Wall Street new round of layoff

Tsotne said:
I once mentioned (as I remember) that one of the most famous economists in US argue whether outsourcing is beneficial or not for USA. Paul Samuelson says it is not, since huge amount of jobs have been lost and earnings doesn't cover the harm caused by unemployment. Jaggish Bagwatti wrote a rebuttal to Samuelson arguing that outsourcing gives the US net benefit, since people who become unemployed temporarily are retrained and reemployed some time later in a more productive industry - this kind of industries create a link between the financial jobs created and corporations moving out of the country in the sense that more manufacturers move offshore, more demand will be in the domestic country for financial positions. What is the baseline of exporting financial jobs? Demand for them has been slowing due to some other reasons caused by global financial collapse. If financial jobs disappear, what is then left from US? Hollywood and some big software companies? They are escaping tough regulations and expensive workers too...
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If Bagwatti wrote this, what a complete load of bullsh!t it is.
 
"since people who become unemployed temporarily are retrained and reemployed some time later in a more productive industry"
Not sure what the author meant by "retrained and reemployed". I believe in this ever connected world, outsourcing is a great way for corporations to reduce operating cost and hence compete with international companies. Here in US, we need to realize that the we need to compete and hence be either more productive or earn comparable wages.
Atleast in IT, many jobs can be done by high school graduates by little training. Neither Govt nor local companies are putting effort to train people. Its easy to outsource or hire on H1Bs than train locals. But again for unemployed section, what is better(easy) learning technologies or getting unemployment benefit checks??
 
In "since people who become unemployed temporarily are retrained and reemployed some time later in a more productive industry" he means temporary unemployment. People who loose jobs switch to higher productive sector and as the pattern emerges showing manufacturing companies moving out of the country, they strive to be trained for other jobs - not that particular manufacturing sector. The time shows the mass of people turning to more mental jobs rather than physical one by obtaining higher education, getting experienced in target sector, trying to get interns in finance for example and so on...doing everything to be "retrained" and split their ways from old industries they lost jobs in.
 

Globalization is biting back the western countries. Mental jobs are being outsourced fast too. Very soon not only chips but also their design decisions will be made in other countries. Not sure what people will do once mental jobs are gone :(
 
ThinkDifferent said:
Bernanke and Krugman the first two that come to my mind. Those two have been constantly wrong for the last three years.
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I'm not well aware of Krugman and cannot say anything about him but Bernanke strictly cannot be included in the list of academics I mentioned since he is connected to politics and whatever he says, people always have doubt behind his faithfulness. Bagwatti on the other hand, regardless of his position in UN, he's been involved in academia and has written the book while having no much concern with politics.
 
logixwriter said:
"since people who become unemployed temporarily are retrained and reemployed some time later in a more productive industry"
Not sure what the author meant by "retrained and reemployed".
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The argument is baloney and those pushing it -- if indeed anyone still is -- should be stood against a wall to face a firing squad. If 5m factory workers lose their jobs, trust me -- 5m new jobs paying the same kind of money will not be created in "services." Assuming such workers could be trained for such work en masse to begin with. I would recommend you take a look at Brown and Hesketh's 2004 book, The Mismanagement of Talent, which explodes such puerile and specious arguments. As they carefully explain, the new jobs that are being created in the US and UK are in low-pay and low-skill areas like food catering and old-age nursing.

I find academic economists in general to be a dishonest and clueless lot. It's a classic example of the emperor without any clothes. They cite one another in learned papers in academic journals and voila! -- a profession is created.
 
You misunderstood the point of retraining. It might be that this word doesn't fully describe what the clue is in this book. What is meant is switching to service from manufacturing institutionally maybe not the case with those 5m workers, but with next generation. View this in such way, after the change in generation service will be more demanding for workers than manufacturing sector since those corporations move offshore and the market will fix the supply in terms of education and experience because the next generation will take those paths. So US will benefit from switching from "manufacturing mentality" (very roughly saying) to service. As for why it benefits, is there a doubt that standard of living in US has increased after US began relying its GDP on service rather than manufacturing?!
 
Tsotne said:
You misunderstood the point of retraining. It might be that this word doesn't fully describe what the clue is in this book. What is meant is switching to service from manufacturing institutionally maybe not the case with those 5m workers, but with next generation. View this in such way, after the change in generation service will be more demanding for workers than manufacturing sector since those corporations move offshore and the market will fix the supply in terms of education and experience because the next generation will take those paths. So US will benefit from switching from "manufacturing mentality" (very roughly saying) to service. As for why it benefits, is there a doubt that standard of living in US has increased after US began relying its GDP on service rather than manufacturing?!
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Of course there's a "doubt." In the old days -- say the fifties and sixties -- a single paycheck was enough to pay the mortagage on a house, rear a family, pay for the children's college, and have a bit set aside for retirement. The fake "prosperity" of the last two decades has taken place against a decline of manufacturing (replaced by lower-pay service sector jobs) and has been financed by debt. It's the unaffordability of this exploding debt that has precipitated the current financial crisis and high debt burdens -- individually and collectively -- are serving as a brake on any kind of consumption-based "recovery." In alternative language, the "prosperity" has been bubble-based and entirely unsustainable.
 
"since people who become unemployed temporarily are retrained and reemployed some time later in a more productive industry"
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Just for case of clarity, let's take an example of my friend who lost his programmer position in a big wireless company provider back at 2004. He got his unemployment for 9 month, and different offers from unemployment office to retrain as a clerk or computer technician. Unfortunately both ways were unacceptable since did not provide even half salary he needed to pay a mortgage on his house and child care fees. His wife salary was enough only to pay for the food and bills. Who remember 2004 and was unemployed probably remember how difficult it was to find any programmer position that time. After his unemployment came to the end they had to sell the house and he worked as a car-service driver for almost 3 years until he passed two CISCO certificates (without any government help) and started working as Network Engineer in a small company.

Yes you have the opportunity to retrain and reemployed, but this is not government's merit but more individual one. I saw people who did not have a chance to start their career a second time and still working for 12$ per hour after getting decent salaries with their BS degrees and IT related jobs in the past. In addition, to be retrained and reemployed and to get what profession? My friend was an unemployed programmer and became network engineer, I was an unemployed programmer and was lucky to get financial engineering degree, but how many network or financial engineers do we need versus programmers?

To summarize above I completely disagree with the Jaggish Bagwatti. We do not speak about next generation now, but about a current one, who also want to get a decent lives and work in the profession they like. Outsourcing is good if you do not have enough specialists in your own country but it should work only as a temporary measure. Personally I think it is better to train your own specialists and give jobs to them versus give everything away because in this scenario sooner or later you will pay exactly the same wages as you paid back home since you won't have anybody to do it anyway.
 
bigbadwolf said:
The fake "prosperity" of the last two decades has taken place against a decline of manufacturing (replaced by lower-pay service sector jobs) and has been financed by debt. It's the unaffordability of this exploding debt that has precipitated the current financial crisis and high debt burdens -- individually and collectively -- are serving as a brake on any kind of consumption-based "recovery." In alternative language, the "prosperity" has been bubble-based and entirely unsustainable.
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This is totally correct point. I don't defend the correctness of idea of outsourcing and I'm in contrast but the author's views on this issue is different. I have read about many interesting debates about benefits of outsourcing and most of the pro-s seem to be fake as well. But the numbers which are agreed upon to be reflecting the economic well being of society speaks for Bagwatti and Greenspan. Whether we believe or not is out deal. I don't agree personally like you. There is a very related debate with Alan Greenspan in congress. Please see:


Ilya Weinstein said:
To summarize above I completely disagree with the Jaggish Bagwatti. We do not speak about next generation now, but about a current one, who also want to get a decent lives and work in the profession they like. Outsourcing is good if you do not have enough specialists in your own country but it should work only as a temporary measure. Personally I think it is better to train your own specialists and give jobs to them versus give everything away because in this scenario sooner or later you will pay exactly the same wages as you paid back home since you won't have anybody to do it anyway.
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Ilya, I understand and share your opinion but it is rather unrelated to the topic in the sense I've been pushing. We are talking about the institutional transition from manufacturing to service based economy which we are all seeing. Of course that programmer who lost the job and has been unemployed for 9 months is not expected to be "retrained" and reemployed in one-two days, but those 5-6m workers who lost the job give rise to the pattern that they should seek different path to follow and abandon manufacturing based skills for their own well-being. This pattern emergence has been described in the Bagwatti's book where he states his criteria why he considers outsourcing and generally globalization beneficial. Whether we agree or not is another topic. I personally don't agree and share the point you provided. Industrialized nations need to be relied on manufacturing.

Extract from the description of the book:
He sets out to prove that the antiglobalization movement has exaggerated claims that globalization has done little good for poor countries. For example, supported by statistics from the Asian Development Bank, he argues, astonishingly, that in China the "aggressively outward economic policies" that characterize globalization reduced poverty from 28% of the population in 1978 to 9% in 1998. Nevertheless, Bhagwati does not advocate total laissez-faire economics and recommends that continued globalization should be "managed," prescribing policies he believes will "reinforce and ensure" its benign effects, such as taxing skilled workers who leave poor countries for jobs abroad, using nongovernmental organizations as corporate watchdogs, slowing financial liberalization and loosening intellectual property safeguards.

In the video we hear the consequences which directly or not have been caused by such blind outsourcing policy when corporations are seeking low costs, less regulation, etc. and "escape" the domestic country regardless of consequence. But who cares...
 
BofA is technically insolvent, as I think is Citicorp. It's not just an American thing: the leading French banks are also insolvent.
 
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