Outsourcing, Monopolisation, Stagnation
U.S. technology pundits, analysts and political commentators have understandably lamented the outsourcing issue, that is, the rapid transfer of technology jobs to countries such as China and India.
As Robert Cringley noted, the technology industry was the last U.S. industry left that had trade surpluses. If this industry does truly transfer it’s main centre of gravity out of the U.S., the country will be floundering with little in the way of underlying economy to fund and prop up it’s war economy.
U.S. technology pundits, analysts and political commentators have understandably lamented the outsourcing issue, that is, the rapid transfer of technology jobs to countries such as China and India.
As Robert Cringley noted, the technology industry was the last U.S. industry left that had trade surpluses. If this industry does truly transfer it’s main centre of gravity out of the U.S., the country will be floundering with little in the way of underlying economy to fund and prop up it’s war economy.
It is tempting to lay blame in classically Hansonesque xenophobic finger pointing. Some of those reasons blamed include “broken borders” (no: most of the undocumented workers were displacing poverty level wage workers, not computer programmers), lax immigration laws (partially: the L1 visa allowed tech job training in the U.S. while paying local wage levels but more pointedly, it was still difficult and expensive to then obtain a permanent residency for qualified H1B workers, so at the end of the dot-bomb period, most left the U.S, taking their expertise, investments and taxes with them), wage imbalances between first world and third (partially: we should see escalating tech wages in third world countries since the demand for technologists still places them in good wage bargaining positions).
However, what is not questioned is whether the entrenched monopolies in the U.S. technology industry have stagnated the industry from within. EMC this month notes there are now 115 million users of GPRS wireless mobile data devices. This is in the context of 1 billion GSM world wide cell phone users. Yet in the U.S., there are only 10 million users using the GSM system, whereas major wireless giants (Verizon, Sprint) use CDMA which is only used in a few other countries in the world, typically because of the patent stranglehold that U.S. corporations have on that technology.
The result is a replay of beta vs. VHS, a “lower quality” (yet functional) technology will win out through sheer weight of numbers. GSM being overwhelmingly (80%) the major portion of the market results in innovation occurring there (particularly in Japan) with CDMA technologies adopting such innovations later if at all (i.e. text messaging).
Likewise, the convicted yet unpunished monopolist Microsoft, has established control of at least 90% of the desktop market, most tellingly in the enterprise. The defence of its realm by insistence on pushing its proprietary technologies and actively working against standards based technologies leaves it ill-poised for the next convulsion in the technology industry as seen in past leaders such as IBM being completely unprepared for the rise of the PC.
While this will leave MS stock in free-fall as most workers move from PCs to data transmitting cellphones, served by Java/Linux driven servers, more notably, this also does little to retain those technologies in the hands of U.S. corporations. The uptake of Linux in China and India has been strong, as has recently highly publicised defections of European government organisations from MS to Linux.
If indeed we see further adoption of these standards based technologies in Europe and Asia/Pacific regions while the U.S. continues to cling to proprietary technologies, the value of U.S. technologists will continue to wane. Will we see as Cringley has written, a reverse brain-drain, drawing the U.S. best and brightest to Europe and Asia/Pacific while the remaining U.S. tech workers attempt to patch yet another Outlook mail virus?
This is the bleeding edge of globalisation, where everyone is left scratching their heads wondering who is actually benefiting, other than the tiny few owners and investors of multinational corporations. Countries like Australia who due to their racist immigration policies and genocidal histories are left able to subsist with relatively higher standards of living due to low populations, despite a dependence on imported technology. However, with its large population, a dramatic downturn in the U.S. economy and therefore the petrodollar, could have globally disastrous consequences.
OPEC has considered in the past transferring it’s petroleum transactional currency from greenbacks to Euros, retaining the status quo for now. As more countries join the EU, expanding the population base and more importantly, averaging out the political climate through co-dependency, the Euro becomes increasingly more attractive as the currency for oil transactions, the main prop under the U.S. dollar value.
As noted by other commentators, only one country had the audacity to change it’s currency from dollars to Euros, Iraq in 2000, sealing it’s political fate. The problem could be that if the technology industry moves offshore forcing depreciation of the dollar further against the Euro and the Yuan, this could tip OPECs hand. Since most countries hold large U.S. dollar reserves for oil transactions, this could cause a dumping of the dollar, furthering the U.S. economic slump.
It’s rare such economic effects do not have political and militaristic consequences.