Tuesday, September 27, 2016

First World job security in a Third World invasion

To reinforce the point I tried to make in my first post this morning ('This election is about the First versus the Third World'), here's a profound and sobering article by David Hunt.  He titles it 'The Omen of Lost Shirts'.  He examines the growing trend to bring in cheaper (and often less skilled) labor to replace expensive, highly-qualified First World workers, and what it means for the latter and the society in which they live.  Here's an excerpt.

I was struck some time ago by a picture of two Air France executives being set upon by protesters over layoffs.  The protestors assaulted them, ripped their shirts off and – possibly – intended even worse before they managed to escape and obtain police protection.  The specific details of the layoffs are only circumferentially related to my central point: executives of a company announcing layoffs were physically assaulted.

In a similar vein, consider one specific protest that happened during the height of the “Occupy” movement: protesters angry at Bank of America’s (BoA) foreclosures descended – not on the company’s facility as I would opine would be a legitimate location – but to the home of one executive.  Not content to trespass on the lawn, they stepped onto the porch itself, frightening the man’s son who was at home (bolding added):

But when hundreds of loud and angry strangers are descending on your family, your children, and your home, a more apt description of this assemblage would be "mob." Intimidation was the whole point of this exercise...

And lastly, consider two different levels of emotional display clearly evident in this video of a Carrier executive announcing the coming closing of both the Indianapolis production facility and the distribution center.  First, immediately relevant, is the very visible and barely-controlled fury at the announcement.

The second, the executive’s reptilian coldness in reading – and sticking to – a script (even if, inside, he felt uncomfortable about it), I’ll discuss a little later.

Just Short of Boiling

Unless you’re comatose you have heard that companies are replacing, wholesale it seems, American workers with H1-B visa holders. For example, Disney called their IT personnel into a meeting; many of these persons were top performers, having received excellent performance reviews with some winning top corporate honors.  They were informed that their jobs were being transferred to cheaper foreign workers, told that their severance pay relied on their staying to train those workers before they were shown the door… and then they were terminated.  Now they’re filing suit.

This is an epidemic. Abbott Pharmaceuticals just did it.  As have Harley Davidson and South California Edison.  Intel announced a 12,000-person layoff even as they lobby for more H1-B and L1 visas.  Taco Bell is shipping jobs overseas.  And it’s not just skilled labor: Tesla’s new factory seems to have used imported manual labor, saying they “expect their subcontractors to obey all laws...” – doubtless wink-wink.

A decade-old letter to the editor in the EE Times said “In my department, more than 20 Americans were ordered by corporate management to train our own replacements.” and added “I strongly suggest American students avoid the technology and engineering fields.”  And a similar training-your-foreign-replacement action at BoA arguably contributed to one employee committing suicide.  More broadly, being downsized in general increases the risk of suicide; one study reports losing one’s job increases it by 2.5 fold.

. . .

There’s even a book out about this wholesale replacement of American workers with cheaper immigrants:

And it’s not just cheaper labor; Shelly Palmer posted an antifreeze-level-cold LinkedIn post about how he replaced people with technology and commented (bolding added):

To the hundred or so people we’re about to get fired, I apologize. We make a living by analyzing problems for our clients and offering them solutions that create shareholder value. We’re just doing our job so you can lose yours. I’m pretty sure that one day (sooner rather than later) a machine-learning algorithm is going to replace most, or all, of my job too.

He apologizes. He apologizes.  As I asked in the comments, without immediate reply, how would his crocodile tears look had he learned Mr. Lee, whose job he eliminated, committed suicide from the loss of face and income?  I’m sure the fat wad of cash deposited in his bank account ameliorates his guilt; no doubt that his anticipated job loss will be after he’s gotten his lucre… he’s just following orders, er, doing his job.

Let Them Eat Pink Slips

So refer back to that Carrier executive’s announcement: it contained so little empathy for the fact that he’s announcing to these people the destruction of their lives, at least in the short term, as well as significant ripple effects in their community that it approached mathematical definition of zero.  It’s possible that he did, in fact, dislike the task which he had been assigned, but his hectoring of the workers to “be calm” and “be professional” and “keep up the output and quality” even as he says, in translation, “Your future has been utterly overturned” bespeaks a dearth of EQ – the hip-hop-happenin’ term these days.  Like Shelly Palmer, just above, I’d bet his bonus assuages any residual remorse he might have.

And while I can, on an intellectual basis, appreciate the economic arguments in favor of offshoring – like the one put forth by scholar Walter E. Williams, a man whose views I generally admire, here, – I will counter that the greatest global economic good does not necessarily equal the greatest American good.  Nor does it take into account other factors like national security concerns.

There's much more at the link.  Sobering, infuriating, worrying reading.

I'm not sure whether either Donald Trump or Hillary Clinton fully grasp the size of this problem;  but I suspect the former does so in more realistic terms than the latter.  Of course, Mr. Trump may well have used the laws of the land to do precisely the same thing in his businesses;  one doesn't know.  However, as a businessman, I think he knows more about the subject than any professional politician. Can he effectively address the problem?  Only time will tell . . . and the decision of the electorate in November.



Borepatch said...

Certainly Trump is the only one who's even talking about this. He even mentioned Disney in the debate.

What will he do? Who knows?

Old NFO said...

Gotta think Trump DOES know the ins and outs... How will he deal with it? We'll see.

Anonymous said...

It took me two tries to realize what you were saying vs. what you were quoting. Partly due to the preacher-like tone of the quoted article, and your background as a cleric.

When the choice is to remain competitive through technology and layoffs, or let your company (and thus 100% of your employees) fail, there is no solution that doesn't involve people losing their jobs and careers.

Globalization, H1B visas, unfettered "free trade", and so forth are evils that make things worse. Technology can make things better or worse, depending on application, but will always lead to shifting workers to different roles (which may mean unemployment for some.)

Don't you dare blame someone else for a suicide's decision to terminate his own life. That's on him.

Will said...

"When the choice is to remain competitive through technology and layoffs..."

This is where you go wrong. Companies do this almost entirely to "enhance" their bottom line, not to remain in business.

Tal Hartsfeld said...

This is why a lot of the products one purchases these days are of such shoddy quality. Poor design, inferior materials used, cut-rate labor employed.
And we're still paying the same prices for the same once-reputable brands at that.
"Bottom-line mentality" indeed! The only "bottom" should be that of a river or of a cliff where the severed and mutilated bodies of these overprivileged civilian aristocrats lay.

lpdbw said...

Anon above was me; clicked the button too quickly.

Will and Tal, what you're saying is that paying no attention to the bottom line is ok, you won't have to ever worry about competition eating your lunch and driving you out of business.

Remind me not to depend on any companies you run for long-term employment.

That sounds like Marxists or Democrats (BIRM) to me.

I can be against shoddy quality, bad value, poor "free trade agreements", and H1B visas without going full Marx.

zuk said...

Then change the law or change the motivation. Hand wringing does NOTHING.

The law obligates companies to do what is in the best interests of the owners- in most cases the shareholders, NOT the employees. Shareholders do not buy GM because they would like more benefits to accrue to the United Auto Workers, they do it so that when they SELL GM they will get more MONEY back than they put in.

When you use government to mandate otherwise you get France, where companies will not hire because they can not fire. (and the other socialist states)

I AGREE with the sentiment. It is not in our national interest to divest ourselves of manufacturing and food production. The destruction of the middle class is THE biggest issue in our current political and economic state and is the shaping factor of our society going forward.

Companies ARE being run by rapacious executives with no regard for either long term health of the company or their employees. Using borrowed money to buy back stock, so as to increase earnings per share, since YOUR bonuses and evaluation are measured by EPS is a sick and twisted strategy that ONLY benefits financial speculators and senior management. Ditto with temporarily reducing expenses to accomplish the same changes in the same measures.

But wailing and gnashing of teeth won't change it. Nor will decrees from on high. The only thing that will change it is changing the rules and changing the incentives.

Stop using EPS or other easily manipulable measures to reward management. (Very difficult by the way.) Instead reward decisions and techniques that continue innovation, and build strength for the future.

Stop the disincentives to conducting business in the USA-- the ever increasing regulations, the hostile environment to business,the NIMBYism, the political interference in the marketplace. (I will destroy the coal industry!- great, you did, now what? Solyndra again?)

Stop the appeals to forced diversity (what benefit do we get from 100k somalis living in the heartland of america?) Stop the flow of low waged, low skill immigration. Do we need 30 million low skill workers when we've shipped our manufacturing to their home countries?

Find a way for companies that do large amounts of business overseas to repatriate their money, so it can be used to build and support business HERE.

No easy fixes. The root causes are in what's allowed and what's encouraged. Every thing else flows from that. H1-Bs are a symptom. Offshoring is a symptom. All the financial shenanigans are symptoms.

We're measuring and rewarding the wrong things, so we get more of them.


Anonymous said...

When I worked for a Fortune 500 company, we in management were constantly told our job was to keep share prices high. I wasn't an MBA so I thought we could best do that by building quality products that customers wanted at a profitable price. As far as the BOD was concerned it was done buy lowering cost and head count.

Funny thing this caused a downward spiral in lower sales do to quality issues, loss of profit to price reductions, and loss of opportunities because we were unable to respond to changes in our field. The corporation bought and sold small companies in order to obtain market share and sales dollars, then laid off the people who had generated the innovation and sales. The company headquarters staff added all burden and time delays in decision making with endless meetings. The few new products are mostly repackaging of old things because there is no staff or budget to do much else.

During this time, the top 3 tiers received bonuses while the rest of the company had salary cuts. As ZUK pointed out the reward system was based on vapor numbers not a hard bottom line.

I'm so glad to be back in a small techno driven company. We service our customers, make a good product at a profit and are growing.


Rolf said...

There is a reason why there are essentially ZERO Disney products in my house. A few that we were given, nothing more. And it isn't just that most of them carry a profoundly anti-Western and anti-male message. It's their corporate culture, too. Which my kids have heard about. They'll never be buying Disney Princess garbage for their kids when the time comes, either.

I won't "Mess with the Mouse," but I'm going to support it, either.

Jonathan H said...

In case you are interested, the trial for the attackers started today and was somewhat of a circus as well. https://sg.finance.yahoo.com/news/raucous-scenes-air-france-shirt-132418900.html

VFM #7916 said...

Mr. Grant,

What are your thoughts on creating and maintaining job security, or anticipating income opportunities for first worlders when dealing with third world immigration?
In an ethical manner, not through government largesse, etc.

Peter said...

@VFM #7916: That's a difficult question to answer, because so much depends on the type of job, the nature of the work, and so on. I think job security is also going to be heavily influenced by the robotic revolution, and by the advent of advanced artificial intelligence systems. We've spoken about that in these pages several times before.

Basically, any job that's repetitive in nature, requiring few mental skills, is likely to be automated in the not too distant future. (Many have already been automated). This extends across all trades and fields of industry, business and commerce. The simplest example already visible is self-checkout tills at supermarkets. Before long even they will go away, as RFID tags attached to every product will automatically total your purchases as you wheel your cart past a sensor at the exit, and debit your credit card or bank account automatically. Goodbye to most of the shop assistant jobs out there . . .

Immigrant labor, prepared to work for a pittance and/or cost employers a lot less in terms of benefits, will almost certainly take over most of the lower-paid, repetitive jobs until such time as robots become even cheaper for the purpose. When they do, those jobs will go away, and the immigrant workers will be suffering as much as locals. The question then becomes; does one allow those immigrant workers access to the same (relatively lavish) social support networks available to citizens? If so, who's going to pay for it? If not, what are you going to do with them?

So, you see, job security has to do with many issues other than immigrant labor (although the latter's certainly a big one). I have no simple answers. I don't think anyone does. Nevertheless, I think it's a no-brainer to say that jobs within a country should be reserved for that country's citizens and/or legal immigrants. Those outside the country may deserve our aid from a simple humanitarian perspective, but that can be rendered to them in their own country. There's no reason to bring them to ours and deliver it here.

I hope that partly answers your question.

Will said...


you sure did read a lot out of something that wasn't even said, or inferred. Most everyone is pointing out that bad management, due to a number of internal and external factors, is mostly what drives offshoring and related idiocy.

Besides the games played to artificially drive up share prices, I would say that the number one drag on US companies is the management game of "office politics". I've been told that this is how managers add real value to the companies they work at. Nothing could be further from the truth. It is merely tribal warfare, writ small. A company ALWAYS suffers as a result of this sort of stupidity when it is not kept in check, which it rarely is. Decisions are made to affect other managers, not for the benefit of the business. Imbeciles is about the nicest label I can imagine for these worthless chair-warmers.

Y. said...

Dudes, even if Trump wins and makes sure these H1B shenanigans, and everything like that disappears, American IT workers would still be up shit creek. Mostly.

Russians, Poles, Czechs, Romanians, Bulgarians and so on - they have basically the same aptitude for IT work*. You can see that in for example computer games, where Witcher 3 was a very widely acclaimed game (http://www.metacritic.com/game/pc/the-witcher-3-wild-hunt), developed entirely in Poland. Engine included - and that's no mean feat.

Russia isn't that big of a problem, doing business there is harder than elsewhere, especially for foreigners.

Yet those developers in eastern Europe can live very well on a fraction of what a denizen of California requires. This is why multinationals have been expanding into these places.

And of course, almost the entire population of Eurasia, the most populous continent, is like that. Noted exceptions is the mid-east, where IQ is depressed due to rampant inbreeding, but that is something easily fixable (city-dwelling Iranians don't marry their cousins. That nation has seen the fastest growth in science ever observed since late 1980's).

Therefore, US knowledge workers and companies that employ them are going to have to compete with their counterparts in every adequately governed Eurasian country. Of course wages are going to go down. When it comes to legislation vs economic forces, look no further than Venezuela..

US of A invented globalization and made it the destiny of man.

*I believe this is true, because the genotypic IQ estimates for these countries and US are basically the same, and the cultural differences are much smaller than between US and India or China.

Anonymous said...

Don't for get to add McDonals Hambergers to list!!!

McDonalds Versus Americans