Monday, November 01, 2004

Democrats and Outsourcing

The Democrats have made outsourcing a main campaign issue this year and it seems to resonate with the voters. The vision of millions of jobs moving over seas scares hell of people.

Before I go too far with this I must state that I work for an outsourcer and have worked in the outsourced IT profession for about 10 years. I, for one, own my entire livelihood to outsourcing. I am not afraid of outsourcing but I am afraid of off-shoring. John Kerry has said that he will enact tax incentives to prevent American corporations from moving jobs over seas. I am not really against this idea in principle as long as it does not impact the over-all outsourcing industry. Millions of Americans work in outsourced jobs here at home. I make my living in this industry and I have vested interest in seeing it stay healthy and here.

The real question that I have on this issue is how do the Democrats reconcile this belief in protecting American jobs at home but then promote the importation of “cheaper” prescription drugs from over seas? It seems to me that importation of drugs would be diametrically opposed to the idea of preventing the outsourcing and off-shoring of American jobs. The US is one of the leading manufacturing centers for prescription medications. It is a large industry that employs thousands of people. These are the high paying jobs that John Kerry wants to keep here and yet he wants to put these people out of work by importing drugs from Canada.

It is hard to imagine a way in which importation of drugs would not inspire these companies to move their operations outside of the US. If they did not do this how could they continue to compete against the cheaper imports? We have seen this in other industries in the past so the idea that importation would damage American companies is not out of the question.

What is more important to the Democrats; cheap drugs or good jobs. They seem to be stuck between a rock and a hard place on this issue. If they support drug importation they are supporting job outsourcing and off-shoring. If they go against drug importation they risk angering special interest groups who are strongly in favor of the idea. How can John Kerry have it both ways? A cynic might think that this is just another example of John Kerry wanting to be on both sides of an issue.


Anonymous said...

All I can say is Amen. Another example of playing to politics for a vote.

darcey said...

dude - the drugs are made in the US. Kerry want to "re-import" them from Canada.

Drunken Samurai said...

Oh, so he wants the Canadian government's price controls and subsidies for US consumers. So basically, a country of 25 million is paying for discounted drugs for a country of 300 million. Seems fair don't you think? Canadian taxpayers get screwed because the US government cannot pass price controls in its own country. Either way this is a screwed up deal for everyone.

Anonymous said...

All in all, preying on people's situation and emotions is part of what a politician does. The good ones are exceptional at it and do it often.

Unfortunately for workers in America what was stated in the second debate is true:

Charlie Gibson: "Senator (Kerry), I want to extend for a minute, you talk about tax cuts to stop outsourcing. But when you have IBM documents that I saw recently where you can hire a programmer for $12 in China, $56 an hour here, tax credits won't cut it."

John Kerry: "You can't stop all outsourcing, Charlie. I've never promised that. I'm not going to, because that would be pandering. You can't."

As you have stated, "outsourcing" per se is not the issue, but rather "offshoring." Unfortunately, for accuracy's sake, "offshoring" is not as big of a buzz word to the worker class as "outsourcing." I cannot remember ever hearing anyone complain about being released due to "offshoring" however I have heard complaints about being "outsourced" regardless as to whether the job was filled by a guy in a company building across the street or across the world.

As for the drug importation, it is a bit of a tricky situation. Drug companies exist in America and sell their drugs at high mark-up historically to pay for R&D, administrative and promotional costs. With foreign markets, the prices are lower as there are other economic factors that have to be accounted for to remain viable products. So, it is possible that you can go from Seattle into Vancouver, buy your pharmaceutical drugs, then return to the Seattle and pay less for the entire trip than you would have had you purchase it in Seattle. So it appears, theoretically, that it is cheaper to buy drugs made in America that are sold to distributors in Canada to import them into America to be resold to the government.

Beyond the logistical issues and taxation on goods going into Canada and then into America, there lies a beast of an issue: ensuring that the drugs you are getting are actually made in America. How are they planning on verifying that the vicodin coming into the US is actually the same vicodin that went into Canada from the US and not some vicodin made in China that comes in a wrapper that says "Made in the USA?"

So, should you want to entwine the two issues, perhaps it can be surmised that the "offshoring" issue will actually be alleviated with retraining the population for a new trade in the soon to be expanded transportation sector or with US Customs.

Anonymous said...

The Heinz Corporation outsources to Canada and other contries.

Drunken Samurai said...

Thanks for the comments! I think the issue of drug re-importation is very important. If the US imports drug from Canada to take advantage of the cheaper prices why would the drug companies supply the higher demand in Canada. Wouldn't they just keep shipping the same amount or less and still sell to US consumers at the same or even higher prices? Then what? Does the uS government force drug companies to sell to Canadian distributors? Would this just create huge shortages in Canada?