The American Spectator

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Outsorcerers

2.20.04 @ 12:01AM

HOMING IN
Re: William Tucker's Outsourcing Is Out of Sight:

I walk down the trench like Kirk Douglas in Paths of Glory, looking at the faces of the outsourced, waiting to blow the whistle that will take us over the top to fight the likes of William Tucker...

Mr. Tucker speaks of the mythical beast "the American consumer." By using his logic, a "consumer" is not one who "consumes" but one who pays less for medical insurance because some poor schlep's job has gone to Bangalore. That's an excellent display of "compassionate conservatism."

The Corn Law analogy is a good one -- the free traders have been reading their history! However, it's only so good. Yes, the cost of goods do reduce when they are manufactured abroad, witness the massive decline in the cost of computer technology. However, if Mr. Tucker thinks the cost of his insurance is going to go down because someone in India is reading his X-rays he has another thing coming. When you go into business providing a service, you can bet someone else is providing that service. When all the costs are pared so far down that all the X-rays are being read in India there are usually no more costs to pare other than either the CEO takes a pay cut (excuse me while I pick myself up off the floor from laughing) or else you cut the price of your policies. And if that ever happens, I will happily eat my words.

Yes, public education would be improved. However, these are some positive pointers that might persuade Mr. Tucker that it's better to keep jobs in America. Firstly, unlike China, America is not a Communist country whose wealth is held in the hands of a favored favorite sons of the Party. Unlike India, America does not sit next door to a country whose national hero is the guy who built their bomb which he subsequently sold to anyone willing to show him a dime. And America, unlike Russia, is not a kleptocracy where the Head Man is gathering more power to himself in a deliberate assault on a fragile democracy.

If Mr. Tucker requires more reasons for keeping jobs at home. I'll be happy to oblige.
-- Martin Kelly
Glasgow
SCOTLAND

Since when is trade free?

What chance has the American worker to export American goods and services to mercantilist governments like those of China and Japan, among many others?

Before an American company is allowed (!) to sell to China, it must transfer proprietary technology to Chinese subsidiaries, produce in China, and agree (tacitly) to lobby the U.S. government to open the U.S. further to Chinese exports. Before the U.S. company can say "intellectual property," Chinese companies have appropriated any commercially valuable technology, thereby reducing the American company's competitive advantage and exposing it to competition back home in the domestic U.S. market.

Cui bono?

The U.S. must use access to the American market to open foreign markets to U.S.-produced goods and services.

Otherwise, "free trade" will remain as nonsensical as "peace process."
-- David Govett
www.japanorama.com

Like Mr. Tucker I believe that free exchange of products and services is a good thing. But there are practical matters I would like to see you address. That is the structural disparity in the out sourcing game. Mr. Tucker are you aware:

(1) That a student arriving from India, taking a part time job, is not required to pay any federal income tax ever? See IRS Circular E, pg 14. That is a 17% advantage to the Indian against a native-born student. Or more succinctly, the employer can pay the Indian 17% less and still be at parity with paying the American as far as a net wage to the employee. (Think about that as you buy your cup of coffee at the 7-Eleven.)

(2) That an H-1B holder has two classifications of income? Wage earned and Living Expenses Abroad. The H-1B holder pays the usual tax and FICA on the wage. But they pay no tax or FICA on the Living Expenses. So, the game is, structure the entire employment package with a low wage level and a high Living Expense level. If I had that opportunity I would jump at it, as would most Americans. The net effect is that H-1B here is paying minimal tax, and depending on income level is getting a 17-30% subsidy from the U.S. taxpayer.

Letter to the Editor

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