DOBBS: Let's start with some opinion.
You may have noticed recently that I'm being attacked for some of my views about the exporting of American jobs and my calls for a balanced U.S. trade policy.
Gerard Baker of "The Financial Times" recently called me "the high priest of demotic sensationalism." An editorial in "The Economist" magazine has accused me of embarking on "a rabidly anti- trade editorial agenda and greeting every announcement of lost jobs as akin to a terrorist assault."
Daniel Henninger of "The Wall Street Journal" excoriated me, I must say in high style, for my troglodyte views on outsourcing. He says, "It's as if whatever made Linda Blair's head spin around in 'The Exorcist' had invade the body of Lou Dobbs and left him with the brain of Dennis Kucinich." "Washington Post" columnist James Glassman has simply accused me of being a "table-thumping protectionist."
Now, those quotes are from some of the most respected news organizations and there have been dozens of other articles critical of some of my views that outsourcing American jobs is neither sound, smart, humane, nor in the national interest.
And I will tell you that it does make a fellow think when attacked so energetically and so personally. But in none of those attacks, upon reflection, has a single columnist or news organization seen fit to deal with the facts that present themselves now.
No. 1, we're not creating jobs in the private sector in this country. That has never before happened in our history. Our economists and our politicians, our leaders, need to come up with answers, not dogma.
No. 2, we haven't had a trade surplus in this country in more than two decades. And our trade deficit continues to soar to new record levels.
No. 3, we have lost three million jobs in this country over the past three years and millions more American jobs are at risk of being outsourced to cheap overseas labor markets. That seems to me, at the least, to be more than sufficient evidence for all of us, Republicans and Democrats alike, to question critically the policies of both parties that have led to us this critical juncture in our economy and our history.
Frankly, I would love to be proved wrong in my views. And I would gladly change my position if only the critics would answer a few questions factually, empirically and straightforwardly. First, how many more jobs must we lose before they become concerned about our middle class and our strength as a consumer market.
Two, when will the United States have to quit borrowing foreign capital to buy more foreign goods that support European and Asian economies while driving this nation deeper into debt.
Three, what jobs will our currently 15 million unemployed workers fill? Where and when? My critics and proponents of so-called free trade and my views on outsourcing suggest I'm a protectionist because I want to curtail the export of American jobs to cheap foreign labor markets just to reduce wage levels and to eliminate our trade deficit and to pursue balanced trade policy.
Our principal trading partners include Canada, China, Japan and the European Union. All typically maintain annual trade surpluses and pursue balanced trade. Why don't my critics call them protectionists? Why not call them economic isolationists.
My critics and proponents of the status quo are offering false choices. They say we must decide between protectionism or economic isolationism as the president said today and so-called free trade. I'm sure they believe those choices are the only ones available. I don't question their sincerity. But perhaps they are also afraid our policymakers may soon discover a middle ground for a desperately needed new U.S. trade policy. A balanced trade policy in the national interest.
I'm joined now by three guests with unique perspectives on the exporting of America. George Colony is the chairman and CEO of Forrester Research. A well-known Forrester study forecasts this country will lose at least 3.3 million professional and service jobs to cheap overseas labor markets by 2015.
And joining us, Chris Larsen. He is the chairman and CEO of E- Loans. The online lender now let's its customers decide whether their loan applications are processed in this country or in India. And Chris Larsen joins us from Sacramento. Good to have you with us, Chris.
And New York state Senate minority leader David Paterson. He will soon introduce a bill designed to keep jobs in this country. State Senator Paterson joins us from Albany, New York. Thank you all for being with us.
Let me begin first and I think it's appropriate that we begin with you, George, because your survey -- your forecast really first put the parameters around the issue. Over 3 million jobs lost over a period of time. Do you have a comfort factor about the number of outsourcing jobs that have been lost to overseas markets?
GEORGE COLONY, CEO, FORRESTER RESEARCH: Today it's about 220,000 jobs that have gone offshore by year end 2003. We advise large corporations who in the technology policies and also how they outsource. There are really four imperatives we see for those companies. One, it's not for everybody. 60 percent of American companies have not outsourced yet. Only 15 percent have done it to date. So it's not for everyone. It's hard to manage. We're finding that it costs about double the cost to manage an offshore job than it would onshore and, third, it's -- very hard to do...
DOBBS: You know that flies in the face of McKenzie (ph) which says basically that it is the path to efficiency and glory and productivity and will result in a 72-percent savings as a result of lower labor costs.
COLONY: We're not finding that. It's actually quite hard to do.
DOBBS: Straightforwardly, I'm delighted to hear it. I hope it is difficult to the point of impossible.
COLONY: It's very tough, in fact.
DOBBS: Let me turn to you, if I may, David Paterson. Your bill suggests withholding taxpayer funds from companies that outsource. How realistic is that you will see that bill passed and how effective do you think it will be?
DAVID PATERSON (D), MINORITY LEADER, NEW YORK STATE SENATE: I think when the bill is understood everyone will want to pass it, Lou. We are not trying to put these companies on a blacklist and we're not in any way trying to impede them.
DOBBS: You're not an economic isolationist as the president said today?
PATERSON: We understand it is an evolving global market and we all want to be a part of it. What we're saying is that where companies are outsourcing we think the public should know about it so the public can make a choice. We think they should give six months notice before they transfer jobs overseas so workers can be aware. We should not make American workers be denied their severance pay if they don't train their foreign replacements as some companies are doing.
Finally, and I feel like I'm giving the NFL football sort of disclosure, but we want the express written consent of consumers when their records are being transferred overseas, particularly medical records and personal banking or accounting or taxpayer records where the rights of privacy laws are not as strong as they are here in the USA.
DOBBS: It is one of the huge issues amongst many that are not being dealt with here. You are absolutely right. COLONY: The companies that don't do it, and probably will never do it are the ones that are involved in this issue of privacy, not pushing records offshore. In many companies' cases they would not be able to do that. And they should not do that.
DOBBS: None of them should be doing that in my humble estimation because it is proprietary, personal, it is a matter of U.S. privacy law. Let me turn to you, Chris Larsen because your company is unique. You are not only outsourcing, you are telling people you are outsourcing and you are giving your customers a choice about the impact of outsourcing. How is it working when you give your customers at E- Loans a choice between India and American service?
CHRIS LARSEN, CEO, E-LOAN: Well, we're surprised, it's actually a very high number, roughly 85 percent of our consumers are choosing to have their applications processed in India when given the choice. I think it really is a balance between, of course, trying to efficient and trying to be as fast as we possibly can. Consumers always want that but you have to be transparent and I think you have to give the control ultimately to the consumer and they make that decision of whether or not the benefit outweighs these consequences that I think are so stark.
DOBBS: One of the complaints that I have heard from thousands of our viewers is that they will call up for a computer or financial services company, they will obviously be talking with someone in India or another country, and the person will identify themselves as Thom, Joan, John, or Suzie and obviously, those are phony names built for comfort, fictional comfort of the customer. Do you do that?
LARSEN: No. We actually don't have any jobs in India that involve direct customer contact. I think that's one of the jobs that needs to be done in the U.S. because it's very nuanced, but I agree with you. I mean a lot of companies are going out of their way not only not disclosing but actually deceiving their customers. That's leading to a big consumer backlash and that definitely has to stop. We do believe disclosure is part of the answer. Clearly those are always troubling issues but if you disclose to the consumer, let the consumer choose, I think that's the right balance.
DOBBS: George has a...
COLONY: I want to ask Chris a question. Why are the consumers choosing to go with India and not the U.S.?
LARSEN: In our case, what we do is we offer the consumers a time benefit. We're able to process home equity loans one to two days faster by using the advantages of the time offset, if you will. We haven't given the consumer a cost benefit. One versus the other. We think that's the way it's going to go.
DOBBS: I guess my question here, Chris, why is there that -- and I was going to get back to this in just a moment. Since we're on the subject, as George is leading us to the point, why would there a time advantage dealing with India versus the United States? LARSEN: It's almost like having a graveyard shift that we're using in India, because it's almost a 12-hour offset, we can do some processing beginning here in the U.S. and then during our nighttime, their day time, continue the processing through PDF that we are sending over there, they send that completed work back to us so it works well from that perspective.
PATERSON: I was wondering if the fact that in India that the cost of hiring the workers is often 50 to 68 percent less than it is in America you could actually have more workers and you would have a better service because you have more people involved in it and it makes people in this country appear, not to be working as hard, when actually they are, in a sense, beaten by the salaries that they make here in the United States.
DOBBS: Well, let's -- let's ask Chris to answer that first, if we could.
LARSEN: Yes, I don't know if that's really so much the case. I do agree with the earlier comment, some of these jobs are not well suited and are much harder, actually, to use in the offshore outsourcing. I think companies do have to be very careful. There are clearly some jobs that are extremely well suited.
DOBBS: How much money are you saving at E-Loans to do this?
LARSEN: We don't have the exact data yet. I think if you'll look at some of the typical jobs it's 40 percent of the cost you would be paying here in certain positions. Clearly there's a cost savings. I do believe where we're going to be going with this as an industry. You are going to have to offer a consumer a cost break on having your data sent overseas.
DOBBS: What percentage of labor -- I guess the question is this. In your total scheme of things, how large a factor are labor costs in your margins?
LARSEN: It's pretty heavy, about 70 percent. So it definitely is a very significant component. Particularly in some of the back office functions. So it is significant. It can't be ignored if you are really going to have the most competitive price out there to your customers.
DOBBS: Are your competitors doing it as well?
LARSEN: You know, in our industry, it is just rampant. If people aren't doing it now. They are talking about it. I think it's going to accelerate.
DOBBS: George, it sounds like your number may be a little conservative.
COLONY: We don't think so. We think that number is a little conservative but not off by very much. It could be 4 million...
DOBBS: I've never known Forrester Research to be less than competent...
COLONY: But one point, Chris, you may not like this, Lou, but...
DOBBS: It doesn't matter.
COLONY: As we talk to our clients who are having software developed overseas, the software developed overseas is of higher quality. That's a big surprise. It's lower cost but it's higher quality. There's a quality measure in software called CMM and five is the highest, one is the lowest. What we're finding with our clients is that the software developed in India is CMM level 4 or 5. And software developed by EDS, Accenture's 2 to 3. And that's really...
DOBBS: ...outsourcing there so I don't know what that means. Because their entire development...
COLONY: This is six months ago, of course, they're headed there now.
DOBBS: They're there. They have been outsourcing all of their material.
COLONY: What they are finding is the quality of software is rising. That's the disturbing part of this.
DOBBS: That is disturbing. We are going to have to talk about it more. I think it should be disturbing for everyone. This country is where software was pioneered and innovated and you're telling us it is actually being produced and coded better...
COLONY: Higher quality.
DOBBS: That's remarkable. You're right, I don't like it a bit and I'm going to check it out. Thanks a lot, George. And Chris, we thank you very much for being here, as you might guess, I'd like to you take a look at figuring out another way to improve margins but I have a feeling you are going to be a tough sell. We'll talk about it more. I give you my compliments for being straightforward about it and straight up. And we thank you very much as well, Senator Paterson for being with us.
PATERSON: I was saying I hope that other business people are as responsible as Chris is, but as a government I don't think taxpayer dollars need to be going to subsidize companies who may be causing Americans to lose jobs.
DOBBS: Straight up, Amen. As I say, I applaud Chris and his company for being honest about it. I wish they would also be restrained and keep those jobs where they belong in my humble opinion. Gentlemen, thanks a lot for an interesting discussion, appreciate it.
When we continue here, health officials are fighting back against a wave of exotic diseases that could threaten mankind. We'll have a Special Report for you. And American car makers, pass their European competitors in one very important category. We'll have that and a great deal more ahead. Stay with us.
DOBBS: Health officials are trying to develop new ways to fight new diseases such as SARS, mad cow and West Nile virus. With the increase in travel and trade, these diseases know no geographic boundaries. Kitty Pilgrim has the report.
KITTY PILGRIM, CNN CORRESPONDENT (voice-over): SARS, West Nile, mad cow, avian flu, monkeypox, there are so many new diseases these days the U.S. Centers for Disease Control is calling it the, quote, "new normal."
JIM HUGHES, CENTERS FOR DISEASE CONTROL AND PREVENTION: Over the last two years there have been quite a number of examples of emerging global microbial threats. We're constantly reminded of the fact that an infectious disease problem in another part of the world can be rather rapidly on our doorstep and in our midst.
PILGRIM: At least ten infectious diseases that the CDC has been battling have come from animals and have now infected humans. Carried by cows or birds or mosquitoes or transferred to humans who travel by plane, the new diseases know no boundaries. The Centers for Disease Control recently held a conference to talk with 65 countries about better reporting and coordination. The U.S. contagion efforts have been effective. The CDC sent teams to help other countries. 84 people were sent to ten Asian countries to help with the recent SARS outbreak. Some say China initially didn't understand about international cooperation.
DR. WILLIAM SCHAFFNER, INFECTIOUS DISEASE SPECIALIST, VANDERBILT UNIVERSITY: China was in denial. They tried to deal with this internally for the longest time without reporting it to the World Health Organization. And I think the Chinese colleagues have learned enormously from that. And in the current bird flu outbreaks, et cetera, they are very much more open. They have welcomed people into China.
PILGRIM: New diseases have called for new measures. Screening passengers on airplanes for SARS. Civet cats destroyed in some animal markets in Guankong (ph), China, for SARS control, killing hundreds of millions of chickens in Asia. Quarantining farms in Delaware and Texas for avian flu, spraying for West Nile virus, bans on the sale of prairie dogs after a monkeypox outbreak.
PILGRIM: The biggest reason why some countries don't report a disease is fear of economic repercussions. But recent outbreaks of SARS and bird flu and mad cow have proven it's considerably more costly to hold back on the information in the long run -- Lou.
DOBBS: Thank you, Kitty. Up next here, some good news tonight for U.S. car makers. (BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: That reliability increase that we have seen over the past five or six years has really moved them forward and ahead of the European manufacturers.
(END VIDEO CLIP)
DOBBS: A major achievement for the hubble space telescope. Images truly out of this world. We'll return with that in just a moment.
DOBBS: Incredibly for the first time in more than two decades American car makers overtaking the European competitors in overall reliability. That according to the latest test conducted by "Consumer Reports." American cars ranking above the European automobiles in several categories. Bill Tucker has the story.
BILL TUCKER, CNN CORRESPONDENT (voice-over): It was a rough climb but after 24 years, Detroit has won some bragging rights over its European competition.
MICHAEL FLYNN, UNIVERSITY OF MICHIGAN: They have been making for some years now a series of incremental improvements in how they design and build cars.
TUCKER: Ford was the big winner with its Ford Focus named best of class in small cars and most fun to drive. But there was plenty of glory to go around. GM's Buick Regal was rated as the most reliable family sedan over the past 3 years and it's Monte Carlo was named the most reliable of all GM models. The American made Jeep Liberty was named Chrysler's most reliable and the PT Cruiser earned higher than average marks from "Consumer Reports."
DAVID CHAMPION, CONSUMER REPORTS: What they've done is attention to detail. Like the Japanese do, great attention to detail all the little problems they've put to bed. The domestic manufacturers really look at those and really put a system in to put those problems to bed. And we're seeing basically the fruits of their work.
TUCKER: The news for Europeans was less happy. All Mercedes- Benz models rated below average as you did all Audis. The BMW 7 series and the Mini Cooper made it big in the movies with "The Italian Job" but not in the ratings.
MICHELINE MAYNARD, AUTHOR "THE END OF DETROIT": Consumers don't base European cars based on quality ratings. They are looking for things like engines performance, technology and these are areas that the Europeans still do well.
TUCKER: As good as the news for Detroit, there is still room for improvement. (END VIDEOTAPE)
TUCKER: After best in their competition from Europe, U.S. auto makers can now set their sight on Asia. Japan and Korean automakers continue to reign atop the "Consumer Reports" reliability ratings, Lou.
DOBBS: Surprising news and great news for American car makers. It's great news. Thanks, Bill Tucker.
Time now to take a lot of your thoughts on broken borders.
Michael Keeley of Niwot, Colorado said, "Lou, why is it that U.S. citizens are being punished by exhaustive searches at U.S. airports, but President Bush feels that aliens coming across the Mexican border do not even need to follow the rules for proper identification?"
Many of you wrote about the problems with electronic voting. Sagar of Belmar, New Jersey, "simply incredible, we can send rovers to Mars and control them from here, we can get receipts from ATMs, but we can get a print out of our vote."
And Vicki Davis of Idaho Falls, Idaho, "a new computer system is not like a new car, just because it starts up doesn't mean that it's working. The issue is accuracy, accuracy and accuracy."
Allen Kaltman of Jericho, New York, "Mr. Dobbs, as an information technology professional, I can assure you that there are only 2 kinds of people who are opposed to voting machines that can be audited, crooked politicians and idiots."
On Exporting America from Hartford, Connecticut, "my fellow IT workers and I here in insurance city sure do appreciate what you are doing. I know first had that outsourcing has all but destroyed the job market in this region."
And 17 year-old Andrew of Salinas, California, who will be voting for the first time in this presidential election this fall. "Lou, I am a huge fan of your show. I believe that you are one of the few persons who actually covers the issues instead of talking about Janet Jackson's breast."
We thank you for that. And we love hearing from you. E-mail us at loudobbs@CNN.com
On Wall Street today, stocks fell. The Dow down 72, the Nasdaq fell 13, the S&P dropped 6.
We continue here in just a moment. Before we do, a reminder to check on our Web site for the now list of more than 400 companies we confirmed to be exporting America. That's CNN.com/Lou.
Next Hubble telescope, Hubble images. They are the deepest ever in our universe. Stay with us.
(COMMERCIAL BREAK) DOBBS: Before we go to those Hubble images, the results of our poll tonight. 8 percent of you say you have a lot of confidence on electronic voting, 11 percent some, 11 percent little and an amazing 69 percent of you say you have no confidence in e-voting.
And finally tonight, those images from Hubble. Astronomers today unveiled the deepest portraits of the visible universe ever taken. A stunning view that reinforces the importance of Hubble to the future of space exploration and science.
DOBBS: Captured by the Hubble ultradeep field images, a different view of the universe.
STEVEN BECKWITH, DIR. SPACE TELESCOPE SCIENCE INSTITUTE: You have all these little snakey things in there that we have never seen in a previous image. We're just looking back far enough into time, far enough into the universe that the universe looks quite different.
DOBBS: The Hubble captured an estimated 10,000 galaxies. the deepest pictures of space ever taken and may reveal what caused the reheating of the universe a billion years after the Big Bang.
MICHAEL SHARA, ASTROPHYSICIST: What we're doing here is drilling through the universe to a time far away and far back in time when the galaxies were very very young, and when many different things like star formation, galaxy assembly, super novic explosions were happening in profusion across the universe.
DOBBS: During its nearly 14 years in orbit, Hubble has proven to be one of the most significant and successful scientific instruments in its time.
CHARLES LIU, PROF. ASTROPHYSICS CUNY: The Hubble Space Telescope has made a greater impact on basic research in astronomy in particular, than any other instrument of our generation. Today's results are just 1 example of the ways that it's opening up the frontiers of astronomy and astrophysics and answering, helping us to answer, anyway, the basic questions about our universe.
DOBBS: But Hubble's future is now uncertain. NASA has decided not to provide Hubble with future service missions on the shuttle, because of safety concerns. This would render the space telescope inoperable in 2 to 4 years.
KELLY BEATTY, SKY & TELESCOPE MAGAZINE: Hubble is like a well maintained antique car and as long as you keep it well maintained, it's going to perform for you.
DOBBS: If Hubble were to receive a 4th and final upgrade, astronomers claim it could be 10 times more powerful, seeing even deeper into space and extending its life into the next decade.
(END VIDEOTAPE) DOBBS: NASA administrator, Sean O'Keefe, announced in January the Hubble will be serviced. A mission was supposed to take place in 2006, that decision is now under review. There is also a push on Capitol Hill to keep the Hubble in operation.
That's our show for tonight. We thank you for being with us. Tomorrow, noted economist Paul Craig Roberts joins me. Roberts warns that this country could be a third world country within 20 years. And then face-off, e-voting, a threat to our democracy. And we'll have a special report on the Sierra Club, the contest between the environment and immigration.
Please join us tomorrow. For all of us here, good night from New York. "ANDERSON COOPER" is next.
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