Wednesday, September 15, 2010

rvaidya: Learning to deal with confused and declining empires

sep 15th, 2010

---------- Forwarded message ----------
From: Vaidyanathan R



Learning to deal with confused and declining empires

Published: Tuesday, Sep 14, 2010, 2:08 IST
By R Vaidyanathan | Place: Mumbai | Agency: DNA

The decision of the Ohio state government to restrict outsourcing for government contracts has created a furore among IT and other business groups. Barack Obama is also bashing the outsourcing industry — and Indian companies. But is all this new? In 2003, New Jersey went down the same populist road. Here's a report from that time: "The Scottsdale, Arizona-based eFunds, a firm that processes electronic fund transfers for some 200,000 New Jersey welfare recipients, will end its Mumbai operations shortly and open a customer service centre in the same state. The new call centre, to be opened in Camden City, New Jersey, will cost US$340,000 a month, about 20% more than the $270,000 it cost to run it out of India. The extra cost will be underwritten by the state government…". "This is a victory for New Jersey and its  taxpayers. We have 6% unemployment and it is important to show our people that the government is sensitive to their job search," said Shirley Turner, a state senator who moved a bill to limit outsourcing. That bill was passed in the senate by a 40-0 vote in December 2002, with an amendment removing the possibility of even legal aliens in the US being employed for  servicing the contract. It provided that only citizens of the US "shall be employed." Asked how she would justify the higher costs of functioning out of the US and criticism from free traders, she said the government had to respond to a "higher calling". "Higher calling" is a very interesting  expression to use in global trade and commerce. Imagine any Indian politician talking about a "higher calling"! With the unemployment rate touching 15% among young and poor groups in many states and elections looming in  November, one can expect many such "higher callings". Fortress USA is going to emulate Fortress Europe.  But first it needs acknowledging that outsourcing is a favor done by Indians to the US. Using low-cost Indian firms helps US companies stay afloat in a recession when it may take at least 40 quarters (10 years) for the US economy to recover. With a national debt of more than $13 trillion (it is going to top the GDP soon), America is becoming a banana republic. Not only that, the budget deficit is skyrocketing and is more than 10% of GDP — and rising. Most state governments are broke and they are producing spurious, Satyam/Enron-type accounting tricks to stay afloat. Many state
universities are in dire financial straits. There will be furious printing of more currency to make ends meet. The expected inflation is   going to rip society apart. One of the largest  selling items last year was handguns. 

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Raghu said...

The difference is this: the US takes what it wants and uses catch phrases to cover its' inability to provide cogent reasons.We, on the other hand,have failed to move on. If, indeed, we are doing them a favour, and we have intelligence, ability and foresight, why haven't our firms diversified or looked at more avenues in India? Why is our existence based on US realities?

exosing christianity's true agenda said...

I could not have written it better Raghu. You are absolutely correct. Don't worry. Once the Tea Party Express rides into town, this will be overturned.

That said, the US unfortunately is plagued in many ways. I have a deep affection for Americans and I absolutely do NOT want to see China as a superpower.

Here's the problem: you have so many TV/X-Box addicted kids who don't even know how to do simple math. In addition, the fastest growing segment of population is underachieving minority groups who will probably not be huge taxpayers. AND, you have a huge segment of the population that is aging and needs a large taxpayer base to keep it on life support. Not good...