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3/12/2004
01:02 PM
Bob Evans
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Business Technology: The Silos Of Protectionism: Time To Raise Them, Or Raze Them?

An outsourcing conference generates strong opinions on both ends of the spectrum on such issues as free trade, offshoring, outsourcing, and the proper role of government in such matters. And Bob Evans muses that a year from now, we'll be thinking about these issues in dramatically different ways.

Some anecdotes, quotes, and observations from a conference last week on outsourcing and offshoring:

"People all over the world are getting ground into dust, and they feel the United States is the leader in grinding them into dust. And this country is doing that in the name of globalization." --Ike Gittlen, Trade Issues Casual Staff of United Steelworkers of America, and president of United Steelworkers Local Union 1688

"We are a 16-year-old startup. In the past 10 years, we have paid more than $1,000,000,000 in payrolls to American workers; we have paid more than $100,000,000 in taxes to the United States government; and we have contributed more than $1,000,000 to local charities such as Children's Hospital and the United Way. How many other startup companies around here have done that?" --Sunil Wadhwani, co-founder and CEO of software and services firm iGate, which does a substantial amount of offshoring business

"What's going on with this offshoring of American jobs to India and China is nothing but terrorism--economic terrorism. The job of government is to protect citizens, and that means protect them from terrorism from without, such as foreign terrorists flying airplanes into buildings, or economic terrorism from within, which is exactly what some CEOs of companies engaged in outsourcing are doing." --Frank LaGrotta, a member of the Pennsylvania state Legislature

"There are people advocating that we erect protectionist barriers for certain industries because those industries are considered to be 'strategic.' But that means somebody has to decide which industries are strategic and which aren't. Who's going to make that decision? Who's going to say, 'The industry I work in isn't strategic'? But sooner or later, we need to face the reality that there are no industries that are more strategic than others." --Mark DeSantis, CEO of Formation 3

"If my parents didn't have Social Security around to take their money and invest it for them, and if they'd have had to make their own investment decisions, they would have lost it all." -- Frank LaGrotta

"Of all the outsourcing that goes on in the United States, only 1% goes offshore--the other 99% goes to other workers right here in the United States. And meanwhile, which country in the world is the largest exporter of goods and services? It's the United States--we export far more than any other country in the world. And because of that, the U.S. economy has 12 million jobs--12 million!--focused exclusively on selling products and services to other countries. And we need to think about that very carefully when we begin to wring our hands because some U.S. companies are deciding to send certain jobs offshore so that those companies can remain competitive." --Sunil Wadhwani

"No one in South America can get a raise--no one. I've been there." --Ike Gittlen

"It's the government's responsibility to those Americans whose jobs have been terrorized--taken away--to provide them with the income, benefits, education, training, etc., to compensate them for what they've lost." --Frank LaGrotta

"We have a choice: We can continue to look backward, which is the perspective of those who want to erect concrete silos for protectionism and isolationism, or we can look forward, which is the way to further growth and competitiveness and prosperity. And I say we must look forward." -- Sunil Wadhwani

OTHER VOICES
"Old admirers are aghast. It's as if whatever made Linda Blair's head spin around in 'The Exorcist' had invaded the body of Lou Dobbs and left him with the brain of Dennis Kucinich. ... Lou Dobbs isn't an economist; he's a television performer. As such what Lou is doing would satisfy economic rationalists from Adam Smith to Milton Friedman. 'Exporting America' has little to do with economics but everything to do with Lou Dobbs' economic self-interest."

-- Aniel Henninger column in The Wall Street Journal, March 5


These various perspectives all emerged from a panel discussion moderated by my colleague Brian Gillooly, editor-in-chief of our sister magazine Optimize, at the "2004 Outsourcing Summit" put on last week by the Pittsburgh Technology Council. (Anyone wishing to follow or participate in this and other discussions can do so at a site the Council has set up for that purpose at bpoforum.org, or by checking the Council's main site at pghtech.org.) Needless to say, some highly vigorous divergence of opinion emerged. And I had to wonder if the extreme polarity of this discussion--which was truly great theatre--reflects how most people truly feel about this issue and if it's a foreshadowing of how we'll be thinking a year or two or three from now. Will the screeching for trade wars and protectionism and isolation win out, in spite of history proving repeatedly that such actions always cause extraordinary harm to the very industries and related sectors that they seek to "protect," and also achieve nothing other than generating animosity within other countries that then feel the United States says one thing but practices another?

I'm guessing we will not go down that destructive path. I think that a year from now, we'll talk less about protectionism and more about global competitiveness; less about "Benedict Arnold CEOs" and more about innovation; less about "Exporting America" and more about the rising standards of living that we're seeing among the 2.5 billion people in China and India, as well as other countries around the world, which leads directly to the purchase of more American products and services. Examples? Those countries represent the fastest-growing markets for Boeing, Caterpillar, Motorola cell phones, and a host of other U.S.-based corporations.

I'm confident that a year from now, we'll understand more clearly that outsourcing rarely equates to offshoring, and that, in the larger scheme of things, both of those issues have become subsets of the real issue, which is simply this: competing and winning in a truly global economy.

Bob Evans
Editor In Chief
bevans@cmp.com


To discuss this column with other readers, please visit Bob Evans's forum on the Listening Post.

To find out more about Bob Evans, please visit his page on the Listening Post.

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