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03/03/06
Big Brother - #1
Filed under: Politics and Economics
Posted by: site admin @ 8:13 pm

The following news article describes something that happened to me, although this is about someone else.

http://www.shns.com/shns/g_index2.cfm?action=detail&pk=RAISEALARM-02-28-06

This invasion of privacy is not only insulting and inconvenient, it’s also incompetence of the highest order. Not only is this a complete violation of the 4th Amendment, its just plain stupid.

Twice in the last 2 months I’ve been punished for paying off my credit card by having my account flagged, thus freezing my account. Somehow, someone in Homeland Security thinks this will help stop terrorism. No, it won’t. What it will do is just drive terrorists underground. If I were a terrorist, I’d clue in pretty fast and stop using credit cards. If someone thinks they are actually going to catch terrorists this way, they are completely mistaken.

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Some Flaws in Outsourcing
Filed under: Politics and Economics
Posted by: site admin @ 8:05 pm

Outsourcing has been in the news a lot lately. Just today, President Bush was defending outsourcing while on a trip to Hyderbad, India. It’s become very popular with large corporations in the last decade. They perceive it as a way to cut costs for nearly anything. Like lemmings, one CEO after another is racing off the cliff with politicians egging them on. No one sees the flawed assumptions and long term consequences of the attitudes behind this.

First, a major flaw: The corporate sponsors of outsourcing look to countries like India and China as a nearly unending pool of low cost labor. They see what they perceive as a well trained labor force willing to work for 10-20% of the wages US workers will take. What they fail to realize is that the quality of that workforce doesn’t necessarily match that of the workforce from Western countries. The reason for this is simple: Emerging societies do not have a tradition of quality universal education. They can’t - they simply don’t have the infrastructure. While there are schools, not everyone can attend. What this means is that while these societies should have (statistically) the same percentage of talented people as any other society, not all of those with latent talent will have the opportunity to exercise that talent. Only those that can afford an education will be able to stretch themselves - and in societies that do not have a long tradition of meritocracy, that means that there won’t necessarily be a correlation between wealth and talent - and thus talent and education. The net result of this: It will take some time, probably as much as 2 generations, before the expressed abilities of the society match the latent abilities. In the meantime, those who think they are automatically hiring only the cream of the society will find out that many that they hire may come from well off families but aren’t necessarily the most talented themselves.

There are other flaws in the outsourcing philosophy as well. Another large one is the bizarre assumption that companies must look overseas to find talent. Instead of looking in places like Appalachia, Arkansas or Montana, companies think they must go to the other side of the earth to find the skills they need. They ignore the costs of communication and coordination that come from time and cultural differences, and presume that the costs of hiring anywhere in this country exceed the costs of everywhere in other countries.

And then these companies complain that they can’t find skilled workers here in the US. What they are really saying is that they don’t want to pay people here enough to give them the incentive to go into a particular line of work. While that is certainly their prerogative, what they fail to realize is that, long term, this lack of incentive also dries up the well for the future. We already see that in colleges and universities today. I used to teach as an adjunct at a local college. That job disappeared because enrollment dropped in the technical field that is my area of expertise.

What’s particularly shortsighted about this is that the government seems to have no clue about the long term consequences of this either. People aren’t stupid - particularly the people capable of doing sophisticated or technical work. If they are concerned that the investment of time and money in a particular set of skills won’t pay off, they are much less likely to make that investment. In times of rapid change, investing either time or money becomes riskier. When government policy encourages rapid change, it increases that risk even more. Eventually, it’s simply not worth the risk. And those who come to that conclusion may decide it’s not worth investing in anything. If enough people come to that conclusion, we can easily lose large bases of skill that we might never regain.

If you change the rules of the game too often, people stop playing. And all because a lot of people in power don’t understand the true meaning of outsourcing.

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