Outside the Beltway

Outside the Beltway

American Ingenuity

James Joyner
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Thomas Friedman continues his recent string of columns about outsourcing.

Yamini Narayanan is an Indian-born 35-year-old with a Ph.D. in economics from the University of Oklahoma. After graduation, she worked for a U.S. computer company in Virginia and recently moved back to Bangalore with her husband to be closer to family. When I asked her how she felt about the outsourcing of jobs from her adopted country, America, to her native country, India, she responded with a revealing story:

“I just read about a guy in America who lost his job to India and he made a T-shirt that said, `I lost my job to India and all I got was this [lousy] T-shirt.’ And he made all kinds of money.” Only in America, she said, shaking her head, would someone figure out how to profit from his own unemployment. And that, she insisted, was the reason America need not fear outsourcing to India: America is so much more innovative a place than any other country.

There is a reason the “next big thing” almost always comes out of America, said Mrs. Narayanan. When she and her husband came back to live in Bangalore and enrolled their son in a good private school, he found himself totally stifled because of the emphasis on rote learning — rather than the independent thinking he was exposed to in his U.S. school. They had to take him out and look for another, more avant-garde private school. “America allows you to explore your mind,” she said. The whole concept of outsourcing was actually invented in America, added her husband, Sean, because no one else figured it out.

There’s something to this, I think. Having taught my share of international students who came to get university degrees in the U.S., two generalizations that I can make is that they were, on the main, both more knowledgable about the “facts” and less comfortable with actually having to think on their own than their American counterparts.

This is America’s real edge. Sure Bangalore has a lot of engineering schools, but the local government is rife with corruption; half the city has no sidewalks; there are constant electricity blackouts; the rivers are choked with pollution; the public school system is dysfunctional; beggars dart in and out of the traffic, which is in constant gridlock; and the whole infrastructure is falling apart. The big high-tech firms here reside on beautiful, walled campuses, because they maintain their own water, electricity and communications systems. They thrive by defying their political-economic environment, not by emerging from it.

What would Indian techies give for just one day of America’s rule of law; its dependable, regulated financial markets; its efficient, noncorrupt bureaucracy; and its best public schools and universities? They’d give a lot.

These institutions, which nurture innovation, are our real crown jewels that must be protected — not the 1 percent of jobs that might be outsourced. But it is precisely these crown jewels that can be squandered if we become lazy, or engage in mindless protectionism, or persist in radical tax cutting that can only erode the strength and quality of our government and educational institutions.

Aside from the nonsensical throw-in of tax cuts–which one would think would tend to lead to innovation rather than retard it–I agree.

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3 responses to “American Ingenuity”

  1. Captain Scarlet Avatar
    Captain Scarlet

    the rote learning angle may also work against outsourcing..especially in the technical help desk area. i’ve had pretty bad service from indians working for HP. i own two HP computers and when i call their help desk these indians sound like they are reading from a script and cannot break away from it. if you have a non-standard problem, their answer is always “hp does not support this”. bullshit. i’m tired of having to fight with them to get help.

  2. Hal Avatar
    Hal

    It depends on the focus of the tax cuts. Tax cuts that favor larger, more established companies are going to give a larger advantage to them over smaller upstarts, allowing them to quash valid competition because they get a better tax break and were able to use the savings to bribe large customers with deep discounts of their product. Then there’s the issue of where the money from the tax cut is likely to be spent – or saved, or invested, or whatever. If the money is just sucked into offshore investments, one can hardly make much of a case that the tax cuts are actually being re-invested back into the country.

    Then there’s the issue of the base of the innovation – the schools, libraries, museums, programs as well as infrastructure like roads and adequate power. Clearly these have a cost overhead that should be paid for. If you cut your taxes such that you can no longer pay for the things that provide the innovation, the system is starved for resources and suffers.

    Clearly Friedman was inferring that the Administration’s set of tax cuts are cutting deeply into infrastructure which he believes is the advantage we have – as a country – in the globalized competition of the high tech age.

    It’s not really a non sequitur on his part, although it was kind of thrown in there in an offhand way. But that’s why I consider Friedman largely a toady – he doesn’t really come out and talk about the real issues, just sugar coats some facts and waves his hands in an interesting fashion so as to get a paycheck.

    It’s quite a conundrum to have highly skilled workers being outsourced. Saying you’ll “reeducate” them is rather silly on the face of it – they lack the jobs, not the education. If we believe that innovation is the key to competition, investment into our innovation “infrastructure” seems like the only wise policy choice there is.

    Not shovelling money into Cayman bank accounts. . .

  3. James Joyner Avatar
    James Joyner

    But almost all of the infrastructure you’re speaking of takes place at the state and local level and is largely unaffected by federal marginal tax rates. And, of course, the reason people take money to offshore accounts in the Caymans–unless the transactions were themselves illegal, of course–is to dodge high tax rates. Surely, American CEOs would prefer to put money into American banks with the safety that ensures rather than putting them in a third world bank.

    Money that goes into offshore investments, presumably, would lead to larger profits for the American investors. Otherwise, why do it? Secondarily, it means those overseas workers become potential consumers of American goods, which would also boost our market.

    Being highly educated does not mean, necessarily, that one has skills competitive in the current economy. Indeed, ask any social science or humanities Ph.D. about that.

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