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‘One in six’ Silicon Valley tech jobs ripe for offshoring

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What do we do now? Cults such as the extropians see technology as the unstoppable escalator to future prosperity, but the rest of us are discovering that their utopian faith has caused graver problems than anyone expected.

A recent report identifies Silicon Valley as the most vulnerable region in what it describes as "the largest out-migration of non-manufacturing jobs in the history of the US economy".

Ashok Bardhan and Cynthia Kroll at the University of California Berkeley compiled the report last autumn (PDF from here) and provided a more detailed regional analysis for the San Francisco Chronicle this week.

They reach their findings by examining the relative fortunes of "at risk" industries, and conclude that California is particularly at risk because of greater-than-average employment in electronics manufacturing and business support services. In a two-year period between 2001 and 2003, a million jobs were lost in these sectors, 200,000 in California. Outsourcing isn't new, the researchers contend, but white collar services jobs can be sent offshore far quicker than blue collar manufacturing jobs. They offer no prediction on how many of the at-risk jobs will be sent offshore.

In a short space of time, the offshore trend has become a US election issue which looks like it'shere to stay. But even politicians don't grasp the extent of the disappointment. Weren't things always supposed to get better?

Globalization advocates such as the New York Times Thomas Friedman - the Blimpish fellow in a muddle over Register T-shirts this week - still promise they will. We only have to leave things alone, and not meddle. His economic analysis is nothing if not fatalistic, but he reserves his direst warnings against "protectionism".

This causes some mirthless ironic chuckles, particularly in one of the prime destinations for offshore jobs India. Protectionism isn't new, as any student of the Dutch and British trading empires knows, and its greatest advocates are the countries who most vociferously decry it. As Larry Elliott noted here, "if Africa exports raw cocoa to the European Union, it faces a tariff of just 0.5 per cent. If it turns the cocoa into chocolate, the tariff is 30.6 per cent."

Protectionism seems to work, but only one side is allowed to play it - while pretending not to. So it isn't hard to see why India and China don't wish to suffer the same fate, and have invested so heavily in science and education.

The other great irony is that thanks to the deification of information processing, tools which were supposed to replace human drudgery have instead caused us great anxiety as we seek to preserve a new kind of drudge work - processing information.

Information isn't some magical kind of new stuff - it usually refers to facts that machines were supposed to perform faster and cheaper than humans, who took more breaks and complained when beaten. "Anybody that competes with slaves becomes a slave," wrote Kurt Vonnegut in his satirical novel about a society of 'intelligent machines', Player Piano.

Information isn't, except in a few specific circumstances, a commodity, and it certainly isn't of itself knowledge. So some responsibility for the crisis in what has become known as the information industry must be laid at the people who build the machines and those of us who write about them. Who else are the people who buy the machines supposed to believe?

(The correct response isn't to smash up the looms, but to reassert some fundamental values. Compare the idolatory of Steve Jobs to the relative obscurity of the distinguished engineer Ivan Sutherland, who quite apart from his other achievements [like this], values the longevity of important stuff.)

Bardhan and Kroll's study is interesting because it doesn't examine loss by industry by industry, but by occupation: the stuff people do. The extent of offshoring crosses traditional boundaries. Similarly, because both Presidential candidates are funded by the same sponsors, all of whom share the faith in this celestial escalator, both are unlikely to estimate the breadth of the current angst over offshoring, which crosses traditional political boundaries too.

A humane view which identifies some of these values was recently expressed by Robert X Cringely who, with the help of his readers, looked at how economic fatalism has brought about the current crisis.

"We've managed over the last 40 years to give up control of our own money, placing it in the custody of those who do not share our values and who are ultimately held unaccountable. They impose their values on us and we - for no rational reason - accept this," he writes. A reader cites the example of California bus drivers who, through the vast and influential state pension fund CALPERS, invested in the company that the state outsourced bus contracts to, and which then dispensed with the bus drivers.

We've written here how short-sighted and destructive Wall Street logic is, and to many it indeed looks relentless. But that doesn't make it inevitable. ®

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