11 August 2010

"Chop shop" does not mean what Chuck Schumer wants you to think it means

The Economist: Free Exchange | S.D. | Chop shop?

Charles Schumer, senator from New York, thinks that companies like Indian software giant Infosys are “chop shops”, which he defines as companies that “outsource good, high-paying American technology jobs to lower wage, temporary immigrant workers from other countries”. [...]

I think Mr Schumer’s choice of rhetoric is very deliberate indeed: when you want to demonise someone, why not imply that what they do is somehow illegal or generally dodgy and suspect? But perhaps he could do with a small lesson in the way the commercial-services industry works. [...]

Mr Schumer also thundered that this measure “will not affect the high-tech companies such as Intel or Microsoft that play by the rules and recruit workers in America”. I’m not sure what “rules” he is referring to: he makes it sound as if companies who use legal methods to staff projects in the US, using a visa scheme that the American government has set up, are dodgy operators in some sort of grey market. I, for one, did not know that there were unwritten “rules” about the ratio of foreign workers to American ones that companies operating in the US had to follow. [...]
Why am I posting this?

(1) I always like stories that make Chuck Schumer look like the lying windbag he is.

(2) Whenever people like me support free trade and oppose protectionism we get criticized along the "easy for you to say, you don't work in a shoe factory" lines. Well software/IT/misc. professional services is something I do, and I'm still for more open trade, outsourcing, and the rest. The spice must flow.

(3) There are a lot of fine people in India and elsewhere overseas and they "deserve" these jobs exactly as much as anyone here. There's no rational basis for claiming that these positions "belong" to America.

PS Further evidence that you should not attempt to screw with only one half of the import-export system:
What’s also funny about all this chest-thumping service-sector protectionism is that it comes from the world’s leading exporter of commercial services, who you’d think would understand the need for open markets in an industry where it is the world’s biggest player. In 2008, the last year for which the WTO has comprehensive worldwide data, America’s exports of commercial services were around 5 times India’s (and about 28% of its total exports). And while latecomers like India have been playing catch-up, America's service-sector exports have not exactly done badly: they more than doubled in value between 1999 and 2008, when the US had a big surplus in its commercial-services trade.

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