Causes of financial problems in America, the US Part 2

Silicon Valley

This is a street that leads down into Silicon Valley.
This is a street that leads down into Silicon Valley.

Internet and knowledge based economy

I have already discussed some of the apparent causes of economic crisis and financial problems of America that tends to a recession. It was in my earlier article

Why America and Americans are in Financial Problem? Part I.

Now I would like to discuss role of Internet in American economy. You can see how it has changed both American and global economic scenario.

Internet has changed the whole technological aspect of the world. This technology has turned business and economic scenario of twenty first century. Eighteenth, nineteenth and twentieth centuries were an industrial era but certainly the twenty first is not.

This is an information age. We have entered into knowledge based economy. Natural resources and technological developments were in the driving seat of economic development since past three centuries. However, the present days are different. Future will also act in different manner.

Knowledge, knowledge and knowledge only will be everything. All financial and other resources will flow towards knowledge. He who has knowledge will survive. People with updated knowledge will emerge as the winner, says C K Prahlad, top management Guru..

Internet has provided opportunity to get information ready hand. and knowledge is now accessible to all. In fact, it has democratized accessibility of knowledge. Internet has broken barriers of the borders between countries. It is now truly globalized.

Affect of outsourcing via internet


The US was pioneer in the information technology and Internet. Most of the Internet service providers (ISP) were and are from America. Until recent past, America was No.1 among net users. All these provided America and the Americans with an upper hand in technology, knowledge and thus in the economy. If we look into the business and trade scenario of last two decades, we find that Internet, computer hardware and software directly or indirectly had a lion's share in the American economy.

Bill Gates of Microsoft emerged as the richest man in the world during these days and remained in the position for a long time. Google, MSN and Yahoo along with Amazon and E-bay could manage to play a major role in economic development in America during last few years. Likes of Apple and IBM corporations have also played their role in boosting American economy.

Though Google is yet flourishing Yahoo and MSN are losing their grounds in web based businesses. Amazon is not doing so well now. Bill gates of Microsoft is no longer No.1.

(Updates: Yahoo and MSN are now trying to join their hands with each other. An application of merger is pending with the US authorities.)


BPO Center, Patni Noida Building

Patni Noida Green Building,  Patni's award-winning, state-of-the-art, environment-friendly IT-BPO center in Noida, India
Patni Noida Green Building, Patni's award-winning, state-of-the-art, environment-friendly IT-BPO center in Noida, India | Source

Turning point

Situation is now turned. Emerging economies of Asia such as India and China have found their places in the present global economy. Silicon valley cannot move without Indian IT professionals. Moreover, American corporate sectors outsource a lot of business to India and other Asian countries. They are now able to delegate much of their business to call centers of India and other Asian countries. It is much cheaper to get the work done elsewhere than to in America. Though the American corporations are earning much and maintain their growth, common Americans are suffering from job losses.

Corporations are regularly down sizing in the US. They are more and more depending on BPO (Business process outsourcing) and KPO ( Knowledge process outsourcing). Medical transcription outsourcing has transferred thousands of jobs from the US to India. Microsoft and Google have established their offices in India. Merrill Lynch, Franklin Templeton, City Bank and many other financial service providers also find their way to Hyderabad and Bangaluru in India. American banks and credit card companies have started keeping their Customer accounts in India. Hospitals are getting their medical transcriptions there. A lot of research works and legal formalities have also been out sourced to Indian companies. Internet has made all these possible.

Dow Jones investors are now able to trade online in Hong Kong, Shanghai and Bombay Stock Exchanges, Indian stock market is doing much better than American market.

Impact of outsourcing on American economy

Internet and emerging economies


The US has a strict visa policy especially for the citizens of the third world countries. It is very difficult to get an American visa for a common Indian or Vietnamese. However, internet facilities reduced the need to enter into America in search of a job. They can get an outsourced American job living in their own country. Some times they can do it even staying in their homes.

Internet has also revealed secrets of the developed countries. They are now exposed to other nations. In present days, it is not an easy task for America or other developed countries to manipulate situation in their favor.

The emerging economies such as India, China, Brazil, Russia, Philippines and Malaysia should be grateful to Internet. They can flourish their economy with the help of Internet. India has used Internet to import jobs outsourced from US, UKand other developed nations.

Cheaper broadband service in India helps in keeping (outsourced services) costs low. Though imported, Indian broadband service is much cheaper than that of America. A 24x7 service is available for mere $ 6 per month. Broadband service users in India are increasing by leaps and bounce. Indians are very good in communication skills and trained in information technologies.

Internet in China

HUST CERNET satellite dish
HUST CERNET satellite dish | Source

Is internet still economically benificial for common Americans?

  • Yes
  • Not at all
  • Not
  • Benificial for big corporate houses
See results without voting

Will Americans think?


China has surpassed in the number of Internet connections in America last month. Can one imagine what can China do with its large population of more than a billion i.e. six to seven times of America? India also has growing number of internet users.

Philippines, Indonesia, Brazil...and many other countries are in the row. Where as disgusted American citizens are staking on some meager income from ad sense or so. Increasing number of US citizens are trying to write in hub pages or in some similar sites to have some income from ad sense. Do you think that income from ad sense can solve their problems?

America has brought revolution by inventing and pioneering information technology. it has supported its economy for two decades. Now internet is acting as a boomerang for America and American economy. American money is flowing out and Internet is playing a major role in the same. It is causing large numbers of job losses in the US. In turn it will bring down American economy.

Booming Sensex and plunging Dow Jones are telling us the story. You can see how Indian stock market is performing much better than the US.

Will Americans think?

N.B. You can feel free to comment on this hub. Debate on the topic is welcome. If you feel that the article is helpful please book mark it to any social networking sites. You can also mail it to your friends and family who may find it useful. Thanks,

Author


America Inc, Outsourced to India

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Comments 23 comments

joe 6 years ago

the only solution is a complete depression. the dollar must be worth less than paper and the economy of america must be trashed. then and only then will america come to stand as a proud country that all look up too again. it is a harsh solution but it is the only fix. we must start from the beginning.


JYOTI KOTHARI profile image

JYOTI KOTHARI 6 years ago from Jaipur Author

Hi Sandy,

This, perhaps, not the solution. If this happen, Americans will start consuming more and price will bound to rise according to rules of demand and supply.

Thanks for your comment.

Jyoti Kothari


Sandy 6 years ago

Hi All,

In my opinion, the only solution is that the Americans start lowering price of everything.


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JYOTI KOTHARI 6 years ago from Jaipur Author

Hi Garima,

Thanks for your comment. It is now difficult for developed countries to hide information and manipulate situation in their favor. Internet has certainly benefited the under developed and poor countries.

Jyoti Kothari


Garima 6 years ago

Hi,

Internet has proven a blessing to emerging economies. Developed countrie can not mislead now.

Thanks for very informative hub. You are writing so well ! These are very useful for businessmen, professionals and students.

Thumbs up !


JYOTI KOTHARI profile image

JYOTI KOTHARI 7 years ago from Jaipur Author

Hi Praveen,

Thanks for your agreement. Possibly America will change.

Jyoti Kothari


Praveen 7 years ago

Hi Jyoti,

I agree with you. Financial problem of America is doubled since the article is written.

Praveen


Dk 7 years ago

Internet is one of the reasons behind financial problem of America. It is not beneficial to common Americans now. If any benefited they are corporate giants like Google and yahoo.

Thanks for an interesting hub.

DK


Bharat Shah 7 years ago

Yes, I agree with your views.

Bharat


Sumeet Bose, Kolkata 7 years ago

Hi Jyoti,

You are pointing out the right thing.


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JYOTI KOTHARI 7 years ago from Jaipur Author

Hi Joubi,

Thanks for your comment. It seems that you will be proven right by the next decade.

Regards,

Jyoti Kothari


Joubi 7 years ago

Very good analysis. I fully agree with you. Americans are learning a good lesson. It may take at least 10 years for them to recover. By that time China and possibly India have outsmarted them!


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JYOTI KOTHARI 7 years ago from Jaipur Author

Hi Mahesh,

America was benefited by internet at one stage and now India and other Asian countries riping the benifit. Story turned.

Jyoti Kothari


Mahesh Manjarekar 7 years ago

Dear Jyoti,

internet is proved boomerang to American economy. President Obama can not stop outsourcing. America can not go against India.

Mahesh


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JYOTI KOTHARI 7 years ago from Jaipur Author

Dear visitors,

Do you think President Obama can stop outsourcing?

Jyoti Kothari


JYOTI KOTHARI profile image

JYOTI KOTHARI 7 years ago from Jaipur Author

earnest,

Thanks Earnest. All these three parts were written six months back. It is pointed out in these hubs, all before crisis!

Any one can predict situations at earlier stage if he has close look to present state. This will help one tremendously in deciding ones future steps.

Jyoti Kothari


earnestshub profile image

earnestshub 7 years ago from Melbourne Australia

very insightful. Thank you for another great hub.


smilybaby profile image

smilybaby 8 years ago from India

Very Good Hubpage of Financial problem.


JYOTI KOTHARI profile image

JYOTI KOTHARI 8 years ago from Jaipur Author

This is something u got is right. But again apparent.. One has to go to deep to search the rout of the problem. Pls follow the hints given in the hub to find deeper causes.

Thanks,

Jyoti Kothari


JYOTI KOTHARI profile image

JYOTI KOTHARI 8 years ago from Jaipur Author

This is something u got is right. But again apparent.. One has to go to deep to search the rout of the problem. Pls follow the hints given in the hub to find deeper causes.

Thanks,

Jyoti Kothari


Dorsi profile image

Dorsi 8 years ago from The San Francisco Bay Area

I saw firsthand the dot com boom in the Silicon Valley (and the bust). (Our business is here in the Silicon Valley) At the beginning, it was like the Gold Rush Days in early California. You could not find a place to rent let alone a house to buy. There were lines to to buy houses, and wealth was getting flung around at an an amazing pace.

Now the tables have turned exactly the opposite- there are foreclosures on almost every street- when the prices of housing went sky high homeowners took too much equity out of their homes and now the prices have dropped and they are left owing the bank. Too much spending and enough saving.

Now we are paying the price for that. Throw in climate change and the cost of disasters related to that and we are not in a good place. People need to hunker down now and start saving as much as they can, and calm down spending, get more resourceful by starting gardens, looking for additional ways to supplement their incomes.


JYOTI KOTHARI profile image

JYOTI KOTHARI 8 years ago from Jaipur Author

Many will not agree. This internet has given a lot to the Americans. It is not easy to digest that is is now a bumerang to American economy.


john schmit 8 years ago

hi, Now u have made a mistake. In the first para u mentioned the hub does not exist. I am not at all agreed that internet causes slowdown in America. I am sorry. You may deny this comment but I am firm in my opinion.

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