A High-Tech Worker's Guide to Globalization's Myths

Myth 1: Free trade is an economic wonder. Protectionism is a disaster.

No economy is completely free or completely closed. While mainstream U.S. economists tout the virtues of free trade, they barely mention all the restrictions we have on trade stemming from national security concerns (thousands of items restricted because of potential "dual-use"), moralistic reasons (e.g., online gambling), health and safety concerns (we can't even import medicine from Canada), or plain old import quotas (e.g., textile import quotas or "voluntary" import quotas on cars made in Japan).

In the past 50 years, nations of East and South Asia (Japan, South Korea, Taiwan, Malaysia, Thailand and, yes, China and India) have become the world's economic powerhouses. But they have never believed in or practiced "free trade." They practice something called "managed trade," what we call "protectionism." Whole industries are protected from foreign competition until they have enough competitive advantage to be strong exporters. Consumer imports are allowed only when protecting domestic producers isn't part of national long-term economic plans. If protectionism is that bad, these countries would be basket cases, not 21st century challengers to the current economic order.

Free trade is a wonderful thing for the "true capitalists" in a capitalist economy -- those who make money from money, rather than by producing something or serving someone. If you can live off your investments in corporations that buy cheap in low-wage countries and sell dear in good-wage societies, free trade must be great; the freer the better. But what's good for the owners of capital isn't necessarily good for those they employ. Our blue-collar workforce found that out over the past 25 years. The white-collar professionals are coming to grips with that reality now.

Myth 2: Globalization is inevitable. It's impossible to save your job.

Beware the classic half-truth! As electronic communications get ever better and cheaper, as transportation links become truly global, this planet has become a smaller place. This process started two centuries ago and will undoubtedly continue. In that sense, globalization is inevitable and should be welcomed.

Globalization makes the wholesale transfer of jobs from one continent to another possible, but it does not make it inevitable. Several industries and professional groups in the U.S. have been quite successful in protecting themselves from the downsides of globalization. Let's look at a couple of examples:

  1. Walk down the aisles of a Wal-Mart or Target, and you'll find that most items are made in China (or at least Asia) and are surprisingly inexpensive. Then walk into the pharmacy section of the same store, and something magical happens. Very few medicines have the "Made in China/Asia" label, and they aren't cheap. Hmm! What's different here? Are Asians incapable of manufacturing pharmaceuticals?

    Actually, India and China are huge manufacturers of bulk painkillers, antibiotics, cough syrup and much more. Most everyday medicines are available there at prices ranging from one-fourth to one-tenth the U.S. price. But the big pharmaceutical companies have poured tens of millions of dollars over many decades into political lobbying. Politicians have rewarded them with import regulations (often disguised as health and safety rules) that prevent any real price competition from lower-cost foreign manufacturers. We can debate whether such restrictions are good or bad for the average American. But they unquestionably protect the huge profits of the big pharmaceutical companies and the jobs of their employees. If global sourcing can be halted for as big and as basic an industry as pharmaceuticals, it can surely be done for other industries as well. All that's needed is political clout.
  2. Here's a smaller and very local example, but it illustrates the same point. I live in the Austin metropolitan area, which has seen stunning high-tech job losses due to both offshoring and the importation of work-visa (H-1B, L-1) holders from low-wage countries. Recently, the biggest local newspaper ran an article about how the Austin City Council wouldn't license more than two or three taxicab companies to operate in the city, thus protecting the high fare structure of the current companies and the livelihood of the operators. So, an Austin taxi driver is politically protected from lower-priced competition from even 100 miles away. But an engineer in Austin has to constantly battle low-wage competition coming from 10,000 miles away.

I could go on with many more examples, but the underlying point is very simple. Globalization-related job losses aren't inevitable. Given the political will at the federal, state and local government levels, most high-tech jobs can be protected. But this country's unorganized high-tech workforce has near-zero political leverage. Consequently, it gets near-zero political protection.

Myth 3: Better education is the answer to the outsourcing/offshoring stampede.

Another dangerous half-truth! Who would deny that a career-oriented education can lead to a better-paid and higher-status career? But more education isn't going to protect your career from other highly educated people willing to work for one-third to one-tenth the comparable U.S. wage.

When manufacturing jobs began to leave U.S. shores 25 years ago, an unholy nexus of corporate apologists, their political allies and university educators began to preach the same gospel:

  1. The low-skill, low-wage, low-status jobs are going to "undeveloped" economies. With our technological edge, we'll keep the higher-paid, high-tech jobs.
  2. Let's spend more money on education. The younger generation and the smarter, motivated older folks must be trained or retrained for high-tech jobs.
  3. Those without a higher education will continue to languish in sub-living-wage service jobs or become blue-collar dinosaurs slated for extinction in our highbrow, high-tech economy.

At the dawn of the new century, it's obvious that our economy is being hollowed out by the exit of not just manufacturing jobs, but design and research jobs as well. However, the "more education" mantra is still being chanted as loud as before. No surprise there. Corporate executives don't want to tell the middle/professional classes that their future is disappearing because of cost-cutting decisions. Their political servants don't want to admit that they're doing nothing to stop it. And college deans definitely don't want young people to ask why they must fall into tens of thousands of dollars in educational debt to qualify for jobs that might not be there when they graduate.

In my youth in the 1970s, the world was neatly divided into rich, developed nations and poor Third World ones. A science or engineering student in a Third World country (like myself) was five to 15 years behind the U.S. technologically. I used a slide rule instead of an electronic calculator, studied from outdated textbooks, couldn't keep abreast of the latest research because our library didn't get most research publications from the West and learned programming on woeful computer hardware.

Today, the division of nations isn't so neat. There are still rich/developed countries and poor/underdeveloped ones. But there is a significant new group of nations where the average citizen is poor, but the nation as a whole is technologically advanced and economically powerful. China, India, Brazil, Russia and Thailand are some examples. Technical education in these countries is both cheap (by U.S. standards) and advanced, thanks to the Internet and the easy movement of ethnic technocrats between the developed world and their countries of origin.

So what kind of education will protect a U.S. software engineer or biotechnologist from someone who can easily study the same things, but earns very much less? Why should a laid-off Java programmer in the U.S. spend 18 months and thousands of dollars getting an advanced degree in neural network programming, when he knows that the moment there is significant demand for neural network techies in the U.S., the top Indian or Chinese engineering institutes will rush to offer equivalent courses or degrees at a far lower tuition fee? Who wants to be "transformed" from an unemployed Java programmer into an unemployed neural network developer with additional student loans?

Classical economists talk of comparative advantage. Education used to give developed-country professionals the advantage that let them enjoy a big income differential with respect to the developing world. Today, that educational edge is almost gone, regardless of whether developed countries pour more money into technical education. How long before the income differential goes too?

Myth 4: High-tech workers have no need or use for labor organizing.

The high-tech workforce of the U.S. has made this myth an enduring part of its psyche. Most techies scorn the idea of even being remotely associated with a union. This myth is actually built upon several submyths:

4a Labor organizations are meant for the steelworkers, auto workers and airplane baggage handlers -- the brawny, not the brainy; the hourly wage toilers, not the upwardly mobile.

Well, teachers and pilots belong to labor organizations too, they just call them "associations," not "unions." Why not IT employee associations?

Or look outside the U.S. Technical professionals in Germany and France are well organized and proud of it. The same is true of much of the engineering profession in India.

4b I don't need a labor organization to negotiate the terms of my employment. I can do that myself. If I don't like my current job, I'll just find another one.

That philosophy works only when demand for your skills exceeds supply. When employers have the option of replacing you with an H-1/L-1 visa holder or shipping your job offshore, you have no leverage to negotiate as an individual. Job hopping isn't too easy either, unless you want to "hop out" of your current career and start anew in a "foreign-competition-proof " one.

4c I don't want to pay union/association dues. I can't see myself going on strike.

Effective high-tech labor organizations such as Alliance@IBM and WashTech have been able to operate even though membership (and therefore contributions) are voluntary and quite modest. But there is no free lunch. Passion and activism can get you only so far. Money is an essential ingredient of all organizations.

The strike issue is a red herring. Police and state-worker associations are extremely powerful, even though they are prohibited by law from going on strike in most states. When employees are united and negotiate collectively, they don't need to strike to get vital issues addressed.

4d If my company's workers get organized, my employer will just send all the jobs offshore.

This is a myth that employers encourage vigorously. It's a self-serving myth, in the same vein as, "It's better to resign than be fired" (even when you've done nothing to deserve getting fired). The fact is that corporations have more than enough financial incentives to replace their U.S. employees with lower-paid foreigners, either onshore or offshore, and many will try to do just that, despite having a nonorganized and completely nonresistant work force.

On the other hand, a well-organized and activist high-tech community can put real impediments and impose significant costs on corporations starting down the "offshore garden path." You ask how? Well, consider that high-tech operations can't be transferred offshore overnight. Corporations start by bringing some foreign workers here (on B-1/H-1/L-1 visas) and forcing U.S. employees to train their replacements. Then they transfer functions serially -- a department here, half a division there. This process can take months, if not years. The corporation is counting on its American workforce to be anxious but completely compliant during this period, which a nonorganized workforce usually is. Employees know and hate what's going on, but do exactly as instructed, for fear of losing that severance check, job reference or whatever.

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