Skip to main content

The economics of free trade are hitting home. The Washington Post reports: Tech Layoffs Skyrocket. These figures were cited for January and February following reports to Tech Crunch, a blog that chronicles news reports that cover the specific numbers of jobs lost in tech companies.

At the same time, workers are being recruited from overseas for jobs in the US.

Even entry-level jobs are going to the inexperienced from abroad. The required skill is that the worker enter the US on a visa, rather than have the authorization to work here already.

As free traders associate the disaster of today's economy to the fact that there have been any constraints on free trade at all, the economics behind free trade are examined from a less biased point of view by Stephen Cullenberg, UC Riverside, in a paper called 'The 'Mistaken Economics' of the Anti-Globalization Movement.' Cullenberg addresses the shortcomings of the neoclassical economists in addressing the concerns of the "Anti-Globalists."

Social construction of the market – Consistent with much institutionalist and evolutionary theory, the anti- globalization literature denaturalizes the market and recognizes that all markets are everywhere "thick," meaning that they are constituted by a certain specific set of institutions that can differ over time and place. Thus, it is possible to debate what institutions are good and which are bad for economic life, without challenging the basic structure of markets or advocating socialist planning as Bhagwati mistakenly thinks the anti- globalization movement supports.

He goes on to illustrate why neoclassical globalists do not care about the fact that they are knowingly and willfully destroying the lives of many individuals, especially in the US. They are bypassing Us citizens and other local talent for the jobs, based on an unproven economic theory that is extremely narrow in its approach to defining a successful economy.

Neoclassical economists have two responses to negative distributional effects of trade. First, the Kaldor-Hicks welfare criterion allows an improvement in overall economic welfare if the winners from trade can at least in principle compensate the
losers from trade. Second, many economists argue that the overall losses to lowskilled workers are empirically quite small and therefore of little policy concern.

The fact is that the level of skill involved in the IT world varies considerably, and the globalists, following the neoclassical economists' model, have simply scaled the ladder until they have also begun replacing skilled workers. This is being perpetrated on us for the greater good, according to the prevailing economic theory.

Cullenberg is not alone in his analysis of the possible flaws inherent in the narrowly-defined parameters of neoclassical economic theory. Archstone Consulting, in a new study has revealed that many companies are also questioning the wisdom of unbridled globalism, offshoring, and outsourcing.

...companies are contemplating the re-establishment of manufacturing domestically, amid rising costs and other strategic challenges within the offshoring model.

Will we see a change in the US corporate policies anytime soon? Is backshoring alone enough to reverse the damage that has already been done to the middle class, the working professionals of the US?

Originally posted to tech ed on Tue Feb 17, 2009 at 11:39 AM PST.


What should the US government and companies in the US do in the future?

14%9 votes
85%54 votes

| 63 votes | Vote | Results

Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags


More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

  •  Globalization has morphed into a sucky (1+ / 0-)
    Recommended by:

    ideology for us americans.  We're on our own.  The drive thru at the Jack N the box where I live, has order takers from a foreign country.  Just the order taker.  You never see them, you just hear them take your order.  Incredible!

    Experience is a hard teacher because she gives the test first, the lesson afterwards

    by publicv on Tue Feb 17, 2009 at 11:43:25 AM PST

    •  we also benefit from it (0+ / 0-)

      Believe it or not our standard of living has gone up in the past 50 years (the current year excluded).

      •  20 of those years (8+ / 0-)

        were pretty damn protectionist.  It was when Reagan was elected in 1980 (a scant 30 years ago, well 29) that free trade truly started.  That's when jobs began becoming scarce for 90% of the populance, median income stagnated and then declined starting in 2002, etc.

        From where I can see Free Trade has been an unmitigated disaster for the areas that actually count (for instance, having a good job counts three times having "cheaper goods" because you need the money from the job to buy the goods).

        "An army of principles can penetrate where an army of soldiers cannot." - Thomas Paine

        by Mister Gloom on Tue Feb 17, 2009 at 11:50:01 AM PST

        [ Parent ]

        •  i'm no fan of reagan (1+ / 0-)
          Recommended by:

          You can make free trade fair trade.  Cutting trade and protectionism has proven to lower incomes for everyone all around.

          •  Free Trade =/= Fair Trade (4+ / 0-)

            They're different animals, just as you can't call my Chrysler a Toyota.

            Or as one hardcore libertarian I know said when someone brought up fair trade "Ah, unfree trade."

            "An army of principles can penetrate where an army of soldiers cannot." - Thomas Paine

            by Mister Gloom on Tue Feb 17, 2009 at 11:54:51 AM PST

            [ Parent ]

          •  Take a look at US 1950-1980 (4+ / 0-)

            Thom Hartmann has pointed this out numerous times:  We had domestic industry and plentiful jobs through protectionism in the US from 1950-1980.  Then free trade started and the low cost countries of China and India got an instant benefit.  Heck, look at Europe, if I lived in the more protectionist European countries I'd have a good job and be able to afford a place of my own.  Instead I've had a 2 year running choice between shit job or no job and I'll be foreever a failure because its getting to the point that I can't avoid moving in with my father (if you move back in with your parents as an adult you will always be a failure unless you have an achievement on the level of a cure for cancer).

            "An army of principles can penetrate where an army of soldiers cannot." - Thomas Paine

            by Mister Gloom on Tue Feb 17, 2009 at 11:57:12 AM PST

            [ Parent ]

            •  so what is your proposal? (0+ / 0-)

              That we don't allow any US companies to hire anyone abroad?

              •  For the first things... (6+ / 0-)

                ...*heavy* auditing of H1-B visa programs.  It is pretty much an open secret that companies jiggle the numbers to claim that there are no US workers qualified for the job.  Heck, we should have a few of the rules and regulations regarding hiring that European countries put on their companies to ensure a better treatment for their citizens.  

                What "fair trade/Free Trade" proposals would you make?  I'm looking forward to this because chances are I've seen and rebutted them already (especially that old "retrain" lie).

                "An army of principles can penetrate where an army of soldiers cannot." - Thomas Paine

                by Mister Gloom on Tue Feb 17, 2009 at 12:01:15 PM PST

                [ Parent ]

                •  auditing of H1Bs is good (1+ / 0-)
                  Recommended by:

                  No reason not to do it.  One thing that would make things more fair is demanding the same standards of American companies inside and outside US.  For example, we require a linen shop to provide health, paid vacation and holidays, and 401k to its employees in this country.  However, the same company doesn't have to provide any of the above benefits to its employees outside of US, which reduces their costs even more so than the income gap.  You could tax them the difference.

                •  Without a Comprehensive Change... (0+ / 0-)

                  in immigration policy we will continue to have problems with foreign workers taking Americans' jobs.  You feel the bite from H1B's because you are probably in the Tech field.  But, come to Texas and look at any construction site.  Mostly immigrants.  Many of the policy makers support open borders and sancutary for immigrants.  Why should IT, H1B workers be treated any differently than laborers.

                  We need to make a decision on what kind of immigration policy we want, enforce it, and accept the consequences.  And of course some Americans will be affected in their job search.

      •  Yay! Lower cost goods are the first off-shored, (4+ / 0-)

        as they're produced with lower cost labor.  So even though your wages are stagnant/declining, the cost of stuff YOU buy is lower than it otherwise likely would be.  Too bad about that your future job prospects, your saving to help pay for your kids' college, your health care, and your retirement -- at least you'll get to go there in inexpensive silk!

      •  And come back down with a THUD!! (0+ / 0-)

        Experience is a hard teacher because she gives the test first, the lesson afterwards

        by publicv on Tue Feb 17, 2009 at 11:52:41 AM PST

        [ Parent ]

        •  you can argue we contributed to global meltdown (0+ / 0-)

          Rather than our meltdown was caused by trade.  We exported our crappy mortgages and brought other countries down with us.

          •  All the heads of Corporations in those other (2+ / 0-)
            Recommended by:
            Brooke In Seattle, Dirtandiron

            countries were with it.  Our own country colluded with them on this mortgage debacle scheme.  International banks, headquartered in other countries, should never have had to lend to or be able to have bought our country's citizen's mortgages.  That was a dumb innovation. Nor should our corporate heads have owned mortgages of the citizens from other countries.

            Experience is a hard teacher because she gives the test first, the lesson afterwards

            by publicv on Tue Feb 17, 2009 at 11:59:11 AM PST

            [ Parent ]

          •  If we had the old level (5+ / 0-)

            of good jobs we wouldn't have had the crappy mortgages.  The reduction in income vs. inflation led directly to the debt bubble as people tried to make up the difference with debt.  If wages had actually kept pace with inflation we'd have never had the debt bubble (most prevalent in mortgages but present elsewhere admittedly) than the mortgages would have been less of an issue.

            And if we had had regulation of derivatives (which, while not a free trade issue, is something the neoliberal free traders oppose) the real credit meltdown wouldn't have happened period.

            "An army of principles can penetrate where an army of soldiers cannot." - Thomas Paine

            by Mister Gloom on Tue Feb 17, 2009 at 12:04:42 PM PST

            [ Parent ]

  •  Your link to (0+ / 0-)

    entry-level jobs are going to the inexperienced from abroad

    is hard to understand. I just saw Dublin in an address. You got a problem with Irish companies? What is this diary about anyway?

  •  how is this different from making t-shirts in (0+ / 0-)

    Being in technology myself I am affected by this as well, but don't see how it's any different from offshoring manufacturing.

  •  can you clarify this? (0+ / 0-)

    worker enter the US on a visa, rather than have the authorization to work here already.

    The visa is itself for working. So I don't get your point.

    Rabindranath Tagore-"Bigotry tries to keep truth safe in its hand with a grip that kills it."

    by joy sinha on Tue Feb 17, 2009 at 11:46:19 AM PST

  •  Google has issued pink slips (2+ / 0-)
    Recommended by:
    Brooke In Seattle, Dirtandiron

    At the end of January, even Google joined the long list of tech companies that lay off people during the worst economy since the Great Depression. They abandoned one of their projects, and the rest is history. Now there are now good tech companies at all! Google was everybody's honey.

  •  If you hate free trade (0+ / 0-)

    vote for Green.

    Democrats have always and will always be free trade.

    That was one of the big post world war II Truman and JFK did.

  •  Q and A (5+ / 0-)

    What should the US government and companies in the US do in the future?

    Hire the most talented person for the job regardless of sex, sexual orientation, religion, race, or nationality...given that any foreign national is already a U.S. resident and has the right to work here. Importing huge amounts of people to do a job that people here are qualified for is ludicrous at this particular time. What jobs are the people who get displaced here supposed to take? They aren't going to be making coffee at Starbucks that's for sure.

    •  That's been the problem all along. (5+ / 0-)

      As whole industries are outsourced and off-shored, the people in this country who are secure say things like, "Oh, just retrain for another job."

      But we have run out of jobs to retrain for.

      So much so, that you need to add one more category to your list of classes: AGE.

      And many of us have retrained several times, owe student loan debt, and STILL can't find a job doing anything because we are looked at suspiciously for even daring to try to change career fields. Why, I am asked, would I want to change career fields after a lifetime? Oh, I don't know -- maybe because all the jobs that I used to do have been sent to other countries?

      It's part of the plan to have a country of low-paid wage serfs who owe their souls to the company store -- but the company is allowed to cut them loose any damn time they please. They expect complete loyalty but give none in return.

      We have abandoned the social contract in this country, and there are too many people who think they have theirs, so screw anyone who didn't make it by now. It's the Republican way of life: Unless you are rich or well connected, you're on your own.

      "The difference between the right word and the almost-right word is like the difference between lightning and the lightning bug." -- Mark Twain

      by Brooke In Seattle on Tue Feb 17, 2009 at 12:45:47 PM PST

      [ Parent ]

      •  We need to organize and fight this. (1+ / 0-)
        Recommended by:

        In the US, we seem to have lost the will or the ability to fight for what we need. Other countries have massive protests when the wealthy threaten to make changes that matter to them. Not so here. The rationale is, I suppose, the quicker each individual makes the change, the better off he/she will be in the end. "The Time Machine" covered that theme thoroughly.

        Do you know of any organizations that enable US workers to keep up on the issues, and to maintain contact with Congress?

        •  Not really effective (0+ / 0-)

          France continues to atrophy despite general strikes, if anything general strikes have spend up the process.

          "An army of principles can penetrate where an army of soldiers cannot." - Thomas Paine

          by Mister Gloom on Tue Feb 17, 2009 at 01:15:04 PM PST

          [ Parent ]

          •  Before this (0+ / 0-)

            general (world wide!) recession, France's demise was greatly exaggerated. Now everyone has their issues. Germany was supposedly in a better position, but they're suffering too. The Financial Times was fond of saying how much better the neoliberal "Anglo Model" was compared to the French system, but even the president of Starbucks says the UK is a hopeless case at this point, and he ought to know, being in a spot of bother himself.

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site