http://www.indiadaily.com/editorial/15565.asp

America must learn that illegal immigration, H1B, and outsourcing are not ways to live and fight deflation forever
Special Correspondent
Feb. 11, 2007





As an Indian American I am puzzled with what is happening in the name of outsourcing, H1B visa and illegal immigration. No one can ever believe that a Government is allowing it and doing little to stop it. In case of H1B and outsourcing, the Government is actually promoting it. Our culture has to change. Spend as you wish, borrow irresponsibly and create huge debt, cannot be the way to live forever. The net result is huge deflation in the economy, which the Federal Reserve denies, ever existed.

Let us examine the root cause of illegal immigration, H1B, and outsourcing. These are means of exploiting the naïve aliens. This is also means of depriving American citizens of a decent livelihood. What is the root cause of all this? Who can we blame?

The problem started in 1980s. America ran into a huge budget deficit in the name of conservatism. The same trend is still continuing. The cold war wiped out the Soviet Union and converted America into a debtor nation. The debt and high legacy overhead caused deflation, that no President, no Fed Chairman ever agreed to accept as a fact. The evidence of deflation is in the lack of pricing power of the corporations.

Corporate profit is defined in layman terms as revenue less expenses. When you fail to increase revenue sequentially, you have no other choice but to reduce expenses. Paid employees called the executive board, or Management governs the corporate America. These are not the owners except a very few cases such as Microsoft. The paid servants are eager to maintain their job and fat bonuses. When they cannot increase revenue because of deflation and lack of pricing power, they cut expenses right and left without looking at the long-term consequences for the corporation.

The easiest place to cut cost is to tell the middle manager –‘you have to live with twenty head counts instead of thirty’. That’s an easy big reduction in expenses. But no one understood that the company has to let go ten experienced workers. A corporation’s biggest asset is its knowledgebase and that is encapsulated within the employees.

Eventually these corporate servants who controls the show found a gold mine in India and China. Cheap, low quality work force eager to work on anything for dollar. “Hurrah! We mad it”, they said. Wall Street all on a sudden started its triumph bull leg in 1996. The outsourcing and H1B cheap labor schemes flourished. At the same employers that need unskilled labor restored to hiring illegal immigrants. The Government requires I4 - Employment eligibility form all employees but does not care to check if compliance is made.

Some say its part of globalization. Let us say something bluntly. You cannot manufacture globalization unless India, China and Japan agree to bring their currencies to a fair value. Chinese Yuan is 50% undervalued, Japanese yen is 70% undervalued and Indian Rupees in 30% under valued. If you want to talk about globalization, first correct the unfair currency manipulation by China, India and Japan.

The best of India’s talent go to study abroad (mainly America) and settle there with professional jobs. India and China are not places for quality. It is true they are cheap workforce on the surface but those who have tried completing a serious project in India knows how difficult it is to deal with Indians. Please do not misunderstand. Indians are great people. But building software without the expert knowledge of language or the culture is not easy. There is a difference between software and hardware. A robot can perform hardware assembly. Remote controlled robots cannot perform software development. Every Indian believes they know English very well until they work in an American corporation and are pointed out the problems in their English. People in India use passive sentences very often while American English is very straightforward. Simple sentences are appreciated. Indian English is imported from UK. In India never ending compound sentences are common.

If quality were of any concern, the corporations would not have outsourced from India or China. But deflation made all the difference. When you lose your pricing power and your legacy costs start killing you, what else can you do? A hungry person with little money cannot look for quality in food he consumes.

The root cause of illegal immigration, H1B fiasco and outsourcing is deflation. The restaurant owners who hire illegal immigrants do so because he or she cannot all of a sudden increase the price of the food in the menu by 30%. If he could, and people had enough money to pay for their food, he would never hire any illegal immigrants. Similarly if corporations have the pricing power, they will not require H1B and outsourcing.

When you ask what is the root cause of illegal immigration, H1B, and outsourcing, do not blame the businesses only. The root cause lies in ruthless borrowing by the Government and setting up a culture of paying most of the paycheck to service the debt payment for the existing loans. The culture has to change. People must live within their means. Government must stop borrowing. Corporations must bring social responsibility back.