Obama on a fresh move to check outsourcing to India
From R. Vasudevan—Reporting from New Delhi
New Delhi, 10 September (Asiantribune.com):
Accusing opposition Republicans of pushing bankrupt economic policies and putting politics ahead of national welfare, President Barack Obama has vowed to end Bush era tax cuts encouraging companies to "create jobs and profits in other countries".
"I think if we're going to give tax breaks to companies, they should go to companies that create jobs in America - not that create jobs overseas," he said on a mid-term campaign in the perennial swing state of Ohio Wednesday. "That's one difference between the Republican vision and the Democratic vision. That's what this election is all about," he said vowing to stand by his plan to allow the Bush tax cuts to expire for people making over $250,000, while extending the cuts for those making less.
Obama also pushed a new $350 billion plan to lift the sagging economy, including $200 billion in tax cuts for businesses to purchase new equipment and write off 100 percent of new investments through the end of 2011.
Giving examples of different Democratic and Republican approaches, Obama said: "One of the keys to job creation is to encourage companies to invest more in the United States. But for years, our tax code has actually given billions of dollars in tax breaks that encourage companies to create jobs and profits in other countries."
India will formally convey its disappointment to the US over the ban imposed by the state of Ohio on offshore outsourcing at the high-level bilateral Trade Policy Forum meeting in Washington later this month. "It will be on the agenda. I will raise the issue at the TPF meeting there definitely," Commerce and Industry Minister Anand sharma said.
Sharma and US Tarde representative Ron Kirk will co-chair the September 21 meeting of the Trade Policy Forum (TPF), which is the principal trade dialogue between the US and India. Sources said India would not like to adopt a "confrontationist" stand ahead of President Obama's visit to India in November.
Meanwhile, Road Transport Minister Kamal Nath has said emphatically outsourcing is an economic issue and "in the end, it is not something... they (the US) are doing us a favour. The US companies, to remain competitive, must be able to outsource." Despite these odds, the Indian IT firms would remain competitive, Nath -- who had dealt with such issues as former Commerce Minister -- said.
The Prime Minister's Advisor on on Innovation, Sam Pitroda, said the Ohio ban was not much of an issue for the Indian IT industry. The move by the US state had more to do with domestic compulsions. "When unemployment (in the US) goes in double digits, it is worrisome. So, it is a natural reaction. It's nothing to worry about. I don't see it as a long-term issue to worry about," he said.
-Asian Tribune-
Comments
The end of the gravy
The end of the gravy train
The United States is at the verge of a protectionist war – to protect American jobs from been taken away by non-Americans. There has been four ways in the recent past (say, over the last 20 years or so) that this has been happening: (1) Through the wholesale closure of manufacturing plants in the U.S. and cloning them in cheap labor markets, with the bulk of them going to China (2) Through outsourcing of IT and Business Process oriented work (back-office work, call centers, paper flow work) from U.S. offices to locations outside the U.S. – with the bulk of these going to India and the Philippines (3) Through in-sourcing – that is by recruiting foreign personnel to come to the U.S. temporarily to work in the United States in various fields ranging from software engineering to fashion modeling - mostly accomplished through the H1B and L1 visa classifications (4) A lesser explored area is how minorities of Asian origin have effectively exploited special preferential status provided by U.S. laws to companies owned by “Disadvantaged” groups in securing government contracts – though Asians, for example, Indian Americans (i.e. of India origin) is by far the most affluent ethnic group in America. This law has been in the book for nearly 40 years.
All this seemed fine and actually very hip – until recently as mid-2008 when the bottom began to fall off from the U.S. economy. With the national unemployment rate stranded at 9.6% and over 8.5 million Americans having lost their jobs over 24 months, the tide has begun to move in the opposite direction. Trickle-down advocates like Bill Gates who just two years ago testified that there should not be any cap whatsoever on the number of annual H1B visas, now have egg on their faces – as with Microsoft laying-off 5,300 people over the last 12 months!
What we are presently experiencing is just the beginning of a new kind of a protectionist war lead by the United States. It is only natural for Indians – who will be severely affected by such a war – to protest and complain. But India unlike China – who in effect finances America’s massive debt – has little leverage over any future U.S. actions. The Indians protests will be heard, but little will be done.
While it is factually correct that a significant component of America’s jobs have been exported out to the great detriment of working Americans, this by itself is not the only cause for America’s present economic woes. And many U.S. legislators realize that much requires to be done at the structural level – such as revamping the nation’s educational system. But to the relief of many Americans, legislators have finally begun to realize that the trends of in-sourcing and outsourcing that were born during the boom years of the 90’s have resulted in massive loss of American jobs. Slowly but surely they are attempting to correct this by closing the loop-holes – as they have done with other laws such as Immigration Laws (example, immediate green card upon marriage to a US citizen) and Tax Laws (example, liberal business deductions).
Increasing the H1B and L1 visa fees nearly 6-fold to $2320 (unanimously passing the House with bi-partisan support by Democrats and Republicans) in August, the State of Ohio stipulation (as described by the author) in August, Sen. Charles Schumer's recent disparaging characterization of India’s 2nd largest IT company as a “chop shop”, President Obama’s labor day speech, “… I want to see Made in U.S.A…. no trickledown …closing tax loopholes for companies outsourcing jobs” etc. are only the initial indications of what are at the tip of the on-coming protectionist iceberg. With a projection of two years for the U.S. job market to get back to pre-recessionary levels the doors for foreigners are bound to close shut – much sooner than later.
The end of the gravy train
The end of the gravy train will be good for all involved!
While outsourcing to the Developing (Third) World suited the West's corporate sector and capitalist system, and deregulation just led to unbridled capitalism and the bubble, it has now peaked out. But while the Democrats and Obama will attempt to deal with the 'jobs' situation by bringing the production 'home', the system cannot deal with the high wages that are expected by workers here, with the added impact of the new immigration restriction laws that are also being considered. But the US has always been innovative in its economic maneuverings and solutions will emerge, or rather will HAVE to emerge if things are to survive without a wholesale downturn that could be disastrous. Will the Republicans find solutions within their philosophy of the capitalist economy that THEY brought on starting with Reaganomics??? I rather doubt it...
Yes, the Indians may have to look inwards more, and not exploit the US with the cunning that they have done thus far. China has been far more astute and is fast becoming an example for the world. But even China will have to rein in rapid development if they and the planet are to survive.
Some austerity for the very rich nations will do the whole world some good. There is plenty to go around if the very rich can stop in their tracks of GREED and DESIRE FOR UNNECESSARY LUXURY that has gripped them these last few decades, setting a bad and stupid example, and with only complete destruction at its logical end.
Nature has its own cybernetic controls when things get out of hand as we are seeing now with the natural disasters of recent months. Humans will have to clearly understand this.
Thus, pulling the plug on the gravy train will be good for all!!
Gravy Train : Impact on
Gravy Train : Impact on SL
This just came on the wires: In yet another protectionist move, the United States Agency for International Development (USAID) has reportedly suspended a $10-million programme that would have trained around 3,000 Sri Lankans in IT and BPO. But the programme has been halted after protests in the US. Congressman Tim Bishop, who represents New York’s First Congressional District, was one prominent figure to have raised objections, saying it would “teach foreign workers how to take jobs from American workers.”
Fair or not, the issue has bi-partisan American support; Sri Lankans should not lose heart but the government should cultivate other avenues to develop these critical future skills.
As Voyager implies, what is happening may be good for all - as this would also be a lesson to services-providers that they cannot continue to unfairly exploit services-recipients and must learn to play by a fair set of Rules. And I know through my direct professional experiences many Indian IT firms had repeatedly misrepresented - often lying about the capabilities of their Indian workers.
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