The Waterways Journal
Waterways Journal Editorial
8 December 2008
Today the Bush administration, its soon-to-be replacement, and congressional representatives from both sides of the aisle are scrambling to straighten out an economy gone amok. Actually the entire world is struggling.
We may be guilty of repeating ourselves, but serious times call for serious measures, and government would do well to pay attention to what has been happening in the United States for years. It didn't just happen overnight!
In the midst of this present challenge, congressional delegates have begun acquiescing to proposed solutions that could cost taxpayers trillions of dollars. Many observers label these solutions "bailouts" and believe the free market should be allowed to control conditions and force companies to improve their performance or go under. Others agree that helping large, failing companies and banking institutions is bailing them out, but they say we must do so or we will suffer still-worsening conditions. Congress and the auto companies, however, must acknowledge that the "rich" pool from which they drew buyers for expensive cars is shrinking. Does the reason Wal-Mart is doing so well during these troubled times escape them? They bear much responsibility for it.
During recent years we have watched entire factories being shipped overseas. We watched as we lost our textile industry. We watched as America began outsourcing work to foreign lands. We have discovered that countries overseas can produce high quality goods cheaper than we can due to cheap labor and these countries often subsidize their factories (such as automobile plants). U.S. manufactures cannot compete well on such an uneven playing field.
Our manufactures have difficulty competing with imports, and our workers, now earning less, are having trouble maintaining their lifestyle. So we have created a scenario where the middle class in the U.S. is getting poorer and the workers overseas are living better than ever.
We now have companies outsourcing work, while others are bringing in guest workers, all to trim operating costs. That makes sense from a business standpoint, but it does not always serve us well. As conditions and wages have changed overseas, U.S. companies that moved there are finding it harder to survive. Some are returning to the U.S. Perhaps that's a good sign. In the field of law, however, outsourcing is a boon. Industry sources say that 90 percent of all work done by attorneys in the U.S. is called "commodity work" — legal research and drafting usually done by paralegals and legal assistants. The work can be done in India, for example, for $40 an hour or less compared to $120 an hour here. We've even seen figures as low as $10 an hour. This permits lawyers to reduce staff and save on rent. While hiring a lawyer for a legal staff here is a big decision, firms can hire and train up to 10 at one time in India. How extensive is legal outsourcing? It was predicted in 2006 that by 2015, India would increase its billings for outsourced work to $970 million. Exact numbers are evasive.
The New York Times reported on December 4, "The Indian National Association of Software and Service Companies estimates that the country's technology sector will create 50,000 fewer jobs in 2008 than last year, although it predicts the sector will still have added 200,000 workers by year's end." Taken en todo, the overall expenditure runs into many billions of dollars. Work is outsourced not only to India but to New Zealand, South Korea and other countries. Legal work is just one area of outsourcing. Even Hollywood producers are outsourcing their business.
Having produced this litany of what we see as negative impacts on the U.S., we wonder why government finds it difficult to understand that we can create jobs and provide lasting benefits at a price considerably less than they are considering for bailouts.
President-elect Obama has repeatedly emphasized the importance of rebuilding and improving our infrastructure as a way to put people to work and get done work that we should be doing anyway. We hope he includes water-resource projects on his agenda. Even Obama realizes that the planning has already been completed for many infrastructure projects and that they could be launched swiftly and bring immediate results.
Money spent on infrastructure would put spendable cash into the hands of construction companies, suppliers and workers immediately. The impact would be felt regionally wherever such projects were undertaken. No one sees it as a total solution to the financial chaos we now experience, but it would be a positive start at a fraction of the cost.