Ohio’s Outsourcing Ban – A Tip of Iceberg of US’ Protectionism


Article first published as Ohio’s Outsourcing Ban is the Tip of the US Protectionism Iceberg on Blogcritics.

protectionist tariffs H-1B Visa fee hike and the ban imposed on outsourcing by Ohio State are the latest of the US protectionist measures unveiling once again the protectionist policies of the US Government. The U.S. teaches the entire world to fallow the ‘Free Market Economy principles.’ It does so even at G7 meetings to the so called ‘most developed countries’ of the world. They started GATT negotiations asking the world nations ‘to accept or reject’ the agreement, as if there was no other alternative. They’ve ultimately established WTO, completed Uruguay Round and urging to complete ‘Doha Round’ trade negotiations for further Liberalization, Privatization and Globalization (LPG).

Not New

While GATT negotiations of Uruguay Round were on, the US televisions transmitted a news item that showed an Indian garment catching fire instantly to tell the viewers, not to buy Indian garments as there was imminent danger of getting caught by fire easily. This was done in the 2nd half of the 90s’ decade and the US garment producers were alleged to be behind transmitting the news item. Similarly, high tariff on Chinese tyres in the name of anti-dumping duties is one such case. This is nothing but a covert protectionism. The US stipulates strictures to the third world countries through IMF and World Bank loans, like reducing or abolishing subsidies to their agricultural sector, selling every service –Hospitals’ user charges, water charges by metering the consumption even by farmers and so on- to the people. The US aka its companies want people of all countries buying its agricultural products and inputs. Every country in the world should buy the America produced grains, wheat, burgers, pizzas and what not?

Larger Background

Actually, the matured capitalist economies like the US, the EU and Japan are increasingly facing crisis after crisis that are becoming more and more difficult to recover from. Japan’s painful and decade long recession from 90s into 21st Century and the present deflation & dead-slow growth, the dotcom bubble’s burst at the beginning of the millennium, the

ongoing world financial crisis, European Union’s debt crisis that is still threatening and renewed fears of double-dip recession for the US are only a few examples to mention. The necessity of coming out of these crises and the developed countries with a unanimous plan layout, gave birth to the LPG policies. They are beneficial to the developed countries but devastating to the developing and least & underdeveloped countries. It is actually the economic terrorism launched by the developed economies with the help of the World Bank and International Monitory Fund.

Popular resistance

Even after successfully completing the Uruguay Round, the developed countries could not achieve the desired objective of unobjectionable passage into the economies for naked loot and plunder of the 3rd world countries. The ruling classes of the third world signed the agreement with the looters but not the people. The peasants, workers, unorganized labor, middle-class employees and various sections of intellectuals and activist groups resisted, though not up to the mark, these policies. They changed the governments, agitated and protested against the policies regularly to defend their livelihoods. It is an established fact that the never ending series of crises of the capitalist imperialism is an innate characteristic of the capitalist system. One cannot move the hill with a single piece of hair, however long it may be.

Outsourcing is itself a Protectionist Measure

The fee hike for H-1B and L1 visas and the ban of outsourcing will definitely reduce the business opportunities for Indian IT companies. But it seems that the governments forgot how the outsourcing evolved. The Outsourcing of Business Practices (OBP) came into existence to evade taxes at home, to escape from stringent laws of environment at home, to avoid high level of salaries at home and to avail cheap labor at the destination countries of the outsourcing. Evading taxes, escaping laws and avoiding salaries at home; and availing cheap labor abroad are none but protectionist measures practiced by the companies. Outsourcing evolved for the benefit the companies who are outsourcing their businesses. Getting employment from outsourced business practices is an effect of the OBP but not the cause. The outsourcing companies are accumulating enormous profits by evading taxes, by avoiding stringent laws and by avoiding high salaries.

Elections Time

The US government works for the benefit of corporate houses but not for the people of America. Outsourcing of IT industry is mainly concentrated in China and India. The countries like New Zealand are outsourcing its chartered accountancy to the India. Analysts expect India’s $51 billion IT industry would adversely be impacted. Last week, US President Barak Obama too raised the outsourcing issue, stressing that he would end "tax breaks" for companies that "create jobs and profits in other countries". Indian IT companies like Infosys Technologies, Wipro, HCL Technologies and TCS get 60 per cent of their export revenue from the US. The apex body of Indian IT industry Nasscom also expressed its concerns over Ohio’s ban on outsourcing.

One should not forget that this is the election time. Keeping in view of November elections for the US Congress, politicians tend to woo the voters with various gimmicks. Why only Ohio State banned the outsourcing? It did it because the elections for Ohio governorship are also due in November. An analyst commented with Reuters that more than the IT companies, MNC’s like IBM and Accenture were more exposed to the fears of a ban. It was a political gimmick and moreover a temporary sentiment.

So, the people of America! Don’t get wooed by political gimmicks. You can demand your government not to outsource. And you should also demand not to launch aggressive wars against independent countries as part of Imperial design. Though I am an Indian, I am with people of every country who sweats to produce a thing that has a ‘use value’ (not exchange or market value – a thing possesses an exchange value, if and only if it has a ‘use value.’)

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