Obama’s chilling State of the Union

President Obama’s State of the Union address yesterday included some chilling words for the offshore outsourcing community:

“To encourage … businesses to stay within our borders, it is time to finally slash the tax breaks for companies that ship our jobs overseas, and give those tax breaks to companies that create jobs right here in the United States of America,” he said.

All the major Indian tech firms saw their share price tumbling today. Wipro lost 4.9% of their value, while Infosys lost 2.7%, and TCS 3.3%.

But, NASSCOM president Som Mittal said that his member firms are the “solution, not the problem.” His view is that the USA cannot rebound from the depths of economic despair without the help of overseas partners.

And Som is right.

Obama has to speak to a domestic audience for the State of the Union. He has to speak of job creation because of the terrible effect on jobs over the past couple of years. But Obama is also preoccupied with that fledgling economic recovery, the banking system, the new healthcare system, and his ongoing foreign military engagements.

The breakdown of international capitalism is not likely to be high on his agenda, and it’s not desirable anyway. Just listen to American fears of ‘social healthcare’ when anyone suggests the richest nation on earth might be able to find some cash to offer universal healthcare, rather than universal bank bailouts. Are these same people going to support artificial barriers and job creation schemes that go against everything that America stands for?

Forget about the feelings of the Indian technology firms for a moment and consider what Microsoft, Dell, Intel, or IBM is going to say to the President if he suggests they are penalised for working across borders? They might be American-based, but they are global. They hire globally and they deliver services globally. Perhaps the president might find that every major US-based firm relocates its headquarters to a more business-friendly environment, like the European Union?

It’s fine rhetoric in front of the flag, but the reality is that work and people move across borders this century in a way that could not be imagined a generation ago. It’s not rhetoric that we need, it’s a new understanding of how America can create jobs and increase interaction with other countries.

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