Myths v Realities in the Global Market

Myth: All jobs can be outsource to India

Reality: India is reaching its outsourcing limits

Myth: Manufacturing in America is decreasing

Reality: Manufacturing in US in growing

Myth: China and India have unlimited cheap labor

Reality: Qualified Indians are already getting paid equal to US. The Indian educational system cannot produce Ph. Ds. In Guangdong Province, the province outside of Hong Kong called the workshop of the world, is short one million workers. Up to 25% have been injured or killed in industrial accidents and many are going to Shanghai for higher wages.

Myth: China will dominate Innovation

Reality: China Cannot Innovate. No intellectual property laws. Innovation will be stolen. You can put 1,000 qualified, brilliant, Chinese scientists in a building and they will come up with some great inventions all of which will be stolen the next day. So the company that pays these scientists will never see a profit.

Myth: China Graduates 600,000 engineers a year

Reality: Many of these are car mechanics, most do not have the skills to work for multinationals. The actual number of employable engineers is less than the United Kingdom

Myth: China will produce millions of graduates to compete against Americans

Reality: China spends proportionally less on education than Uganda. India spends 85% of its education budget on the top 10,000 graduates. Most graduates don’t have appropriate skills, so 17% are unemployed.

Myth: China will keep growing and remain the center of low cost manufacturing

Reality: Many countries have cheaper labor and jobs are migrating from China

Myth: China will continue to take manufacturing jobs from the US

Reality: China is taking manufacturing jobs, but often from countries like Mexico. Manufacturing jobs are declining in the US for the reason that all manufacturing jobs decline. Machines get better at doing jobs that people used to do. Now other countries are taking jobs from China.

Myth: All jobs can be outsourced

Reality: Over 80% of jobs in US are in the service industries, many of which cannot be outsourced

Myth: Highly skilled jobs like radiologists can be outsourced

Reality: Yes, but these highly skilled jobs like radiologists can also be automated. So the jobs that were outsourced will be done by machines in the US, which will help highly skilled labor shortages and bring down costs.

Myth: Resource rich countries like Saudi Arabia, Russia, and Venezuela will get all our money

Reality: Resource rich countries always become poorer. In 1980, Saudi Arabia’s per capita income was 60% greater than America’s. Today, Saudi Arabia’s per capita income is less than one quarter of the US.

Myth: India benefits from Globalization.

Reality: Over the past three years the US trade with India has tripled.

Myth: China’s economy will keep growing

Reality: China had enormous problems from pollution, insolvent banks, to 85,000 large scale riots and a stock market that has fallen 20% in the last three weeks.