie from business interests that there are not enough American engineers and scientists. For mysterious reasons Americans prefer to be waitresses and bartenders, hospital orderlies, and retail clerks.


The hundreds of individual cases that have been brought to my attention are dismissed as "anecdotal" by my fellow economists. So little do they know. I also receive numerous responses from American engineers and IT workers who have managed to hold on to jobs or to find new ones after long intervals when they have been displaced by foreign hires. Their descriptions of their work environments are fascinating.

For example, Dayton, Ohio, was once home to numerous American engineers. Today, writes one surviving American, "I feel like an alien in my own country--as if Dayton had been colonized by India. NCR and other local employers have either offshored most of their IT work or rely heavily on Indian guest workers. The IT department of National City Bank across the street from LexisNexis is entirely Indian. The nearby apartment complexes house large numbers of Indian guest workers filling the engineering needs of many area businesses."

I have learned that Reed Elsevier, which owns LexisNexis, has hired a new Indian vice president for offshoring and that now the jobs of the Indian guest workers may be on the verge of being offshored to another country. The relentless drive for cheap labor now threatens the foreign guest workers who displaced America's own engineers.


Teitelbaum posed the question to the US Representatives: "Why do you continue to hear energetic re-assertions of the Conventional Portrait of 'shortages,' shortfalls, failures of K-12 science and math teaching, declining interest among US students, and the necessity of importing more foreign scientists and engineers?"

Teitelbaum's answer: "In my judgment, what you are hearing is simply the expressions of interests by interest groups and their lobbyists. This phenomenon is, of course, very familiar to everyone on the Hill. Interest groups that are well organized and funded have the capacity to make their claims heard by you, either directly or via echoes in the mass press. Meanwhile those who are not well-organized and funded can express their views, but only as individuals."

Among the interest groups that benefit from the false portrait are universities, which gain graduate student enrollments and inexpensive postdocs to conduct funded lab research. Employers gain larger profits from lower paid scientists and engineers, and immigration lawyers gain fees by leading employers around the work visa rules.

Using the biomedical research sector as an example, Teitelbaum explained to the congressmen how research funding creates an oversupply of scientists that requires ever larger funding to keep employed. Teitelbaum made it clear that it is nonsensical to simultaneously increase the supply of American scientists while forestalling their employment with a shortage myth that is used to import foreigners on work visas.


Integrity is so lacking in America that the shortage myth serves the interests of universities, funding agencies, employers, and immigration attorneys at the expense of American students who naively pursue professions in which their prospects are dim. Initially it was blue-collar factory workers who were abandoned by US corporations and politicians. Now it is white-collar employees and Americans trained in science and technology. Princeton University economist Alan Blinder estimates that there are 30 to 40 million American high end service jobs that ultimately face offshoring.

As I predict, and as BLS payroll jobs data indicate, in 20 years the US will have a third world work force engaged in domestic nontradable services.

Is this happening in Europe too? I know some of the terrible industrial accidents in Italy lately have been blamed on the fact that recently immigrated labour was not able to understand safety rules, but I don't hear about a similar phenomenon on the white-collar level.

Is this because so many Indians speak workable-to-excellent English, less speak Italian? Is this an issue in Britain?

How is it in your country?

Will small scale manufacturing or pursuit of the 'humanities' rescue what's left of middle class academic commercial aspiration?

Between a growing Hispanic population willing to stoop to work americans disdain, and an information rich future going to cheaper offshore labour, where will educated american intelligence turn for careers?

Intelligence? Politics? Blacksmithing?

please don't say Homeland Security or the arms industry!

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty
by melo (melometa4(at)gmail.com) on Tue Dec 18th, 2007 at 07:43:43 AM EST
Great diary.

Thanks for finding that Roberts write.

This has been the steady grind-away in the US since 1980.

Probably Britain, too.

Roberts has been writing about it since at least 2002.

I'm too old to become a mercenary, alas.

"When the abyss stares at me, it wets its pants." Brian Hopkins

by EricC on Tue Dec 18th, 2007 at 08:16:39 AM EST
[ Parent ]
you're welcome, eric.

i guess this a part of a worldwide levelling of wages, and this example is particular because of the collusion of so many agencies.

is your last question an allusion to more careers to be available as mercenaries?


'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue Dec 18th, 2007 at 11:26:30 AM EST
[ Parent ]
Very quickly - as I have to go to work  ;-)

The Ruling Class is starting to get push-back from the citizens.  The strongest contingent of the 'resistence,' currently, from elements of the Republican Party.  Even cursory Class Analysis of the Huckabee phenomena reveals his supporters within the TheoCon camp and his opponents are the MoneyCons, and their hirelings, and the NeoCons, and their hirelings.  

The TheoCons are concentrated in the working and lower middle classes, in the non-industrialized and de-industrializing parts of the the US.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Tue Dec 18th, 2007 at 11:31:36 AM EST
nice. i never had the Cons so tidily segmented before.

it stands to reason this is where the fault line will fissure.

it reminds me of the chinese near-monopolising the laundry business in many large cities over the world.

'course you didn't hear outrage from all the budding launderers back then.

or the buggy whip manufacturers...

software and IT are the future, it seems so shortsighted yet is protectionism the answer?

thanks for dropping in. come back later if you can, it sounds like you have more insights you could share!

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue Dec 18th, 2007 at 11:47:38 AM EST
[ Parent ]
It hasn't been too bad in the IT industry, but outsourcing has changed a lot of the fundamentals so it may be changing. I dunno.

however, there has definitely been an outsourcing of call centres to India which as caused problems due to the accent issue.

Plus poorly paid or seasonal jobs are entirely dominated by migrant workers here.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Tue Dec 18th, 2007 at 11:39:46 AM EST
Plus poorly paid or seasonal jobs are entirely dominated by migrant workers here.

yup, here too, how was it in bulgaria?

who cleans up after them, or do they do it themselves?

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue Dec 18th, 2007 at 11:59:38 AM EST
[ Parent ]
They clean up after themselves. You have to see the poverty to believe it. Nobody goes to Bulgaria to scrape by, there's no living wage to be had.

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Tue Dec 18th, 2007 at 12:19:40 PM EST
[ Parent ]

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