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To: nextrade! who wrote (17975)	2/29/2004 8:17:02 PM
From: nextrade!	Read Replies (2) \| Respond to of 306849

How To Spell D-i-s-a-s-t-e-r February 22, 2004 cross-currents.net For several months, we have cited the "outsourcing" of jobs as one of the greatest threats to our economic well being to ever come down the pike. We are not assured by N. Gregory Mankiw, chairman of the Council of Economic Advisers, who recently insisted that the move of service jobs overseas was "probably a plus for the economy in the long run," since the process can only result in lower production costs for American corporations and lower prices for consumers. In the meantime, we continue in a jobless "recovery" with persistently low inflation! Corporate profits have already rebounded and stock prices with them. One wonders why more Americans need to lose their jobs. Yet in a recent Gwinnet Daily Post article, Bruce Meyerson reveals that more than 150 corporate executives met and "listened intently for tips on how to move jobs overseas effectively," paying $1400 a head for the privilege! The controversy over outsourcing spurred one speaker to bar the press from his presentation. The topic of the presentation was "Is offshore outsourcing unpatriotic?" The speaker, Jeffrey Cohen of consulting firm McKinsey and Co., was asked why his presentation was closed, Cohen impatiently answered, "I'd prefer not to comment.'' Well, that pretty much says a lot, doesn't it? As we showed in the February 3rd issue of Crosscurrents, IBM will save $168 million annually starting in 2006 by shifting several thousand high-paying programming jobs overseas. But with more than 1.7 billion shares outstanding, IBM's savings will mean at most, another piddling ten cents per share in earnings and maybe another $2-1/2 tacked onto the stock price. Can the importance of ten cents in earnings and another $2-1/2 in share price be sufficient to export these jobs as well as the thousands already exported? Of course it will - to management insiders who stand ready to sell their shares, the same trend we have noted for other outsourcers like Dell. In the January 20th issue of Crosscurrents, we discussed the deceitful practice by which American companies not only outsource American jobs but train their new employees to speak perfectly, down to the accents for the various U.S. regions they service, and even adopt fictitious American sounding names to assure the consumers on the other side of the line that they are dealing with just another American Joe or Jane. Is this duplicitous or are we just a little paranoid? How bad can it get? As Marla Dickerson's LA Times story showed, "Indiana Gov. Joseph Kernan ordered a state agency to cancel a $15.2-million contract with an outsourcing firm after citizens went ballistic at the notion of workers in India upgrading their state's computers to, of all things, process unemployment claims of laid-off Hoosiers." We feel constrained to repeat the lament we have made time and time again; that those who lost manufacturing jobs to cheaper labor overseas were retrained for the jobs we are now AGAIN exporting. If our computations are correct, the 1800-1900 jobs that will emigrate from IBM will cost Uncle Sam perhaps $46 million in income taxes, making it a bit more difficult to pay the Chinese interest on all the T-Bills they are purchasing with the proceeds of whatever products we're buying from them. It also means less state taxes, less sales taxes and whatever other goodies the once gainfully employed provided for our society. And while we're at it, unemployment benefits may just enter the picture as well. Are we missing something here? Despite the long-term feel good attitude of chairman Mankiw, the continued outsourcing movement could easily spell D-I-S-A-S-T-E-R in the shorter term. The drain on the country's resources may be marginal but the impact at the margin is often significant. Those who have lost out in this global shift cannot all be truck drivers, plumbers or fast food servers. We sense an impending urgency as U.S. corporations compete for earnings, earnings, and more earnings. As earnings rise, the well-tested theory is that stock prices rise, which makes it easier for insiders to sell, sell, sell more shares as they have been doing in droves. We're told that cheaper labor is affording us lower prices but at what cost?! Researchers at UC Berkeley have come up with a number; at least 14 million U.S. service jobs are vulnerable. If a worse case scenario unfolds, that would equate to a net loss of roughly 100,000 jobs each month over the next decade plus. Perhaps the country could afford the "corporate downsizing" of a decade ago, as workers could be retrained and the biggest bull market of all time was on the horizon, but now? Consumer debt levels are at historic highs and if we're going to export middle class jobs, what jobs will we replace them with? We can ill afford outsourcing in the current environment. American companies must bite the bullet and keep the jobs here at home.