Neutron Bomb

IBM is shipping jobs overseas because

... wait for it ...

(1) the complete cost of employing an American, including taxes, regulations, compliance, etc., is much higher than employing an Indian national.

That's it.

That's the complete list.

Question: when we raise taxes by 40% [ http://business.theatlantic.com/2009/08/ya_know_plus_or_minu... ] to close the budget gap, and start taxing employers even more for universal health coverage, and do X and Y and Z over the next 10 years ... will this make American workers more or less affordable as compared with off-shore workers?

This is a fascinating view into how Bob thinks. This article, right up until the conclusion is excellent.

It lays out in great detail how the ever rising health care costs are hurting companies. It also in detail explains how the car companies were only focused on the short term and that ended up bankrupting them. But IBM takes the long view and that's why they are still in business.

And Bob concludes that the problem is short tern thinking? That took me by surprise since it's almost the exact opposite of the case he just made.

Bob thinks this is all because of focus on short term profits and we somehow need to stop that. But how?

Isn't it obvious that instead we should make the US worker more competitive?

For labor intensive industries that may only go so far when people in the developing world work for A LOT less. But not all industries are labor intensive. And the standard of living in China is rising fairly fast. A bit slower but still rising in India.

Isn't reducing the costs of health care and pensions the most obvious answer to how to make US workers more competitive?

Exactly how to do it for health care is a political topic, so lets not discuss that on HN. But even Bob mentioned severing the pension from the company.

This is either misleading or just confused. India funds roughly 25% of health care costs through the government, and has lower employment costs, yet you imply that if we were to incrementally approach their health-care system, the difference in employment costs would widen.

Edit: incidentally I agree with your point that IBM's issue is as simple as lower employment costs, but I'd suggest it's lower because Indians have a lower overall cost of living and lower standard of living, and the best students generally want to move to a country where they aren't climbing over mountains of trash and starving people all the time. I think we ought to let more of them do so, but in the meantime, of course companies are going to move to where the cheaper resources are.

Surely you cannot fail to have noticed how much Americans currently spend on health care, and how moving from private industry to state industry consistently increases the amount spent (at least in the US!)? Now, a case could be made that health care is an exception, largely because it's so heavily regulated already as to be effectively a poorly-run state industry with private profits. However, taking any other country's efficient or well-run government program and trying to build one like it in the US is probably doomed to failure. The US government has very bad incentives for "efficient" and "well-run".