Tariffs Vs. Corporate Income Tax

[Phenix]

I find it interesting that many people on this forum are in full support of substantially increasing corporate income taxes but completely opposed to tariffs. It seems that in both scenarios the costs will be passed on to the consumer; so why is there support for one but opposition to the other?

[bacchi]

The simple answer is that corporate taxes are on profits while tariffs are a tax on everything imported. Even a company trying to modernize its processes, for example, would pay 35% extra (on Chinese electronics, for example).

[tennisray]

So happy someone asked this question! It did seem weird how Republicans Pooh-pooh increasing corporate tax rates by saying the corporations will pass costs to the consumer. But not saying the same about tariffs. And vice versa with democrats. I’m genuinely interested.

[Ron Scott]

I find it interesting that many people on this forum are in full support of substantially increasing corporate income taxes but completely opposed to tariffs. It seems that in both scenarios the costs will be passed on to the consumer; so why is there support for one but opposition to the other?

My guess is that people who feel this way are watching too much deliberately biased TV and YouTube videos.

That’s only partially in jest.

[Boll weevil]

Couple other things are that the actual price increase is likely to compound to multiples of the imposed tariff due to compounding throughout the supply chain and that other counties are likely to retaliate with their own tariffs.

[twinstudy]

Any income tax only applies to profits/taxable income. A tariff applies to the whole price.

And even putting aside the derivation of the money, a corporate income tax, at least in theory, isn't discriminatory. There's horizontal equity. Whereas tariffs specifically benefit certain industries.

I'm also personally opposed to any measure that helps unsustainable industries stay afloat. I might agree to funding for socially beneficial work such as cancer research, but tariffs on commercial industry? Nah. If you can't survive in the free market, then fuck off.

We used to have restrictions here in Australia focussed on keeping local manufacturing. We would subsidise local auto makers more than it would cost to just fire all their staff and put them on benefits. In the end we stopped it, they closed down and we're saving a lot of money plus we have cheaper cars.

[NorCal]

I wouldn't say I'm in support of dramatically increased corporate taxes, although I'm not opposed to them being back to where they were in prior decades.  I am firmly against tariffs as a broad policy, for the following reasons:

1. Corporations always have a profit motive.  That's what they exist for.  There is a general alignment between the revenue source and the companies incentives.  This is not the same for trade.  Tariffs will fundamentally change the pattern of trade, where in some cases will eliminate that trade in its entirety.  Markets change, and some things are very price sensitive.  Getting a tariff rate even slightly wrong can eliminate a governments entire funding source.

2. The pool of corporate profit is much larger than the pool of trade.  There is likely no tariff rate high enough to fully offset corporate taxes without fundamental demand destruction. 

3.  There is a conceptual link between higher corporate income taxes and product prices, but this does not imply that the market impact is comparable to tariffs.  Corporate income taxes primarily impact the cost of capital.  This influences which markets companies invest in and  how they raise money (debt vs equity).  There is a long term impact on prices, competition, and return-on-equity.  But the link is indirect, largely detached from product pricing, and not particularly inflationary or deflationary.  In contrast, tariffs act like a direct sales tax that directly impacts prices, inflation, and reduces competition.

4.  The national security environment of the United States largely relies on trade relationships built in the post-war era.  The implicit deal in the post war era with the Marshall Plan is that the US would be the world's consumer.  We would grant access to our market in exchange for support with national security efforts around the globe.  This is how the US maintained relationships and alliances around the globe for the last ~80 years.  It created the dollar system which we still benefit from, but is increasingly at risk.  Even during the Biden years, there are increasingly few reasons for a country to develop and maintain a relationship with the US.  However, China is now building trade relationships with the rest of the world.  They are acting as the supplier to the world and deepening trade relationships that the US is abandoning.  Look forward a decade, and it's hard to see many countries throughout Asia/Pacific that would choose their relationship with the US over a relationship with China.  Tariffs will only accelerate that trend.

[RetiredAt63]

Corporate taxes are an internal matter.  Tariffs are international.  That is a huge difference.

There is a free trade agreement in place between the US, Mexico and Canada, (actually negotiated by Trump when he was last in office) that states no tariffs for trade between the 3 countries. If Trump imposes tariffs it will show that the US is not reliable at keeping trade treaties.  In the long run what country will want to sign trade treaties with a country that is unreliable?

Does he have any idea how much trade there is between our 2 countries?  He won't have cheap gas if he puts tariffs on Canadian imports, since 60% of imported oil is Canadian.  Oh, and we export a lot of electricity to the north-eastern US.

We put retaliatory tariffs on last time and will again this time, if necessary.   

I know people who boycotted American goods last time, when Trump was putting tariffs on Canadian goods and calling us a security risk.  I'll happily buy produce from Mexico, our reliable treaty partner, instead of the US if he does it again.

And maybe his Canada/US border wall will slow down all the smuggled guns coming in illegally.   /s

[twinstudy]

I know people who boycotted American goods last time, when Trump was putting tariffs on Canadian goods and calling us a security risk.  I'll happily buy produce from Mexico, our reliable treaty partner, instead of the US if he does it again.

The notion of buying your own country's goods bamboozles me. I can understand wanting to 'buy local' - there are some restaurants around that grow their own veggies or fruit or harvest their own grain or honey. I think that's cool. But putting aside certain things (like food) where provenance is really important, why should I care? I don't care if my iPhone is made in America, Japan, China or Bangladesh. If some worker in Bangladesh can output equivalent product for a cheaper price then hell  yeah, she deserves that job over an American. That's meritocracy - the American dream at work.

[NorCal]

I know people who boycotted American goods last time, when Trump was putting tariffs on Canadian goods and calling us a security risk.  I'll happily buy produce from Mexico, our reliable treaty partner, instead of the US if he does it again.

The notion of buying your own country's goods bamboozles me. I can understand wanting to 'buy local' - there are some restaurants around that grow their own veggies or fruit or harvest their own grain or honey. I think that's cool. But putting aside certain things (like food) where provenance is really important, why should I care? I don't care if my iPhone is made in America, Japan, China or Bangladesh. If some worker in Bangladesh can output equivalent product for a cheaper price then hell  yeah, she deserves that job over an American. That's meritocracy - the American dream at work.

There is a certain infatuation with manufacturing jobs that is entirely misplaced.

Popular imagination in some circles believes that manufacturing jobs are a reliable path to a middle class lifestyle for those with a high school education or less.

Never mind that this hasn’t been true for multiple generations.  High paid manufacturing jobs now require lots of education and technical knowledge. Low skilled manufacturing work doesn’t generate the economic value required to support a middle class lifestyle.

Making the US into some big manufacturing specialist would involve heavily devaluing the dollar, making us all poorer.

The whole idea of buying stuff manufactured in your country is economically illiterate nostalgia for a world that only briefly existed.

Like you, I’m always happy to buy local from a standpoint of supporting smaller businesses in my local community. But overly focusing on country of manufacture is silly.

[twinstudy]

Never mind that this hasn’t been true for multiple generations.  High paid manufacturing jobs now require lots of education and technical knowledge. Low skilled manufacturing work doesn’t generate the economic value required to support a middle class lifestyle.

Making the US into some big manufacturing specialist would involve heavily devaluing the dollar, making us all poorer.

The whole idea of buying stuff manufactured in your country is economically illiterate nostalgia for a world that only briefly existed.

Like you, I’m always happy to buy local from a standpoint of supporting smaller businesses in my local community. But overly focusing on country of manufacture is silly.

I agree with this. The support of manufacturing in particular has always seemed to me to have vaguely jingoistic overtones.

When people say, 'keep Australian jobs', my reaction is - why? Does an Australian deserve a call centre job more than a Bangladeshi, or an automotive manufacturing job more than a Thai person? I doubt it. We're all just humans at the end of the day.

[NorCal]

Corporate taxes are an internal matter.  Tariffs are international.  That is a huge difference.

There is a free trade agreement in place between the US, Mexico and Canada, (actually negotiated by Trump when he was last in office) that states no tariffs for trade between the 3 countries. If Trump imposes tariffs it will show that the US is not reliable at keeping trade treaties.  In the long run what country will want to sign trade treaties with a country that is unreliable?

Does he have any idea how much trade there is between our 2 countries?  He won't have cheap gas if he puts tariffs on Canadian imports, since 60% of imported oil is Canadian.  Oh, and we export a lot of electricity to the north-eastern US.

We put retaliatory tariffs on last time and will again this time, if necessary.   

I know people who boycotted American goods last time, when Trump was putting tariffs on Canadian goods and calling us a security risk.  I'll happily buy produce from Mexico, our reliable treaty partner, instead of the US if he does it again.

And maybe his Canada/US border wall will slow down all the smuggled guns coming in illegally.   /s

Out of curiosity, have the idea of export duties on oil & gas come up in Canadian public discourse?  I could see that being more impactful over the short term than import tariffs.

[RetiredAt63]

Corporate taxes are an internal matter.  Tariffs are international.  That is a huge difference.

There is a free trade agreement in place between the US, Mexico and Canada, (actually negotiated by Trump when he was last in office) that states no tariffs for trade between the 3 countries. If Trump imposes tariffs it will show that the US is not reliable at keeping trade treaties.  In the long run what country will want to sign trade treaties with a country that is unreliable?

Does he have any idea how much trade there is between our 2 countries?  He won't have cheap gas if he puts tariffs on Canadian imports, since 60% of imported oil is Canadian.  Oh, and we export a lot of electricity to the north-eastern US.

We put retaliatory tariffs on last time and will again this time, if necessary.   

I know people who boycotted American goods last time, when Trump was putting tariffs on Canadian goods and calling us a security risk.  I'll happily buy produce from Mexico, our reliable treaty partner, instead of the US if he does it again.

And maybe his Canada/US border wall will slow down all the smuggled guns coming in illegally.   /s

Out of curiosity, have the idea of export duties on oil & gas come up in Canadian public discourse?  I could see that being more impactful over the short term than import tariffs.

I don't know if that specifically has come up.  But there is A LOT of discussion about the overall impact of tariffs and possible actions our government could take.

Trudeau has just met with Trump.  Who knows what will come out of that?

The issue here is complicated by the fact that we presently have a minority government whose term is nearly up.  Canadians tend to vote governments out more than they vote governments in.  And since the Liberals have maintained their minority government with the help of the NDP, odds are the Conservatives will be the beneficiaries.  But at this point there is also concern that a Conservative government will roll over and play dead.  Certainly the Conservative Premier of Alberta is already doing that.   And it also means that Trump can look at the present government as weak and not worth dealing with, and plan to wait until after the election when a Conservative government is in and ready to "play nice".

[Log]

I know people who boycotted American goods last time, when Trump was putting tariffs on Canadian goods and calling us a security risk.  I'll happily buy produce from Mexico, our reliable treaty partner, instead of the US if he does it again.

The notion of buying your own country's goods bamboozles me. I can understand wanting to 'buy local' - there are some restaurants around that grow their own veggies or fruit or harvest their own grain or honey. I think that's cool. But putting aside certain things (like food) where provenance is really important, why should I care? I don't care if my iPhone is made in America, Japan, China or Bangladesh. If some worker in Bangladesh can output equivalent product for a cheaper price then hell  yeah, she deserves that job over an American. That's meritocracy - the American dream at work.

There is a certain infatuation with manufacturing jobs that is entirely misplaced.

Popular imagination in some circles believes that manufacturing jobs are a reliable path to a middle class lifestyle for those with a high school education or less.

Never mind that this hasn’t been true for multiple generations.  High paid manufacturing jobs now require lots of education and technical knowledge. Low skilled manufacturing work doesn’t generate the economic value required to support a middle class lifestyle.

Making the US into some big manufacturing specialist would involve heavily devaluing the dollar, making us all poorer.

The whole idea of buying stuff manufactured in your country is economically illiterate nostalgia for a world that only briefly existed.

Like you, I’m always happy to buy local from a standpoint of supporting smaller businesses in my local community. But overly focusing on country of manufacture is silly.

This is also very based on a very LARPy notion of what "working class" political interests are, when the real working class in America today is almost entirely service workers.

But there is some truth to the idea that a city region needs to manufacture exports in order to develop and become prosperous. Some of Jane Jacobs' writing goes into how measuring a national economy is kind of stupid, when the real entity of economic productivity is not the nation, but the city region. This is kind of what you're pointing to when you differentiate between buying local vs "buy American," but the fact is a lot of the Blue Tribe, who love to buy local, live in places with already prosperous regional economies, while a lot of Red Tribe is centered around places that are under-developed.

One of Jane Jacobs' other points about this is that in an era of independent city-states, currency exchange rates served as a market-driven, self-balancing system of tariffs, which helped less developed cities catch up. When currencies come to dominate larger and larger areas like the US Dollar, the Euro, or even the Canadian or Australian dollar... it makes it harder and harder for Poland or Hungary to catch up to Germany. Or for Alabama or Ohio to catch up to California or New York. And wouldn't you know, those places that can't catch up are all the ones that hate the big cities, are are sympathetic to tariffs, and vote for nationalist right-wing populists.

[Ron Scott]

The notion of buying your own country's goods bamboozles me.  …putting aside certain things (like food) where provenance is really important, why should I care? If some worker in Bangladesh can output equivalent product for a cheaper price then hell  yeah, she deserves that job over an American. That's meritocracy - the American dream at work.

At a high level I agree with this sentiment. And I think the demand for WFH is going to usher in a wave of low cost talent far beyond what we’ve seen to date. As a shareholder I expect the companies I invest in to continually work toward increasing productivity.

Where we might disagree is in defining national security interests. Food production is more than “provenance”. It’s about ensuring the population can be fed if geopolitical tensions reduce the ability to import it. And there are other things that would put a country in significant trouble if the means of production required the support and ability of other countries to prodvide exports. Things like drugs, high tech components, etc. I would draw a wide fence here out of an abundance of caution.

Yeah, open borders have made us rich. But that was in a specific time in specific places. Tomorrow may be different. Trade by all means, but think first.

[BicycleB]

The notion of buying your own country's goods bamboozles me.  …putting aside certain things (like food) where provenance is really important, why should I care? If some worker in Bangladesh can output equivalent product for a cheaper price then hell  yeah, she deserves that job over an American. That's meritocracy - the American dream at work.

At a high level I agree with this sentiment. And I think the demand for WFH is going to usher in a wave of low cost talent far beyond what we’ve seen to date. As a shareholder I expect the companies I invest in to continually work toward increasing productivity.

Where we might disagree is in defining national security interests. Food production is more than “provenance”. It’s about ensuring the population can be fed if geopolitical tensions reduce the ability to import it. And there are other things that would put a country in significant trouble if the means of production required the support and ability of other countries to prodvide exports. Things like drugs, high tech components, etc. I would draw a wide fence here out of an abundance of caution.

Yeah, open borders have made us rich. But that was in a specific time in specific places. Tomorrow may be different. Trade by all means, but think first.

I don't always agree with everything Ron Scott says, but in this case - 100% agree!

***

Another reason for some tariffs is to balance out the playing field if one country's government supports that country's industry to the point where another country's native businesses can't fairly compete. There's an argument that China is doing this broadly, and that the US is not the only country moving toward anti-China tariffs to balance that out.

Fwiw, I also read that China itself is implementing policies to increase its domestic consumption and reduce its over-reliance on export goods. But those will probably take time, even if they succeed, so in the meantime I am sympathetic to some tariffs for now.

That said, too many tariffs would reduce trade in general, making everyone poorer. The last time a lot of that happened, it was called The Great Depression. Politics aside, it would be nice to keep the tariffs modest and precise enough to prevent a Great Depression repeat.

[RetiredAt63]

The notion of buying your own country's goods bamboozles me.  …putting aside certain things (like food) where provenance is really important, why should I care? If some worker in Bangladesh can output equivalent product for a cheaper price then hell  yeah, she deserves that job over an American. That's meritocracy - the American dream at work.

At a high level I agree with this sentiment. And I think the demand for WFH is going to usher in a wave of low cost talent far beyond what we’ve seen to date. As a shareholder I expect the companies I invest in to continually work toward increasing productivity.

Where we might disagree is in defining national security interests. Food production is more than “provenance”. It’s about ensuring the population can be fed if geopolitical tensions reduce the ability to import it. And there are other things that would put a country in significant trouble if the means of production required the support and ability of other countries to prodvide exports. Things like drugs, high tech components, etc. I would draw a wide fence here out of an abundance of caution.

Yeah, open borders have made us rich. But that was in a specific time in specific places. Tomorrow may be different. Trade by all means, but think first.

I don't always agree with everything Ron Scott says, but in this case - 100% agree!

***

Another reason for some tariffs is to balance out the playing field if one country's government supports that country's industry to the point where another country's native businesses can't fairly compete. There's an argument that China is doing this broadly, and that the US is not the only country moving toward anti-China tariffs to balance that out.

Fwiw, I also read that China itself is implementing policies to increase its domestic consumption and reduce its over-reliance on export goods. But those will probably take time, even if they succeed, so in the meantime I am sympathetic to some tariffs for now.

That said, too many tariffs would reduce trade in general, making everyone poorer. The last time a lot of that happened, it was called The Great Depression. Politics aside, it would be nice to keep the tariffs modest and precise enough to prevent a Great Depression repeat.

I also am surprised to find myself agreeing with him!  But from a different perspective. 

Canada needs to become more self-sufficient in some critical manufacturing areas. For example, we should not be dependent on medical supplies from the US that can be cut off in times of emergency.  This is even more important when our trading partner has an administration that does not respect trade agreements.  So there are times I think my government depends too much on its trading partner to be good for national security, and is not doing enough supporting Canadian-made goods.

The thing is, the US and Canada have a long history of cooperation and helping each other.  We send hydro crews to emergencies across borders (thank you New Hampshire guys who came during the ice storm in 1998), we send fire-fighting teams across borders, there were Canadian emergency people at the World Trade Centre (and 24 Canadians died there).  It's sad when that gets downplayed or ignored or denied.

[NorCal]

Getting outside of tariffs into broader trade policy, I have some broad agreement and minor disagreement with the last few posts.  In no particular order:

1.  "Free trade" as a value made sense up through the end of the cold war.  Trading relationships were largely built on whether a country fell into the US led order or the soviet led order.  Trade aligned with these values, and that was an appropriate way to look at the world at the time.  What's changed is that the underlying values of our trading partners is different.  Or at least operating at a different scale with China.  The idea of "Free Trade" should evolve to be an extension of our other values at not a value in its own right.  We should strive to build trade relationships with countries that share our values and reduce trade with countries that don't. 

2.  There is merit to the national security argument.  However, this is usually argued in bad faith and implementation rarely does anything about national security.  The best path to protect national security for most products is to ensure there is a diversity of suppliers, not necessarily domestic suppliers.  Using food as an example, a major drought can hit domestic suppliers as easily as a trade war can hit foreign suppliers.  Having multiple sources of supply is more important than having a domestic supply for most products.  Using the Canadian medical supply example, being able to source from Europe or Asia could solve the problem better than trying to manufacture everything at home. 

[FINate]

I find it fascinating that Republicans are supporting higher taxes, while at the same time Democrats say the cost will be passed on to consumers because, in my experience, the typical Dem position is higher corporate taxes are a way to make the rich pay their fair share. So it's interesting to see both sides staking out radically different territory in MAGA world.

If I remember my college econ classes correctly, who pays a tax mostly depends on the elasticity of demand for the product. An inelastic demand product, such as gasoline, is mostly paid by the consumer. Being inelastic, demand isn't really affected by price and producers know this, so they pass on the cost. Whereas for elastic demand goods, such as many luxury items, the cost is mostly paid by the producer because they cannot raise prices.

One of the main incentives for sending production to other countries was to avoid environmental and labor regulations in the US. This allowed for low cost production of goods that produced large profits for multinationals. Tariffs have many negative side effects, but they also have the benefit of making it less profitable to avoid these regulations.

[MustacheAndaHalf]

In the U.S., Canadians are more popular than every President and member of Congress - perhaps going back decades.  The 25% tariffs on Canadian sour crude oil (refined in the U.S.) will impact oil prices, since the volume is significant to both countries.  The combination of being mean to Canadians and pushing up gas prices seems like a bad way to start a new policy.
"A majority of Americans (87%) have a favorable view of Canada, the best rating of the nine countries tested."
https://www.ipsos.com/en-ca/most-americans-view-canada-favourably

Manufacturing of bombs, bombers and fighters is vital to winning a war.  Manufacturing that can be retooled during war is important for national security.  But most manufacturers of small consumer goods probably don't meet that criteria.  And at any rate, a tariff on all imports isn't limited to national security, so I don't see that as the goal.  It could be a goal, but I don't see it tailored with that in mind.

The last time I was interviewing at a few companies, one position involved frequently interacting with a team in another time zone.  That was a significant negative for me - I dislike the time delays, and the communication problems.  It is my understanding that all of the big tech companies have an "open office" concept, because they value people being able to communicate easily, with minimal friction.  If the "open concept" idea is correct, then 13 hour time differences with meetings planned a few days in advance can't be as good.  I think employers are tending to limit WFH now, so I'm thinking remote work is less likely to take off than might be expected.

[NorCal]

I find it fascinating that Republicans are supporting higher taxes, while at the same time Democrats say the cost will be passed on to consumers because, in my experience, the typical Dem position is higher corporate taxes are a way to make the rich pay their fair share. So it's interesting to see both sides staking out radically different territory in MAGA world.

If I remember my college econ classes correctly, who pays a tax mostly depends on the elasticity of demand for the product. An inelastic demand product, such as gasoline, is mostly paid by the consumer. Being inelastic, demand isn't really affected by price and producers know this, so they pass on the cost. Whereas for elastic demand goods, such as many luxury items, the cost is mostly paid by the producer because they cannot raise prices.

One of the main incentives for sending production to other countries was to avoid environmental and labor regulations in the US. This allowed for low cost production of goods that produced large profits for multinationals. Tariffs have many negative side effects, but they also have the benefit of making it less profitable to avoid these regulations.

You are correct about the elasticity argument, although it is technically a combination of elasticity of demand and elasticity of supply.  They have separate curves, but the overall point is correct.

Equating price impacts of tariffs to the price impacts of income/profit taxes is a fallacy.  Tariffs behave more like a sales tax when it comes to pricing.  It becomes part of the product costs, and there is a direct linkage to prices.  Individual income taxes don't really have a measurable impact on prices. 

Corporate income taxes only impact prices indirectly, as it relates to cost-of-capital and competition.  Going back to Econ 101, prices will trend towards the marginal cost of production.  The impact of corporate income taxes on the marginal cost of production is pretty minimal. 

I don't think you can fit this into a neat left vs right narrative flip on taxation unless the left starts heavily advocating for massive sales tax increases.  Tariffs are fundamentally different from other corporate taxation.

[FINate]

I find it fascinating that Republicans are supporting higher taxes, while at the same time Democrats say the cost will be passed on to consumers because, in my experience, the typical Dem position is higher corporate taxes are a way to make the rich pay their fair share. So it's interesting to see both sides staking out radically different territory in MAGA world.

If I remember my college econ classes correctly, who pays a tax mostly depends on the elasticity of demand for the product. An inelastic demand product, such as gasoline, is mostly paid by the consumer. Being inelastic, demand isn't really affected by price and producers know this, so they pass on the cost. Whereas for elastic demand goods, such as many luxury items, the cost is mostly paid by the producer because they cannot raise prices.

One of the main incentives for sending production to other countries was to avoid environmental and labor regulations in the US. This allowed for low cost production of goods that produced large profits for multinationals. Tariffs have many negative side effects, but they also have the benefit of making it less profitable to avoid these regulations.

You are correct about the elasticity argument, although it is technically a combination of elasticity of demand and elasticity of supply.  They have separate curves, but the overall point is correct.

Equating price impacts of tariffs to the price impacts of income/profit taxes is a fallacy.  Tariffs behave more like a sales tax when it comes to pricing.  It becomes part of the product costs, and there is a direct linkage to prices.  Individual income taxes don't really have a measurable impact on prices. 

Corporate income taxes only impact prices indirectly, as it relates to cost-of-capital and competition.  Going back to Econ 101, prices will trend towards the marginal cost of production.  The impact of corporate income taxes on the marginal cost of production is pretty minimal. 

I don't think you can fit this into a neat left vs right narrative flip on taxation unless the left starts heavily advocating for massive sales tax increases.  Tariffs are fundamentally different from other corporate taxation.

Thanks for the clarification, this stuff was 20+ years ago for me :)

It sounds like tariffs are functionally similar to a consumption tax on imported goods. In principle, I think we should have higher consumption taxes. In practice, however, I don't expect Trump will implement these in a rational way, so the results may be rather messy.

[dandarc]

Why do you want higher consumption taxes? Those are inherently regressive in nature and hit those who can least afford the hardest. That's why there's so many carve outs and seemingly unnecessary complexities added - that stuff is necessary to try and undo enough of "inherently regressive" to make it palatable to enough people that the law can be this way.

[FINate]

Why do you want higher consumption taxes? Those are inherently regressive in nature and hit those who can least afford the hardest. That's why there's so many carve outs and seemingly unnecessary complexities added - that stuff is necessary to try and undo enough of "inherently regressive" to make it palatable to enough people that the law can be this way.

Because it will reduce overall consumption. And the environmental impacts aren't income specific, consumption is consumption regardless of who's doing it. I would love to see a 20% VAT in the US as this would greatly reduce the amount of waste in this country. Use some of the proceeds from the tax to offset the impact to the lowest income folks.

[twinstudy]

Why do you want higher consumption taxes? Those are inherently regressive in nature and hit those who can least afford the hardest. That's why there's so many carve outs and seemingly unnecessary complexities added - that stuff is necessary to try and undo enough of "inherently regressive" to make it palatable to enough people that the law can be this way.

Because you don't get a free excuse for over-consuming just because you're poor.

Though I'd be content to balance out every sin tax with a subsidy/credit for those who do the opposite, thus meaning that if you make good / healthy choices you get a net bonus, which is progressive, in the sense that a $2,000 credit for a poor family is going to mean a lot more than a $2,000 credit for a rich family.

[ChpBstrd]

Tariffs reduce aggregate demand. That's a sanitized way of saying put people out of work, slow the national economy, and risk recession.

Corporate income tax increases, OTOH, might reduce growth a little. Higher corporate taxes might make some projects and business expansions not pencil out, might reduce margins, and would likely reduce stock prices.

Overall, nobody gave up on making money or changed their mind about getting rich because their tax rate went up a few percent. Tariffs, though, likely change consumers' behavior by forcing them to consume fewer goods and services with their limited incomes. Corporate taxes are unavoidable if you want to start or invest in a corporation, but tariffs on discretionary purchases can be avoided and therefore are avoided. 

A final note: The corporate income tax rate does not directly affect the prices of goods and services. Tariffs do. So by raising prices, tariffs contribute to inflation, which require higher interest rates to stamp out, which slow economic growth. Tariffs can increase prices even on things made in the imposing country, if there is a domestic monopoly or duopoly as the only alternative to the tariff'ed importers. I.e. Why shouldn't the only U.S. manufacturer of N95 masks or a particular auto part, for example, raise their prices to match the cost of imported masks after the tariffs, and keep the difference as margin?

[ChpBstrd]

Never mind that this hasn’t been true for multiple generations.  High paid manufacturing jobs now require lots of education and technical knowledge. Low skilled manufacturing work doesn’t generate the economic value required to support a middle class lifestyle.

Making the US into some big manufacturing specialist would involve heavily devaluing the dollar, making us all poorer.

The whole idea of buying stuff manufactured in your country is economically illiterate nostalgia for a world that only briefly existed.

Like you, I’m always happy to buy local from a standpoint of supporting smaller businesses in my local community. But overly focusing on country of manufacture is silly.

I agree with this. The support of manufacturing in particular has always seemed to me to have vaguely jingoistic overtones.

When people say, 'keep Australian jobs', my reaction is - why? Does an Australian deserve a call centre job more than a Bangladeshi, or an automotive manufacturing job more than a Thai person? I doubt it. We're all just humans at the end of the day.

I suspect the WFH movement and improved online collaboration tools has shaken the old idea that the U.S. can be a nation of service providers and outsource all the messy manufacturing forever.

A Bangladeshi or Indian or Filipino or Peruvian can now offer knowledge worker services from across the world. They can also collaborate across vast distances on software development, new product designs, marketing campaigns, legal research, investment banking deals, medical lab or image analysis, and a billion administrative tasks. The modern internet has done for services supply chains what modern ships and airplanes did for manufacturing supply chains. That is, it has flattened the world, and made it possible to outsource what was formerly not possible.

With the internet, it's arguably easier to outsource services work than it was manufacturing. There are no harbors or ships to build, no month-long lag between when the work is paid for and when it is received, no fuel to burn, etc. Plus, providing services this way makes it easier to exploit tax havens and avoid tariffs. If a multi-continental team writes a piece of software or a legal brief, and the corporation employing them credits it all to the one domestic worker on the team, then they've essentially sneaked a bunch of product past customs!

So how secure is your high-paying service-sector knowledge worker job, where you attend meetings and work on a computer? Are you now ready to work in a factory protected behind a wall of tariffs, or do you want to stick with competing against a planet full of talented, well-educated people who are happy to make $5 per hour attending meetings and working on a computer?

[bacchi]

A final note: The corporate income tax rate does not directly affect the prices of goods and services. Tariffs do. So by raising prices, tariffs contribute to inflation, which require higher interest rates to stamp out, which slow economic growth. Tariffs can increase prices even on things made in the imposing country, if there is a domestic monopoly or duopoly as the only alternative to the tariff'ed importers. I.e. Why shouldn't the only U.S. manufacturer of N95 masks or a particular auto part, for example, raise their prices to match the cost of imported masks after the tariffs, and keep the difference as margin?

This also applies anywhere. If a US clothing company moves production from China to Vietnam, the Vietnam suppliers are free to raise their prices to just below the China-tariff price (to 1.3x, for example).

Meanwhile, other importing countries without these tariffs will purchase from China at the original price (1.0x).

The USITC published a report on the original Trump tariffs:

* US manufacturing did go up but marginally. Most of the manufacturing shifted to non-tariff countries.
* Revenue went down.
* Prices went up.

The 25 percent steel tariffs were nearly completely passed through to U.S. importers as the price of covered steel imports by 22 percent.
[...]
The 10 percent aluminum tariffs were nearly completely passed through to U.S. importers as the price of covered aluminum imports rose by 8.0 percent.

Downstream users faced higher input prices. Across the 33 industries included in the model, downstream U.S. producers are estimated to have produced $3.4 billion less on average each year between 2018 and 2021 because of section 232 tariffs.

And, to no one's surprise,

Chinese exporters largely maintained the same prices and U.S. importers absorbed the costs of the tariffs through a combination of less-favorable margins for sellers and higher prices for consumers or downstream buyers.

[MustacheAndaHalf]

A Bangladeshi or Indian or Filipino or Peruvian can now offer knowledge worker services from across the world. They can also collaborate across vast distances on software development, new product designs, marketing campaigns, legal research, investment banking deals, medical lab or image analysis, and a billion administrative tasks. The modern internet has done for services supply chains what modern ships and airplanes did for manufacturing supply chains. That is, it has flattened the world, and made it possible to outsource what was formerly not possible.

With the internet, it's arguably easier to outsource services work than it was manufacturing. There are no harbors or ships to build, no month-long lag between when the work is paid for and when it is received, no fuel to burn, etc. Plus, providing services this way makes it easier to exploit tax havens and avoid tariffs. If a multi-continental team writes a piece of software or a legal brief, and the corporation employing them credits it all to the one domestic worker on the team, then they've essentially sneaked a bunch of product past customs!

And yet the internet, despite being around for decades, hasn't caused widespread adoption of remote software engineering.

You mentioned "collaborate across vast distances" and gave India as an example.  India has an 11-13 hour time difference with the West Coast, where the largest software companies have most of their engineers.  Collaborating is difficult, since it requires a meeting time outside of regular hours (for one or both groups).  Small problems are easier to ignore than setup a meeting.

The largest software companies have an open floorplan, to encourage software engineers to interact.  That floorplan, which each company spends a lot to create, is pretty much the opposite of a team divided by a 12 hour time difference.  If an open floorplan is a great idea (which these companies adopt), there must be something wrong with making interaction much more difficult through remote work.

There's many more points, but I'll end with the salary issue.  Yes, workers get paid far lower salaries in India.  But those same software engineers, realizing they are doing the same work for less, often move to the U.S. where they get paid much higher salaries.

[FINate]

The largest software companies have an open floorplan, to encourage software engineers to interact.  That floorplan, which each company spends a lot to create, is pretty much the opposite of a team divided by a 12 hour time difference.  If an open floorplan is a great idea (which these companies adopt), there must be something wrong with making interaction much more difficult through remote work.

I worked at those largest companies for several decades.

The open floorplan concept was clearly motivated by cost efficiencies. If you can cram 2x the number of people in the same area it means spending a lot less on facilities. Building/leasing less space is a huge cost saver.

As for effectiveness, it's a disaster for engineers. Hire a bunch of folks that need to concentrate for long periods on a complex task, then insert them into an environment where they're constantly interrupted and losing their flow. It was very common for engineers to book solo "meetings" in video conferencing booths just to get some uninterrupted peace and quite. There was a lot of unofficial work from home as this was the only place many could actually work. This was all pre-pandemic. It was no great surprise to me when, by many measures, software engineer productivity actually increased during the pandemic.

Of course, WFH is not without downsides, including difficulties collaborating and training up new engineers. Yet there are many remote-only companies that find a way to make this work.

Furthermore, the timezone thing is already an issue for large tech, as most go where the talent is and have engineering offices around the world.

So why the return to office? In some cases this was a shadow layoff, a way to trim the ranks w/o the cost of a RIF. But also, many of these large tech companies have substantial real estate investments, and since there are pros and cons with both remote work and in office, it makes sense to utilize what they already have.

[jrhampt]

Yes, the internet has been around a while now.  I have seen multiple waves of outsourcing followed by waves of insourcing as reality sets in around things like time differences and communication issues.  Do I think my WFH job of the past 15+ years is particularly secure right now?  No, because we are in the middle of another wave of outsourcing and at this point in my career I am more costly than I have ever been.  But I wouldn't say this is a new thing, more of a cycle.

[MustacheAndaHalf]

The open floorplan concept was clearly motivated by cost efficiencies. If you can cram 2x the number of people in the same area it means spending a lot less on facilities. Building/leasing less space is a huge cost saver.

Maybe that's open for debate, but this article claims Apple spent billions to foster collaboration:

"Apple Park: A Look Inside Apple’s $5 Billion Dollar Headquarters"
"In fact the building was designed to be as free flowing as possible to allow for collaboration between employees."
https://applescoop.org/story/apple-park-a-look-inside-apples-5-billion-dollar-headquarters

[GuitarStv]

The open floorplan concept was clearly motivated by cost efficiencies. If you can cram 2x the number of people in the same area it means spending a lot less on facilities. Building/leasing less space is a huge cost saver.

Maybe that's open for debate, but this article claims Apple spent billions to foster collaboration:

"Apple Park: A Look Inside Apple’s $5 Billion Dollar Headquarters"
"In fact the building was designed to be as free flowing as possible to allow for collaboration between employees."
https://applescoop.org/story/apple-park-a-look-inside-apples-5-billion-dollar-headquarters

I've done software development my whole career, and would say that maybe one in ten developers like open floor plans.  Usually the folks who are extremely outgoing and like to spend the day chatting.  None of the ones who get much work done are fans.  Constant interruption and distraction destroys the ability to think out complex solutions.  Teamwork is great and necessary, but shouldn't come at the cost of being able to think.  With a closed floor plan it's possible for employees to schedule meetings and meet as often as necessary.  With an open floor plan, it's impossible for employees to have quite time to do work.  One is clearly superior than the other.

[FINate]

The open floorplan concept was clearly motivated by cost efficiencies. If you can cram 2x the number of people in the same area it means spending a lot less on facilities. Building/leasing less space is a huge cost saver.

Maybe that's open for debate, but this article claims Apple spent billions to foster collaboration:

"Apple Park: A Look Inside Apple’s $5 Billion Dollar Headquarters"
"In fact the building was designed to be as free flowing as possible to allow for collaboration between employees."
https://applescoop.org/story/apple-park-a-look-inside-apples-5-billion-dollar-headquarters

That article doesn't claim they spent buildings to foster collaboration. They spent billions on a HQ that was designed to make a statement, and as part of this they designed for collaboration. Making it a ring to minimize travel time between all pairwise locations is perfectly sensible and a good way to foster collaboration. And having people in-office does create lots of opportunity for impromptu collaboration around lunch and coffee. But open offices are, IMO, a net negative. A quote from that article:

However, according to Apple Explained, many employees wrote to tech journalist John Gruber explaining their dissatisfaction with the open working environment. They were allegedly unhappy about the lack of privacy, and that the glass doors were easy to walk into when distracted.

[ChpBstrd]

A Bangladeshi or Indian or Filipino or Peruvian can now offer knowledge worker services from across the world. They can also collaborate across vast distances on software development, new product designs, marketing campaigns, legal research, investment banking deals, medical lab or image analysis, and a billion administrative tasks. The modern internet has done for services supply chains what modern ships and airplanes did for manufacturing supply chains. That is, it has flattened the world, and made it possible to outsource what was formerly not possible.

With the internet, it's arguably easier to outsource services work than it was manufacturing. There are no harbors or ships to build, no month-long lag between when the work is paid for and when it is received, no fuel to burn, etc. Plus, providing services this way makes it easier to exploit tax havens and avoid tariffs. If a multi-continental team writes a piece of software or a legal brief, and the corporation employing them credits it all to the one domestic worker on the team, then they've essentially sneaked a bunch of product past customs!

And yet the internet, despite being around for decades, hasn't caused widespread adoption of remote software engineering.

You mentioned "collaborate across vast distances" and gave India as an example.  India has an 11-13 hour time difference with the West Coast, where the largest software companies have most of their engineers.  Collaborating is difficult, since it requires a meeting time outside of regular hours (for one or both groups).  Small problems are easier to ignore than setup a meeting.

The largest software companies have an open floorplan, to encourage software engineers to interact.  That floorplan, which each company spends a lot to create, is pretty much the opposite of a team divided by a 12 hour time difference.  If an open floorplan is a great idea (which these companies adopt), there must be something wrong with making interaction much more difficult through remote work.

There's many more points, but I'll end with the salary issue.  Yes, workers get paid far lower salaries in India.  But those same software engineers, realizing they are doing the same work for less, often move to the U.S. where they get paid much higher salaries.

I disagree. The trend I'm noticing is the increased use of cloud-based tools to package releases worked on by dozens of developers at a time, each focused on a particular use case, user story, or bug. Integration and architectural decisions are increasingly being made over Microsoft Teams, Github, or Salesforce, if not by top-down imposition by a senior expert. Physical meetings are becoming as rare as the old "pairs programming" trend, and are increasingly seen as costly and archaic. Instead, project managers farm out and monitor tasks using any one of dozens of agile project management cloud products.

The speed of development can be increased by having a round-the-clock team in different time zones, each working their own shifts and building upon the work and correspondence done by the previous shift. I.e. a U.S. based project manager might submit a user story into the team's cloud-based tool at the end of their day, and arrive in the morning to find that the Fillipino team has developed the solution, the Indian team found a bug, and the Eastern European team developed a fix for the bug.

This sort of pattern is now routine in the software and IT hardware design world. It's becoming more common in manufacturing design (e.g. specs and sketch in US, convert to CAD in another country, build custom forms in a third country, manufacture in a fourth country), customer service, marketing, social media production, and similar fields where information is the product. Other knowledge work fields like healthcare, legal services, or higher education have been much slower to offshore, due to licensing and legal requirements. Yet these jobs - for which costs have risen dramatically - are nonetheless just the processing of information where the local worker could be reduced to a largely communication role.

[LennStar]

Of course, WFH is not without downsides, including difficulties collaborating and training up new engineers. Yet there are many remote-only companies that find a way to make this work.

Furthermore, the timezone thing is already an issue for large tech, as most go where the talent is and have engineering offices around the world.

Just chiming in:
I am working for a company that would would probably still count as small.
The programming team now has members from Germany, Greece, the Baltics, Malaysia and I think one is in Indonesia.

The English levels and "dialects" are more of a problem than the distance. The most people in one office (or home) is 3.

Before I quit today I sent someone in Malaysia that a test fails because she probably has done a copy&paste error (the item with name X does not exist). I expect to have an answer when I get on tomorrow that says "Oh, you are right, sorry, I have fixed that" or "No, it's something else."

[dandarc]

Of course, WFH is not without downsides, including difficulties collaborating and training up new engineers. Yet there are many remote-only companies that find a way to make this work.

Furthermore, the timezone thing is already an issue for large tech, as most go where the talent is and have engineering offices around the world.

Just chiming in:
I am working for a company that would would probably still count as small.
The programming team now has members from Germany, Greece, the Baltics, Malaysia and I think one is in Indonesia.

The English levels and "dialects" are more of a problem than the distance. The most people in one office (or home) is 3.

Before I quit today I sent someone in Malaysia that a test fails because she probably has done a copy&paste error (the item with name X does not exist). I expect to have an answer when I get on tomorrow that says "Oh, you are right, sorry, I have fixed that" or "No, it's something else."

Don't even have to be remote for this kind of thing to be a problem.

[sixwings]

A final note: The corporate income tax rate does not directly affect the prices of goods and services. Tariffs do. So by raising prices, tariffs contribute to inflation, which require higher interest rates to stamp out, which slow economic growth. Tariffs can increase prices even on things made in the imposing country, if there is a domestic monopoly or duopoly as the only alternative to the tariff'ed importers. I.e. Why shouldn't the only U.S. manufacturer of N95 masks or a particular auto part, for example, raise their prices to match the cost of imported masks after the tariffs, and keep the difference as margin?

This also applies anywhere. If a US clothing company moves production from China to Vietnam, the Vietnam suppliers are free to raise their prices to just below the China-tariff price (to 1.3x, for example).

Meanwhile, other importing countries without these tariffs will purchase from China at the original price (1.0x).

The USITC published a report on the original Trump tariffs:

* US manufacturing did go up but marginally. Most of the manufacturing shifted to non-tariff countries.
* Revenue went down.
* Prices went up.

The 25 percent steel tariffs were nearly completely passed through to U.S. importers as the price of covered steel imports by 22 percent.
[...]
The 10 percent aluminum tariffs were nearly completely passed through to U.S. importers as the price of covered aluminum imports rose by 8.0 percent.

Downstream users faced higher input prices. Across the 33 industries included in the model, downstream U.S. producers are estimated to have produced $3.4 billion less on average each year between 2018 and 2021 because of section 232 tariffs.

And, to no one's surprise,

Chinese exporters largely maintained the same prices and U.S. importers absorbed the costs of the tariffs through a combination of less-favorable margins for sellers and higher prices for consumers or downstream buyers.

Yes, the tariffs in Trumps first term was one of the largest tax increases in modern history, and apparently voters want to double down on it. I'm a dual citizen and live in Canada right now, the tariffs threat kinda falls flat for me IMO, we'll see but what ended up happening last time was importers just raised their prices and kept buying from the exporters. I would expect the same to happen for most Canada's exports.

https://taxfoundation.org/research/all/federal/tariffs/

[twinstudy]

So how secure is your high-paying service-sector knowledge worker job, where you attend meetings and work on a computer?

Until McKinsey starts hiring Bangladeshis for $5 an hour, or enough patients want to see an outsourced psychiatrist who charges third world rates that there's a patient shortage (instead of the opposite which is always the case in medicine - a patient abundance), or a corporate defendant wants a trial lawyer from India, or Google wants to hire software engineers who didn't go to elite schools - I don't think there's any threat to knowledge worker jobs.

Even junior lawyer/paralegal positions in my field, which are not particularly difficult and which would be the first to go, haven't been outsourced, because clients object, and also because quality control is poor. For basic tasks like discovery, AI can assist, but all it does is make humans more efficient. You still need a human on the end of it checking each piece of work as it's outputted. AI would need to be exponentially better than it is today to have any role at all. The same applies to outsourced legal work.

[FINate]

So how secure is your high-paying service-sector knowledge worker job, where you attend meetings and work on a computer?

Until McKinsey starts hiring Bangladeshis for $5 an hour, or enough patients want to see an outsourced psychiatrist who charges third world rates that there's a patient shortage (instead of the opposite which is always the case in medicine - a patient abundance), or a corporate defendant wants a trial lawyer from India, or Google wants to hire software engineers who didn't go to elite schools - I don't think there's any threat to knowledge worker jobs.

Even junior lawyer/paralegal positions in my field, which are not particularly difficult and which would be the first to go, haven't been outsourced, because clients object, and also because quality control is poor. For basic tasks like discovery, AI can assist, but all it does is make humans more efficient. You still need a human on the end of it checking each piece of work as it's outputted. AI would need to be exponentially better than it is today to have any role at all. The same applies to outsourced legal work.

Google already hires lots of engineers that didn't go to elite schools. I should know, I was one of them :) State schools produce wonderful engineers, generally on par with their elite peers. Besides, there simply aren't enough grads from elite schools to fill the ranks.

ETA - it's also worth noting that Google has long employed a very significant percentage of engineers outside the US.

[sixwings]

So how secure is your high-paying service-sector knowledge worker job, where you attend meetings and work on a computer?

Until McKinsey starts hiring Bangladeshis for $5 an hour, or enough patients want to see an outsourced psychiatrist who charges third world rates that there's a patient shortage (instead of the opposite which is always the case in medicine - a patient abundance), or a corporate defendant wants a trial lawyer from India, or Google wants to hire software engineers who didn't go to elite schools - I don't think there's any threat to knowledge worker jobs.

Even junior lawyer/paralegal positions in my field, which are not particularly difficult and which would be the first to go, haven't been outsourced, because clients object, and also because quality control is poor. For basic tasks like discovery, AI can assist, but all it does is make humans more efficient. You still need a human on the end of it checking each piece of work as it's outputted. AI would need to be exponentially better than it is today to have any role at all. The same applies to outsourced legal work.

A very, very small percentage of knowledge workers went to elite schools or work at the companies you've described, it's not controversial to say that top tier talent who went to top tier schools will continue to find work. The issue is the other 99% of knowledge workers. Many companies are outsourcing knowledge work. Back when I worked at Deloitte it was very common to have Deloitte in India or Mexico involved in projects because they were much cheaper.

That said, I'm not entirely sure companies can function extremely well being 100% remote. I have a friend whose company is a start up with about 500 people who are 100% remote and has only ever been a 100% company. He said it's a nightmare. Lots of inefficiencies, poor communication due to time zones, no culture, no connection to the company or people there with really high turnover, collaboration within a team is fine but outside their team there is none so the silos are brutal resulting in more problems. Maybe more established companies have more success than a company that has only ever been 100% because it built the culture and structure and standards over many years before transitioning to being remote while a new company doesn't have those fumes to run on. Maybe companies get better at it over time and figure it out, but I'm unconvinced right now. A company built on executives in north america with a team of developers in india and other parts of the world is probably not going to be building a great product.

[twinstudy]

So how secure is your high-paying service-sector knowledge worker job, where you attend meetings and work on a computer?

Until McKinsey starts hiring Bangladeshis for $5 an hour, or enough patients want to see an outsourced psychiatrist who charges third world rates that there's a patient shortage (instead of the opposite which is always the case in medicine - a patient abundance), or a corporate defendant wants a trial lawyer from India, or Google wants to hire software engineers who didn't go to elite schools - I don't think there's any threat to knowledge worker jobs.

Even junior lawyer/paralegal positions in my field, which are not particularly difficult and which would be the first to go, haven't been outsourced, because clients object, and also because quality control is poor. For basic tasks like discovery, AI can assist, but all it does is make humans more efficient. You still need a human on the end of it checking each piece of work as it's outputted. AI would need to be exponentially better than it is today to have any role at all. The same applies to outsourced legal work.

Google already hires lots of engineers that didn't go to elite schools. I should know, I was one of them :) State schools produce wonderful engineers, generally on par with their elite peers. Besides, there simply aren't enough grads from elite schools to fill the ranks.

ETA - it's also worth noting that Google has long employed a very significant percentage of engineers outside the US.

By all means, Google should hire talent from wherever it wants. I was wrong to imply that only elite school graduates are considered for Google. I should have said that if you have elite qualifications (from whichever school) or great technical ability, you should have no difficulty still getting that job at Google, whatever competition you might face from outsourcing. I see outsourcing as a net positive for talented knowledge workers.

[MustacheAndaHalf]

There's a few posts above that quote FINrate ("WFH is not without downsides") but accidentally put my name to the comment.

A Bangladeshi or Indian or Filipino or Peruvian can now offer knowledge worker services from across the world. They can also collaborate across vast distances on software development, new product designs, marketing campaigns, legal research, investment banking deals, medical lab or image analysis, and a billion administrative tasks. The modern internet has done for services supply chains what modern ships and airplanes did for manufacturing supply chains. That is, it has flattened the world, and made it possible to outsource what was formerly not possible.

With the internet, it's arguably easier to outsource services work than it was manufacturing. There are no harbors or ships to build, no month-long lag between when the work is paid for and when it is received, no fuel to burn, etc. Plus, providing services this way makes it easier to exploit tax havens and avoid tariffs. If a multi-continental team writes a piece of software or a legal brief, and the corporation employing them credits it all to the one domestic worker on the team, then they've essentially sneaked a bunch of product past customs!

And yet the internet, despite being around for decades, hasn't caused widespread adoption of remote software engineering.

You mentioned "collaborate across vast distances" and gave India as an example.  India has an 11-13 hour time difference with the West Coast, where the largest software companies have most of their engineers.  Collaborating is difficult, since it requires a meeting time outside of regular hours (for one or both groups).  Small problems are easier to ignore than setup a meeting.

The largest software companies have an open floorplan, to encourage software engineers to interact.  That floorplan, which each company spends a lot to create, is pretty much the opposite of a team divided by a 12 hour time difference.  If an open floorplan is a great idea (which these companies adopt), there must be something wrong with making interaction much more difficult through remote work.

There's many more points, but I'll end with the salary issue.  Yes, workers get paid far lower salaries in India.  But those same software engineers, realizing they are doing the same work for less, often move to the U.S. where they get paid much higher salaries.

I disagree. The trend I'm noticing is the increased use of cloud-based tools to package releases worked on by dozens of developers at a time, each focused on a particular use case, user story, or bug. Integration and architectural decisions are increasingly being made over Microsoft Teams, Github, or Salesforce, if not by top-down imposition by a senior expert. Physical meetings are becoming as rare as the old "pairs programming" trend, and are increasingly seen as costly and archaic. Instead, project managers farm out and monitor tasks using any one of dozens of agile project management cloud products.

The speed of development can be increased by having a round-the-clock team in different time zones, each working their own shifts and building upon the work and correspondence done by the previous shift. I.e. a U.S. based project manager might submit a user story into the team's cloud-based tool at the end of their day, and arrive in the morning to find that the Fillipino team has developed the solution, the Indian team found a bug, and the Eastern European team developed a fix for the bug.

This sort of pattern is now routine in the software and IT hardware design world. It's becoming more common in manufacturing design (e.g. specs and sketch in US, convert to CAD in another country, build custom forms in a third country, manufacture in a fourth country), customer service, marketing, social media production, and similar fields where information is the product. Other knowledge work fields like healthcare, legal services, or higher education have been much slower to offshore, due to licensing and legal requirements. Yet these jobs - for which costs have risen dramatically - are nonetheless just the processing of information where the local worker could be reduced to a largely communication role.

A bug "worked on by dozens of developers"... are you claiming 20+ people often debug the same problem together?
Bugs typically get assigned to one person to debug and fix, not 20.

Which companies use 24 hours of software engineers around the world?
I believe the largest companies in the world have many software engineers (Apple, Microsoft, Google).  I've never heard of them using 3 shifts of software engineers to work on the same code.  I have seen code maintained by a number of people, and it is always a mess.  Everyone's style differs, and you need to understand each one to understand the code.  Three teams would each be a silo, as others mentioned, and would blame each other for problems.

Also, to nitpick your example, the Philippines is only 2 hours later than India.  If the software engineers in India work a full day, workers in the Philippines will only have 2 hours to work on it before going home for the day.  I'm thinking your example might have been flawed because it wasn't a real example.  Is there a major software company that hands off code to different time zones, like you claim?

[ChpBstrd]

There's a few posts above that quote FINrate ("WFH is not without downsides") but accidentally put my name to the comment.

A Bangladeshi or Indian or Filipino or Peruvian can now offer knowledge worker services from across the world. They can also collaborate across vast distances on software development, new product designs, marketing campaigns, legal research, investment banking deals, medical lab or image analysis, and a billion administrative tasks. The modern internet has done for services supply chains what modern ships and airplanes did for manufacturing supply chains. That is, it has flattened the world, and made it possible to outsource what was formerly not possible.

With the internet, it's arguably easier to outsource services work than it was manufacturing. There are no harbors or ships to build, no month-long lag between when the work is paid for and when it is received, no fuel to burn, etc. Plus, providing services this way makes it easier to exploit tax havens and avoid tariffs. If a multi-continental team writes a piece of software or a legal brief, and the corporation employing them credits it all to the one domestic worker on the team, then they've essentially sneaked a bunch of product past customs!

And yet the internet, despite being around for decades, hasn't caused widespread adoption of remote software engineering.

You mentioned "collaborate across vast distances" and gave India as an example.  India has an 11-13 hour time difference with the West Coast, where the largest software companies have most of their engineers.  Collaborating is difficult, since it requires a meeting time outside of regular hours (for one or both groups).  Small problems are easier to ignore than setup a meeting.

The largest software companies have an open floorplan, to encourage software engineers to interact.  That floorplan, which each company spends a lot to create, is pretty much the opposite of a team divided by a 12 hour time difference.  If an open floorplan is a great idea (which these companies adopt), there must be something wrong with making interaction much more difficult through remote work.

There's many more points, but I'll end with the salary issue.  Yes, workers get paid far lower salaries in India.  But those same software engineers, realizing they are doing the same work for less, often move to the U.S. where they get paid much higher salaries.

I disagree. The trend I'm noticing is the increased use of cloud-based tools to package releases worked on by dozens of developers at a time, each focused on a particular use case, user story, or bug. Integration and architectural decisions are increasingly being made over Microsoft Teams, Github, or Salesforce, if not by top-down imposition by a senior expert. Physical meetings are becoming as rare as the old "pairs programming" trend, and are increasingly seen as costly and archaic. Instead, project managers farm out and monitor tasks using any one of dozens of agile project management cloud products.

The speed of development can be increased by having a round-the-clock team in different time zones, each working their own shifts and building upon the work and correspondence done by the previous shift. I.e. a U.S. based project manager might submit a user story into the team's cloud-based tool at the end of their day, and arrive in the morning to find that the Fillipino team has developed the solution, the Indian team found a bug, and the Eastern European team developed a fix for the bug.

This sort of pattern is now routine in the software and IT hardware design world. It's becoming more common in manufacturing design (e.g. specs and sketch in US, convert to CAD in another country, build custom forms in a third country, manufacture in a fourth country), customer service, marketing, social media production, and similar fields where information is the product. Other knowledge work fields like healthcare, legal services, or higher education have been much slower to offshore, due to licensing and legal requirements. Yet these jobs - for which costs have risen dramatically - are nonetheless just the processing of information where the local worker could be reduced to a largely communication role.

A bug "worked on by dozens of developers"... are you claiming 20+ people often debug the same problem together?
Bugs typically get assigned to one person to debug and fix, not 20.

Which companies use 24 hours of software engineers around the world?
I believe the largest companies in the world have many software engineers (Apple, Microsoft, Google).  I've never heard of them using 3 shifts of software engineers to work on the same code.  I have seen code maintained by a number of people, and it is always a mess.  Everyone's style differs, and you need to understand each one to understand the code.  Three teams would each be a silo, as others mentioned, and would blame each other for problems.

Also, to nitpick your example, the Philippines is only 2 hours later than India.  If the software engineers in India work a full day, workers in the Philippines will only have 2 hours to work on it before going home for the day.  I'm thinking your example might have been flawed because it wasn't a real example.  Is there a major software company that hands off code to different time zones, like you claim?

My understanding is that all the big tech companies outsource some software development work, and the people in Asia/Europe typically work during their daylight hours. I worked for a small-cap publicly traded online marketing company, and we had offices in Poland where software developers would work during the US night time. Interestingly, they were on the same teams as the U.S. crews. The 7 hour difference allowed us to have a morning meeting in CST with the developers who were just about to get off work in Gdansk. Progress was discussed, action items handed off, and issues/bugs identified to work on by the next shift. I didn't directly work with any devs in Asia, but I understand they existed on other teams.

This was over a dozen years ago, in the era before WFH, Microsoft Teams, or even very fast internet. We used desk telephones for those calls, but already had screen-sharing tools and networked task scheduling software. We pulled it off, and the team enjoyed 15 hours of daily development time (accounting for the one-hour shift overlap), a lower cost of developer labor, and access to a labor pool that wasn't experiencing shortages as the US was. I'm not saying it was easy, but it had benefits we were achieving even in the relatively primitive early-2010s.

[MustacheAndaHalf]

There's a few posts above that quote FINrate ("WFH is not without downsides") but accidentally put my name to the comment.

A Bangladeshi or Indian or Filipino or Peruvian can now offer knowledge worker services from across the world. They can also collaborate across vast distances on software development, new product designs, marketing campaigns, legal research, investment banking deals, medical lab or image analysis, and a billion administrative tasks. The modern internet has done for services supply chains what modern ships and airplanes did for manufacturing supply chains. That is, it has flattened the world, and made it possible to outsource what was formerly not possible.

With the internet, it's arguably easier to outsource services work than it was manufacturing. There are no harbors or ships to build, no month-long lag between when the work is paid for and when it is received, no fuel to burn, etc. Plus, providing services this way makes it easier to exploit tax havens and avoid tariffs. If a multi-continental team writes a piece of software or a legal brief, and the corporation employing them credits it all to the one domestic worker on the team, then they've essentially sneaked a bunch of product past customs!

And yet the internet, despite being around for decades, hasn't caused widespread adoption of remote software engineering.

You mentioned "collaborate across vast distances" and gave India as an example.  India has an 11-13 hour time difference with the West Coast, where the largest software companies have most of their engineers.  Collaborating is difficult, since it requires a meeting time outside of regular hours (for one or both groups).  Small problems are easier to ignore than setup a meeting.

The largest software companies have an open floorplan, to encourage software engineers to interact.  That floorplan, which each company spends a lot to create, is pretty much the opposite of a team divided by a 12 hour time difference.  If an open floorplan is a great idea (which these companies adopt), there must be something wrong with making interaction much more difficult through remote work.

There's many more points, but I'll end with the salary issue.  Yes, workers get paid far lower salaries in India.  But those same software engineers, realizing they are doing the same work for less, often move to the U.S. where they get paid much higher salaries.

I disagree. The trend I'm noticing is the increased use of cloud-based tools to package releases worked on by dozens of developers at a time, each focused on a particular use case, user story, or bug. Integration and architectural decisions are increasingly being made over Microsoft Teams, Github, or Salesforce, if not by top-down imposition by a senior expert. Physical meetings are becoming as rare as the old "pairs programming" trend, and are increasingly seen as costly and archaic. Instead, project managers farm out and monitor tasks using any one of dozens of agile project management cloud products.

The speed of development can be increased by having a round-the-clock team in different time zones, each working their own shifts and building upon the work and correspondence done by the previous shift. I.e. a U.S. based project manager might submit a user story into the team's cloud-based tool at the end of their day, and arrive in the morning to find that the Fillipino team has developed the solution, the Indian team found a bug, and the Eastern European team developed a fix for the bug.

This sort of pattern is now routine in the software and IT hardware design world. It's becoming more common in manufacturing design (e.g. specs and sketch in US, convert to CAD in another country, build custom forms in a third country, manufacture in a fourth country), customer service, marketing, social media production, and similar fields where information is the product. Other knowledge work fields like healthcare, legal services, or higher education have been much slower to offshore, due to licensing and legal requirements. Yet these jobs - for which costs have risen dramatically - are nonetheless just the processing of information where the local worker could be reduced to a largely communication role.

A bug "worked on by dozens of developers"... are you claiming 20+ people often debug the same problem together?
Bugs typically get assigned to one person to debug and fix, not 20.

Which companies use 24 hours of software engineers around the world?
I believe the largest companies in the world have many software engineers (Apple, Microsoft, Google).  I've never heard of them using 3 shifts of software engineers to work on the same code.  I have seen code maintained by a number of people, and it is always a mess.  Everyone's style differs, and you need to understand each one to understand the code.  Three teams would each be a silo, as others mentioned, and would blame each other for problems.

Also, to nitpick your example, the Philippines is only 2 hours later than India.  If the software engineers in India work a full day, workers in the Philippines will only have 2 hours to work on it before going home for the day.  I'm thinking your example might have been flawed because it wasn't a real example.  Is there a major software company that hands off code to different time zones, like you claim?

My understanding is that all the big tech companies outsource some software development work, and the people in Asia/Europe typically work during their daylight hours. I worked for a small-cap publicly traded online marketing company, and we had offices in Poland where software developers would work during the US night time. Interestingly, they were on the same teams as the U.S. crews. The 7 hour difference allowed us to have a morning meeting in CST with the developers who were just about to get off work in Gdansk. Progress was discussed, action items handed off, and issues/bugs identified to work on by the next shift. I didn't directly work with any devs in Asia, but I understand they existed on other teams.

This was over a dozen years ago, in the era before WFH, Microsoft Teams, or even very fast internet. We used desk telephones for those calls, but already had screen-sharing tools and networked task scheduling software. We pulled it off, and the team enjoyed 15 hours of daily development time (accounting for the one-hour shift overlap), a lower cost of developer labor, and access to a labor pool that wasn't experiencing shortages as the US was. I'm not saying it was easy, but it had benefits we were achieving even in the relatively primitive early-2010s.

I think outsourced development work is typically an entire project or contained module.  Something that doesn't require a lot of interaction, which is tricky across time zones.  Companies also have branch offices in other countries, where I think entire projects get assigned overseas.

Unfortunately, most companies have branches in Ireland to avoid paying taxes.  I think they use really large licensing fees - that they charge themselves - to transfer their profits to Ireland, where they pay almost no tax.  Or at least, that was what I think happened years ago.

[ChpBstrd]

It seems that in both scenarios the costs will be passed on to the consumer; so why is there support for one but opposition to the other?

The corporate income tax cuts over the past 30 years may have gone to profit margins. See the 30y trend for S&P500 margins:
https://dqydj.com/sp-500-profit-margin/

If this is the case, the consumer did not necessarily get lower prices in exchange for tax cuts, and would not necessarily get higher prices if they were raised again.

[GuitarStv]

A bug "worked on by dozens of developers"... are you claiming 20+ people often debug the same problem together?
Bugs typically get assigned to one person to debug and fix, not 20.

I agree with you in a general sense, but it depends on what actually is getting identified as 'a bug'.  It's not uncommon for an issue to be found that impacts multiple different parts of the code.  In this sort of case you can have many different developers working on aspects of a single bug - it's not unusual for five or six people to be working on what is effectively a 'single' bug in this manner where I work.

[MustacheAndaHalf]

A bug "worked on by dozens of developers"... are you claiming 20+ people often debug the same problem together?
Bugs typically get assigned to one person to debug and fix, not 20.

I agree with you in a general sense, but it depends on what actually is getting identified as 'a bug'.  It's not uncommon for an issue to be found that impacts multiple different parts of the code.  In this sort of case you can have many different developers working on aspects of a single bug - it's not unusual for five or six people to be working on what is effectively a 'single' bug in this manner where I work.

Re-reading ChpBstrd's original context, another interpretation is that the packaged release has dozens of developers... one of whom may be working on one bug.  See below.

I disagree. The trend I'm noticing is the increased use of cloud-based tools to package releases worked on by dozens of developers at a time, each focused on a particular use case, user story, or bug. Integration and architectural decisions are increasingly being made over Microsoft Teams, Github, or Salesforce, if not by top-down imposition by a senior expert.