Friday, February 24, 2006

Corporate America's Education Myth

I have several friends with masters degrees in computer science (so they are plenty educated.) So, why have they been replaced by workers in Hyderabad, India? Good question. This article answers the question.

Published on Thursday, February 16, 2006, by Working For Change
Corporate America's Education Myth
by David Sirota

The New York Times has a piece today on the latest myth being peddled by our government and the corporate interests who run it. It goes something like this: job outsourcing and declining wages is happening in America because Americans are getting more stupid, and thus the only way for America to stop the bleeding is to produce more students educated in science and math. This is a brilliantly crafted storyline because it both reinforces Americans' concerns about its public school system and, more importantly, distracts from the corporate-written trade policies that are really at the heart of America's economic problems. Oh yeah, one other thing - the storyline is also a shameless lie.

The Times' piece describes a new report showing that many major corporations - who continue to pocket billions in American-taxpayer-funded corporate welfare - are going to be shifting research and development jobs overseas to places like China and India. The Times obediently reports without any question at all that "the study contended that lower labor costs in emerging markets are not the major reason for hiring researchers overseas." We shouldn't be surprised at that - corporate executives are smart enough to know how to lie. And they are lying.

If you take 2 minutes and actually think about what's going on, you will realize the painful intellectual acrobatics it takes to try to claim otherwise. Low wages - and the trade policy that forces Americans to compete with low wages - is at the heart of this, nothing else.

Think for a moment about this education argument. The United States has the best universities in the world. While our education system certainly needs upgrading, the concept that we are not producing enough good graduates for R&D jobs is just silly. And the idea that India and China have better schools producing better-trained workers is also ridiculous. These countries may be quickly developing - but last I checked, most of the world's most prominent technical colleges and universities are here in the good old U.S. of A.

So now think like a corporate executive trying to maximize profits. You have one set of R&D workers here in the United States, and another set of less-skilled, less-educated R&D workers in the developing world. You can do one of two things - afford to pay fewer workers in America. Or, you can go to India or China, spend a fraction of what you'd spend here on wages, and be able to hire an army of researchers. Granted, each researcher overseas might be less-skilled than each researcher in the United States - but the sheer numbers of researchers you can get over there makes the economics of outsourcing work.

That is what this is all about - the huge gap between wages and education. Workers in the developing world might be less skilled, but they are far less paid than they are less skilled. That means it still makes economic sense for companies to exploit their low wages - because those companies can pay such low wages, they can often afford to hire more workers, and even train these workers themselves - and STILL lower their overhead compared to staying in the United States.

This is where trade policy comes in - you know, the trade deals like NAFTA and China-PNTR which included all sorts of restrictive protections for corporate interests, and were stripped of all protections for workers' interests. One of the pillars of the American dream has long been the idea that if you work hard and get educated, you can move up the income ladder. But by now forcing our workers to compete with workers in oppressive countries like Communist China who clearly don't have those same privileges, the American dream is undermined. Free trade creates a wage-cutting, race-to-the-bottom competition between workers for jobs - a competition that American workers cannot win, and shouldn't even be forced to try and win.

So yes, we should spend more to educate our workers in this country - better education is always good for society. But no, if the only thing we do is produce more and better-trained science/math graduates, and continue to refuse to reevaluate free trade orthodoxy, then outsourcing is not going to stop. I realize that's hard for some people who consider themselves benevolent liberals to accept. One of the threads that seems to run through many of the Democratic Party's and the "center-left's" economic thinking is this elitist idea that if workers just got smarter they'd be doing better. You can detect it in the DLC/post-Clinton elite circles, and in the pundits like Tom Friedman who serve as role models in those circles.

My bet is these folks see themselves as educated, look at themselves as having done well, and have concluded that if only more workers just had the tenacity to get as educated as them, those workers would do better. These people won't say this outright, of course - but the attitude is obvious in the education-equals-better-jobs argument. Meanwhile, that argument also provides these folks with a defense mechanism, allowing them to justify and feel better about the corporate-written free trade policies they have joined with Republicans in ramming down our throats - a trade policy that is now undermining American workers.

Here's the truth these folks don't want to talk about. We can spend more money and train more science/math graduates, but unless we also train those graduates to accept working at slave wages, free trade makes sure those graduates have to enter into a competition for jobs with oppressed workers in the developing world. That's an unwinnable competition - and one we must finally stop by reevaluating and reforming our trade policy for the long-haul.

David Sirota is a writer and veteran political strategist. He just completed a book for Random House's Crown Publishers entitled "Hostile Takeover" - it will be released in the Spring of 2006. Sirota is currently the co-chairperson of the Progressive Legislative Action Network (PLAN). - a position he took after finishing a two-year stint at the Center for American Progress. Sirota is currently a Senior Editor at In These Times magazine, and a regular contributor to The Nation magazine. He is also a twice-weekly guest on the Al Franken Show.

© 2006 Working Assets


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