
We need an offshoring tax - vaksel
http://services.silicon.com/offshoring/0,3800004877,39453991,00.htm
======
steveplace
Quote: _Let's start with the value proposition. Offshoring should never been
seen as only a cost savings exercise - the hidden costs associated with
quality control, oversight, lack of grass roots innovation, lower standards of
service based on service agreements, and exit costs need to be fully
considered._

 _If you don't consider all of these aspects, you have not properly understood
the true value proposition and may be surprised when you do not see any real
cost savings._

So he's saying that the companies that offshore will lose value relative to
the companies that don't? If that's the case, why is government intervention
necessary?

~~~
pchristensen
I think he's saying that the costs of offshoring aren't reflected in the
price, and that when you buy for the low price you also get liabilities you
didn't know were there.

Kind of like the externalities of oil and gas exploration, drilling,
pollution, habitat destruction, etc that happen when you buy gas but aren't
included in the price.

EDIT: I don't think this is true, just an attempt to explain the article.
Companies that buy bad outsourcing packages will lose to ones that manage
their business better (onshore or off)

~~~
derobert
Those costs are not at all kind of like externalities because an externality
is an impact on a not directly involved ("external") party. But these costs
are all on the organization who decided to outsource, so — unlike with
externalities — one shouldn't expect a market failure, and the article does
not provide evidence of one, or even claim one.

------
Tichy
"Offshoring countries provide huge subsidies to their homegrown services
companies to stimulate growth in the market, so it makes sense to provide
offsetting incentives for companies to look at local talent."

On the other hand, why not accept the free gift from the offshoring countries?
The subsidies they pay (if they really do) translate directly into savings of
your tax payers. On the other hand any "offshore tax" would just come directly
out of the pocket of your tax payers by way of having to pay higher prices for
the products of the off-shoring country. So there would be no net gain.

Just to name another way to look at it. I don't know what the best course is,
but that article seemed to be all claims and little reason.

~~~
friism
Right on.

Industrial subsidies in countries like China translate to a net transfer of
wealth from Chinese taxpayers to taxpayers in countries buying the subsidised
service.

From a standpoint of global economic utility, subsidies shouldn't be
encouraged however, because they lead to sub-optimal allocation of resources.
It seems to me that a good way to get rid of subsidies is to make the case to
the taxpayers footing the bill. If prompted, it seems unlikely that the
Chinese populace would want to pay for westerners getting artificially cheap
goods and services.

(Just using China as an example here)

~~~
Tichy
I am not sure that the subsidies really exist - labor simply is cheaper in
some countries. Perhaps the best way to react is to accept the free gifts and
transform them into innovation? That would be tax the own population that
benefits from the cheap imports (subsidized or not), and invest the collected
money into diversification and research? It seems unlikely to me that the
industries subject to offshoring will ever fully recover. Or, if the
industries seem likely to recover, maybe they should receive the tax money?
After all, aren't the subsidies an attempt to squeeze competition out of the
market, to come back with higher prices once the monopoly is established? So
the tax money should maybe be spent on helping the industries survive.

For example lots of money could be spend on fancy software projects, that have
no pressure to make money. Then, when India and other countries can not keep
the prices low any longer, there will still be software companies in the own
country. They can then turn back to producing serious stuff. (Just thinking
for fun here). On the other hand, maybe the no-worries exploration phase
yields some interesting results that bring in money later on.

Also, where to draw the line? Is it realistic to watch the whole world for
"fair labor prices"? It seems more realistic to try to make one's own country
"fair", you can't solve everybody else's problems, too.

------
9oliYQjP
Rather than an off shoring tax, I think we need to look at the flow of assets
covered under intellectual property across borders. I'm just putting this idea
out there; I'm not sure how I feel about it personally. But businesses want to
treat intellectual property like real property. However, unlike real property,
they want the benefits of being able to ship it over borders without
restriction (e.g., an off shoring company sending the latest code on a nightly
basis). Real property is subject to import tariffs, duties, rules, etc.

Countries wouldn't just accept truck loads of goods crossing into their
borders without restriction unless some sort of free trade deal was in place.
But this is essentially what is happening with intellectual property. Every
night, a huge amount of intellectual property gets transferred via the net
from one country to another (e.g., an off shoring company's nightly build).
Unless I'm mistaken (which I very well may be), it's hardly accounted for. I'm
not sure that we can continue to have it both ways with intellectual property.
It probably should either consistently be treated like property, or not.

~~~
ewanmcteagle
Free trade is the default. It has to deliberately made otherwise. Restricted
trade serves only special interests and since the world is gradually trying to
move towards undoing trade restrictions I don't see why this is a good
argument.

~~~
9oliYQjP
I'm not disagreeing with you, however free trade is most certainly not a
default as far as the law is concerned. As such, intellectual property is for
all practical purposes being treated entirely inconsistent with real property
in this manner.

EDIT: FYI here is the U.S. Harmonized Tariff Schedule in delimited format (2.0
MB)
[http://www.usitc.gov/publications/docs/tata/hts/bychapter/09...](http://www.usitc.gov/publications/docs/tata/hts/bychapter/0910_HTS_delimited.txt)
to give a sense of the sort of wire-ranging tariffs that exist on real goods
imported to the U.S.

~~~
9oliYQjP
I wouldn't normally whine, but why is this comment being downmodded? It's
largely a factual observation. In fact, the parent of the comment above is
arguably incorrect in that countries have recently been imposing protectionist
measures. Notably, the "Buy American" clause of the stimulus package has
resulted in terribly protectionist measures. Countries that do trade with the
U.S. have responded in kind with protectionist measures of their own. While
it's true that the world was moving toward freer trade, I don't think you can
say that this is the case today in the presence of so much evidence to the
contrary.

------
skushch
Sort of like a tariff? This will end well.

------
zacharyvoase
We don't need any more tax, thank you very much. It's called competition, just
deal with it. If a company feels it can get a better deal (in terms of either
quality or price), and they go offshore to get it, that's your problem, not
theirs.

Either improve your quality, lower your prices, or both.

------
shimon
It seems hard to define "offshoring" clearly enough to write a law for this
tax. Couldn't you serve the same goal, though, by encouraging companies to
hire locally, i.e. subsidizing job creation? There are lots of ways to do
this, such as a tax credit based on how many full-time employees a business
has. Many jurisdictions already have such a tax, so perhaps we need to ask:

1\. how much of a local-hire subsidy would we want, and

2\. how do we educate business managers about the cost advantages available
through such subsidies, so they have a better understanding of the
comprehensive cost of offshoring?

------
lew2048
Write the equation that defines "the national interest".

The economy is an extremely complex system. This guy wants to fix a component
of that very complex, highly-inter-related system with a verbal argument.
Hand-waving. No testing of the law, which he doesn't specify. No testing of
the implementation mechanism, a gov bureaucracy, which we know to be extremely
un-reliable, and to be so complex a subsystem as to have emergent properties
which often produce perverse effects.

This has as much chance of making the world a better place as a random change
to source code in the linux kernel.

------
maxharris
This is not hacker news.

~~~
vaksel
yeah because offshoring has nothing to do with programming

