Economics 101, By Way of Hollywood U. - InformationWeek
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8/16/2007
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Rob Preston
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Economics 101, By Way of Hollywood U.

What do global outsourcing, protectionist policy, and the movie Dave have in common?

What do global outsourcing, protectionist policy, and the movie Dave have in common?A couple of reader responses to a recent column I wrote on global outsourcing got me to thinking about Dave, the 1993 movie about a good-hearted everyman tapped to double for the U.S. president while he lay in a coma.

As the wide-eyed Dave, played by Kevin Kline, starts to feel more comfortable as the president-select, he gets bolder in his policy initiatives. In one scene, Dave proclaims on national TV: "l'm making it the responsibility of this government to find a job for every American who wants one," after which the media and electorate swoon.

What vision! Why hasn't the current administration thought of that one -- just go create jobs for everyone who wants one! And while we're at it, let's pass a constitutional amendment outlawing unemployment for good!

Some American business technology pros, perhaps with their own economics degrees from Hollywood U., argue for a similar tack to ensure full IT employment. In response to my recent column, which commented on Indian outsourcer Wipro's hiring plans for the U.S. in the context of a rapidly globalizing tech industry, one reader offered these policy prescriptions:

• "External companies (like Wipro) must hire only natural-born U.S. citizens. Otherwise, they are automatically taxed at 10 times the regular rate."

• "Internal companies will get a ratcheted tax for contributing to unemployment. The longer people are unemployed because of their practices, the greater the business will be taxed. When this tax increases yearly, there is less financial incentive to screw U.S. citizens to save a few bucks."

Of course, any offshore company subjected to such nonsense will take its business -- and hiring plans -- elsewhere. But even more thoughtful calls for protectionist policies ignore the fact that companies can, and are, moving their operations to not only lower-cost countries, but also to those countries with the most accommodating regulatory, tax, and labor environments. Wouldn't it be better for everyone if we made offshore tech companies feel more at ease in the U.S. rather than less so?

It's good business and PR for Wipro to hire Americans to serve its U.S. customers, just as it has been for Honda, Siemens, Fujitsu, and other foreign companies that no longer seem foreign at all.

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