Monday, February 02, 2004
A post from ZDNet
I liked how this came out, as it puts into words some of the reasons why I think it's a good idea to remain open to competition with foreign countries.
Yes, India does provide a bunch of tax incentives to set up facilities in India. It shouldn't surprise anyone, as they are a DEVELOPING nation. That means they are much poorer than the developed world, and thus, they have a huge interest in bridging the gap as soon as they possibly can.
America does some of the same kinds of things. States compete on tax cuts for foreign car companies, resulting in these companies often paying ZERO in taxes for MANY years (India's tax breaks last 5 years). This is part of competition. American States that are POORER attract companies from states that are RICHER by providing tax incentives for them to do so. The same applies at the nation-state level.
Why is this wrong? What is unethical about a poor nation deciding "hey, we want to make our people better off and LESS poor, so we'll cut our taxes and give foreign companies an incentive to invest in our economy?" Taxes were lower in America in the 1800s, too. America had a VERY low tax regime for most of its early history (compared to Europe), making it a haven for investment (though not near the levels of foreign nations, but then again, technology has advanced and investment flows easier).
Tax competition is just as much competition as competition between companies. Countries compete on economic policy, and the one that leads to the most growth wins.
That's right, if they work for a US IT company they pay nothing in income taxes.
Well, even if they did, they wouldn't be paying income tax to America's government. So, either way, that money is money not collected by the Indian government, who is trying to engage in competition with far richer, more successful and more capitalized America as a place for business.
Yes, that helps to make Indian workers even cheaper. Yet, we have plenty of advantages (see next section). India has its tax policy, and educated workers who are well-suited for the kind of development projects which work from a distance (the kind being outsourced, which as I said, won't likely include custom software development).
For all those people with small companies, imagine what you could do if the burden of all income taxes were removed from your shoulders! Heck, we might even be able to actually "compete" on a level playing field.
Software is an english language displine (Indians know english, but do they know it as well as an American?), and most of the money oriented around Software is American. Most of the biggest VC firms in the world are based in America. America is the biggest economy in the world, putting every american entrepreneur within striking distance of the richest consumers in the world (not to mention they have a very intimate knowledge of that market due to the fact they grew up there). More Americans get university degrees than in any other country in the world. Americans, again, are the richest people in the world, giving them more money to start companies in the first place.
America has STACKS of advantages. Developing nations can compete on cost. We CAN compete, and have done it numerous times before.
There is also another little thing IBM doesn't want anyone to know about and that's the health risk they put their employees through. IBM exposed pregnant workers to extremely dangerous chemicals for years, even AFTER being warned by the chemical manufactures of the dangers. In the US, they are getting their rear ends sued and will eventually have to pay up. However if they move those operations to another country, the problems some how seen to simply disappear.
Could you provide a link to this? I've only found cancer cases related to work IBM does in the United States (all the plaintiffs are American, as show here and here). Are you saying that IBM is not a safe company IN GENERAL, or that they abuse foreign workers in particular?
Either way, It is a FACT that some developing nations have lower environmental standards than Western nations. In response, remember that America had lower environmental standards when it was developing in the 1800s. Of course, the cost of environmental degradation is higher with 6 billion people in the world, so remember that cleaner technology is available today at low enough cost that even developing nations can afford it (in other words, they won't pollute as much as we did at comparable levels in our development). Lastly, remember that the surest cure for lax environmental rules is to have a people wealthy enough to have time to consider whether the air they breath is poisoning them.
Like I've warned before, don't exaggerate the environmental problems in developing nations. South Korea is a "developing" nation, but South Korea is about as polluted, from a sulfur dioxide standpoint, as Belgium (Belgium is actually WORSE). Recently, though, they've done things like lower the length of the work week (from 44 to 40 hours) and push through more environmental legislation.
The problem of lax environmental standards is one of poverty, and wealth gives people the money and interest to raise their environmental standards to the level of western nations. In the meantime, the west can certainly afford more stringent standards, particularly since they are the ones producing the most pollutants of things like CO2, and as the belgium example shows, sulfur dioxide.
As a final point, though, the environment really isn't a problem for software development firms. Software isn't a polluting activity. Companies aren't going to outsource in order to avoid American environmental regulations.
The only question in my mind concerning all of this is when will the American public say ENOUGH and force our elected animals to stand up and do what they should both morally and financially?
It's those who declare that human beings have the right to offer their services, irrespective of the spot on the globe on which they were born, which have the moral high ground.
I liked how this came out, as it puts into words some of the reasons why I think it's a good idea to remain open to competition with foreign countries.
Yes, India does provide a bunch of tax incentives to set up facilities in India. It shouldn't surprise anyone, as they are a DEVELOPING nation. That means they are much poorer than the developed world, and thus, they have a huge interest in bridging the gap as soon as they possibly can.
America does some of the same kinds of things. States compete on tax cuts for foreign car companies, resulting in these companies often paying ZERO in taxes for MANY years (India's tax breaks last 5 years). This is part of competition. American States that are POORER attract companies from states that are RICHER by providing tax incentives for them to do so. The same applies at the nation-state level.
Why is this wrong? What is unethical about a poor nation deciding "hey, we want to make our people better off and LESS poor, so we'll cut our taxes and give foreign companies an incentive to invest in our economy?" Taxes were lower in America in the 1800s, too. America had a VERY low tax regime for most of its early history (compared to Europe), making it a haven for investment (though not near the levels of foreign nations, but then again, technology has advanced and investment flows easier).
Tax competition is just as much competition as competition between companies. Countries compete on economic policy, and the one that leads to the most growth wins.
That's right, if they work for a US IT company they pay nothing in income taxes.
Well, even if they did, they wouldn't be paying income tax to America's government. So, either way, that money is money not collected by the Indian government, who is trying to engage in competition with far richer, more successful and more capitalized America as a place for business.
Yes, that helps to make Indian workers even cheaper. Yet, we have plenty of advantages (see next section). India has its tax policy, and educated workers who are well-suited for the kind of development projects which work from a distance (the kind being outsourced, which as I said, won't likely include custom software development).
For all those people with small companies, imagine what you could do if the burden of all income taxes were removed from your shoulders! Heck, we might even be able to actually "compete" on a level playing field.
Software is an english language displine (Indians know english, but do they know it as well as an American?), and most of the money oriented around Software is American. Most of the biggest VC firms in the world are based in America. America is the biggest economy in the world, putting every american entrepreneur within striking distance of the richest consumers in the world (not to mention they have a very intimate knowledge of that market due to the fact they grew up there). More Americans get university degrees than in any other country in the world. Americans, again, are the richest people in the world, giving them more money to start companies in the first place.
America has STACKS of advantages. Developing nations can compete on cost. We CAN compete, and have done it numerous times before.
There is also another little thing IBM doesn't want anyone to know about and that's the health risk they put their employees through. IBM exposed pregnant workers to extremely dangerous chemicals for years, even AFTER being warned by the chemical manufactures of the dangers. In the US, they are getting their rear ends sued and will eventually have to pay up. However if they move those operations to another country, the problems some how seen to simply disappear.
Could you provide a link to this? I've only found cancer cases related to work IBM does in the United States (all the plaintiffs are American, as show here and here). Are you saying that IBM is not a safe company IN GENERAL, or that they abuse foreign workers in particular?
Either way, It is a FACT that some developing nations have lower environmental standards than Western nations. In response, remember that America had lower environmental standards when it was developing in the 1800s. Of course, the cost of environmental degradation is higher with 6 billion people in the world, so remember that cleaner technology is available today at low enough cost that even developing nations can afford it (in other words, they won't pollute as much as we did at comparable levels in our development). Lastly, remember that the surest cure for lax environmental rules is to have a people wealthy enough to have time to consider whether the air they breath is poisoning them.
Like I've warned before, don't exaggerate the environmental problems in developing nations. South Korea is a "developing" nation, but South Korea is about as polluted, from a sulfur dioxide standpoint, as Belgium (Belgium is actually WORSE). Recently, though, they've done things like lower the length of the work week (from 44 to 40 hours) and push through more environmental legislation.
The problem of lax environmental standards is one of poverty, and wealth gives people the money and interest to raise their environmental standards to the level of western nations. In the meantime, the west can certainly afford more stringent standards, particularly since they are the ones producing the most pollutants of things like CO2, and as the belgium example shows, sulfur dioxide.
As a final point, though, the environment really isn't a problem for software development firms. Software isn't a polluting activity. Companies aren't going to outsource in order to avoid American environmental regulations.
The only question in my mind concerning all of this is when will the American public say ENOUGH and force our elected animals to stand up and do what they should both morally and financially?
It's those who declare that human beings have the right to offer their services, irrespective of the spot on the globe on which they were born, which have the moral high ground.
