Catch up on stories from the past week (and beyond) at the Slashdot story archive


Forgot your password?

Software Tariffs and US IT Outsourcing? 670

HeelToe asks: "A while back I worked with someone who thought the US should simply impose tariffs on imported products to adjust their price to equalize foreign labor rates to the US minimum wage. I was laid off and my position moved to Canada last year. Since then, I've thought a lot about his ideas, as well as one of our topics of conversation a while back: Why doesn't the US tax the import of software? It seems to me like they should. It's not a "tangible" product (same reason used to deny my co-workers and me NAFTA and Trade Act benefits), but when someone outsources to another country with cheap labor for any other industry, there are usually import tariffs. Why is software different, and how would this change the climate of US IT jobs leaving for other parts of the world if we did tax software imports? I've done some looking on the web, but can find nothing in the Harmonized Tariff Schedule of the United States. I did find this thread from a few months back on's Career Development Forum, but not much else. What does Slashdot think?"
This discussion has been archived. No new comments can be posted.

Software Tariffs and US IT Outsourcing?

Comments Filter:
  • by Drunken Coward ( 574991 ) on Friday March 28, 2003 @07:32PM (#5619685)
    But it seems it would be largely futile to impose such tariffs, as usually international software developement is done by satellite offices of US-based companies, thus making them immune.

    Otherwise, it could be similar to the issue of the "Made in America" labels that can be put on any product partially constucted within the United States. So if a widget is manufactured in Mexico, but put together in the US it can still bare the label, exempting it from some tariffs. So for coding and other computer style products, this can be worked around by doing the majority of the work outside the country with the cheaper labor, then wrapping it all up within the borders.
    • by pdan ( 624244 ) on Friday March 28, 2003 @07:39PM (#5619747)
      Write code abroad, and compile in US
      • by Alan Cox ( 27532 ) on Saturday March 29, 2003 @10:28AM (#5622035) Homepage
        Humourous or otherwise, it demonstrates one of the reasons the US cannot handle this - source code is speech so protected.

        The entire western economic system is going to implode, just as Japan has done (partly saved by its wildly different culture and huge farming protection rules). The same process - the innovators dilemma - works for countries too. We are inefficient, we are expensive, we lose the layers of industry just as the model says. Soon all that will be viable is lawyers and finance houses, then the whole pile collapses.

        Ironically the USA and EU had the power to stop this - they could have imposed taxes on incoming goods. They could have ringfenced that money to go back to workers in those countries, creating ecomic growth,. driving up demand for luxury goods and creating markets, instead they signed GATT and NAFTA and other treaties that drive work to the poorest without rewarding them. When there is no work left in the EU/USA who will buy the cars, the tv sets, the dvd players ?

    • There are some significant differences between Trade Rules (NAFTA, HT Etc.) and Labelling.

      Application of NAFTA rules to items with foreign content involves breaking the item apart into it's constituents and assigning values to each part based on cost, labor, and country of origin for that part. Then if enough is NAFTA made, no duty (simplified version). So while, Mexico and Canada wouldn't get hit, India, Singapore etc. could potentially be tariffed. Packaging is usually not a significant cost factor
    • by saider ( 177166 ) on Friday March 28, 2003 @08:58PM (#5620191)
      Actually, you cant just assemble it here and say "Made in America". Some years ago I worked for a domestic electronics maufacturer. Their label read "Assembled in America from foriegn and domestic parts". When I asked the marketing folks why it wasn't "Made in America", they said it was because we did not have enough domestic components to qualify. All our IC's and discrete components were imported. Only about 10% of the parts were actually made here in the USA.

      But all of this is just hearsay.
    • by Jordy ( 440 ) <jordan&snocap,com> on Saturday March 29, 2003 @12:50AM (#5621083) Homepage
      Having worked at companies that have outsourced from everything from local companies to German companies, I've found that outsourcing really does have its limits.

      If you run a company that only needs small easily defined utilities to automate tasks and don't need them done immediately, outsourcing works very well.

      However, if you run a company that needs to turn on a dime to enter new markets, exploit existing ones, handle complex B2B integration issues or have vague software requirements, outsourcing falls flat. Even if you are dealing with a company 20 miles away, the simple fact that the programmers there don't understand your business leads to design mistakes and missing features that a dedicated well trained programmer that spends his time thinking how to improve your business should have caught.

      As businesses face stiffer competition in the world market and the complexity of the software systems they run increases, I believe they will find it harder and harder not to justify hiring local talent they can train to understand their business.

      If anything, I believe the US needs to do two things to help slow the departure of development jobs:

      First, we need to better educate programmers to make them more rounded. The better they understand the complexities of specific industries, the better they can anticipate the needs of their employeers. A developer should be positioned in a company to understand how it can improve, not be a monkey that hammers out what the business side of the company thinks it wants.

      Second, we need to sell the benefits of hiring in-house programmers over outsourcing. Marketing is really something developers aren't particularly good at, but has to change.

      Now this won't stop the migration of jobs to foreign countries, but it will assure that it is relegated only to simple grunt work keeping the highest paying skilled work at home.
  • Bad Idea (Score:5, Insightful)

    by Ken@WearableTech ( 107340 ) <ken&kenwilliamsjr,com> on Friday March 28, 2003 @07:32PM (#5619686) Homepage Journal
    This is a bad idea. This tax will not prevent others from loosing jobs. Do you want the IRS going checking source code looking for poor english comments as a clue it was written elsewhere but compliled here?

    This tax will do three things:
    1. Software Will Cost More
    2. The Governemt Will Never Give Up This Tax (In 25 years great software may come from many nations, think about the future)
    3. Even Free Software May Be Subject to Tax or Fees
    People need to understand that when Corporations are taxed they never loose money; they just charge us more. The only thing that may work is a tax incentive to companies that use American Software.

    I'm just starting out in this career field but I can see the writing on the wall, alot of programming is going to go the way of manufactring, overseas.
    • Re:Bad Idea (Score:3, Insightful)

      I think this just meens that Americans should "move up" to arguably more advanced jobs then just a standard code monkey.
      • a standard code monkey

        So if an infinite number of monkeys on an infinite number of typewriters will eventually bang out the complete works of Shakespeare, what would an infinite number of code monkeys on an infinite number of boxes crank out?

      • Re:Bad Idea (Score:4, Insightful)

        by Grishnakh ( 216268 ) on Friday March 28, 2003 @07:59PM (#5619897)
        Which is what? Most decent programming jobs (i.e. not HTML or VB) require a relevant college degree, usually CS. What's beyond that in the business world? Management? It's hard to manage people on the other side of the world, and that's not what CS is about anyway (otherwise they'd get a MBA instead).

        The "move up" argument made perfect sense back when blue-collar, unskilled manufacturing jobs were exported. It provided more incentive for people to learn a trade, go back to school, get a college degree, etc. so they could get a better job. But if the college degree-requiring jobs are moving out of the country, the "move up" argument simply doesn't hold any more. There's only two ways to move up; into management (I explained why that won't work above), and into more advanced degrees. Well, a PhD in CS might be interested, but there's not a lot of jobs out there suited for that, except maybe in research. And there's nowhere near enough research jobs out there to support that many programmers.

        I'm starting to come to the conclusion that, for some, the answer may be to "move up" (or move out) to a country that has a healthier economy, and a better focus on things that are really important, like education, research, science, technology, etc. instead of how to make the most short-term profit at all costs.
        • Re:Bad Idea (Score:3, Insightful)

          Your certifications and advanced degrees will only get you past a short-sighted HR recruiter.
          It's your wits, experience, technology exposure, past and present learning appetite, critical mind, well-presented opinions and IT culture that will get you the job.
          Well, you don't need all that, but you do definitely need a sane mix of some of them.
          • Re:Bad Idea (Score:3, Insightful)

            by Catbeller ( 118204 )
            It's your wits, experience, technology exposure, past and present learning appetite, critical mind, well-presented opinions and IT culture that will get you the job.

            And the ability to work for US$5,000 - US$10,000 dollars a year. If you can't do that, skill mixes and experience won't count for much. It's the bottom line that counts.
      • Re:Bad Idea (Score:4, Interesting)

        by Delirium Tremens ( 214596 ) on Friday March 28, 2003 @08:09PM (#5619937) Journal
        Exactly. What I don't get about the American IT engineers is that the guy is either a computer science genius or a bad-ass coder. Nothing in between. No trouble-shooting skills. No creativity. No interest in excellence. Niet.

        What's the deal? You spent 4 years in an expensive College that gave you a Bachelor degree and all you care about is your bumper stickers? Darn.
        I thought the American IT guys were mostly people from MIT, Stanford, Berkeley, [INSERT_BIG_NAME_HERE], etc ... but I was so wrong.

        During the last 2 years, I interviewed close to 30 people for a couple of Software Architect position sin Atlanta. Most people who were remotely qualified were H1 guys from India. The few Americans that were actually good enough on paper went back home wondering what the hell happened during the interview. Shit, I ended up sending them the questions beforehand and they still got surprised by what hit them.

        But then, when I look at what is actually taught in some of those overhyped colleges, maybe the only value is in that bumper sticker... It is definitely time to "move up" to more advanced qualifications.

        • Re:Bad Idea (Score:5, Insightful)

          by HBI ( 604924 ) on Friday March 28, 2003 @11:20PM (#5620719) Journal
          College degrees are near-useless for identifying actual skill. All it signifies is that you had or borrowed the money to pay for the classes, and didn't drink or mud so much that you got tossed out. At some schools, it's even near-impossible to get thrown out.

          The curriculum is outdated and in most cases concentrates on practical know-how when theory would be much more appropriate given the 5 year time lag between actual practice and curriculum. When I was in college (87-91) they were teaching Pascal on AT&T 3B2s when C was the dominant language. The AT&T boxen were even then relatively ancient.

          I doubt it's much different in Europe, and my impression of qualitative skill from foreign offices of companies i've worked for doesn't say that things are much different in Europe or the Far East.

          You obviously haven't been interviewing for long to not have already gotten this down, or haven't watched employee life cycles.

          In closing, The overall best IT guy I ever saw was a guy with a GED and no college. I don't even bother interviewing people with advanced degrees much - they are usually useless in practice.
        • Re:Bad Idea (Score:3, Insightful)

          by HeelToe ( 615905 )

          I think my best asset is the huge problem solving base I developed (really, learned how to develop) while at university. I went to Virginia Tech, which at the time, had a reasonably known program, but the basic philosophy was to teach us by forcing us to use unix for all our coursework. I had seen it in high school CS classes and knew it was better than butter on bread, but this didn't keep me from experiencing all manners of problems with it. It helped me by showing me I must learn to recog
        • Re:Bad Idea (Score:4, Insightful)

          by Trinition ( 114758 ) on Saturday March 29, 2003 @12:04AM (#5620908) Homepage
          The probelm is that the "bad-ass coders" and "computer science geniuses" work for the MBAs who would rather force you to cut corners to make a short-term deadline than worry about long-term costs and other repurcussions. In an ideal world, the "bad-asses and geniuses" would refuse to work, but there's nagging thing about food on the table and clothes on the backs.
    • Re:Bad Idea (Score:3, Insightful)

      by JohnWiney ( 656829 )
      In my experience, corporations never loose money, except to senior executives. They often lose it, of course.
    • Re:Bad Idea (Score:2, Interesting)

      by chickenwing ( 28429 )
      "People need to understand that when Corporations are taxed they never loose money; they just charge us more. The only thing that may work is a tax incentive to companies that use American Software."

      From economics, we know that both the supplier and consumer bear the costs of a tarriff. The elasticity of the demand curve determine the distribution of these costs.

      That being said, im not sure i completely buy into all this economic mumbo-jumbo, especially as I am out of work and am happy to lay the blame on
    • Re:Bad Idea (Score:5, Insightful)

      by koh-der ( 597436 ) on Friday March 28, 2003 @07:51PM (#5619838)
      Absolutely a bad idea, i agree. Just because your job moved up to canada does not mean the grass is greener over here (yes I am in Canada). And trust me, it is as bad up here. My friend just got laid off because the company is moving the whole operation to China...

      Tariffs could have negative effects not directly but indirectly. Take sugar for instance. Odd example, but hear me out. Sugar has an import tariff to protect the US sugar manufacturers. It protected the manufacturers but it had a huge indirect effect. Since the sugar prices were cheaper (especially in Canada), all the candy manufacturers moved up to Canada.

      Now think software. If software tariffs indeed is feasible and succeed, sure it might protect software manufacturers, but what about those who depend on them? If a software for factories (robots, assembly line etc) is imposed tariffs, where would the factories stand? What about consulting? Tax software? Could see CPA's opening up offices in canada just to avoid the massive software prices...

      Rather than protectionism, I think more effort should be put towards innovation. Anyway, that is my 2 cents.
    • "This tax will do three things:
      1.)Software Will Cost More
      Bull. Since this fiasco started software prices have remained the same or even went up while labor has been exported. This is a false argument by lobbiest looking for cheap labor. The CEO's pocket the difference.

      "2.)The Governemt Will Never Give Up This Tax (In 25 years great software may come from many nations, think about the future)"

      This is a good thing since it will protect innovation and American jobs. If a taiwanese company came in and sol
  • Tarriff Law (Score:4, Insightful)

    by Yankovic ( 97540 ) on Friday March 28, 2003 @07:33PM (#5619697)
    Actually there are a lot of subtleties to tarriff law. For example, if production of something occurs in another country but is shipped to the US in a partially completed state and then finshed here, there are no tarriffs. It'd be very difficult to do what you describe for code, though it's always possible. I think a lot more people would have to be affected by outsourcing in order to get the law adapted (that's not to say they won't be soon).
    • One of the other posters is totally correct, they'd "import" it as source and compile/package installers in the US. I can't think of a reasonable way to stop that without causing all kinds of horrible problems, including the death of free software.
  • by mpost4 ( 115369 ) on Friday March 28, 2003 @07:34PM (#5619705) Homepage Journal
    First I would say that this probably was the same reasoning behind the mass influx of H-11b's (no I don't have anything against people coming to this country to make a better life for himself/herself more power to them) The software companies probably said there were not enough people to do the work they needed to get done. Remember that this probably setup back during the dot com's time. It does apperar that the EU does have tariffs [] Here is another article about tariffs 08.550.phtml?type=trade []. Yes it is from the BSA []

    So is there an answer, there will be much opposition to tariffs, companies will not want this because it will cut into their bottom line. So are we going to get tariffs, do we want tariffs? Tariffs will raise the price of software (not like the companies do not make a lot of money on software as it is and probably could absorb the cost of tariffs with out raising prices, but they would rather not)
    • To counter the price raising argument I would like to point out that while IT labor has been exported, the price of software has stayed the same or even risen in cases like Microsoft.

      If it goes up then yes it will be bad for some CEO's and a few consumers if the price actually goes up but we can save our jobs and help our economy.

      The idea of wealth trickly down is that if companies make money they in turn hire more people which in turn they buy more products and the cycle increases. Republicans love this
  • There is so much outstanding research to indicate that this is such an inane idea that you shouldn't even think for a minute of presuming that you are special or software is special. Tariffs are dumb. They cause wars.
  • Since code can flow internationally over networks, it would be tough to detect evaders. Just as an example, if you as a corporation wanted to avoid a tariff, you could "contract" some schlub for a low price to "produce" a 500,000 line product. He'd in reality get it done in India, take delivery via the internet, then hand it over to your company. Plausible deniability for your company, kinda like being Kathie Lee Gifford getting her stuff from Southeast Asian sweatshops.
  • How do you determine where the software comes from? It's simple to incorperate in the US. It's simple to package product in the US even if the coders aren't here. It's simple to compile or make the code available in the US, even if the coders aren't here.
  • Nooooo! (Score:3, Insightful)

    by spencerogden ( 49254 ) <> on Friday March 28, 2003 @07:37PM (#5619732) Homepage
    Tariffs are always a bad idea. Instead of looking at way to implement them in the software industry we should looking at how to remove them from other areas. The only people tariff hurt are consumers, who have to pay more for the product.

    I am a soon to be CS grad, and I am scared of the current job market. But if software can be produced better and cheaper elsewhere, oh well. Tariff are just crutch.
    • Re:Nooooo! (Score:3, Insightful)

      "But if software can be produced better and cheaper elsewhere, oh well. Tariff are just crutch."

      Good McDonalds wants you! Please clean the grill and cover for the drive thru window. Thank you.

      Ha, you wanted cheaper software right? You got it!

      Your too expensive and can not work for minimal wage.

      Now how do you feel? Tarrifs are part of standard imports on goods for the last century. When you buy sneakers, they are tarrified, when you buy a foreign car its tarrified. If not then American would look more

      • Re:Nooooo! (Score:3, Insightful)

        by spencerogden ( 49254 )
        >Now how do you feel?

        It sucks. I'd like to have job doing what I want. But I am not so arrogant to think that my industry should be protected at the detriment of the rest of the country. This same arguement, that we should have tariffs, leads to protectionism. Why should we allow immigration, they'll just take our jobs right? Tariff and other protectionist measures help a few, but do great harm to many.
  • by dlek ( 324832 ) on Friday March 28, 2003 @07:38PM (#5619737)
    I'm a Canadian! :)
    • Me too, but that is just another excuse for them to get angry/impose tarrifs. They're just jealous that we have universal medical coverage for less per capita than they spend for partial medical coverage because of HMOs, and everything else that makes us different.

      So employers can hire healthier people, not worrying about catastrophic health-insurance bills, which makes everything a bit cheaper to make up here.

      If the US wanted to reduce its' corporate costs and make business more cost-competitive, instead

  • by antis0c ( 133550 ) on Friday March 28, 2003 @07:40PM (#5619754)
    Very bad idea in my opinion. What happens when you get into Open Source Software? If the government thinks imposing tariffs on software is a good idea, they might deem it ALL software, including Open Source. So will that mean for every time I download OpenBSD I'm going to have to pay a tariff? What about software mirrors? Components? Data itself? I'd rather not open up that can of worms..
    • lets see, someone does it for free, then they have to pay a percentage of zero to the government..

      seems to make open source stronger.

      tarif the money that is spent, that is where the problem is. so you pay an indian company 5 dolars an hour + a tarif that brings the cost of developers in line with the national average.
  • I'd be interested to see how this applies within the framework of NAFTA and WTO. The US just got slapped for the Steel Tariff. Like many things, outsourcing to remote location(including countries) has its drawbacks. A few friends have had to put in really strange hours because of meetings/teleconferences with overseas offices, which can be a real drag. "We're cheap, if that's what you're looking for, just don't ask about our customer support, anyone who really knows anything about your problem is probab
  • by g4dget ( 579145 ) on Friday March 28, 2003 @07:42PM (#5619762)
    Among advanced nations, the US is engaged in a race to the bottom when it comes to working conditions, salaries, job security, and the environment. And for years, US politicians have made fun of Europeans because their labor costs were "too high".

    Yet, when other countries get their labor costs to be lower than those of the US, then Americans start complaining and want to impose taxes. Well, which is it? If the US can impose tariffs on Indian computer products, is the US willing to have tariffs imposed on US computer products by Europeans, whose labor costs are higher because of better social services?

    I think this Onion article [] points out what really is going on: many Americans just can't deal with the fact that the rest of the world is different and actually likes is that way.

    • US is engaged in a race to the bottom when it comes to working conditions, salaries, job security, and the environment.

      This comment is utterly preposterous on the face of it. The US has the lowest unemployment rates and highest per capita income of any developed country.

      • by MKalus ( 72765 ) <mkalus@g m a i l .com> on Friday March 28, 2003 @08:15PM (#5619965) Homepage
        This comment is utterly preposterous on the face of it. The US has the lowest unemployment rates and highest per capita income of any developed country.

        You make the mistake to think that the stats you are reading are actually the same.

        The way they are gathered between the US and Europe for example is completly different.

        Unofficial it is said the US has an unemployment rate of 10% and that is roughly the same ballpark the EU has.
        • by the eric conspiracy ( 20178 ) on Friday March 28, 2003 @08:33PM (#5620050)
          You make the mistake to think that the stats you are reading are actually the same.

          Really? The BBC seems to think they are comparable.

          Then we have longer term studies that show that the US has far stronger job creation than Europe, and in fact the unemployment measurements in Europe are artificially low because of training programs, early retirement, workweeks limited to 35 hours, etc.

      • This comment is utterly preposterous on the face of it. The US has the lowest unemployment rates and highest per capita income of any developed country.

        Of course, unemployment only counts those still on unemployment. It neglects those who've been unemployed too long and those who don't qualify for unemployment.

      • by Guy Harris ( 3803 ) <> on Friday March 28, 2003 @08:34PM (#5620056)
        The US has the lowest unemployment rates and highest per capita income of any developed country.

        Lowest unemployment rates? Not true in January 2003, at least, according to this table from the OECD [] - the US rate was 5.7%, whereas Austria had 4.1% and Sweden had 5.3%, for example.

    • by vandan ( 151516 ) on Friday March 28, 2003 @08:00PM (#5619899) Homepage
      You make the assumption that the US understands that there is more to the rest of the world than profit potential.
      History demonstrates that this is not the case.
    • And for years, US politicians have made fun of Europeans because their labor costs were "too high".

      And how, exactly, is this terribly ironic? The jobs aren't going to Europe; they're going to India, Taiwan, China, and other places that lack the benefits (costs) of the US, and particularly Europe.

      If anything, this is proof that the politicians were right: our high labor costs are driving labor demand to other places. Whether the benefits (better standard of living) are worth the costs (more and more out

  • In my opinion you will not see tarifs on imported software because the corporations which import that software are very large and very powerful and it would be against their interests. Additionally, imposing tarifs on software would be a protectionist move and would harm the US economy in the long term (as well as harm those in other countries whose lives are being improved by their relatively high local wages) since it would discourage inovation.

    On top of all that, MS and other big software companies wou

  • If they'll work cheaper than you, its YOUR problem, not theirs. Complain to your local Congressman/MP about the government-sponsored inflation which raises the costs of doing business where you are.
  • Why doesn't the US tax the import of software?

    Taxing software seems impossible. What exactly is importing software? Sending code over FTP? Sending the finished product? If its compiled in the US and developed elsewhere is that still imported?? Maybe taxing the actual labor that would make more sense.
  • Lets not forget about the opportunity for mischief.
    I frankly get a bit nervous about certain integrated systems that drive many aspects of the nation's critical infrastructure where there is no domestic producer.
    I am not attempting to call into question the motives of the people of Elbonia... They are good folks. But might Elbonians have potentially higher motivation to introduce rogue backdoors?
    Could the Elbonians have political or other motivation to do harm to the USA?

  • Tangible? (Score:5, Insightful)

    by jasonditz ( 597385 ) on Friday March 28, 2003 @07:45PM (#5619788) Homepage
    If software isn't tangible how can it be imported to begin with?

    Software in an intangible form is basically just an idea. Can we tax ideas now? How can you regulate its importation to begin with if it doesn't exist in any physical way? Are we going to prohibit foreigners from coming into the country on vacation now, lest they write a piece of code, and in effect, import software?

    What about all the software that hasn't been written yet? Maybe we should start taxing foreigners on the basis of software they might potentially create in the future, since the software really exists in his mind, just waiting to be written down...

  • by sidespace ( 652582 ) <> on Friday March 28, 2003 @07:45PM (#5619790) Homepage
    There are several fundemental assumptions this post makes that have to be corrected.

    First, as someone who works a lot in both the USA and Canada, I can guarantee you that living costs in Canada are, on average, HIGHER than the USA. If your job was moved to Montana (which has lower living costs than where you are now) would you be asking Montana for import tariffs? Of course not; so please, drop this argument.

    Second, I see a lot of Slashdot posts discussing the movement of I.T. jobs to "cheaper" locales. A lot of the arguments made against this move are the same arguments that were lodged against Japanese auto companies in the 1970's. North American IT workers may be in denial now, but the offshore trend will continue to deteriorate the IT job markets of both the USA and Canada.

    So what is the solution? Just as the auto-workers realized in the 1970's, the successful worker will be one who not only performs menial tasks (i.e. programming) well, but also adds significant value to their position. For example, if you are a good communicator AND understand technology you will have no problem finding a job. If you prefer to lock yourself in the back room and code (and complain to Slashdot) then you are going to be in for some tough times. Keep in mind that times now, on average, are good. Use this time to retrain and expand your skillset, not reading up on arcane NAFTA regulations.

    • I don't know what kind of smoke you're inhaling to think that times are, on average, good, at least in the IT industry.

      So here's the question - the American auto industry was crippled in the 70s and took years to recover. It's still pitifully weak compared the Japanese companies. So how does the US IT industry avoid this, remembering in particular that in the auto industry, there were only a few big auto manufacturers, whereas IT has many more players, and the players are part of the problem since they ca

      • by tc ( 93768 ) on Friday March 28, 2003 @08:58PM (#5620189)
        But didn't the American auto industry deserve to be crippled in the 70s? The Japanese battered the American auto industry by being more efficient at producing cars. That's how free markets work - you do something more efficiently, cheaper, better, you win. And that's a Good Thing.

        Similarly, if a bunch of people Someplace Else can write the same software cheaper than Americans can, then good for them! They deserve to get that software writing business.

        I've seen a lot of whining about standards or costs of living, and clamouring for tarriffs, but why exactly is it that it's okay for US workers to earn vastly more than third world workers for doing essentially the same job? Why should a US worker have some divine right to be protected by tarriffs against his more economically efficient competitors in foreign lands?

        Let the free market do its thing.

  • Not that Im saying all software made in the US is bad, but slapping a tax on all non-US software is just going to make people use inferior though cheaper products.
  • Most "premium" software is developed internally for non-IT companies to solve a need unique to their industry. Consider airline reservations systems and the airline industry.
    It would be "tricky" to manage what a large multi-national does for offshore programming.
  • Instead of punishing other countries that are less wealthy, why not establish a international minimum wage []. You can still impose tarrifs on those countries that don't have them, but this would as well protect people in your country and help people in less developed countries. And, of course, re-established international competition at a fairer level.
  • by Ron Harwood ( 136613 ) <harwoodr.linux@ca> on Friday March 28, 2003 @07:48PM (#5619815) Homepage Journal
    I had a look at your resume [] and what you didn't mention was that the company [] you worked for is based in Canada [] and got its seed funding from a Canadian Mutual Fund []... ...perhaps you didn't know that... Neither did I until I looked at your resume and did a google search on the last company you worked for.

    So really, Canada should be charging a tarrif on that software because they lost that job to the states for 4-5 years... ;)
  • > A while back I worked with someone who thought
    > the US should simply impose tariffs on imported
    > products to adjust their price to equalize
    > foreign labor rates to the US minimum wage.

    Better yet, outlaw all imports. I'm sure that would create lots of jobs.

    Trade is a positive-sum game.
  • by mcc ( 14761 ) <> on Friday March 28, 2003 @07:50PM (#5619822) Homepage
    1. What about free software? (With a little f.) Is it tariffed? How?
    2. What about Free software (with a capital F) which is resold with added services such as support? Much such software is created internationally. An obvious example would be Redhat Linux, which was written by mostly unpaid people around the globe but sold by a U.S. company. Would this be an import, since many of those who wrote linux-- including the two people ostensably most responsible for the product at the moment (Linus Tourvalds and Alan Cox, the latter of which is actually a RedHat employee in britain last i checked) are not U.S. citizens and are working outside the U.S.? What about something like S.U.S.E., which is roughly the same product as RedHat with a different configuration and setup procedure, but is sold with support by a German company? If a software tarriff were imposed, could S.U.S.E get around it by encouraging their customers to just download the free version of their product and burn it to CD-R, then offer just "support"? Is an automatic update service like Yast2 [] "support" or "software"?
    3. Where do you draw the line between hardware and software? Is firmware hardware or software? If we tarriff firmware, do we have to tarriff mp3 players from japan which just happen to have software running within the mp3 player? What if that mp3 player comes with a software cd containing drivers? Does this make it software? This admittedly is not a big issue. The biggest issue, however, is:
    4. Right now no country that i am aware of tarriffs software. However, if the U.S. tarriffs software, it seems pretty likely to me that other countries will start doing so as well. This will lead to a pretty nasty situation for the U.S., since by far the U.S. is the biggest exporter of software! If the U.S. inadvertantly makes software tarriffs common international practice, they have the most to lose, both in that they will probably be paying the most taxes and that raised prices on U.S. software in other countries will be more likely to stimulate "local" software companies around the world.
  • This is the stupidest idea since the great depression. Anyone who thinks taxing imports is a good idea doesn't understand the most basic economic concepts. Do a websearch on the Smoot Hawley tarrifs. They were a major cause of the depression.

    ProfQuotes []
  • by farrellj ( 563 ) on Friday March 28, 2003 @07:51PM (#5619835) Homepage Journal
    Tax Software like that, and you will trigger a deep recession. Software shoud compete on it's merits, not on marketing, and it shouldn't matter where it comes from...common, does this person really think that us North Americans (Canadians and USAians) couldn't compete against anywhere else without artificial barriers? Good software will eventually rise to the top especially as Open Source becomes the major paradign for software creation.

  • by ShadowMind ( 546734 ) on Friday March 28, 2003 @07:53PM (#5619844)
    I'm a bit too drunk to comment on this fully, but a few points as to why this approach doesn't work in the long term.

    The UK tried this when other countries semiconductor capabilities exceeded their own - tariffs were impose on imported components. It was meant to protect the UK computer industry - but it backfired badly. Unable to compete in the manufacture of ICs, UK companies couldn't even import components and produce full systems competitively. The policy led to the death of systems manufacturing without benefitting the component producers.

    The same thing happened to the UK film industry. In order to fight against films produced in Hollywood, a law was passed requiring a certain percentage of all films to be produced in the UK. Since the general public wanted Hollywood films, the only way to comply was to show supporting features produced in the UK. Since this was more profitable than producing feature films, the UK film industry ended up producing supporting features about candlemaking in Birmingham. So it died. We are now seeing some recovery, but only after at least two decades of decline.

    As has been seen in the automotive industry, protection of national producers in this manner only leeds to apathy within the domestic industry. Protected from outside innovation and competition there is no reason to improve, instead the industry will settle into a cosy cabal with domestic producers. When, eventually, the import duty is removed the existing industries are far behind their foreign competitors. This is detrimental not only to the industry long-term but also to the domestic consumer.

    Eventually, for the reasons outlined above, domestic producers will not be able to export - for two reasons. Lack of competition will lead to an atrophying of the state-of-the-art within the country and hence be behind other counties producers that are open to a free market. Also profit from export will be much lower than domestically. These factors will produce an inward facing industry which does nothing to help the balance of trade.

    Lastly, those countries who have tariffs levied against them, may retaliate with equivalent tariffs or legislation against the import of other goods and services from the tariff imposing country which will hurt the countries export marketing and thier domestic industry as a whole.

    For better or worse (and I believe better) we all operate in a global market. This drives competition and innovation and in the longer term will bring benefit to all. Protectionism only serves to kill those it seeks to protect.

  • This is fine in theory...

    that is until you want a Linux distro made outside the US like say SUSE...

    What we _do_ need is a control on our US population other than corporations and the government that _teach_ people rather than prefer them stupid. The jobs aren't just going away because of money. Some of them, no flame intended, are going aways because the IT market is glutted with a lot of paper people that never are up to snuff. The good ones get drowned or hang onto small lifeboats to survive while t
  • by praksys ( 246544 ) on Friday March 28, 2003 @07:54PM (#5619855)
    1. Trade war. The US exports for more IP than it imports. Just to give you an idea of how big the difference is, US spending on R&D is roughly equal to spending by the rest of the OECD combined. When it comes to software production the disparity is even larger. If the US starts a trade war in this area then they have almost nothing to gain, and they have a very large and lucrative export sector to lose.

    2. Racism. Why is it that people have so much trouble with the idea of competing with poor people for work? Do you think they aren't hungry enough already? Does the idea of them actually developing some sort of economy disturb you? After all they have to compete with cheap mass produced products from industrialized nations, and massively subsidised food. Why shouldn't we have to compete with them for work?

    3. Self-interest. Why the hell would any country want to encourage their best and brightest to waste their talent doing work that could be done for a fraction of the price by cheap labor in other countries? For that matter why would you want to waste your life doing something that is not economically productive? Find something worthwhile to do with you life, instead of trying to strong-arm your customers into paying artificially inflated prices for skills that are not needed.

    4. Freedom. It isn't just good for software. When ever you see someone who is trying to shut out the competition you can be pretty sure he is trying to get a free ride by screwing everyone else.
  • by stienman ( 51024 ) <adavis AT ubasics DOT com> on Friday March 28, 2003 @07:54PM (#5619858) Homepage Journal
    Why is software different

    Because it's bits and bytes, and can be replicated infinitely. So a programmer makes a program in 40 hours, and it's taxed forever, even if the programmer isn't continuing to work on it.

    and how would this change...if we did tax software imports?

    It would legitimize software as a 'thing', which has the same copyright, property, IP, patent, etc protections as things that exist physically and can't be duplicated for free.

    If software is ever to be free, programmers need to be free. For programmers to be free, we must invent real jobs that pay well that a real programmer can do for only a few hours a day. Then it won't matter if your job is shipped out, since your job simply won't exist anymore.

    Oh, wait, software will never be free. Sorry, guess you're screwed...

  • I'm sure the WTO will love this idea just as much as they loved those steel tariffs...
  • What we need to do is limit capital flight as well as allow weaker markets to impose tarrifs. So, the best solution is to make it illegal for companies to relocate overseas. I think that solves the problem much better. After all, they made there money here, and they should be required to keep their money here and support the country and the people that helped them get where they are.
  • So, basically, the problem is that overseas workers can in many cases produce more good code per $ than US workers? Adding a tariff will protect some jobs here, but at the greater cost of increased administrative costs of handing (and working around) the tariff, and higher software costs in general. Basically what the tariff does is make outsourcing more expensive than using local talent. Sounds nice in general, but unless the USA spends more money on software, the net effect of this is that our software dollars will buy less productivity, and hence we'll have less software. So, instead of saving an American job, it might just mean that the software project doesn't happen wholesale.

    A much better approach is to find a way to justify the higher wages of American works. In order to not get outsourced, find a way to prove you're worth the money. Is that sheer code productivity, product insights, or what? There needs to be an angle. If you look at laptop manufacture, while most of the work is done around the South China Sea, product management, marketing, sales, etcetera all happens in the US. And while it sucks to be a laid off engineer, it certainly rocks to be able to buy an excellent laptop for half would an equivalent product would have cost a few years ago.

    The thing about free trade is that its benefits are diffusely spread, but those it hurts are highly concentrated. So, even though steel tariffs cost more American jobs than they save, the steel industries and unions are more concentrated and vocal than the broader steel consumer industries, which is everyone from car manufacturers to can makers to appliance builders, or whatever. Higher steel costs might have saved a job in Pennsylvania, but they probably cost twice that many jobs in lots of other places. People were laid off from car dealerships because of them, even if the person laid off didn't know that was the root cause.

    I've worked with several engineering projects where components were outsourced to India. The Indian engineers were are talented and motivated, and wrote good code. And, honestly, I can't say they need the money any less than "native" programmers. Our long term national interest is certainly aligned with India developming a modern, integrated economy! And I'm happy to be able to pay less for software, or buy packages that otherwise wouldn't have been written, than if all software had to be authored in the USA.
  • by t0qer ( 230538 ) on Friday March 28, 2003 @08:08PM (#5619928) Homepage Journal
    I've heard that Dell outsourced all it's frontline support to India.

    It makes me sick everytime I see that Dell Intern "Who turned out the lights in tech support?" commercial knowing that what they portray on TV doesn't resemble reality at all.

    Dell cannot draw me into it's delusion of an american company anymore. I still love their service contracts though :D
  • by Sonicboom ( 141577 ) on Friday March 28, 2003 @08:09PM (#5619936) Journal
    I agree wholeheartedly about making corporations pay some sort of tax for outsourcing US jobs to another country. By removing jobs from the US, they're hurting the economy. The only people that benefit from this are the rich owners who are more concerned with lining their own pockets rather than keeping our economy stable. The combination of the "dot bomb" and outsourcing of IT jobs has caused the pay scales to stagnate because (1) there's not as many IT jobs, and (2) why pay a programmer top dollar when someone in some other country will do it for a fraction of the cost.

    The same for production of goods, like computers, TVs, cars, clothes, etc... but there should be a clause that says that the burden must be absorbed by the corporation, and not passed onto the consumers.

    Conversely, companies who produce goods in the USA using US labor and US parts should be given tax breaks.

    Our problem is that since the 80s we've moved out of being a "production-based economy" - and we've become a "service-based economy"... and it's cheaper for US corporations to exploit workers overseas to produce our goods rather than pay US workers an honest wage. Now that most of our goods are made overseas, we're moving our service-oriented jobs there, too.

    Notice that the "american dream of being middle class" is now pretty much a fantasy. (one parent works, the other stays home and raises kids, 3 bedroom home 2 car garage - nice suburban neighborhood). Now it takes 2 incomes to make ends meet in this scenario - and barely...

  • fairness (Score:2, Insightful)

    by six11 ( 579 )
    At one point in the past I would have agreed with the poster. But somebody asked me: what do I have against these people from other countries who want to make a living selling software in my own country?

    This is a question that anti-globalization people need to ask themselves. If somebody in mexico can turn screws for $1.24 an hour, it makes sense that you would use that labor source before using a $38 an hour source in Michigan. That $38 figure only because so obnoxiously high because of some tortured sens
  • Employees did not show an ounce of loyalty to their employers during the boom so why should the employers show loyalty to the employees during the recession? Many overpaid and incompetent IT works jumped shop as soon as they got a higher offer from some other company. Those people are the ones who ruined everything for the rest of us.
  • by stygar ( 539704 )

    ....are already subject to enough punitive measures by Americans who don't want competition, even in spite of NAFTA. Ask a BC logger or a Saskatchewan wheat farmer.

    Why is an American programmer any more entitled to a job than one in Calgary? It's not like you can claim that the Canadian is working for ten dollars a week like one in India.

    This is typical of the American attitude towards international trade: other countries exist to serve as markets, not sources of competition. Buying things from Americans

  • by rollingcalf ( 605357 ) on Friday March 28, 2003 @08:13PM (#5619952)
    Software can be encrypted and sent over the Internet so the IRS cannot detect it coming into our borders.

    Then even if they detect it, how do they decide a value on which the tax will be applied? A piece of software can cost anywhere from $0 to a over a billion dollars. The IRS will always end up undervaluing or overvaluing it.

    Some countries are actually retarded enough to impose import duties on software; anything downloaded off the Internet gets in duty-free because they can't catch it, while anything physically brought in on CDs or diskettes gets taxed based on a value that the customs officer pulls out of their ass. I recently sent my brother 2 CDs with Linux and other free software because broadband is not widely available in his country, and they slapped on US$50 duty, ignoring the $2 value I put on the customs form (for the cost of the media) and the glaring FREE SOFTWARE label on the CDs.

    Then there is the consideration that software can be duplicated infinitely. Someone can import a single copy of a software package that is worth $200 by itself, then get it installed on 10,000 machines.

    And how would you assess the foreign value component of software that was developed by teams in the US collobarating with overseas developers?
  • by geekoid ( 135745 ) <<moc.oohay> <ta> <dnaltropnidad>> on Friday March 28, 2003 @08:16PM (#5619968) Homepage Journal
    tangible Audio pronunciation of tangible ( P ) Pronunciation Key (tnj-bl)
    1. Discernible by the touch; palpable: a tangible roughness of the skin.
    2. Possible to touch.
    3. Possible to be treated as fact; real or concrete: tangible evidence.
    2. Possible to understand or realize: the tangible benefits of the plan.
    3. Law. That can be valued monetarily: tangible property.

    some people don't seem to know the context of tangible in this instance.

    I think the poster wants to tarrif the money paid to outside vendors.

    If it is done as a percentage, then free software would be free. however if you paid someone to write software, free or otherwise, that would get tarrifed
  • Tit for Tat (Score:2, Insightful)

    Since the US is surely a net exporter of software, does that mean you think it would be a good idea for the EU, Japan, etc to put import tariffs on Oracle, IBM and yes, even Windows?
  • by Featureless ( 599963 ) on Friday March 28, 2003 @08:44PM (#5620117) Journal
    It's near impossible to enforce, and it's not in anyone's economic interests but domestic software developers.

    Can you really picture the American government taking an altruistic stand to preserve our domestic software developers?

    I thought not.

    Our government will sell out cheap (sorry, have sold out cheap) to the big indistry consortia that stands to benefit from that particular kind of cheap labor. This is old news.

    Taking the long view on "cheap foreign competition" over the years, the lesson of history is that labor always loses.

    Fans of capitalism will announce that even though you're out of work, the economy benefits because as goods (and now services) are cheaper, everyone (businesses and individuals) can afford more, and be more productive, etc. Theoretically you'll get another job doing something else and progress marches on.

    Globalization as a whole is tricky, though... simplistic thinking like this doesn't take into account the vagaries of currency markets and national conditions. I'm not qualified to really get into currency and other macroeconomic games, but as for the other... overseas software shops may never be as bad as it is in the garment industry (though I won't bet on it), but generally speaking "free trade" is often just code for "legal loophole" - it allows one to shop around for a "friendly" environment (child labor, inhuman work weeks, totalitarian security, exploitive wages and contracts, "flexible" legal system, no environmental regulations, and even the occasional ability to "disappear troublemakers without too much fuss"). They could never get away with this stuff in America - we have (or had) decent public education and functioning democracy. So they shield themselves in the complexities of trade to do it elsewhere.

    Ultimately I think favorably of globalization only as long as there are enormous punitive tarrifs to correct for legal imbalances, and a very healthy reexamination of global economic (and especially currency) policy to insure that games aren't being played. But I am always learning more about the topic and I would love to hear other opinions about this.
  • Nope! (Score:3, Insightful)

    by Greyfox ( 87712 ) on Friday March 28, 2003 @08:48PM (#5620132) Homepage Journal
    Companies outsource to other countries because the product is not hard to ship and the exchange rate is so favorable to them. I can hire 8-10 Romanians for every 1 US programmer. As an added bonus I don't have to muck around with all those work saftey laws, income tax blah blah blah, etc, which makes hiring a US worker so much more expensive.

    The reason I can do this is because the first time I went to Romania, the exchange rate was 17000 Romanian Lei to $1. The second time I went it was 19000 Romanian Lei to $1. In a word, the exchange rate favors me.

    SO... obviously what you need to do is devalue the dollar against the world economy to the point where a dollar is roughly in line with the Romanian Lei. And the only way to do that is to have rampant inflation. The easiest way to do THAT is to get the Fed to print more money. Lots more money. While this WILL cause a massive devaluation of your savings, if you are like most Americans, you won't have a lot of savings to devalue in any event.

    Once we've persuaded the Fed to print a few extra trillion dollars a year, we can start working on repealing some of those pesky workplace safetey laws. My company just had to spend a lot of money to remove some asbestos and really, was that asbetos really bothering ANYONE? I submit that it was NOT! If it weren't for some goddamn hippie worried that someone might get cancer, that stuff could have stayed up there forever.

    Once our population becomes one of the poorest and least safe workforces in the world, there should be no further problem with overseas IT outsourcing.

  • by JWhitlock ( 201845 ) <John-Whitlock@i[ ].org ['eee' in gap]> on Friday March 28, 2003 @09:23PM (#5620319)
    Tariffs act like a tax that we all pay but can't see, for the benefit of a single group.

    Let's say the U.S can produce a widget for $2 and Third-World country X can produce it for $1. Any reasonable business person (and many consumers) would save 50% and buy the $1 widget. Of course, the American Widget Workers will scream bloody murder, and ask for some government protection.

    So the U.S. puts a 100% tariff on widgets, so that the U.S. companies can compete. Great for the widget makers, but everyone that uses widgets is paying a dollar more than they would have to. Any product that uses widgets is that much more expensive. Companies that use widget-based products need more money for inventory and can spend less on salaries, so there are less total jobs in the economy. The only people that benefit are the American Widget Workers. And even they don't benefit as much as they think they do - the tariff works it's way invisibly through the economy, making the goods they buy more expensive than they would normally be. Plus, the third-world manufacturer can still sell widgets to other countries, whose products will have an advantage over the U.S., since they'll be using half-price widgets! There goes the exchange rate on a dollar...

    Now replace widgets with software, and it gets a whole lot worse. What business doesn't use software? What sector of the economy wouldn't be helped by having to pay much less for software?

    If job security really bothers you, there are some software jobs that can't be outsourced. Most U.S. military projects go to American companies, for reasons of security. It's even better if you can get security clearance.

    It's not easy to be a worker in a fast-paced economy, where the skill sets are changing and job security is non-existant. But it's a lot better than the alternative, a broken economy where the government protects the jobs of a few privilidged workers at the expense of everyone else.

  • by Travoltus ( 110240 ) on Friday March 28, 2003 @09:30PM (#5620352) Journal
    I propose we give government subsidies to corporations who choose the cheapest labor possible.

    We need to do more business with countries where child labor is encouraged, and where prisoners provide more skilled work for free. The United States needs to take the lead in encouraging nations to avoid imposing socialist employee safety laws on employers.

    America! Of corporations! By corporations! For corporations!

    Fascistus Maximus
    CEO, Omni Consumer Products
  • The usual reason (Score:5, Insightful)

    by Anonymous Coward on Friday March 28, 2003 @09:49PM (#5620420)
    Heeltoe, the reason that you will not see any government action is quite simple, it has been decided by investors (rich people, rarely do work themselves, all about greed) have decided that as a highly educated, intelligent developer you are making too much money. The problem being that software developers make about 40% more than your average factory worker, and that's 40% that could be going into someone elses pocket.

    The first solution is the beloved H1 (amongst others) Visa. This was designed to reduce teh so called "tech labor shortage" (read: high salary) of the high-tech sector. When this failed to increase corporate margins, companies were forced to make prfound sectors about the bold new global economy (read: outsource work to places labor is cheap). I have watched a number of projects get outsourced to the 3rd world for exactly this reason.

    So when I think back to those years when mom was telling me that all I needed was a good education, work hard in school, etc. I get sad. I should have tried to be a football player like those "losers" I figured would work a check out counter. I was right of course, they are working the check out counter, but the business world won't stop until my salary is reduced to the level of a check out clerk, but those football players sure got laid more.

  • by Rui del-Negro ( 531098 ) on Friday March 28, 2003 @11:01PM (#5620651) Homepage
    Software is no different from other products. It's not the lack of tariffs on software that's wrong; it's the tariffs imposed on other products.

    By imposing tariffs on products made in poorer countries, you are essentially forcing them to lower their prices even more (to stay competitive). Result? USA workers lose (because tariffs are never enough to really offset the lower initial cost), foreign workers lose (because tariffs are never low enough to let them really raise their standard of living), US state wins. In a country with good welfare / unemployment funds / etc., this could be a good thing. In the US system it's not. The money ends up being spent on obscure government and defence projects, and the programmers remain unemployed and broke.

    Capitalism can be a reasonably fair system if all markets are open. Tariffs screw everything up, for everyone. If there are no tariffs, the tendency is for all markets to become level. A poorer country may have an initial advantage (lower wages), but as it becomes richer, its workers will want higher wages, until it has reached the same level as richer, more developed countries, which means workers in those richer countries become an economically viable option again.

    And everyone lives happily ever after. As it is, you have a lot of unemployment at home, a lot of people that hardly make enough to eat abroad, and a cowboy that spends hundreds of bilions of dollars in toys that go "boom" on other people's homes.

  • by jasno ( 124830 ) on Friday March 28, 2003 @11:34PM (#5620784) Journal
    We think you're a protectionist idiot who needs to go study economics.

    No, don't just take the jobs oversees, take the companies that use foreign labor overseas as well. Look, there's no solution to the 'problem' of foreign labor. Adapt, overcome, and continue to innovate and you'll be fine.

    If programming really is so easy that anyone can do it, why should you get a premium for being an American?
  • by darnok ( 650458 ) on Saturday March 29, 2003 @12:45AM (#5621057)
    > Why doesn't the US tax the import of software?

    Because if they did, then other countries might do a similar thing and start taxing the import of software from the US. As the US is the largest producer of commercial software, and is in an economic hole, this would hurt the US more than it would any other country.

    It might have worked a few years ago, before there were viable options to Windows and (low- to mid-range) Solaris and HP systems, but now Linux and BSD make it viable to run companies without US-produced commercial software.
  • by Wansu ( 846 ) on Saturday March 29, 2003 @12:49AM (#5621075)

    ... how would this change the climate of US IT jobs leaving for other parts of the world if we did tax software imports?

    If that's the only change made, then those companies would open IT shops here and staff them with imported workers on H1B visas. If the desired outcome is to employ more native born US citizens, imposing a tariff isn't sufficient by itself.

  • by shylock0 ( 561559 ) on Saturday March 29, 2003 @02:24AM (#5621323)
    Regardless of the economic and political implications, the technological difficulties involved with enforcing such a tariff are simply staggering. Software is completely liquid. You can e-mail source code, compile it in a native country, and then sell it. How would you tariff software developed in multiple countries by persons of multiple nationalities? Allowing for that would make it too easy to get around the tariff.

"It takes all sorts of in & out-door schooling to get adapted to my kind of fooling" - R. Frost