Recently in Economy Category

The Washington Post (which has outsourced some of its' tech news to TechCrunch as of this week) reports that the days of law school grads landing the $150,000 jobs drafting contracts at megafirms may be in jeopardy due to outsourcing, just as tech folks saw their jobs move to India years ago.

GURGAON, India -- When Aashish Sharma graduated from law school two years ago, his father had visions of seeing him argue in an Indian court and eventually become an honorable judge.

Instead, Sharma, 25, now sits all day in front of a computer in a plush, air-conditioned suburban office doing litigation research and drafting legal contracts for U.S. companies and law firms. He is part of a booming, new outsourcing industry in India that employs thousands of English-speaking lawyers such as him to do legal work at a small fraction of the cost of hiring American lawyers.

Imagine that. The explosion of litigation costs and the massive volume of electronic information involved in today's court cases, has overwhelmed the market for affordable attorneys and paralegals, according to the Post. Instead, that electronic information can be shifted around the world and done overnight so when the $800/hour partner comes in the next morning, the task of analyzing, cataloging and researching is done for a pittance compared to what it would cost to pay experienced American paralegals to work overnight. 

"Ninety percent of a lawyer's work is legal research and drafting, and all this can now be offshored to India," said Russell Smith, who worked in a Manhattan law firm called SmithDehn before moving to India to set up an outsourcing company in 2006. "A large portion of our fees in the U.S. is because of office rent. It is often a big decision to hire one attorney in the U.S. In India, we can hire 10 at a time and train them all at once."

Smith's Indian company, SDD Global Solutions, handled much of the legal work for the film "Borat." Other clients include the Washington-based firm Appleton & Associates and U.S. movie studios and television networks.

"My people in India can do everything from here, except sign the opinion letter and appear in an American court," he said.

Smith's Indian office recently researched and drafted the motion papers for the dismissal of a libel case against the producers of HBO's "Da Ali G Show." Smith said that if it had not been for the cheaper option of outsourcing, the producers would have settled.

Imagine the consequences for the American legal system if every party had the resources to prepare for trial rather than weigh the costs of arguing their case successfully, and then the likelihood of recovering fees against the cost of a settlement.

In Japan, the average birthrate is 1.3 children per woman.  This is not enough to maintain their population.  Why is this important?  With fewer children to become workers in the future, Japan is looking at having a huge number of retirees and a huge void in their workforce.  So how, in a country that sees 40 percent of its population being over 65 in 2055, do you replenish the workforce without increasing baby output or brining in literally millions of immigrant workers?

 

Oh yeah, you know where we're going - Robots!

 

Takao Kobayashi, one of the researchers working on the "what do we do about our shrinking workforce" problem, talks about other, non-robotic means of combatting the problem, such as building more daycare centers so that more women can work as opposed to being stay-at-home moms and that some seniors are pushing retirement back until they're 65 (Pushing back to 65?  I totally live in the wrong country), but he doesn't see that as being enough to solve the problem.

 

So yes, they're looking to robots to fill the void, doing everything from bathing the elderly to monitoring their health.  From vaccuuming the carpet to watching their kids.  As cool as robots are, I don't know how I'd feel about having one watch my kid.  Maybe I'm just a dumb American, but I find something more than a little creepy about leaving my child with C-3PO.

 

And while it would be easy for me to say "Keep the robots out of here!" and throw to an Old Glory commercial, there's a legitimate reason for the U.S. not to embrace robotic workers - unemployment is up and the concensus is that America is in the middle of a recession.  Do we really need to be replacing human employees?

 

And when the metal ones come for you (and they will come for you), make sure your loved ones will be taken care of.

 

 

Details at Reuters.

While the economy at large is in dubious condition, the gaming industry (and super-retailer GameStop) is actually doing ok.  Better than ok, in fact.

 

From CNN

 

The company's financials tell some of the story: for all of last year, GameStop's sales increased 33 percent, same store sales increased nearly 25 percent, and profit for the company increased 82 percent compared to the previous year. "By any barometer," one company executive said in a conference call with analysts, "[it's been] another outstanding year for GameStop."

 

What's the deal?  How is it that when consumer spending is down and the nation's economy is widely considered to be "in the toilet" that GameStop is moving forward?  Something touched on in the article (which is something that I think most people noticed at the time) is that it's a similar situation as right after 9/11.  People have so many other concerns that they just want to stay home where it's safe and comfy.  While a video game may seem steep (most new games for the XBox 360 debut at $69.99) that's nothing compared to, say, a vacation.  On a vacation there's transportation, lodging, food, entertainment and souvenirs to pay for.  70 bucks for a single game that you can play over and over and over starts sounding pretty good, especially considering that you can sell it back when you're done.

 

Something else that helps is the mainstream acceptance of video games these days.  It used to be that beyond the age of about 15 or so that you were considered too old for video games.  Now it's profoundly acceptable for an adult to spend an evening playing Halo.  With the social acceptability of video gaming on the rise it allows the people with the money to spend it more freely on video games.  While a kid may need to save his allowance for weeks to get a game or wait until their birthday, a 20-something can walk into a GameStop and walk out with 3 games, a strategy guide and an extra controller.

 

Certain industries defy nationwide trends in times of economic peril.  Oil companies are another, but for totally different reasons.  So while I'm glad to see GameStop doing well (more profits = less likelihood of layoffs, which are awful) I  their performance is an indicator of overall economic recovery.  I wish it were, but it isn't.

 

Also, if anyone from GameStop is reading, no I don't want a subscription to Game Informer and I'm not really interested in pre-ordering Final Fantasy 37.  I'm good.

...if your job title is something like:

1. Social Media Consultant
2. Social Media Manager
3. Online Talent Manager

Rubel makes the point that alot of these jobs are simply extensions of existing professions in advertising and public relations. I tend to agree. In fact, I see these "online niche" positions migrating to a bigger role in the public space. 

At his news conference, President Bush announced his "economic stimulus" refund checks would be mailed this May.

Can we figure out how to invest it back into some expanded broadband, considering it would provide $143 BILLION to the economy?

Bah.

While I fully admit that it would be reckless gun-jumping to assume that the Wireless Consumer Protection Bill will become a law any time soon.  To assume that it would become a law at any time without significant changes would also be extraordinarily naive.  It's just a draft at this point.

However, it's still exciting to me.  The stipulations that would allow us, as consumers to a) purchase a phone at full price to avoid a contract and b) to not have to pay anything extra on our monthly bill to avoid a contract are what really float my boat. 

This would be a move towards a mobile phone culture like they have in Europe and Asia.  I've posted about it in bits and pieces so I'll be brief.  You buy a phone, you buy your service and that's it.

What would be so great about the Wireless Consumer Protection Bill is that no one is saying that contracts would be eliminated.  You see, it's all about choice.  A contract is far less offensive when instead of your being only option it's an option.  There are plenty of people who are just fine with signing a contract in order to get a cheaper phone.  Especially, if like me, you just bought a phone with a no-contract price tag of $550 a 2-year contract that reduces your price by $300 after mail-in rebates sounds great.  A lack of choice is what I feel has held the U.S. mobile phone market back.  The lack of choice in handsets has started to be addressed with the iPhone, the Tilt (AT&T's branded HTCH Tytn II) and the Touch (another HTC device for Sprint) and En-V from Verizon.  That's a great start, but hardware is only half of the mobile phone equation.

I think that the potential for a hybrid of the Euro/Asian mobile culture and the American contract-based culture is a step towards putting the U.S. in a position to say it's changing the industry.

There's a lot more going on in the WCP bill than just the option to sign up for mobile service sans contract, but it's the part that's most exciting to me.  Once it becomes a little more "real" Andrew will get into some of the nitty gritty of translating from Washington-ese to human.

It shows great potential and even the fact that one of the most senior members of Congress would attach his name to it is enormous.  Take a sec to read it right here.  And I know it's hokey, but if you believe in this contact your representative and let them know that you support Wireless Consumer Protection.  Don't know who your rep is?  Check out www.house.gov and look towards the upper left.  You'll see a tool to find your rep based on ZIP+4.  Rep. Michael D. Honda (D-CA), expect an email, sir.

I'm watching a live feed of the House of Representatives, where they are debating an Energy bil which would increase taxes on oil companies and subsidize clean and renewable energy.

Rep. Peter Hoekstra (R-MI) is offering a motion to recommit which would insert the "Protect America Act" (aka the Spy on America and Grant Retroactive Immunity to the Telecoms Act).

With his typical charm and wit, House Ways and Means Committee Chairman Charlie Rangel (D-MI) raised a point of order against Hoekstra's motion. Point of order sustained. Hoekstra appeals. The House is now voting on the motion to table the appeal of the ruling of the Chair (today it's Rep. Luis Gutierrez (D-IL)).

While I don't have much time to write at the moment, I'll point out two things:

• Big Telecom wants this immunity because they've been investing billions into systems to divert and copy fiber optic traffic for the purposes of data mining and spying at various peering points. They also stand to risk billions in judgements and legal fees (and jail time for executives?) if they're not granted immunity, because they've been complicit in a conspiracy to illegally wiretap the entire country.

 

• While renewable energy may not be great for Detroit, the technological investment and R&D for developing truly renewable fuel and energy sources would help the economy. There would be jobs for smart people to think about these things and develop solutions, as well as jobs for the labor needed to implement stuff.

 

• Here's a question: wouldn't Google have an interest in developing energy sources to power their massive data centers? Who do they buy their power from? More importantly, how much does fuel for their backup generators cost? Hey, Larry and Sergey! It doesn't matter if you own your own seperate backbone if there isn't any juice to run your data centers. If you want to be self-sufficient, be self-sufficient. Or, you could always invade a country.

...and waiting for our $600 checks as part of the much-ballyhoed "Economic Stimulus Package," maybe it's time to look at the true state of the economy. The two of us running this thing live on both coasts in two of the most expensive of urban areas in the United States. Let's be blunt: our economy sucks, but tonight we get our bread and circus. Barbara Ehrenreich, who normally I cannot stand, write a fantastic book a few years back, called "Nickel and Dimed" where she gave up her relatively privileged life as a writer and took jobs incognito as a waitress, hotel maid, clean service worker, etc. She lived as they lived, in hotels and by-the-week rentals, and only broke character when she left for the next job and city. In today's Washington Post, Ms. Ehrenreich pens a rather poignant op-ed where she refers back to her experiences during this process and ridicules the complete lunacy of our country's economic situation:

 I t begins to sound a bit naughty -- all this talk about the need to "stimulate" the economy, as if we were discussing how to make a porn film. I don't mean to trivialize our economic difficulties or the need for effective government intervention, but we have to face a disconcerting fact: For years now, that strange stimulus-crazed beast, the economy, has been going its own way, increasingly disconnected from the toils and troubles of ordinary Americans. 

 

The economy, for example, has been expanding, at least until now, and growth is supposed to guarantee general well-being. As long as the gross domestic product grows, World Money Watch's Web site assures us, "so will business, jobs and personal income."

 So, the theory says that if Wal-Mart is growing, the economy is doing fine, right? Wait a minute, doesn't Wal-Mart pay their employees next to nothing, but keeps their prices low enough so they can barely afford to shop there? Don't they buy most of their stock from overseas manufacturing? 

 

We like to attribute our high productivity to technological advances and better education. But a revealing 2001 study by the consulting firm McKinsey & Co. also credited America's productivity growth to "managerial . . . innovations" and citedWal-Mart as a model performer, meaning that our productivity also relies on fiendish schemes to extract more work for less pay. Yes, you can generate more output per apparent hour of work by falsifying time records, speeding up assembly lines, doubling workloads and cutting back on breaks. That may look good from the top, but at the middle and the bottom, it can feel a lot like pain.

 When people don't feel like they have enough. Even Wal-Mart had to cut their prices last Christmas to save their shopping season. Their customers, including most of their own employees didn't have enough money to buy Christmas presents for their children.  This looks pretty familiar to Ehrenreich, as one of our most famous American entrepreneurs knew enough to keep this from happening:

Not that we hadn't been warned. A century ago, Henry Ford realized that his company would only prosper if his own workers earned enough to buy Fords. But, like Wal-Mart, too many of our employers today haven't figured out that their cruelly low wages would eventually curtail their own growth and profits.  

 Henry Ford was a notorious anti-semite, Nazi sympathizer and devoted an entire division of his company to spying on the private lives of his employees, a practice that Wal-Mart emulates today for some strange reason. On the other hand, for all his faults, Henry Ford knew enough about economics to pay his employees a fair wage, and keep his products fairly priced. Enjoy the commercials. 

So, the House just passed a massive, incredible economic "stimulus package" that amounts to handing out free money to people in return for them continuing to breathe. Sounds fair, right? Oh, I forgot. Congress hasn't actually passed a real budget in three years, we're already running a deficit because most Iraq war funding comes in "Emergency" supplemental Appropriations bills debated under special rules, and to top it off borrowing most of the money to fund the from China. Anyone remember the Family Guy where Peter is told by a loanshark:

The difference between us and other banks, Mr. Griffin, is that we're not a real bank!

Now, imagine Yao Ming holding Henry Paulson upside down by his ankles and shaking the change out of his pockets. Seriously. The Chinese hold so much American debt they have to be happier than a bookmaker on Super Bowl Sunday, or something like that. Does anyone else wonder when we're gonna get our collective legs broke? We might be getting nice fresh $600 checks from our senile Uncle Sam this spring, which I assume is a seperate process from this, but remember where it really comes from. Maybe I should learn to speak Mandarin.

What am I doing here? Besides any crap I feel like talking about, I intend to have, starting very soon, timely coverage of events in Congress which affect the Technology community (net neutrality, data protection, patents, trademark, etc). This hopefully will include, subject to reader feedback:

1. Liveblogging of Commitee hearings, markups, the House and Senate floors, and any other event when interesting things happen. In other words, the dirty stuff that makes crappy laws exist.
2. Commentary on introduced legislation, including analysis of what the hell it really means.
3. Occasional reports on the technology lobbying community, including who is asking who for what, and what legislation is the result of it.
4. Coverage of the ever-dysfunctional FCC.

Any other ideas?