Getting What You Pay For

As you might expect, I have several computers for which I am responsible. Counting all of them at our company, my personal machine, my wife's computer and our children's machines, I think there are seventeen total.

One that I have is a Pentium computer that I purchased through a reseller from Dash, a local computer distributor here in Kansas City, back in late 2000. It is still running flawlessly. Even so, given it's advanced age, older software and operating system, and relative lack of giddy-up, I've reduced its workload to doing one thing only - it writes and compiles VB6 code for updates to the soon-to-be-replaced  RPMS Version 7.

In fact, I'm pretty sure that machine is the second oldest computer in our domain. The oldest is a 486 that runs an ancient Novell 3.12 network to which we can still connect. We changed over to a Microsoft server back in 2003, but kept the Novell machine running "just in case." I keep thinking that I will take it down and junk it, but now it has become sort of a longevity test. It just sits in the closet with it's monochrome monitor switched off, patiently waiting for the Microsoft server to die. I'm pretty sure that Novell box is from Dash too, and dates back to 1993 or 1994.

I HAD another computer at the office that I used for E-Mail, documents, accounting, and .NET development. But I now have to replace that four-year-old Dell XPS that ran Windows XP. The motherboard went south back in January, and it cost me $75 with my local computer tech to figure that out. That was better than a bad hard drive I guess, but getting a new board is hardly worth the time and trouble, and might necessitate a reformat of my drive anyway. So bottom line, I'm in the market for another computer.

(I've temporarily replaced the XPS with a Dell Vista laptop that our bookkeeper no longer uses. It's fine, but VERY slow to boot and shut down, which Vista seems to want it to do for updates about weekly.)

I'm not a computer reseller, so I can't go to Dash directly, but I would really like to go back to them one way or another for my new Windows 7 computer. Read this article, especially if you're one of our many electronic components reps:

http://www.dashdist.com/1u2u/company/capacitor.html

Who knew?  I used to get computers from resellers that went through Dash all the time, back in the eighties and nineties. But then I stopped. I suppose it was just a dollars and cents thing, because the PC had seemed to become a commodity, with one more or less the same as another. I thought the battle was really about the best software or network.

And now I've re-discovered that the computer really does matter. It's just that it will take you a couple of years to figure that out.

Protectionism and the Balance of Trade

I read a new post by Pat Buchanon titled The Disemboweling of America. As is his wont, Mr. Buchanon rails against free trade, cementing his position in some circles as our chief xenophobe. Let me summarize:

• Nations seem to rise to power while protecting their industry - Great Britain, the US, Stalin's Russia, postwar Japan, and China today
• Nations appear to decline in power as they embrace free trade - see the above list, and consider Great Britain, and the state of the US economy since NAFTA

I've always been a free trade guy. But I also always thought that the Balance of Trade said a lot more about our nation's relative fiscal strength than the trade deficit. Service businesses like mine don't count when we tabulate the so-called 'trade deficit'. Even though we sell a little software and support to Canada, Mexico, and a few other countries, we're not included in that trade measurement.

And that is true for innumerable US businesses. If you work for a company that provides engineering services internationally; or you educate foreign students in our country (or run an American school overseas); or provide sales representation or distribution for a Chinese manufacturer, you don't count. 

I've always been mildly irritated by that. When pundits decry the trade deficit to make some political point or another, I always wonder why they don't look at the Balance of Trade. Shouldn't what any of us sell internationally count?

So because of Buchanon's article, I thought I'd have a look at it. I found the Bureau of Economic Analysis site, and downloaded a couple of their spreadsheets.

In 2009 we exported a shade over a trillion dollars worth of goods (that's a thousand billion, by the way) and imported just over 1.5 trillion or so. That's about on par with what Buchanon said it would be - a 500 billion dollar trade deficit. 

I figured that we'd more or less make it up in services. I figured wrong. In services, yes, we exported half a trillion. But we imported better than 370 billion. And that made our Current BOT deficit 380 billion for 2009! 

How in the world (literally) did we import more than 370 billion dollars of services? Like this:

• 72.6 billion of travel
• 25.5 billion of passenger fares
• 54.2 billion of other transportation
• 24.5 billion of royalties and license fees
• 153.8 billion of other private services
• 35.8 billion of direct defense expenditures
• 4.7 billion of government miscellaneous services

The one that sticks out like a sore thumb is Other Private Services. You know what those services are, even if you didn't know that's what they were called. Here's a sample of Other Private Services:

Help desk with Indian accent: - "Thank you for calling technical support, my name is Maverick, how may I assist you today?" 

Me: "Well, hello there Maverick, what's your last name?"

Help desk: "I don't know, they haven't given it to me yet." 

I really wanted to ask him how Ice Man was doing, but I bit my witty tongue. And there's more to private services of course, but the international outsourcing of tech support, computer programming, engineering, telecom, radiology, and plenty of other services, aided by the the Internet, has put my old stand-by Balance of Trade argument out to pasture. The Balance of Trade now sucks too, and it has for a while.

Our imports of foreign services overall have increased 210 percent in the last 17 years. But the segment called Other Private Services has by itself increased over 500% in that same time! It is by far the fastest growing segment of our services imports, and it means one major thing:

Jobs.

When we travel to foreign countries, we give piecemeal financial support to other nations. And I've always thought that's fine. It's neat to travel, and it's great that international tourists come here too. And if I buy some software from a German company that is the best suited for what we want to do, and that helps my American product work better in Italy - well, that's the upside for my customers of me paying a license fee to a foreign company.

But should we out-source our programming and technical support jobs because it is cheaper?

Henry Ford understood that the employees of his company would and should also be his best customers. And further, those employees would then have the means to purchase any number of product created in the American Industrial age.

I don't think that we should force companies to 'hire American.' But I would sure like to see us do two things to quit killing ourselves in the Balance of Trade for these Other Private Services.

• First, eliminate federal and state minimum wage laws. Those laws are job killers, plain and simple. We would shrink the labor pool so fast and put more Americans to work with that one measure than virtually any other thing we could do. 
• Second, require employers that import labor via Other Private Services to pay employer social security and medicare tax on those purchases. The employer tax is essentially a government tariff on our domestic labor pool. If we don't have the political will to get rid of it, at least impose it on internationals that want to work over here via the Internet and telephone. I know that isn't a very 'free trade' idea - but it has more political potential than asking our government to eliminate that tax.

Otherwise, if all of us in this digital age purchase our Other Private Services from overseas, instead of hiring local workers, what exactly will America become?