Happy Election Day!
Multinational companies vote every day with their dollars, deciding where to invest based on prospects for growth. This cheerfully titled Wall Street Journal article presents a rosy 2.9 percent annual growth rate by adhering to the American convention of not adjusting for population growth (about 0.8 percent annual rate). The chart in the middle, however, shows that business investment is more or less flat (down for equipment and slightly up for software and structures). Adjust that for population growth and business investment per capita is actually shrinking in the U.S. A vote of no confidence from the world’s business community.
How does it look on the micro scale? I had dinner the other night with a VP for a multinational medical diagnostic equipment company. She works from India and manages about 650 people in Europe and India. Her husband is a professor here in the U.S. and she’d like to move back here, but “my company won’t transfer me here at my level; they’re expanding in Shanghai, Singapore, India, and a bunch of other places,” she noted, “but trying not to hire anyone in the U.S.” She travels (business class) about two-thirds of the time. I asked her what airlines she likes to fly between the U.S. and India: “KLM, Emirates, or Qatar,” she responded, “but Emirates is my favorite.” Would she fly a U.S. airline? “No.” In other words, her company is no longer investing in the U.S. and she herself chooses foreign-run vendors when it is a personal decision.
What about today’s election? She’s a U.S. citizen and was planning to vote. Did she have any reservations about voting for Hillary to continue the Obama Administration’s policies that have led her company to direct its attention and investment dollars elsewhere? No. Why not? Based on media reports she believed Donald Trump to be guilty of “sexual assault.” (some kids age 5-12 were also at the table so I didn’t feel that it was a good time to ask for details on whether she found the porn star or some other woman in the news to be most credible).
Unclear: is the VP working for a company founded in the US and then moved elsewhere or it is a foreign company unwilling to invest in the US and just randomly employing a US citizen?
The main benefits of Chinese and Indian workers is that they’re cheap. If Americans were willing to live in poverty, they could compete with those Third World workers. At this point there are over a dozen woman who claimed that Trump groped or assaulted them. One I read about today was standing on a sidewalk, waiting for a car, when Trump grabbed her rear end. They work in a variety of industries, not just pornography.
Vince, you are not in tune with the compensation in India and China. An India based VP will be earning the same or more than a US based VP of a multinational organization. Stock options are also similar. This is for a “real VP position” and not a VP in a bank (which is every tom dick and harry hanging around for 10 years in the bank).
Vince: Confirming what W says, above, all of the multinational executives that I know say that labor costs in China, for comparable skills, are the same as in the U.S. (Of course, any employer in the U.S. can follow Hillary Clinton’s advice and hire a woman, thus obtaining comparable skills and productivity at a 23 percent discount.) We are in a global labor market, apparently.
(Separately, it is brave of you to defend America’s women by attacking Donald Trump. One scholar that I talked to said that modern-day propaganda nearly always focuses on how someone or some society treats women. It is a good all-purpose excuse to invade a foreign country, for example, because we need to protect their women.)
W: I was referring to this: “they’re expanding in Shanghai, Singapore, India”. When companies “expand” in the Third World, that may involve hiring a few executives to manage the work of hundreds or thousands of non-managerial workers. The executives may get paid as much as American executives, but the factory workers don’t get paid as much as American factory workers.
The most famous example of cheap Chinese labor is Foxconn, which assembles devices for Apple and a number of other American firms. This article says that Foxconn workers make around $4,000 a year. That’s a lot less than the US minimum wage. Foxconn has around a million employees in China. So any executives who tell you that Chinese wages is the same as American wages must be in some niche industry, or else just lying.
http://www.marketwatch.com/story/it-would-take-25-years-of-foxconn-wages-to-afford-10000-apple-watch-2015-03-10
Donald Trump has made a point of talking about manufacturing companies, such as Ford and Carrier, that move factories to Mexico. They do that because they can pay less. The auto workers in Mexico make half as much as the lowest-paid American auto workers.
Finally, I didn’t choose to defend American women by criticizing Trump. I was just commenting on a topic that you chose to write about. Now you’re trying to change the subject.
Actually with airline fares, often the US airline comes up cheaper than foreign flag carriers like Emirates. The reason is that customers prefer the foreign carrier so the US airlines have to compete on price instead.
The last time I flew to HK I was on United. The average age of the cabin crew was maybe 60. For one of the stewardesses (or whatever the PC term is for that these days) it was her last flight before retirement so the cabin crew made an announcement and a fuss over her. For most people, being served by tired/bored/angry looking grandmothers is not a lot of fun. The aircraft was an ancient 747 with CRT TVs hanging from the ceiling as entertainment.
The next leg was HK to Beijing on Dragonair on a new Airbus. I felt like I had traveled back in time (minus the cigarette smoke in the cabin). The cabin crew were young attractive women. Even though the flight was only a couple of hours, they served a full meal and kept coming around with drinks, snacks, etc. The seatback entertainment was state of the art.
America is like that in general now – our next President Hillary is the symbol of the nation -a fat old tired lady wearing a pantsuit.
It is after all THEIR century.
Vince: I don’t think that you need a massive assembly line and thousands of low-skilled workers to design, produce, test, sell, and support medical diagnostic hardware and software. When this company expands in China, Singapore, and India, it is not because they need to stamp out tens of millions of identical widgets the way that Foxconn does.
@Jackie, why would the age and gender of the staff correlate with service. I am struggling to remember even one good restaurant service by a young waitress. Experience helps with dealing with assholes, babies, etc and those are by far the biggest pain points that the crew can control. They don’t install bigger screens or choose the frequency or the quality of the food.
> One I read about today was standing on a sidewalk, waiting for a car, when Trump grabbed her rear end.
That proves without a shadow of a doubt that Trump is either a flip-flopper or stupid, or both.
1 – flip-flopper: Didn’t he state that you should grab them by the p***y ?
2 – stupid: does he even know where the rear is?
I personally know of a young man who was reported to police as a child molester as he was trying to convince his 7-year old daughter to change her shoes by tickling her soles and she was laughing hysterically.
Vince, Philg
The low pay in China, India is only for manufacturing workers on the assembly line and entry level programmers in offshoring companies. For execs, it is same or better outside the US. For all other “knowledge” positions, ex-US pay is around 80% of US pay.
Amazon and google pay around 80% of US pay to low and mid level staff in India.
The corollary to this is that costs in China and India is more expensive for the same standard of living you would have got in the US (if you disregard count bay area and NY costs from the stats).
The jump of median salaries from 1% of US pay to 80% of US pay happened in the last 10 years.