8 Articles Worth Reading
8 Articles Worth Reading
Date: Tuesday, June 07, 2005 2:00 AM
JOB DESTRUCTION NEWSLETTER
by Rob Sanchez
June 07, 2005 No. 1271
***** Comments by Rob *****
Article #1: Our economy is only able to produce a few thousand low
paying jobs while massive job terminations have been announced, and yet
CNN tells you that it's nothing to worry about. That wins the Alfred E.
Neuman award for "What me, Worry?".
Article #3: Mr. Sangha in Canada thinks his employment problems are
because of racial discrimination, but the more likely cause is age
discrimination. The article touches on the fact that Canada has a glut
of high-tech workers due to massive immigration but it never makes the
connection that this mass immigration is related to worsening jobs
prospects for everyone including Canada's minorities. The omission is
no surprise considering that the article appeared in the NY Times who
has always been a big supporter open-borders immigration.
Articles #4 and #5 - What a perfect pair! Friedman gets fried once
again.
Article #6: I know some of you don't like to read long articles, but
make the time for this one. His description of the U.S. public and it's
corporate press:
Mr. Hitler and Dr Goebbels would have been heartily
jealous of such a malleable and docile, if not to say
almost bovine populace, who could readily absorb such
shallow rubbish and believe it all!
Article #7: Britain has a visa that is very similar to our L-1, and the
issues are very similar.
Article 1:
http://money.cnn.com/2005/06/02/news/economy/job_cuts/index.htm
Planned job cuts soar 42% in May
Computer firms lead the surge but it's too early to worry about
weakness in the economy: survey.
Planned job cuts soared in May after hitting a five-year low in April,
but it's too early to worry about weakness in the economy, an
employment firm said Thursday. Employers announced 82,283 job cuts in
May, compared to 57,861 in April, according to a monthly report issued
by Challenger, Gray & Christmas.
Article 2:
http://www.counterpunch.org/roberts06032005.html
Welcome to a Has-Been Country
The US Labor Force: One Foot in the Third World
With Americans increasingly divorced from the producu the goods and
services that they consume, Americans have no way to pay for their
consumption except by handing over to foreigners more of their
accumulated stock of wealth. The country continues to eat its seed
corn.
Article 3:
http://www.nytimes.com/2005/06/05/international/americas/05canada.html
Some Skilled Foreigners Find Jobs Scarce in Canada
Gian S. Sangha wanted to work so badly he cut his hair and removed his
turban when interviewing, even though it compromised his Sikh beliefs.
He sent hundreds of risumis. He prayed fervently and finally bought
a Buddha statue for good luck. But Mr. Sangha, 55, an environmental
scientist from India, could not seem to get a job in Canada, his
adopted country, despite a doctorate from Germany, two published books
and university teaching experience in the United States.
Article 4:
http://www.gregpalast.com/detail.cfm?artid=434&row=0
FRENCH FRIED FRIEDMAN - The Nouvelle Globalizer
by Greg Palast
Vicente Fox got a well-deserved boot in the derrihre for saying
Mexicans come to America for taking jobs "not even Blacks want to do."
But Thomas Friedman earns plaudits and Pulitzers for his column which
today announces that East Indians are taking jobs the French are too
lazy to do. [See, "A Race to the Top," New York Times.] Friedman's fit
of racial profiling was motivated by his pique over France's rejection
of the globalizers' charter for corporate dominance known as the
European Constitution. It's not the implicit racism of Friedman's
statement which is most irksome, it's his ghastly glee that, "a world
of benefits they [Western Europeans] have known for 50 years is coming
apart," because the French and other Europeans "are trying to preserve
a 35 hour work week in a world where Indian engineers are ready to work
a 35-hour day."
Article 5:
http://www.rutlandherald.com/apps/pbcs.dll/article?AID=/20050604/NEWS/506040308/1039
A race to the top
by Thomas Friedman
Come to Bangalore, India, the outsourcing capital of the world. The
dirty little secret is that India is taking work from Europe or America
not simply because of low wages. It is also because Indians are ready
to work harder and can do anything from answering your phone to
designing your next airplane or car. They are not racing us to the
bottom. They are racing us to the top. Yes, this is a bad time for
France and friends to lose their appetite for hard work - just when
India, China and Poland are rediscovering theirs.
Article 6:
http://www.fromthewilderness.com/free/ww3/053105_world_stories.shtml
The Financial Endgame Slowly Plays Out - and then...... the Sudden
Systemic Implosion which will usher in the Brave New World
The US citizen will, over time, be reduced to earn the same wages as
his Chinese and Filipino counterparts. He hasn't realized it yet, but
he is being progressively reduced to sweatshop labour by being reduced
to accepting a job at MacDonald's or Wal-Mart on US$ 7 per hour. Now
manufacturing has been largely outsourced or relocated to China or
other Asian nations. However, the time will come, maybe by 2015 or
2020, when his wages will be reduced sufficiently to make relocating
manufacturing in Ohio an attractive proposition. Welcome to
globalization and the New World Order. the future for the US looks
pretty bleak given its current political drift. I thank God I don't
live there!
Article 7:
http://www.money.telegraph.co.uk/money/main.jhtml?xml=/money/2005/06/06/cnit06.xml&menuId=242&sSheet=/money/2005/06/06/ixfrontcity.html
IT workforce faces cheap labour threat
Britain's IT workforce is being threatened by a new form of outsourcing
that could have as serious ramifications for the labour market as the
transfer of operations overseas. Outsourcing specialists say that,
rather than hiring locally, multinational technology firms are
recruiting cheap skilled labour at their foreign branches and bringing
the staff to Britain for client projects.
Article 8:
Also recommended, but text not included in newsletter:
http://www.vdare.com/rubenstein/050604_nd.htm
Immigrant Displacement Of American Workers Hit New High In May
1. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://money.cnn.com/2005/06/02/news/economy/job_cuts/index.htm
Planned job cuts soar 42% in May
Computer firms lead the surge but it's too early to worry about
weakness in the economy: survey.
June 2, 2005: 1:33 PM EDT
NEW YORK (CNN/Money) - Planned job cuts soared in May after hitting a
five-year low in April, but it's too early to worry about weakness in
the economy, an employment firm said Thursday.
Employers announced 82,283 job cuts in May, compared to 57,861 in
April, according to a monthly report issued by Challenger, Gray &
Christmas.
May job cuts rose 12 percent from the year-ago period. So far this
year, 427,278 job cuts have been announced, 4.6 percent more than the
five-month total of 408,392 last year, the report said.
Computer companies -- which reported 17,886 cuts, or about one-fifth of
the monthly total -- led the rise in May, while the transportation
industry ranked second with 7,339 announced job cuts.
Weakness in the European economy contributed to the May computer cuts,
the report said, adding that companies in other industries can expect
to encounter similar challenges.
But it's too early to harbor concerns about a softening U.S. economy,
the report said.
"If job cuts do not lessen in June, July and August, which historically
are the lowest job-cut months of the year, then it might be time to be
concerned about the economy's strength," John A. Challenger, chief
executive officer of Challenger, Gray & Christmas, said.
The report also noted that employers appear to be retaining their
workers but appear reluctant to add new ones.
Job creation, while improving, is still well below the pace of previous
recoveries, it said. For more that story, click here.
2. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.counterpunch.org/roberts06032005.html
June 3, 2005
Welcome to a Has-Been Country
The US Labor Force: One Foot in the Third World
By PAUL CRAIG ROBERTS
In May the Bush economy eked out a paltry 73,000 private sector jobs:
20,000 jobs in construction (primarily for Mexican immigrants), 21,000
jobs in wholesale and retail trade, and 32,500 jobs in health care and
social assistance. Local government added 5,000 for a grand total of
78,000.
Not a single one of these jobs produces an exportable good or service.
With Americans increasingly divorced from the production of the goods
and services that they consume, Americans have no way to pay for their
consumption except by handing over to foreigners more of their
accumulated stock of wealth. The country continues to eat its seed
corn.
Only 10 million Americans are classified as "production workers" in the
Bureau of Labor Statistics nonfarm payroll tables. Think about that.
The US with a population approaching 300 million has only 10 million
production workers. That means
Americans are consuming the products of other countries labor.
In the 21st century the US economy has been unable to create jobs in
export and import-competitive industries. US job growth is confined to
nontradable domestic services.
This movement of the American labor force toward third world
occupations in domestic services has dire implications both for US
living standards and for
America's status as a superpower.
Economists and policymakers are in denial while the US economy implodes
in front of their noses. The US-China Commission is making a great
effort to bring reality to policymakers by holding a series of hearings
to explore the depths of American decline.
The commissioners got an earful at the May 19 hearings in New York at
the Council on Foreign Relations. Ralph Gomory explained that America's
naove belief that offshore outsourcing and globalism are working for
America is based on a 200 year old trade theory, the premises of which
do not reflect the modern world.
Clyde Prestowitz, author of the just published Three Billion New
Capitalists: The Great Shift of Wealth and Power to the East, explained
that America's prosperity is an illusion. Americans feel prosperous
because they are consuming $700 billion annually more than they are
producing. Foreigners, principally Asians, are financing US
over-consumption, because we are paying them by handing over our
markets, our jobs, and our wealth.
My former Business Week colleague, Bill Wolman, explained the
consequences for US workers of suddenly facing direct labor market
competition from hundreds of millions of Chinese and Indian workers.
Toward the end of the 20th century three developments came together
that are rapidly moving high productivity, high value-added jobs that
pay well away from the US to Asia: the collapse of world socialism
which vastly increased the supply of labor available to US capital; the
rise of the high speed Internet; the extraordinary international
mobility of US capital and technology.
First world capital is rapidly deserting first world labor in favor of
third world labor, which is much cheaper because of its abundance and
low cost of living. Formerly, America's high real incomes were
protected from cheap foreign labor, because US labor worked with more
capital and better technology, which made it more productive. Today,
however, US capital and technology move to cheap labor, or cheap labor
moves via the Internet to US employment.
The reason economic development in China and some Indian cities is so
rapid is because it is fueled by the offshore location of first world
corporations.
Prestowitz is correct that the form that globalism has taken is
shifting income and wealth from the first world to the third world. The
rise of Asia is coming at the expense of the American worker.
Global competition could have developed differently. US capital and
technology could have remained at home, protecting US incomes with high
productivity. Asia would have had to raise itself up without the inside
track of first world offshore producers.
Asia's economic development would have been slow and laborious and
would have been characterized by a gradual rise of Asian incomes toward
US incomes, not by a jarring loss of American jobs and incomes to
Asians.
Instead, US corporations, driven by the short-sighted and ultimately
destructive focus on quarterly profits,
chose to drive earnings and managerial bonuses by substituting cheap
Asian labor for American labor.
American businesses' short-run profit maximization plays directly into
the hands of thoughtful Asian governments with long-run strategies. As
Prestowitz informed the commissioners, China now has more semiconductor
plants than the US. Short-run goals are reducing US corporations to
brand names with sales forces marketing foreign made goods and
services.
By substituting foreign for American workers, US corporations are
destroying their American markets. As American jobs in the higher
paying manufacturing and professional services are given to Asians, and
as American schoolteachers and nurses lose their occupations to
foreigners imported under work visa programs, American purchasing power
dries up, especially once all the home equity is spent, credit cards
are maxed out and the dollar loses value to the Asian currencies.
The dollar is receiving a short-term respite as a result of the
rejection of the European Union by France and Holland. The fate of the
Euro, which rose so rapidly in value against the dollar in recent
years, is uncertain, thus possibly cutting off one avenue of escape
from the over-produced US dollar.
However, nothing is in the works to halt America's decline and to put
the economy on a path of true prosperity. In January 2004, I told a
televised conference of the Brookings Institution in Washington, DC,
that the US would be a third world economy in 20 years. I was
projecting the economic outcome of the US labor force being denied
first world employment and forced into the low productivity occupations
of domestic services.
Considering the vast excess supplies of labor in India and China, Asian
wages are unlikely to rapidly approach existing US levels. Therefore,
the substitution of Asian for US labor in tradable goods and services
is likely to continue.
As US students seek employments immune from outsourcing, engineering
enrollments are declining.
The exit of so much manufacturing is destroying the supply chains that
make manufacturing possible.
The Asians will not give us back our economy once we have lost it. They
will not play the "free trade" game and let their labor force be
displaced by cheap American labor.
Offshore outsourcing is dismantling the ladders of America's fabled
upward mobility. The US labor force already has one foot in the third
world. By 2024 the US will be a has-been country.
Paul Craig Roberts has held a number of academic appointments and has
contributed to numerous scholarly publications. He served as Assistant
Secretary of the Treasury in the Reagan administration. His graduate
economics education was at the University of Virginia, the University
of California at Berkeley, and Oxford University. He is coauthor of The
Tyranny of Good Intentions.He can be reached at:
paulcraigroberts@yahoo.com
3. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.nytimes.com/2005/06/05/international/americas/05canada.html
June 5, 2005
Some Skilled Foreigners Find Jobs Scarce in Canada
By CLIFFORD KRAUSS
VANCOUVER, British Columbia, June 2 - Gian S. Sangha wanted to work so
badly he cut his hair and removed his turban when interviewing, even
though it compromised his Sikh beliefs. He sent hundreds of
risumis. He prayed fervently and finally bought a Buddha statue for
good luck.
But Mr. Sangha, 55, an environmental scientist from India, could not
seem to get a job in Canada, his adopted country, despite a doctorate
from Germany, two published books and university teaching experience in
the United States.
"Here in Canada, there is a hidden discrimination," Mr. Sangha said
over cups of Indian tea and spicy pakoras, or fritters, in the dining
room of his home in the suburb of Surrey. To scrape by, he once cut
lawns, and now does clerical work and shares his house with his
extended family.
It was not supposed to be this way in Canada, which years ago put out a
welcome mat to professionals around the developing world. With a
declining birthrate, an aging population and labor shortages in many
areas, Canada, a sparsely populated nation, has for decades encouraged
foreign engineers, health professionals, software designers and
electricians.
But the results of this policy have been mixed, for Canada and for the
immigrants. Recent census data and academic studies indicate that the
incomes and employment prospects of immigrants are deteriorating.
Specialists say a growing number of immigrants have been forced to rely
on unemployment insurance and welfare, and some have even returned to
their homelands or migrated to the United States.
About 25 percent of recent immigrants with a university degree are
working at jobs that require only a high school diploma or less,
government data show.
"The most mobile workers in the world come to Canada and find
themselves immobilized," said Faviola Fernandez, a teacher from
Singapore who became an immigrant advocate after finding the process of
getting a teaching license in Canada so unwieldy that she gave up.
Over the last decade, the country has attracted 200,000 to 250,000
immigrants a year - measured as a percentage of the population, that is
triple the rate in the United States. Canada's largest cities are
ethnic mosaics of great diversity. One in every six people in Canada
immigrated, giving it the world's second-highest proportion of
immigrants. Only Australia's is higher.
Officials in South Africa and other countries have even begun to
complain to Canadian officials that they are losing talent trained in
their universities in a brain drain they can ill afford.
But very frequently, highly skilled immigrants, who are nearly half of
those who come here, are driving taxis and trucks, working in factories
or as security guards, and hoping their children will do better.
The Canadian public continues to support the government's goal of
increasing immigration, and relations among ethnic groups are good,
though neighborhoods in some cities are becoming more segregated. But
some fear that if opportunities for immigrants do not expand, social
cohesion may suffer.
"The existing system is broken," said Jeffrey G. Reitz, a sociologist
who studies immigration at the University of Toronto. "The
deteriorating employment situation might mean that Canada will not be
able to continue this expansionist immigration program in the positive,
politically supported environment that we've seen in the past."
Mr. Reitz estimates that foreign-educated immigrants earn a total of $2
billion less than an equivalent number of native-born Canadians with
comparable skills because they work in jobs below their training
levels. Drawing on census data, he judges that in 1980, new immigrant
men earned 80 percent of the salaries of native Canadian men, and that
the proportion has now dropped to less than 70 percent.
He concludes that immigrant earnings in Canada are declining to the
lower levels of the United States, where the skill levels of immigrants
tend to be lower.
Academic specialists and immigrant advocates say that discrimination is
one of many reasons for the problem. Native-born Canadians are better
educated now than 25 years ago, so immigrants have more competition,
some specialists note. But all agree that professional organizations
and provincial licensing agencies have been slow to recognize foreign
professional qualifications. The children of immigrants, who enter the
job market with Canadian credentials, typically do better at acquiring
high-paying jobs, immigration specialists note.
"We have an arcane infrastructure of professional organizations that
essentially mitigate against the immediate integration of these highly
skilled immigrants," Joe Volpe, the minister of citizenship and
immigration, conceded in an interview.
"It's a shame we have a shortage of doctors, and yet we have thousands
of foreign trained medical doctors and we don't recognize their
credentials," he said. "We haven't found an easy way of assessing their
qualifications."
Mr. Volpe said he was concerned that news from disappointed job seekers
would seep back to their native countries and discourage qualified
people from immigrating. In a recent speech, Mr. Volpe committed more
than $250 million over five years to pay for programs to accelerate
professional integration. Complaints abound from those caught in this
bind - encouraged to come by federal policy, but hamstrung by
expensive, time-consuming hurdles created by regulatory agencies and
professional organizations.
"Canada advertises that there are no foreigners here, that everyone is
at home in this multicultural dream," said Farid A. Hadi, 40, a
gynecologist who arrived from Egypt last year and is out of work. He is
one of 1,200 applicants for 200 spots in an Ontario program to assess
and retain foreign doctors seeking licenses to practice in the
province. With his savings disappearing, he is looking for lab work.
"I'll do whatever I need to support my family," he added, referring to
his wife and three children.
Mr. Sangha is another example. Since the Canadian Embassy in India and
a Canadian immigration consultant encouraged him to bring his family
here in 1996, he has not had a single job that fits his qualifications.
He would have left Canada long ago, he says, if not for his two
children, who have become acclimated to Canada and are now young
adults. In 2001, Mr. Sangha was turned down for a job as an
environmental inspector with an agency of the Northwest Territories
government. He took the case to the Canadian Human Rights Commission,
where it is under consideration.
The territorial government agency told the commission that Mr. Sangha
had been rejected because he was overqualified and would have become
bored. But Mr. Sangha said in an interview that, during his job
interview, an agency official had shown crude disrespect by
interrupting him and not paying attention to his responses, and that he
was the victim of discrimination. "It's a painful life," he said. "I'm
angry and frustrated. I never thought it would be like this in Canada."
4. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.gregpalast.com/detail.cfm?artid=434&row=0
FRENCH FRIED FRIEDMAN
The Nouvelle Globalizer
by Greg Palast
Guerrilla News
Sunday, June 5, 2005
Vicente Fox got a well-deserved boot in the derrihre for saying
Mexicans come to America for taking jobs "not even Blacks want to do."
But Thomas Friedman earns plaudits and Pulitzers for his column which
today announces that East Indians are taking jobs the French are too
lazy to do. [See, "A Race to the Top," New York Times.] Friedman's fit
of racial profiling was motivated by his pique over France's rejection
of the globalizers' charter for corporate dominance known as the
European Constitution.
It's not the implicit racism of Friedman's statement which is most
irksome, it's his ghastly glee that, "a world of benefits they [Western
Europeans] have known for 50 years is coming apart," because the French
and other Europeans "are trying to preserve a 35 hour work week in a
world where Indian engineers are ready to work a 35-hour day."
He forgot to add, "and where Indian families are ready to sell their
children into sexual slavery to survive." Now, THERE'S a standard to
reach for.
In his endless series of pukey paeans to globalization, Friedman
promises that free trade, an end of regulation, slashing government
welfare and privatization of industry will lead to an economic nirvana.
Yet, all he and his globalization clique can point to as the free
market's accomplishment is the murderous competition between workers
across borders to cut their wages for the chance to work in the new
digital sweatshops.
Friedman praises the New India, freed of the shackles of Old India's
socialist welfare state. I've seen the New India: half a billion people
in dirt huts supporting a tiny minority's right to shop in
air-conditioned malls. It is a Fritz Lang film in Hindi.
There is, of course, a hopeful, growing India where the much-heralded
cyber work is based. But, Mr. Friedman, please note these brains for
hire are found in Karnataka and Kerala, states whose cussed adherence
to social welfare makes them more French than France and nothing like
Thatcherized dog-eat-dog Britain nor Reaganized America.
The computer wizards of Bangalore (in Karnataka state) and Kerala are
the products of fully funded state education systems where, unlike the
USA, no child is left behind. A huge apparatus of state-owned or
state-controlled industries, redistributionist tax systems, subsidies
of necessities from electricity to food, tight government regulation
and affirmative action programs for the lower castes are what has
created these comfortable refuges for Oracle and Microsoft.
And the successful Indian states, unlike the dreadful free-market Uttar
Pradesh, have labor unions so tough they make the French CGT look like
a luncheon club of baguette biters.
A few years ago, I dropped in on a fishing village in Kerala in
Southern India. Most fishermen worked from motorless dug-out log boats.
Their language is Malayalam, but a large banner slung between two
coconut trees announced in English, "WordPerfect applications class
today." After they brought in the catch, the locals practiced
programming on cardboard replicas of keyboards.
What made this all possible was not capitalist competitive drive (there
was no corporate "entrepreneur" in sight), but the state's investment
in universal education and the village's commitment to development of
opportunity, not for a lucky few, but for the entire community. The
village was 100% literate, 100% unionized, and 100% committed to
sharing resources through a sophisticated credit union finance system.
This was the communal welfare state at its best. Microsoft did not
build the schools for programmers -- the corporation only harvested
what the socialist communities sowed.
The economist Amartya Sen won the Nobel Prize in 1998 for predicting
that Southern India, with its strong communalist social welfare state,
would lead the economic advance of South Asia -- and do so without the
Thatcherite sleight-of-hand of pretending that riches for the few
equates to progress for the many.
When I asked the fishermen on their way to programming lessons what the
West could do to encourage their efforts, they did not suggest
privatizing Kerala's social security system. Rather -- and this was
before the Seattle demonstrations of 1999 brought the World Trade
Organization to the West's attention -- they called for the abolition
of the WTO and greater protection for their wooden fishing fleet
against the foreign factory boats marauding in their waters. With
protective trade barriers, they could do as the US did for a hundred
years: build up local resources and industry to create the
infrastructure of growth.
And the programmers themselves do not dream, Mr. Friedman, of stealing
work from indolent Frenchmen or slothful Seattle geeks. Indians are not
in love with the new method of brain-drain by satellite. They're
frustrated dream is tto write code in their own languages for their own
industries.
Indeed, in Karnataka, where he visited a golf course (how did he find a
putting green in India, anyway?), the state put up its middle finger to
WTO rules and the wonders of globalization, blocking the construction
of a new steel plant until the investors agree to keep most of the
steel in India.
Friedman ends with the typical globalizer's warning that, "it's a bad
time for France and friends to lose their appetite for hard work" or,
he growls, they will lose their jobs to Indians and Chinese willing to
work for noodles. What Friedman means is that the French should give up
their taste for old age pensions, universal health care, top-quality
public education, time off for holidays with the kids, protection of
their skies and waters and all those things we used to call advances
but now, according to the Friedman world order, stand in the way of
progress.
It is too bad that the Times' opinion columns have not been outsourced
to India. Were it so, a Keralite might explain to Friedman that human
advances are measured not by our willingness to crawl lower and lower
to buy ourselves a job from Bill Gates, or by counting the number of
Gap outlets in Delhi, but by our success in protecting and nurturing
liberti, igaliti and fraterniti among all humanity.
Read, "Sell the Lexus, Burn the Olive Tree: Globalization and Its
Discontents," Chapter 4 of Greg Palast's New York Times bestseller, The
Best Democracy Money Can Buy. Subscribe to Palast's columns at
www.GregPalast.com.
5. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.rutlandherald.com/apps/pbcs.dll/article?AID=/20050604/NEWS/506040308/1039
Article published Jun 4, 2005
A race to the top
BANGALORE, India - It was extremely revealing traveling from Europe to
India as French voters (and now Dutch ones) were rejecting the EU
constitution - in one giant snub to President Jacques Chirac, European
integration, immigration, Turkish membership in the EU and all the
forces of globalization eating away at Europe's welfare states. It is
interesting because French voters are trying to preserve a 35-hour work
week in a world where Indian engineers are ready to work a 35-hour day.
Good luck.
Voters in "old Europe" - France, Germany, the Netherlands and Italy -
seem to be saying to their leaders: Stop the world, we want to get off;
while voters in India have been telling their leaders: Stop the world
and build us a stepstool, we want to get on. I feel sorry for Western
European blue-collar workers. A world of benefits they have known for
50 years is coming apart, and their governments don't seem to have a
strategy for coping.
One reason French voters turned down the EU constitution was rampant
fears of "Polish plumbers." Rumors that low-cost immigrant plumbers
from Poland were taking over the French plumbing trade became a
rallying symbol for anti-EU constitution forces. A few weeks ago Franz
Muentefering, chairman of Germany's Social Democratic Party, compared
private equity firms - which buy up failing businesses, downsize them
and then sell them - to a "swarm of locusts."
The fact that a top German politician has resorted to attacking
capitalism to win votes tells you just how explosive the next decade in
Western Europe could be, as some of these aging, inflexible economies -
which have grown used to six-week vacations and unemployment insurance
that is almost as good as having a job - become more intimately
integrated with Eastern Europe, India and China in a flattening world.
To appreciate just how explosive, come to Bangalore, India, the
outsourcing capital of the world. The dirty little secret is that India
is taking work from Europe or America not simply because of low wages.
It is also because Indians are ready to work harder and can do anything
from answering your phone to designing your next airplane or car. They
are not racing us to the bottom. They are racing us to the top.
Indeed, there is a huge famine breaking out all over India today, an
incredible hunger. But it is not for food. It is a hunger for
opportunity that has been pent up like volcanic lava under four decades
of socialism, and it's now just bursting out with India's young
generation.
"India is the oldest civilization, the largest democracy and the
youngest population - almost 70 percent is below age 35 and almost 50
percent is 25 and under," said Shekhar Gupta, editor of The Indian
Express. Next to India, Western Europe looks like an assisted-living
facility with Turkish nurses.
Sure, a huge portion of India still lives in wretched slums or
villages, but more and more of the young cohort are grasping for
something better. A grass-roots movement is now spreading, demanding
that English be taught in state schools - where 85 percent of children
go - beginning in first grade, not fourth grade. "What's new is where
this movement is coming from," said the Indian commentator Krishna
Prasad. "It's coming from the farmers and the Dalits, the lowest groups
in society."
The Indian state of West Bengal has the oldest elected communist
government left in the world today. Some global technology firms
recently were looking at outsourcing there, but told the communists
they could not do so because of the possibility of worker strikes that
might disrupt the business processes of the companies they work for. No
problem. The communist government declared information technology work
an "essential service," making it illegal for those workers to strike.
Have a nice day.
"This is not about wages at all - the whole wage differential thing is
going to reduce very quickly," said Rajesh Rao, who heads the
innovative Indian game company, Dhruva. It is about people who have
been starving "finally seeing the ability to realize their dreams."
Both Infosys and Wipro, India's leading technology firms, received more
than 1 million applications last year for a little more than 10,000 job
openings.
Yes, this is a bad time for France and friends to lose their appetite
for hard work - just when India, China and Poland are rediscovering
theirs.
Thomas L. Friedman is a columnist for The New York Times.
6. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.fromthewilderness.com/free/ww3/053105_world_stories.shtml
The Financial Endgame Slowly Plays Out - and then...
by Nigel Maund
May 27, 2005
http://www.safehaven.com/article-3134.htm
This article first appeared on www.clivemaund.com
In accordance with Title 17 U.S.C. Section 107, this material is
distributed without profit to those who have expressed a prior interest
in receiving the included information for research and educational
purposes.
... the Sudden Systemic Implosion which will usher in the Brave New
World
"Capitalism requires people to be quiet souls in the workplace and wild
pagans at the cash register" - Ron Chernow, 1949, US Journalist
Amongst the growing plethora of warnings, some erudite some emotional,
Mr. Paul Volcker's commentary in the Washington Post entitled, "The
Economy on Thin Ice", of April 10th, has to be taken very seriously,
given the former's position as Chairman of the Fed from 1979 to 1987,
when he was succeeded by Alan Greenspan. Volcker was forced into making
very tough economic decisions in 1980, which he did by raising interest
rates sharply to cool a vastly overheated market. Volcker acted as the
Fed Chairman should, responsibly, and, therefore, like few other market
commentators has immense "gravitas" when he flags up major economic
issues as he has done. However, the magnitude of the present Fed
Chairman's problems are on a hitherto unimaginable scale. No country,
or central bank, has ever attempted an exercise in FIAT money creation
of such truly breathtaking proportions before. Moreover, no exercise in
FIAT money creation has ever successfully worked over the long-term in
any nation where it has been attempted. Before the post WW2 acceptance
of the US dollar as a proxy global currency, no country has had the
unique opportunity to try such an exercise out on a global scale. Dr
Greenspan knows this. So, you may well ask, what on earth is he up
to?.... and, equally importantly, why is it being done?
It is easy to caste Dr Greenspan as the befuddled "Mr McGoo" leading
America to economic and financial ruin. However, such a denigration of
this man's abilities is entirely misleading and dangerously erroneous.
The Fed has some of the finest financial and economic brains on the
planet. Therefore, the more acceptable answer as to why the (digital)
US$ money base has been exploded on an astronomic scale has to centre
on it being a part of a globally based economic and political strategy.
The fact that this strategy has not been spelled out to "the world at
large" implies a hidden agenda, and, furthermore, a conspiracy. Whilst
"the conspiracy theory of history" is mocked by the media as the realm
of scaremongers, the ignorant and the naove, anyone who has merely
studied the history of Britain's Kings and Queens, over the last 1,000
years, will readily see that conspiracies were very much part of court
life, national government and Britain's international policy. Nothing
has changed. Indeed, with the advent of widespread literacy, modern
media and information technology, the obfuscation of, and power to
corrupt facts has been raised to a new and more sophisticated plane.
"Baking the news cake" for palatable reception and consumption is an
art form perfected for specific markets, based on the cultural and
educational profile of the local, national or even international
consumer. CNN, CNBC , NBC and Fox News are little more than propaganda
organisations serving up a daily "McNews" for the generally poorly read
and travelled, culturally naove, and generally poorly educated US
consumer, on the basis that those who eat junk, drink junk, read junk,
watch junk and listen to junk deserve, well... just more junk? Mr.
Hitler and Dr Goebbels would have been heartily jealous of such a
malleable and docile, if not to say almost bovine populace, who could
readily absorb such shallow rubbish and believe it all! Unfortunately,
the insidious US style media is polluting the planet in the global
attempt to produce a "dumbed down", ignorant, poorly educated and
malleable global serfdom, hooked on trashy TV and video entertainments
and other such puerile nonsense, and moreover, up to their necks in
debt and easy credit. Again, one is led to ask why? Aren't we living in
the enlightened 21st Century?..... or, are we regressing to type, as
demonstrated over thousands of years of human suffering at the hands of
our own dubious species?
Over the past four years, since the great stock market bubble topped
out at over 11,000 on the DOW, innumerable commentators have been
expecting the inevitable crash. However, time and again the Fed has
wrong footed the bears, making apparent fools of many experienced and
intelligent commentators, including lesser mortals like this writer. To
a large extent, very few people are listening to the bears as a result
of their dismal track record. Complacency is currently rife, as the
markets defy financial and economic logic, and its economic paradigms
and models are apparently refuted by the "new economics" of never
ending FIAT expansion, akin to medieval alchemy. However, even at the
physical scale of stars and galaxies, periods of great expansion are
followed by sudden and very rapid implosion, as gravitational forces
overcome spent nuclear reaction. In this writers' view, the end of the
great global FIAT experiment, based on the United States Dollar, will
end, not as most people think and hope for, as a well orchestrated
gentle descent, but suddenly and very brutally like a collapsing red
giant reduced to a white dwarf or X-ray star. Furthermore, an event, or
a multiplicity of major events, such as a continuing rise in the price
of energy and oil and/or sudden economically forced global rebalancing
will be the trigger for a collapse of the entire financial "house of
cards". This will destroy all the paper currencies, without any
exception, as they are all interlinked within the global markets, and
none are backed by gold or anything else of finite defined value. In
this circumstance, Richard Russell's views on gold and silver rise to
the fore, and he is to be much commended for "sticking to his guns". In
this writers view he is 100% right.
For the average person in the US, Canada, Britain, Japan, Australia and
New Zealand, not to mention much of the European Community, the quality
of life is steadily declining amidst the illusion of paper wealth
represented by assets such as houses, bonds and stocks. Since 1982, the
money supply has been progressively pumped up at an ever expanding
rate, whilst real earnings have been in steady decline, under steady
erosion through real inflation as opposed to the statistically
incorrect CPI as corrupted by manipulative "jiggery pokery" by
successive governments.
The prime instrument in this global economic game has been one
fundamental to the lives of everyone; i.e., the house you live in.
Unless the householder is rich enough to afford to own two or more
houses, which most are not, then the paper gain in the steadily, but
rapidly rising, price of his home can only be realized if he sells his
home and move into a lesser house in the same area, or, one of similar
quality and size in a less attractive or sought after location. Most
people do not like moving home for obvious reasons. Therefore, the only
benefit one gains from ever rising house prices, and property prices in
general, is if one can use some of the increased equity in ones home to
finance other consumption needs, such as: education; cars; consumer
durables; holidays; home improvements and non-essential luxuries such
as speed boats and jet skis. As many writers have pointed out, a home
is a source of finance amidst falling real earnings, a veritable
private bank ATM to be tapped into as deemed necessary. This happy
little arrangement has been facilitated and expanded by an increasingly
lax and accommodative banking environment, which seems almost
disinterested in whether one can ever repay ones debts in the face of
unemployment or illness. Again, it is necessary to ask why this is
being allowed to happen? And, furthermore, why does it fly in the face
of prudent money lending, as deemed sensible practice, since the
creation of the banking system. Why have supposedly responsible
governments allowed it to happen without imposing regulations to
protect the consumer from himself and for himself?
In the event of a collapse in the heretofore ever rising housing
market, often at a factor of 3 to 5 times the increase in average
earnings over a sustained period of nearly 20 years, one's house
becomes a "financial lobster pot". Given the low equity in most new
home purchases, in a collapsing market the mortgagee is little more
than a tenant, albeit with a thumping great paper debt to pay off over
the rest of his or her miserable life. In other words, modern society
has reverted to one of Baronial serfdom reminiscent of 11th Century
Europe at its impersonal worst. Genuine democracy and freedom has
vanished in that other great illusion - so called Democracy. The
biggest fear a family man will hold is losing his job. What a
pernicious instrument of societal control the home has become. It's a
corporate shareholders dream come true. Like a dead albatross slung
around the neck of "the ancient mariner", as he thinks: "how I wish I
had never bought this house!", and, how I wished that I had saved for
what I have purchased and that it really did belong to me. The deep
evil of credit, whose use appeals to man's darkest and bleakest being,
as an instrument of acquisition, exploitation and control, will be
brought home to the unthinking US, UK, Australian, and Canadian
consumer like his very worst nightmares. As Yoda says to Luke Skywalker
in the "Empire Strikes Back", "you're not scared? .....You soon will
be! Oh yes! You soon will be!"
The downside of the exploding property market is immense and highly
insidious. The vast inflation of property prices has served to bring
about the following:
Distort the cost structure of the entire economy through increased "on
costs" of mortgages, rentals and leases, which are recovered through
higher charges on all goods and services;
Inflated house prices push homes into higher tax thresholds including:
sales tax, stamp duties, council or local authority taxes and capital
gains tax resulting in increased costs of living;
The increased purchase price, and lower equity downpayment in homes for
most buyers, requires them to take out ARM's (adjustable rate
mortgages) rather than fixed rate mortgages. This increases the
lender's exposure to financial risks in an environment of rising
interest rates, when unemployment and job loss risks increase.
Furthermore, most mortgages issued in ARM contracts are junk status
loans, backed by derivatives, with little or no financial due diligence
performed by the lender on the debtor;
Further distortions due to high and rising house prices mean that vital
labour mobility is restricted throughout the economy as lower wage
earners, in important sectors of the economy, cannot afford to take out
a loan or move from a location of low house prices to one of high
prices. Such key labour includes: teachers, medical staff, police,
firemen, and drivers of public transport vehicles;
Large mortgages, or home loans, come with a deep psychological load on
the mind of the mortgagee or borrower. The thought that you have a
mountainous debt overhanging your daily life effectively dominates your
life whether you like to admit it or not. The fear of losing ones job,
becoming ill, or having an accident, where you cannot pay your monthly
bill, resulting in your family being made homeless is a socially
destructive and degenerative influence, colouring a person's outlook on
life and their entire social behaviour. The net result is greater
mental stress and physical illness, increased crime, drug and drinking
offences. In some, and by no means rare, cases, suicide results.
Now the great game plan starts to make some sense. Higher home loans
and the greater indebtedness of society are well on their way to
creating a modern version of serfdom, in which people will work for a
nominal income from the cradle to the grave, merely giving birth to a
new generation of serfs, as they live their constrained lives earning
nominal wages, never being able to somehow get ahead as their income is
whittled away by taxes, debt servicing charges and interest payments,
and everyday (and ever rising) living expenses. Lives for most will
comprise a few small pleasures and, mostly, endless drudgery in making
the elite few richer and able to enjoy what most people can never have
or even dream about having.
Modern Industrial-Corporate Dynastic families owe their origins to the
age of technological expansion and industrial development in the 19th
Century. The prime interest of these families is to insure their
dynastic inheritance of power and wealth. The mentality of the rich and
powerful is absolutely no different to what it is was in the age of
Pharoah's, Kings and more obvious and recent megalomaniacs like Hitler
with his 1,000 year Reich. Wealth and power corrupts and distorts the
entire mental philosophy of those who wield such power. The main effect
is to numb the senses to the feelings and wellbeing of all people and
the enormous social responsibility that comes with wealth. Evidence of
the preoccupation of the rich and powerful with grandiose, conspicuous
consumption is evident in the French Chateaux, colossal British Estate
Homes, Aztec and Egyptian monolithic structures and huge Roman villas
etc. Time and again, throughout history, from Chinese Emperors,
European Kings, Indian Moguls, and modern era Dictators, man has
quested for dynastic power over his fellow human beings, murdering
countless millions of ordinary people in the process, oblivious and
indifferent to their suffering. Man's lack of wisdom and responsibility
to his fellow beings has not changed, only his technology and knowledge
base have, which he largely uses, unwisely, to further his personal
ends. The current financial game plan is just another variant of an
age-old desire to control people, this time not with brutal, and highly
obvious and alarming, armies of jackbooted asphalt soldiers, but with
pinstripe-suited, educated, suave bankers offering easy credit and good
times, like the fox to Pinocchio in Walt Disney's classic film. How
easily are the people gulled into economic slavery! Their hedonistic
greed for easy and immediate acquisition of goods and comforts to
fulfil a perceived need, that they cannot afford to pay for, is being
used to enslave them; as in Judo, the Japanese art of self defence, a
person's body and normal behavioural reactions are used to bring them
down.
Hand in hand with the strategy of enslaving people with credit is a
much wider-ranging, multi-pronged attack against the entire fabric of
society's cohesion. The facilitating of divorce laws, abortion, gay
rights, and a raft of more insidious measures such as the progressive
downgrading of the education system, except of course for the elite
schools like Yale, Harvard, Stanford, Browne, MIT, Cornell, Oxford,
Cambridge, Imperial College, UMIST, Durham, or ANU and Melbourne in
Australia, etc, where the offspring of the elite get their university
training. Furthermore, in most countries students have to pay for their
education by taking out bank loans, financially enslaving them before
they have commenced their working lives! At the 1st grade universities,
academic requirements remain high to generally exclude those who have
not had a good private education. Furthermore, these universities are
usually located in more exclusive and more expensive towns, such as
Oxford and Cambridge, further discouraging the poor from shouldering
the extra costs of attending these schools.
In the scheme of the world to come, society is utterly atomised and
totally malleable. Every aspect of normal home and social life is now
under attack, and people are so preoccupied with debt repayment and
just keeping their heads above water, that they are not able to focus
on, let alone comprehend, the society they will bequeath to their own
children. To keep the ordinary citizens happy, they are plied with
constant mindless entertainments, similar to those staged by the Roman
Emperors with their endless Games held in grand stadiums such as the
Coliseum in Rome. These distract the minds of the masses from the
reality of their pathetic existence. An ample supply of cheap food is
also available through a sophisticated mass distribution and integrated
farming system, provided by the powerful and omnipresent supermarket
chains such as Wal Mart, Sears, Tesco's, Sainsbury's, Safeway, K Mart,
ASDA, Coles, etc. The availability of cheap and plentiful food helps
keep the mass of society placid and content. Furthermore, the
availability of fast, hyper-processed, junk food is a godsend for
planners as it is resulting is widespread obesity on a global scale.
Obese people lack the impetus to protest and are typically inactive and
sedentary.
The present concern over the massive US twin deficits does not worry
the Fed for the simple reason that they fully understand what they are
doing. Everything is pretty much going perfectly to plan. They know
that one day the system will collapse, but only when they want it to,
and have all their plans in place ready for that day. Since the
creation of the Fed in 1913, the US has steadily but increasingly
pursued a strategy of flooding the world with US dollars. Following
WW2, which saw the destruction of the old power Europe, the US dollar
was the only currency, with its solid backing of 22,000 tonnes of gold,
and a strong and debt free US economy, backed by a strong resource base
and pre-eminent military power, which could serve as financial
collateral for international trade and settlements. However, first the
militarily drawn out Korean War of 1950 and 1952, and then the
enormously costly Vietnam War debacle, from 1962 to 1975, progressively
sapped US economic power and undermined the dollar. In 1968, the post
war Bretton Woods Agreement in which the gold price was fixed at US$35
per fine ounce was rescinded, and the US dollar was largely taken off
the gold standard. The final vestige of gold backing for the US dollar
was removed by President Nixon in 1971. This single act opened the
credit floodgates and gold rapidly rose to US$ 120 per ounce by 1976.
Thereafter, under Paul Volcker's tenure as Fed Chairman, FIAT expansion
accelerated as the dollar was no longer tied to anything. By 1979, the
inflation of the money supply was literally going out of control. Gold
soared to US$ 850 an ounce and silver rocketed to US$50. Volcker had to
act, and did so decisively, by using the only effective tool in his
armoury, interest rates, raising them rapidly to 22%. This induced a
severe financial recession which the incoming Chairman Alan Greenspan
relieved by once again opening the liquidity spigot, financing Ronald
Reagan's huge expansion of the US military in the 1980's, and a huge
accumulation of US national debt. The economic brakes were applied to a
vastly overheated economy in 1989 by raising rates into the teens
again. However, from 1992 to 2000, the US has seen the liquidity spigot
opened to an unimaginable level. The injection of so much cash into any
economy is bound to cause major distortions and excess, and it did. The
rest is history and is well known to readers. However, the colossal
equity bubble has spilled over into an even larger bond market and now
real estate bubble. US mega debts are collectively something of the
order of US$ 45 trillion, comprising US$ 8 trillion of federal debts.
The trade deficit is motoring along at US$ 600 billion + per annum, and
the US needs to import US$ 2.6 billion a day to finance its debt.
Furthermore, the war in Iraq, planned action in Iran, and maintenance
of 700 + US military bases worldwide is accelerating military
expenditure.
A serious attempt at resolution of the gigantic US economic imbalances
is considered unlikely in the near future as the liquidity spigot is
still pretty much wide open. Real interest rates are still negative or
approximate to zero.
As is well known by most readers, the entire monetary system relies on
the symbiotic relationship between the US consumer, financed by his
vastly asset inflated house, bonds and equities, and provision of cheap
labour in China, Taiwan, Thailand, Malaysia and India where much
manufacturing has been outsourced by global companies. The US citizen
will, over time, be reduced to earn the same wages as his Chinese and
Filipino counterparts. He hasn't realized it yet, but he is being
progressively reduced to sweatshop labour by being reduced to accepting
a job at MacDonald's or Wal-Mart on US$ 7 per hour. Now manufacturing
has been largely outsourced or relocated to China or other Asian
nations. However, the time will come, maybe by 2015 or 2020, when his
wages will be reduced sufficiently to make relocating manufacturing in
Ohio an attractive proposition. Welcome to globalization and the New
World Order. This is all wonderful of course if you are one of the
owners of the means of production and the capital base. You can play
one nation off against another, arbitrage wage rates and maximize
profits, and reduce your labour force to compliant and malleable serfs.
All this comes with the added benefit of "the Sword of Damocles"
hanging over each employee's head in the form of a debt mountain. What
a brilliant scheme this all is!
Far from being idiotic and improvident, Mr Greenspan's Fed has been a
main control box for what is a brilliant global plan, awe inspiring in
its breadth, depth and vision, and staggering in its extremely cynical
execution. This is surely mankind at his most devious and is corruption
of power taken to an ultimate level.
Using his incredible advantage of having a global currency, in which
all commodities are traded, and all international loans and settlements
made, the Fed has not only created an internal US Dictatorship via
credit, but has gulled China, Japan and SE Asia into a brilliant trap.
The highly imbalanced trading relationship between China, Japan and the
US is well known, and has been frequently described in some detail by
Morgan Stanley's Chief Economist, Mr. Stephen Roach. In this
relationship, the US buys the majority of Chinese and Japanese goods
with digital dollars (real money simply no longer exists) running up
huge accounting surpluses with which they buy heaps of meaningless
paper in the form of US Treasury Bonds and Equities, enabling the
"economic merry go round" to happily continue. In this highly distorted
and imbalanced market, no one dare flinch. It is the ultimate
"Prisoner's Dilemma Game", and how Mr. Greenspan, a brilliant Harvard
academic, must love every minute of it. The cost of anyone throwing in
the towel and jettisoning the dollar is quite simply awesome. No one
has the courage to dare try. Like it or not, Asia is America's hostage
politically and economically and can be crippled at a moments notice.
China has no internal market to replace the US consumer, and Japan,
Taiwan and Korea are relatively saturated markets. However, Greenspan
knows that this "circus" cannot be sustained forever. The dollar is
under heavy pressure in the open market as nerves are jangling at the
sheer size of the imbalances and awareness of the eventual correction.
Europe has to a large degree borne the cost of this great experiment,
with a 25% appreciation of the Euro, over three years, impacting
seriously on their economies. Should the dollar drop significantly in
coming weeks/months the Europeans will be screaming for Greenspan to
raise rates into real positive territory before they are left no option
but to short the dollar and precipitate a market crisis.
To add to the above, commodities, not least oil, are on an ever-upwards
trajectory precipitated by sustained and increasing Asian demand.
Eventually, the inherent inflationary costs, global trade and financial
distortions will conspire collectively to force a resolution of current
imbalances. The longer this situation is sustained, the greater will be
the correction required. A soft, low trajectory, landing is considered
highly unlikely. The system will implode when it finally goes. The US
dollar's value is only a perceived value. Its real value is nothing.
When the realisation dawns that there is going to be no nicely "stage
managed" end to this situation, the normal human reaction will be to
"hit the exits". The history of the markets is not one based on simple
mathematical logic. Man is first and foremost driven by his primeval
instincts; i.e., greed and fear. The latter is the more powerful of
these instincts. When this market goes, it will do so across almost all
sectors and go very fast. Greenspan knows this. This is the grand
denouement of his global scheme, as any other end was never possible as
it would fly in the face of simple mathematical and economic logic. We
will then have his Brave New World, and the US will have Patriot Acts 1
and 2, and the Ministry of Homeland Security to sweep up the mess, as
the citizenry finally wake up to their awful predicament. Those who
have paid for their homes and hold private hoards of gold and silver
will be the only ones able to enjoy any form of normal life. However,
the future for the US looks pretty bleak given its current political
drift. I thank God I don't live there!
Nigel H. Maund
BSc(Hons)Lond., MSc, D.I.C., MBA, MIMMM, SEG
Economic Geologist
7. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.money.telegraph.co.uk/money/main.jhtml?xml=/money/2005/06/06/cnit06.xml&menuId=242&sSheet=/money/2005/06/06/ixfrontcity.html
IT workforce faces cheap labour threat
By Philip Aldrick (Filed: 06/06/2005)
Britain's IT workforce is being threatened by a new form of outsourcing
that could have as serious ramifications for the labour market as the
transfer of operations overseas.
Outsourcing specialists say that, rather than hiring locally,
multinational technology firms are recruiting cheap skilled labour at
their foreign branches and bringing the staff to Britain for client
projects. Rick Simmonds, a director of outsourcing advisers ALS
Consulting, said: "It's a new trend, offshore resources coming onshore
to do the work."
The phenomenon has been dubbed "onshore offshoring" and has already
prompted fierce debate in the US.
In September 2003, amid a political backlash against outsourcing, the
annual US issue of temporary H1B visas, required by foreign workers for
prearranged jobs and used predominantly in the technology industry, was
reduced from 195,000 to 65,000. Anti-H1B lobbyists claim the visa
programme is "costing American jobs and undercutting your wages".
However, demand for this year's intake was so high that the entire
quota was exhausted in one day and an extra 20,000 H1Bs had to be
issued. Competition is driving the trend, with the cost of each
overseas recruit "a third to a half that of a UK employee", Mr Simmonds
reckons.
"You can get just as good technical guys from India to put in a big
Oracle system as here," he said. Most workers come for three to six
months but many are now believed to be on long-term visas.
There have been warnings of repercussions for Britain's service
industry. Some companies are said to be laying off staff in high cost
countries and recruiting heavily in low cost ones. Those staff are then
"onshored" with temporary work permits. Mr Simmonds said:
"Traditionally, we've exported work like this."
Tony Virdi, global sourcing director at Atos Origin, confirmed that
"pure wage arbitrage does exist" but added that it carries a host of
ethical issues: "Ultimately the client as buyer has an obligation to
check the IT firm's staff are being hired correctly."
On many IT projects, the systems are already being built offshore. Mr
Virdi said those overseas staff are then being brought onshore "to
deploy the system".
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