Trump's taxing problem: The end of 'affordable' iPhones It's tempting and all too easy to sneer at Silicon Valley for being out of touch with not just the world but the US as well. Huge salaries, a high concentration of a single industry and a self-referential culture oblivious to how its ideas could do anything but change mankind don't help either. The sight of tech's leaders …
As an IT worker in the US, I'm quite happy that President-Elect Trump will make it harder for a foreigner to compete with me for a job. We have tech people out of work and and when I put a job opening out, a few applicants are foreign workers asking I take on their Visa costs, but there are dozens of better qualified U. S. Citizens applying for the same job. The non-U.S. persons do have lower salary requirements, likely because they want to stay in the U.S., but Visa costs outweigh the savings.
I expect the firms bringing these people in from overseas are paying them far less than their U.S. counterparts to justify that fee.
"So surely you can just hire your native workers if you want to?"
Who is the YOU in that sentence? I know it's not in the 99% of the work force.
Call me a grinch, but I don't see anything changing in the futur.e. It's too late to pretend it's going to "turn around", capitalism is now corrupt. The "it" here is any sensible living for the future of the masses.
I was talking to the OP. He/she said "when I put a job opening out, a few applicants are foreign workers asking I take on their Visa costs, but there are dozens of better qualified U. S. Citizens applying for the same job".
All I was saying was hire the dozens of better qualified US citizens and make sure you can measure and prove the benefit to thhe business of your choice. You aren't a grinch at all unless you are in a position to hire staff, prefer off shore candidates, then moan about it.
Capitalism has always been corrupt, it's baked into the model at a fundamental level. Hell, it's even right there in the name - capitalism is all about the flow of capital, i.e. money.
There was a time when some constraints were placed on just how viciously pure that could be, but those disappeared some time early last century, I think.
GJC
Those downvotes without a ressponse are incredibly annoying. I have made quite straightforward factual posts that have attracted a load of downvotes with mostly people not telling me why. In the worst case I knew exactly why, but still. A downvote won't change my opinion.
Intelligent discussion of the issues has a very good chance and is much more fun.
"As an IT worker in the US, I'm quite happy that President-Elect Trump will make it harder for a foreigner to compete with me for a job."
OK, but have you noticed how most of the world's consumers don't live in the US? You think they will be 100% happy with your protectionism, and won't, you know, do the same?
I'm a tech worker in the UK and never worried about my job security from the EU open borders policy or from international outsourcing. The former is because in my experience tech workers from the EU can match UK workers in terms of talent but also demand the same level of salary, so there isn't a huge advantage to hiring them over the local talent and the meritocracy decides who gets hired. I'm perfectly fine with the best job going to the best candidate. As for development being outsourced to distant lands it's become increasingly apparent that the quality of code you get from these outsourcing development houses is terrible. You pay peanuts, you get monkeys.
If you're good at your job then globalisation shouldn't pose a threat to you.
My previous employer outsourced their entire accounts team to India. On the one hand they're now discovering that they (in India) really aren't very good at their jobs. On the other, part of the push to outsource was down to a lack of accountants here in the UK (well, a lack willing to be paid peanuts). At the end of the day it's a boring job that no one in their right minds would want to do.
That of course assumes your employer has a clue. I have been made redundant a few times to be replaced by outsourcing and find out later that the outsourcing has been pretty disastrous - a little bird told me the last job I was made redundant from they spend more flying out to India to find out what's going on than my salary was. But the MBAs and accountants seem to still be working there despite this.
>That of course assumes your employer has a clue.
^ This.^
Outsourcing seems to be more about CV stuffing for those managers in charge of the change. "Look what I can manage!" before the hidden costs kick in.
I get job offers occasionally. Many are for skilled positions, requiring several years' experience in the discipline required. The salary (allowing for inflation) is less than I started on fresh out of uni.
This has been true for a while.
So, the ability to outsource basic Engineering tasks has depressed the value of the work. So, surprise surprise, hiring is difficult from the local pool, as the salaries are generally poor. Fewer people bother acquiring the skills - there's no point, as the salaries are set at outsourcing rates.
That's the long-term cost of "globalisation"
the ability to outsource basic Engineering tasks has depressed the value of the work
I'm not saying you are wrong, but there is not enough information in what you say to draw that conclusion. There are other possible effects which could have caused it.
30 (or more) years ago, for instance, IT-based professions were very specialised, with much fewer jobs but even fewer candidates. Salaries would obviously be much higher than they are now. Look at any niche specialism and you will find much higher salaries.
However, computers then "took off". Salaries were inflated even more, but increased access to computers allowed more people to learn the skills. We now have a market flooded with candidates and, while there are also more jobs, the balance has changed and wages reflect that.
So there is one reason for lower salaries without blaming offshoring. Now, I'm not saying that offshoring hasn't had a huge effect, but it's not the only factor.
"If you're good at your job then globalisation shouldn't pose a threat to you."
Don't talk bollocks.
Say you live in country A, where the cost of living is $20k a year for basic food and rent. Your salary therefore MUST be greater than $20k a year if you are to afford to live in your country.
Now say in country B the cost of living is $4k a year. If someone can do your job as well as you can from there, then they can do it for $10k a year - half the price you need just to rent and eat - and be banking more than they are spending.
This is exactly what has happened to manufacturing jobs world-wide. Automobile manufacturers didn't leave the Rust Belt because the workers weren't good at their jobs. They left because people in Mexico could do the same job and yet only wanted 1/3rd as much money for it. It took them a number of years to get there... but they got there. The same thing applies to you, you're just running 40 years behind the auto workers in Detroit.
"Say you live in country A, where the cost of living is $20k a year for basic food and rent. Your salary therefore MUST be greater than $20k a year if you are to afford to live in your country."
This is true, but as far as most of Europe goes, the cost of living is going to be closer to 20k than to 4k so an European worker is going to expect a salary in the same range as a UK worker. Especially if they actually do come over here and have to face the same cost of living as UK residents face. The guys in India may be a hell of a lot cheaper than that, but the guys in India also turn out terrible terrible code that's not worth even the cheap price you pay for it. Trust me, I've made a few quid cleaning up the mess one of these outsourcers left behind.
"Automobile manufacturers didn't leave the Rust Belt because the workers weren't good at their jobs. They left because people in Mexico could do the same job and yet only wanted 1/3rd as much money for it"
Funny, because my understanding of the situation was that the Rust Belt car industry died because they produced shitty gas guzzling unreliable basically disposable cars that would oxidise in six months, and they subsequently got eaten alive by the Japanese when they started making high-quality economical durable products that would still start on a cold day, a situation that the oil crisis only made worse because who wants a gas guzzler when petrol suddenly costs three times as much? The American manufacturers made the wrong product for the time, the Japanese manufacturers made the right one and the free market made its choice.
As an IT worker in the US I have never had any trouble staying employed. I was working contract in telecom at the time the dotcom and telecom collapse occurred. I became unemployed just before Thanksgiving holiday (late November) and had a new job lined up to begin in January right after the Christmas holiday. That was the longest of several periods of unemployment If you don't keep your skills up and diversified you can only blame yourself for your inability to stay employed and well paid. I am able to consistently command 6 figure annual incomes.
"There is a "but", however. Donald Trump himself. Given his propensity for verbal pugilism during the presidential campaign, it's difficult to know what words were intended simply to score points and grab the sound bite and which was actual policy in the making"
Exactly right. We are all wondering if he really meant all those strange, populist things he said.
He is bound to a gigantic web of vested interest and it is a vested interest he cannot divest from.
He is not the first president to come from a family with millions in the bank. Previous "privileged" presidents like Kennedy or Bush senior, however, could divest their assets because they were tangible. They could sell them, put the proceeds into a hands-off trust and pick up the trust as they exit the White House.
Trump is different. Trump's business for more than 10 years has been LICENSING HIS NAME. There is no f**** way someone can divest from their name. The mere idea is preposterous. So his primary assets - various license deals which license his name and generate revenue will stay. Every single one of them is a target for a "What a nice deal you have here, wonder would you like something to happen to it". A lot of them are in geographical locations where "something happening to it" can be arranged for nominal sums paid to via an intermediary to the local cleptocrat-in-chief or one from his large retinue of cronies. There will be a queue of people including intermediaries working on behalf of the Valley queuing to invest money into "wonder would you like something to happen to it" schemes.
So any politics President Trump will do in the next 4 years will be phenomenally interesting indeed.
You say Trump is tied to his name as a set of valuable properties? And this will negatively affect him as president, with no way to divest himself? It's quite a lot to assume, but okay.
So, what about all that loose talk I heard, that the Trump business brand was becoming toxic? Weren't people running away from it like the plague?
Is that all over now? Good, glad we got that settled. ;-/
You say Trump is tied to his name as a set of valuable properties?
Not to properties any more. To businesses operating on a property - golf, casino, etc. They pay a fee to use his name. This is a licensing deal - it cannot be put into trust, cannot be liquidated, etc as the only thing licensed is the Trump trademark.
So, what about all that loose talk I heard, that the Trump business brand was becoming toxic?
Toxic to me - of course it is. I am not the target audience. I do not play golf and he has not changed my attitude to people playing golf in the slightest. The sub-0.001% of the population which is customers of the "resorts" which license his name does not find anything he does toxic.
He is one of them. Born with a silver spoon in his mouth, grown up with the same silver spoon, still with the silver spoon today and will stay with it tomorrow. Just like them.
If anything, his brand for his target audience has just shot up in most parts of the world. Even the short turmoil when his old buddy Alwaleed bin Talal dumped him and had a very public spat with him is over. If anything becoming a president has made it more valuable in places where sh*t like this is valued and which are primary licensees: Middle East, Asia, ex-USSR, etc. Watch for "Trump" signs being raised above "golf resorts" in Abu Dabi, Bahrain, etc in the immediate future. There will be a few.
Given one of the first things he said after his election was 'I want to unite the country' he was reversing a campaign promise after 30 seconds so dont expect any radical changes - he's got to get most of his shit through congress and they wont like it at all.
"We are all wondering if he really meant all those strange, populist things he said."
All the interviews of republicans I've seen since the election have them saying " That was just for the election", or words to that effect. I've no doubt Obamacare is in his sights, though.
I mean for many companies import duties won't actually matter. Large International corporations surely will find ways to dodge any import duty, as they can simply avoid crossing US borders.
There might be another point. Large companies might move out of the US and set their headquarters somewhere else. Some highly qualified employees might move them, while others might simply quit... bringing a lot more decently qualified people on the "market". They might perhaps found their own company, or work at another company raising the average of skill there.
In any case, there is not much telling what Trump will actually do.
>There might be another point. Large companies might move out of the US and set their headquarters somewhere else. Some highly qualified employees might move them,
Isn't that what is already happening? The US companies have gone multinational so they don't pay tax and they bring in H1B-visa workers, which is similar to moving those jobs abroad. The companies are "American" in terms of control, but not really in terms of tax and, to an extent, jobs. If you've got nothing left to lose, you might vote for Trump... oh look! If the government has nothing left to lose in terms of tax, it might start putting up barriers to increase the costs to multinationals and encourage local-based corporations which actually contribute to the local economy... oh look!
Perhaps what is happening is that people are looking at the iphone 7 and Galaxy 7 and think - meh! I don't really need that. Perhaps they look at their laptop and think, "the new ones don't do anything more for me than the old one, but I do really need a job." Perhaps the prospect of cheap IT just doesn't hold much attraction any more. Perhaps they see Dell hiking prices to pay for the EMC acquisition and think, "I see no reason to help Dell pay off his debt." Perhaps they look at the Apple price hikes (yes it isn't a Brexit phenomenon) and think, "Yes it is a better screen and faster CPU, but that doesn't improve my life enough for me to pay what Apple is asking." Apple has lost sight of something they have always known - you have to sell the benefits, not the tech. The tech-industry's problem is that innovation stalled a few years ago. Consolidation, the cloud and now price hikes are an effort to hide the fact that their products are not providing that much additional benefit to customers.
Razer's Core is a product which should have been in the development labs of all laptop makers - its something I've wanted for years and I can't imagine that no-one at HP, IBM, Lenovo, Sony, Acer, Asus, Apple, or Dell thought of it before. The companies have been so good at picking off consumer surplus that they have forgotten that everyone has to win for the transaction to take place.
But back to the tech industry issues. The lack of trade barriers is great while there is a competitive market place. However, we mostly have a (US-controlled) hegemony. In this scenario, higher tariffs, and more expensive imports should stimulate competition. Perhaps the Chinese and the Russians will focus on making their own better chips which will give Intel a kick, much as AMD's competition did a while back. Once we have more effective competition, we can start bringing the tariffs back down. Perhaps licensing tariffs will help put an end to the moving of profits via "intellectual property" licenses to tax havens, leading not only to more government income, but a fairer playing field for those companies too small to take advantage of complicated legal arrangements - again, more competition.
Trump certainly presents himself as an obnoxious idiot. That idiocy may in the short term lead to higher costs and a less free market, but in the long term a more competitive market with lower-cost products. That's sad for the existing producers, but rather good for everyone else.
It isn't a sure thing of course. Tariffs can hide all sorts of inefficiencies, but we seem to have arrived at monopoly or oligopoly markets with little competition. Competition is hard for the companies involved but good for the customers - and who is not an IT customer?
To get around that, firms will need to build infrastructure in the US and take on, presumably, less skilled and more expensive domestic employees.
The hiring of skilled IT people has been a problem since before I joined the IT industry in the 1970's, and so has been a factor in many of the advances that have either made IT easier for less skilled people or enables highly skilled people to be more effective.
Even that darling of 'american manufacturing' Boeing uses parts made all over the world on their Aircraft.
If President Donald Duck puts import tariffs on all those imports then the Airlines will switch to Airbus.
They use American made parts which is what he wants.
So the US aircraft maker can't compete with Airbus because they have to pay more for the same parts than their European Competition.
How is this a win for the USA?
Isn't Economics wonderful.
As an American living in the UK then I just cant win.
We had this Brexit thing and that gave happy happy joy joy feelings that all foreigners (lawl) would be kicked out and give me a chance at getting a lovely job when manufacturing comes back from China to the UK, perhaps filled by picking strawberries during free time due to lack of staff.
Now we have this Trump thing, and that removes my happy happy joy joy feelings and he wants to do the same thing. Alas this means that the Muricans are trying to steal jobs from Great Brexitan.
I guess all I can do now is go to Canada, where is that immigration portal.
Do you feel a noxious wave of Conservatism is about to claim you? Can't get away? Sorry, I can't feel your pain. Can't understand it, actually.
Why not just, give up? Let the tide of rational prudency wash over you. No more anger. No more frustration at the problems of the world. It won't be so bad, you'll see. Economies will pick up, jobs will get better, and in a decade everyone will be so full of pep that they'll be suckers for another Progressive as President. And by that time the economy will have enough new strength to sustain such abuse once more.
To be honest I'm not really feeling pain; just joining in with the general mood of my adopted country and playing my allotted part. I do have a suspicion Trump might well be a single term president but am prepared to be surprised. I just hope he can keep his tiny hands off all those tempting interns. Another Bill Clinton debacle is not what my once furious, now jubilant, neighbours are looking forward to. Silly buggers were outside last night shooting guns in the air. Hope buyers remorse doesn't set in too soon. We all deserve some happy time now and again.
>As a Brit living in the USA I feel your pain. I was glad I wasn't there now there's nowhere left to run when things get sticky here. Iceland looks pretty cool, in all senses of the word.
Iceland is currently in a wast economic bubble. It is going to collapse one day with all the problems that come with it. My advice is look elsewhere, at least that is what I'm doing and I'm a Icelander.
@Sampler
Australia, the US and the UK are not all that different. So have we not seen the same thing? I think the concerns of 'ordinary' citizens in these countries are largely the same but where we, in Australia, differ from the US and UK is that voting is compulsory in our elections.
I understand that many people in the UK and especially the US feel that not voting is an important right and I accept that. But on the other hand, I believe the compulsory voting necessarily engages - to at least some extent - the entire population. I suspect that this is what keeps Australian politics relatively centrist and makes elections mostly - though never exclusively, unfortunately - about policy issues.
Of course, we don't have a President so that's also a fundamental difference but what about the UK? The similarly between the US Presidential election and the Brexit vote is that, as voting wasn't compulsory, the appeal was much more emotional because they were not so much trying to sway people with their arguments but trying to fire up the existing feelings of the population.
In both the US presidential election and Brexit, one side was firing people up to change things and fix things and make it all the way their pre-existing emotions and biases tell them it should be - telling them that they've been marginalised and that their lay-person instincts were right all along. The other side was telling people to, essentially, stay the course - that the system works and we just need, essentially, some tweaks. Change this tax a little, amend that law a smidge.
In the US, you've also got a real patchwork of voting laws which certainly contribute to these results because, again, the election is not about swaying people but about turnout - about encouraging enough of your people to actually go and vote. There are barriers to voting and the goal is to get 'your' people impassioned enough to overcome those barriers and vote.
@Dan1980 - have an upvote for a considered well argued post. I am interested to know if your moderate government down under is more to do with you having proportional representation than compulsory voting (in favour of compulsory voting by the way) . . . off to Google . . . OK, so you have a system of preferential voting, not as good as my favoured system of proportional representation but way better then first past the post.
I would argue your moderate governmment comes as much from the absence of hard FPTP as it does from complusory voting.
"In both the US presidential election and Brexit, one side was firing people up to change things and fix things and make it all the way their pre-existing emotions and biases tell them it should be - telling them that they've been marginalised and that their lay-person instincts were right all along. The other side was telling people to, essentially, stay the course - that the system works and we just need, essentially, some tweaks. Change this tax a little, amend that law a smidge."
You have this exactly backwards. It's the libs in charge that are changing things, and it's the conservative people voting against them that want it stopped. But you go ahead and preach that the very recent radical liberalism imposed on mostly conservative people is the way it is, and always was. Go ahead and cement left-fringe attitudes as the center of rational thought. After all, didn't history begin when YOU achieved political consciousness?
Oh, and tell all the serfs that they need to "stay the course," and be sure not to fall behind on tax payments! Those windmills won't build themselves...
The Register 
Biting the hand that feeds IT
Copyright. All rights reserved © 1998–2024
