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icenine 12/5/2012 | 3:56:33 AM
re: W Does Cisco seven,

Who paid for your education? Who built the roads? Where did the infrastructure come from? How about your country's "overhead"? Who pays?

Where does your standard of living come from? The world is not flat.
OpticOm 12/5/2012 | 3:56:32 AM
re: W Does Cisco I would not allow my children to go into engineering for anything in the world.
Why should they invest blood, sweat, time, money and tears only to see the opportunities going overseas or occupied by H1Bs?
That would be crazy, so this is vicious, positive feed-back loop.
dwdm 12/5/2012 | 3:56:32 AM
re: W Does Cisco I agree with seven. This is the unfortunet reality. People used to say the quality will go down, but from my experience it is not true at all.

I also think the continuing decline of the engineering graduates in our (US) schools is not helping and will make things worse.
robman 12/5/2012 | 3:56:31 AM
re: W Does Cisco Really the US companies are the one that benefit from outsourcing. The arrangement should have been that the profits would be recycled to grow the company for newer and better products, instead what we see is the soaring salaries of CEOs and other executives for f**rting out loud.

The whole game is different in 21st century, previously CEOs used to be the visionaries and pioneers in the field, now it has come down to bean counters, street pleasers and self centered sychophants. Even though I have been hit some time back, I won't blame H1-B guys, they didn't come on their own. They were called.
I am simply pointing out to you economic reality. None of your points matter in the least. The whole point of globalization will be the leveling of wages. There is nothing that can be done about it. Your standard of living will go down. So, will the average person's in the US. If you think this is unique to engineering, then look at factory workers or farm workers. Then tell me why you buy any goods built in foreign lands or eat food picked by foreign workers.

OpticOm 12/5/2012 | 3:56:31 AM
re: W Does Cisco If you take your logic to the extreme, you end up with slave labor, isn't it?
That would certainly show a deep understanding of economics...
rjmcmahon 12/5/2012 | 3:56:31 AM
re: W Does Cisco I am sorry that you do not understand economics. You get paid for a job based on your productivity. If people are willing to do your job at the same level of productivity for less money, you will lose your job. This will happen 1 of 2 ways:

1 - The company will hire the lower paid worker.
2 - The company will go out of business because its products are too expensive.

Seven, this is an argument based on absolute advantage. Free trade advocates promote the theory of comparative advantage which suggest the company won't go out of business, despite lower productivity, if it specializes in an industry where it has a comparative advantage.


Because the idea of comparative advantage is not immediately intuitive, the best way of presenting it seems to be with an explicit numerical example as provided by David Ricardo. Indeed some variation of Ricardo's example lives on in most international trade textbooks today. (See page 40-5 in this text)

In his example Ricardo imagined two countries, England and Portugal producing two goods, cloth and wine, using labor as the sole input in production. He assumed that the productivity of labor (i.e., the quantity of output produced per worker) varied between industries and across countries. However, instead of assuming, as Adam Smith did, that England is more productive in producing one good and Portugal is more productive in the other; Ricardo assumed that Portugal was more productive in both goods. Based on Smith's intuition, then, it would seem that trade could not be advantageous, at least for England.

However, Ricardo demonstrated numerically that if England specialized in producing one of the two goods, and if Portugal produced the other, then total world output of both goods could rise! If an appropriate terms of trade (i.e., amount of one good traded for another) were then chosen, both countries could end up with more of both goods after specialization and free trade then they each had before trade. This means that England may nevertheless benefit from free trade even though it is assumed to be technologically inferior to Portugal in the production of everything.

As it turned out, specialization in any good would not suffice to guarantee the improvement in world output. Only one of the goods would work. Ricardo showed that the specialization good in each country should be that good in which the country had a comparative advantage in production. To identify a country's comparative advantage good requires a comparison of production costs across countries. However, one does not compare the monetary costs of production or even the resource costs (labor needed per unit of output) of production. Instead one must compare the opportunity costs of producing goods across countries.

A country is said to have a comparative advantage in the production of a good (say cloth) if it can produce cloth at a lower opportunity cost than another country. The opportunity cost of cloth production is defined as the amount of wine that must be given up in order to produce one more unit of cloth. Thus England would have the comparative advantage in cloth production relative to Portugal if it must give up less wine to produce another unit of cloth than the amount of wine that Portugal would have to give up to produce another unit of cloth.
curiousgeorge 12/5/2012 | 3:56:31 AM
re: W Does Cisco
1) Read Amartya Sen's "Development as Freedom". Democracy and capitalism are very synergestic. Slave labor can exist in a globalized world, of course, but only as a perversion. [ Amartya Sen is hardly an exec, VC or a Bushie. ]

2) Do you ever shop at Wal-mart or on-line (ie for low prices)? If so, *you* helped the depression of ASPs of all goods This focus on top line cost, when you think about the fact that margins are also under pressure all the time, is as much the cause of globalization as anything else. The consumer does drive the economy.

Since mosr of us chase low priced goods - we have colectively - and perhaps unwittingly - chosen globalization.

If we are all willing to undo this choice - by paying $100 per month for DSL, by never shopping at WalMart, Amazon & Dell or in fact never buying "Made in China" stuff we could reverse it in due time. Are you up for this?
chook0 12/5/2012 | 3:56:30 AM
re: W Does Cisco Out of curiosity, what would you see them go into? About the only skilled profession that is not capable of being outsourced in some way is lawyers, and they will go down with the ship anyway.

There are situations where you can win the war by retiring from the field of battle (at least temporarily), but I don't think this is one of them.


I would not allow my children to go into engineering for anything in the world.
Why should they invest blood, sweat, time, money and tears only to see the opportunities going overseas or occupied by H1Bs?
That would be crazy, so this is vicious, positive feed-back loop.
dwdm2 12/5/2012 | 3:56:30 AM
re: W Does Cisco I was told that because the jobs are going overseas, there has been significant reduction in H1Bs coming in in the post 9/11 time.

Personally, I think our economy would have been better off if more H1Bs were available compared to many other immigration related issues that the DOHS is dealing with.

Would be interesting to see a comparison on the effects on economy between H1Bs coming in vs. jobs going out of country.

paolo.franzoi 12/5/2012 | 3:56:30 AM
re: W Does Cisco

As your post was intelligent unlike many of the rest, read my other post. I simplified competitive labor advantage into productivity. The other way is to have a specialized skill. I agree with that wholeheartedly. My simplification was that your specialization would add to more productivity. Hope that helps.

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