Continuing this site’s recent trend as the scourge of the New York Times op-ed page…
I am the first to acknowledge that I do not have a degree in economics. I am but a simple uneducated cartoonist, trying to make sense of the world as best I can, with the limited gifts I have been given.
Nonetheless, even I can see what’s wrong with this:
“We have tied up with several small and medium-size C.P.A. firms in America,” explained Mr. Rao, whose company, MphasiS, has a team of Indian accountants able to do outsourced accounting work from across the U.S. All the necessary tax data is scanned by U.S. firms into a database that can be viewed from India. Then an Indian accountant, trained in U.S. tax practices, fills in all the basics.
“This is happening as we speak we are doing several thousand returns,” said Mr. Rao. American C.P.A.’s don’t even need to be in their offices. They can be on a beach, said Mr. Rao, “and say, `Jerry, you are particularly good at doing New York returns, so you do Tom’s returns.” He adds, “We have taken the grunt work” so U.S. accountants can focus on customer service and thinking creatively about client needs.
Okay, I want to see a show of hands. How many of you believe that the major accounting firms which outsource their work to India then proceed to tell their CPA’s: Go hang out on the beach! Focus on customer service and thinking creatively about client needs!
Because that would be the impetus for the outsourcing, of course. Not to save labor costs but to give your people more free time to, you know, fulfill their human potential.
Oh, wait. Maybe not.
Look, an intellectual apologist like Friedman can always come up with cheerful little anecdotes to justify this sort of thing, but it’s painfully clear to any reasonably bright fifth grader what’s really going on. As a wise man once said (at least in the movie version): follow the money.
The reason lies in the numbers; accountants in the United States typically earn $4,000 a month. In places like India it’s closer to $400, says David Wyle, CEO and founder of SurePrep, a tax-outsourcing firm based in southern California that’s employed more than 200 accountants in Bombay and Ahmedabad, India.
Now of course, the free traders in the audience are already composing lengthy emails about the inevitability of change and the invisible hand of the free market and so on but here’s the problem: the invisible hand only functions efficiently when labor and capital are equally mobile. Unfortunately, here in the real world, pretty much any job can be outsourced, but human beings are still stuck living where they live, in Buffalo, New York, or Little Rock, Arkansas, or wherever they may be. They’re not going to move to Bangalore to keep their jobs. And since the cost of living is considerably higher, even in Little Rock, Arkansas, than it is in Bangalore, they simply can’t compete, and the invisible hand is transformed into an invisible fist which pummels one side at the behest of the other not exactly what Adam Smith had in mind. And decades and decades of progress for working people in this country are simply wiped out, as we devolve further and further into a winner-take-all, screw-the-rest society.
Free traders are also prone to ask: don’t Indians deserve to make a living? Well, yes, of course. That’s just a distraction, another argument from the intellectual apologists, the shiny wand the magician waves to keep your attention away from what he’s really doing right in front of your eyes. Corporations are not outsourcing their work out of the goodness of their hearts, out of some innate desire to help people all around the world they’re doing it to save money on labor costs, to wipe out decades of gains largely the result of the work of the much-maligned unions, which brought an unprecedented standard of living to mid-century working class Americans.
If you truly want to better peoples’ lives, you have to start at home. There’s a lot of wisdom to the old bumper sticker slogan: think globally, act locally.
(It’s the damndest thing, how people who think I am a traitor for expressing insufficient enthusiasm for George Bush’s various little wars have absolutely no problem watching their neighbors slide into poverty and despair because someone somewhere is willing to do their job for one-tenth the cost. Patriotism really is in the eye of the beholder, isn’t it?)
Look, people can argue in favor of anything. If your landlord decides to quadruple your rent, and you can’t find anywhere to live because all the other landlords in town have done the same thing, Tom Friedman could easily argue that those landlords will take the extra money they make, and spend it on fabulous vacations, therefore employing all sorts of travel industry people. Doesn’t change the fact that you’re living on the street.
And one other thing free traders always bring up is the canard of “retraining.” I’ve been listening to that stuff since NAFTA was first proposed: there’s no problem, the workers will just be retrained! Well, I don’t know how many former factory workers were retrained for information age jobs like working in call centers (though the number of workers certified for retraining programs by the Labor Dept. is apparently a fraction of the number of manufacturing jobs which have gone overseas), but even if that really did happen, the joke’s kind of on those retrained workers, now that the call centers and other information processing jobs are being outsourced as well.
Sure, it may all work out in the long run. But as John Maynard Keynes once noted (and I’m lifting this from somewhere, read it recently but don’t remember where), in the long run we are all dead.
But what the hell do I know? I’m just a simple uneducated cartoonist, not a big shot New York Times columnist who gets to travel the world and hear fabulous stories of accountants who spend their time on the beach sipping Mai-Tais, thanks to the wonders of globalization.
Update: sauce for the goose…
(edited, typos, blah)