Monday, August 02, 2004

The Brilliant Economics of David Coursey

As usual, a little history. At the dawn of the Internet age, Ziff Davis (who used to publish great tech info, but now specializes in crappy, also-ran video game magazines, and tech mags with about as much non-advertiser sponsored content as an episode of GI Joe) started something called Anchordesk. The content of Anchordesk was geared mostly towards techies and was an invaluable resource for techies at the dawn of the tech boom. It was headed by the venerable Jesse Berst, who, after better than a dozen years at the helm, decided to resign (uh-huh) to pursue other interests (note: it's always worrying to see a page of a company's description and still wonder what in the hell it is they do).

Although one might think I was perturbed to see Jesse go, in my mind all he did was regurgitate press releases that were related to the tech industry; oh how wrong I was! Jesse was replaced by one David Coursey (to develop a quick opinion of David, check out who he's pluggin for prez on the bottom of his page. Hint: It's not Thomas Sowell). Suddenly Anchordesk went from publishing five articles a week (of which four worth reading) to publishing three articles a week (of which four a month were worth reading). Although the news seemed to be the same, Coursey wrote articles with no edge whatsoever. Over time, even that content degraded and David wrote about computer cozies and whatnot.

Well David's gig lasted a couple years and he pursue other opportunities...although he had no other 'opportunities' lined up. I guess out of pity, Ziff Davis let David write an occasional article for their site, which I read with about as much frequency as his Anchordesk articles (never). After a couple months, though, the unskilled, barely employed (did I mention he lives in the San Francisco area?) Coursey drops this piece of ignorant turd off in my inbox:

My bottom line: Offshoring is unpatriotic and customers should be willing to pay a bit more not to purchase offshored products and services. I also believe that some sort of tax needs to be levied on the value of work done overseas that should been done [like the grammar check in this article] onshore by American citizens.

Friggin brilliant! At least he didn't make the same argument as Ray Suarez did at a commencement address I attended where he said something to the effect that (and I quote from memory) "those darkies don't deserve to have good jobs"*; but he does make the ridiculous claim that U.S. businesses are somehow responsible for the sorry state of American education. The various arguments against offshoring fail on a variety points, that are, contrary to David's thinking, quite simple:

  1. Competition. American business 'A' dedicates itself to using U.S. labor for all it's processes. Foreign company 'Z' uses labor where it can get the most bang for it's buck. Optimistically, 'A' will be a shrunken hulk still selling stuff to Americans while 'Z' will have brought many new jobs to it's home country as it goes to dominate the market place.
  2. Fairness. This is always a sticky subject to approach (.i.e. what's 'fair'?), but would it be fair to have people in industries exposed to foreign competition subsidize those who aren't? Is it fair to have shop floor textile workers subsidize David Coursey's cushy office job?
  3. Commie Pricing. This is one analogy I use to explain to my son why communism doesn't work: Imagine going to Walmart and having to price everything, nothing has an existing price. Set the price too low and there will be a run on the product and the company that makes it will go out of business (which is what usually happens); set it too high and the product won't sell and the company, again, will go out of business.
    What David Coursey proposes is much the same: he magically knows all the 'right' prices. American business offshores a lot of work to Ireland and Canada, but you rarely hear any noise about it (Hollywood movies made in Canada come to mind - Boo Hoo!). Why do you hear noise about India and China and not Canada and Ireland? Because the David Courseys of the planet have gone into Walmart and arbitrarily decided what a 'fair' price is; when, in reality, the market determines the price (i.e. the price is what people want to pay for it).

Coursey shows his true ignorance in claiming that the issue is way complicated, but then feels quite adept himself at being able to choose the 'proper' prices for all the offshore tech services. Would David charge a tariff on my Microsoft call to Canada? How much? A different rate for SQL and NT questions? How about an off hours call to India? Firmware programming in Poland? Hard drives made in Ireland? Mexico? These are the simple questions, god forbid if David had to put together the proper tax rate for a bundled system that comes right from a foriegn country. The cost of regulating such a monster would make selling such a product pointless.

The end result of the regime David seeks to implement would be the destruction of various products in the American market; tech products are no different than anything else, no one is going to buy something if the price is more than what they want to pay.

It's the flip side of the old phrase: "he who will attempt to control that which he cannot, will destroy it".

*I overstate, to be sure, and I hate throwing the 'racist' label around (especially since it so often used as a cop-out against conservative arguments); but it is hard to escape the fact that there is often a tinge of ethnocentrism in the 'fair traders' arguments. Why else would they fail to bring up Canada and Ireland, but beat on China and India so incessantly?

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