
Andy Grove: How To Make An American Job Before It's Too Late - jakarta
http://www.bloomberg.com/news/2010-07-01/how-to-make-an-american-job-before-it-s-too-late-andy-grove.html
======
cageface
Mr. Grove correctly identifies the problem but avoids the obvious solution,
perhaps because it's too painful to articulate. The phenomenally elevated
standard of living that we have enjoyed in the U.S. since the end of WWII just
isn't sustainable. The Chinese aren't devouring the tech market because they
manage their economy. They're doing so because the Chinese worker will work
for far, far less than any American worker. Americans currently still
monopolize the high paying design & research job market but there's no reason
to expect that Asia will indefinitely play second fiddle here.

To put it bluntly - the last decade was the beginning of a painful crash of
the American economy back to earth. When we finally do reestablish equilibrium
Americans will be back at work at assembly lines. A massive re-investment in
hard science education, which seems extremely unlikely, might cushion the blow
but there's only so much room for jobs in intellectual capital.

~~~
alf
Lets also not forget that millions of people in China were starving 30 years
ago. The flow of jobs into China pulled 1 billion people out of poverty. This
is not insignificant and is not mentioned enough. Americans will go back to
work when we get to valuing intelligence and work ethic again. It may take a
while.

~~~
jbellis
The Chinese (and many other nationalities) have intelligence and work ethic in
spades.

Perhaps you didn't mean that the way it sounded. :)

------
Aaronontheweb
Andy makes an excellent point: when we outsource the manufacturing and scaling
processes to another country, what we lose in addition to jobs are the
innovations and experience necessary to maintain a strong defensive
econosystem with respect to our economy.

However, I disagree with Andy's recommendation that we should tax offshore
labor - we should focus on making labor in the United States less expensive.
Neuter the Department of Labor, get rid of labor regulations with heniously
expensive and obnoxious unintended consequences like the mandatory 8-hour work
day in California, eliminate the concept of wrongful termination, and put a
muzzle on the EPA.

Negative incentives aren't the way to go to encourage job creation. Make the
climate more hospitable for large businesses within the U.S. instead.

~~~
donw
Have you actually ever been to an industrialized country that lacks an
equivalent of the EPA and OSHA?

Go to Beijing, and enjoy the brown air, which is pretty unbreathable on the
bad days, and just moderately smelly on the good ones. Whatever you do, don't
drink the tapwater, because it'll make even local residents sick. Don't go for
a swim in the river, either.

Be careful near construction sites; there are gaping holes with no signs, and
if you fall into one and break your leg, tough. Also, if there's construction
only on the higher floors of a building, slag from welding may rain down onto
your head. Unless you're well-connected, don't even think about getting the
construction firm to pay for your medical bills.

If you're a woman and your boss rapes you, and you're not connected, that's
too bad. If you're a man and your boss rapes you, and you're not connected,
that's even worse.

Californa's labor practices and tax laws aren't ideal, but I'd much rather
work in California than China.

~~~
lionhearted
> Go to Beijing... brown air... sick... gaping holes with no signs... break
> your leg... welding rain down on your head... boss rapes you and you're not
> connected, that's too bad...

Dude, I was in Beijing two months ago. It's not like you make it out to be.
Actually, it's a hell of a lot nicer than Detroit.

In fact, I was in China five years ago and again two months ago. It's trending
upwards quickly - the pollution was near unbearable five years ago and is
rapidly improving. Infrastructure is improving. Air and water quality are
improving. The country is gradually politically liberalizing... almost
everything is improving in China quickly. Scary quickly, actually.

Over the last 10 years, China is trending upwards quickly and the USA and
trending downwards slowly... you might prefer living in Washington D.C. to
Beijing right now (but would you, really?)... but you almost certainly won't
prefer D.C. to Beijing in 10 years unless something changes.

~~~
nl
_In fact, I was in China five years ago and again two months ago. It's
trending upwards quickly - the pollution was near unbearable five years ago
and is rapidly improving. Infrastructure is improving. Air and water quality
are improving_

All of these things are because of deliberate government policies. I'm sure
you know this, but it's worth pointing out. I think you & donw are agreeing
with each other here - he's just underestimating how quickly the Chinese
government acted to fix what was becoming a problem.

~~~
lionhearted
> All of these things are because of deliberate government policies. I'm sure
> you know this, but it's worth pointing out.

Sort of. If you look at history, every country that's gone through an
industrializing process has had an increase in pollution followed by a
decrease in pollution. Some of that is attributable to regulation, but it
happens in unregulated industries too - almost everyone naturally dislikes
pollution, and generally prefer to reduce it.

Saying pollution is down and infrastructure is up because if government policy
is almost correct, but slightly misses the mark - pollution is down and
infrastructure is up because Chinese people worked to make that happen. But
this same process happens similarly in countries with less government
regulation as well. Over time, people want lower pollution and waste near them
and invest, manage, and produce that result, government or no.

------
gojomo
He had me up until:

 _Levy an extra tax on the product of offshored labor. (If the result is a
trade war, treat it like other wars -- fight to win.)_

Everybody loses a trade war. And the ensuing impoverishment and desperation
can trigger a shooting war.

~~~
Hubbert
We are currently losing this non-war. The Chinese are playing to win this non-
war.

~~~
gojomo
The trade is mutually beneficial; it's not a zero-sum game that necessarily
has winners and losers.

From the trade, we in the USA get cheaper products and low-cost
loans/investment.

We then enact counter-productive feel-good policies that make us less
competitive:

\- employment-depressing labor rules (ranging from minimum wages to complex
and expensive mandates)

\- corporate welfare (including bailouts)

\- subsidies for politically-popular activities (like home ownership and
acquisition of often-superfluous academic credentials)

These choices are not the fault of the Chinese. At worst, because our trade
with the Chinese makes us wealthier, we can then afford to make bigger
mistakes elsewhere before correcting course. We spend the surpluses from trade
on our anti-competitive policy luxuries.

"Winning" won't require getting tough on the Chinese, but getting tough on
ourselves.

~~~
_delirium
The benefits are very short-term at the cost of long-term benefits, though. We
get cheap products now, at the cost of losing our ability to produce them.
There are wide ranges of products now that the U.S. _no longer knows how to
manufacture_. Even if we wanted to build factories to produce stuff again, we
no longer know how, unless China were willing to lend us experts. And there's
an even bigger range of things that would take us 5-10 years to ramp up if we
really needed to make them again.

Basically we traded owning our own production for renting production from
overseas. Renting often has lower immediate costs but higher long-term costs
(and less freedom).

------
mindblink
An article worth reading for a lot of astute observations. Andy doesn't shy
away from making painful points. One of his more striking quotes:

"But what kind of a society are we going to have if it consists of highly paid
people doing high-value-added work -- and masses of unemployed?"

(Actually, my guess is the over-dependency of faith of individual meritocracy
will cause us to miss the deeper structural problems that Grove is pointing
to.)

EDIT: (Anedoctal single point of data with limited context), My friend worked
in a Battery startup company in the Silicon Valley. After the initial design
phase, the VCs and management decided not scale up into manufacturing, they
rather lay most people off and sell the design.

------
BrandonM
I think the core of the problem is the idea of the 40-hour work week. It is
inevitable that more and more jobs will become marginalized and automated.
That is a _good thing_ : the goal of technological progress should be
increased happiness, of which one component is increased leisure time.

As more and more jobs require less and less work performed by humans, the
obvious solution is to work less hours. Instead of family providers working a
total of 60-90 hours per week, they should be working closer to 40-50 in the
somewhat-near future, with that number continuing to drop over time.

We obviously have 3 possible paths:

    
    
      1. We return to the single-provider days of old
      2. We scale back "normal" hours to be 20-30 hours per week per person.
      3. We have high unemployment while many are working 70+ hour weeks.
    

Currently we are going with (3), and it just doesn't make that much sense.
Either (1) or (2) would be acceptable to me, but (2) certainly seems more
fair. I would love to get to a situation where families get to spend valuable
time together and kids are raised by their parents.

I think an average of 25 hours per week would hit a nice sweet spot. It would
allow companies to have 10-hour work days, either alternating 3/2 10-hour days
per week, or 5-hour shifts 5 days a week. Jobs like programming could be
designed to have 2 8-hour shifts per week (to perform actual development)
along with 3 3-hour shifts (to address meetings, squash bugs, perform customer
service, etc.). What is keeping us from this?

Instead, we have something like 15-20% of the population overworking
themselves while another 15-20% are under- or unemployed. Something's gotta
give.

~~~
c1sc0
Ask the French how reducing the workweek to 35 solved their unemployment
problem in the last decade or so.

------
vessenes
I'm very interested in extrapolating some of these trends out -- America does
not have a social system which allows society as a whole to benefit from GDP
growth while jobs are destroyed.

My social history tells me that no other countries have been successful at
creating such a system either.

Whether or not we have such a system, we may well be moving to a world in
which the US can continue to increase GDP significantly while unemployment
increases (efficiency increases, in other words). Successfully creating a
Chinese middle class, and selling them our branded stuff only hastens that
eventuality.

What happens to all these American unemployed people? In an ideal world, they
would be artists and poets, inventors and writers, people who add to our
cultural capital. The end-game here would (in my dreams) look a lot like Ian
Banks' Culture books -- a utopian society which has moved past 'the age of
scarcity'. Unfortunately, right now, places like Saudi are the closest we can
look to for a society with, frankly, enough money for everyone.

In the interim, we are facing a sort of cultural crisis. America's PDI (Power
Distance Index) is middling right now; the PDI describes out comfort with and
exposure to, high levels of power differences in society, including wealth.
Saudi has one of the highest PDIs in the world, meaning that they as a country
haven't solved this problem of building an equitable society based on passive
income production; in fact, their society is less equitable than many poorer
countries. It is hard to imagine that we are aiming at anything else but a
Saudi-ish social system if the GDP growth + unemployment growth trend
continues.

I say this partly because Americans think of someone who is 'unemployed' as
lazy, uneducated, etc. In fact, there's a significant undercurrent of that
perspective in this thread. The reality is that if we are able to keep
improving productivity while birth rates decline, there will eventually be
less work. There might be more money, but there will be less work.

How do we deal with that? I don't have a good answer, but I still am part of
the problem -- I would much rather spend capital on an automated solution for
my business than hire someone.

------
starkfist
It's interesting to hear this from Andy Grove. Intel of the 1990s was
constantly being called out as an abusive workplace, exploiting H1B and "home
grown" engineers, then laying them off when they got too old and sending their
work overseas. Although I agree with most of his essay, I'm not sure I would
want to be an employee in whatever scheme he is envisioning.

~~~
juicebox
You mean the "scheme" of economic survivability?

I didn't read where Grove was proud of how Intel behaved during the '90s. In
fact, I got the opposite impression from this article: Grove is writing from
the pain and tragedy caused by competing with the Chinese on entirely Chinese
terms. Where was the US during those years? Absent. Like a drunk staring into
a Vegas slot machine in the wee hours of the morning going through the
motions, but not really being there.

~~~
starkfist
He doesn't go into Intel's part in the whole thing. He mentions asking
investors for money to build a fab, that's about it.

Regarding his scheme, if his economic stimulus plan means to build a bunch of
Intels, people will choose to party on and watch the economy go down in
flames.

Others in this thread keep talking about "the elephant in the room" but the
real elephant in the room is that given other options, almost nobody chooses
to work in a factory.

------
todayiamme
I have a question; does a company _only_ exist to make profits?*

Whenever, someone starts a debate like this, or whenever I see a human being
slaving away for a pennies in despicable conditions. I have to ask this
question.

If and only if companies are entities that exist to make more and more money
(not wealth) then you will inevitably run into such problems. The companies in
the USA outsource that labor to China, or India only for earning more money,
but are they creating wealth? By destroying the long-term sustainability of
human civilization on this planet (I live a few kms from a few of these
factories in India. You have to see in order to believe what they get away
with)? By ultimately harming the very source of their wealth through such
measures?

I have absolutely no idea about the implications of these concepts to make any
categorical statement on them, but I think that David Packard and Bill Hewlett
may have gotten it right. (see:
[http://www.jimcollins.com/article_topics/articles/the-hp-
way...](http://www.jimcollins.com/article_topics/articles/the-hp-way.html))

*profits are a pre-requisite to its existence. I want to ask if they exist only to do that?

~~~
rbranson
The answer is yes. Wealth is the unlocking of human potential through
productivity and efficient use of finite resources such as labor and goods.
What these companies do is shift costs, not unlocking potential. Luckily for
humanity, this is mostly a temporary condition. It only takes a few decades
for labor markets to modernize and they will eventually run out of new markets
to exploit.

------
meric
Andy Grove is worrying about yesterday's jobs. He shouldn't be. No one was
worrying about agricultural jobs disappearing, replaced by manufacturing jobs.
As technology advanced, fewer farmers were needed to satisfy the basic needs
of the consumer. As their basic needs were satisfied new needs for random
widgets, plastic toys and entertainment devices appeared, creating
opportunities in manufacturing. Today, service jobs has mostly replaced jobs
in manufacturing in developed countries; The amount of service & creative work
(e.g giving massages, selling products, and of course inventing the next
digital device) output an American worker can produce makes it uneconomical to
put the worker in a mundane factory making McDonald's toys instead. As
technology advances and robotics replaces even factory workers in developing
countries, more labor will be freed up to do other things. As had happened in
the past, when the most basic consumer needs are resolved there will always be
new needs arising; Where yesterday's consumer demanded shelter, food, clothing
and a radio, today's consumer demands cars, houses, artwork, internet, hot
water supply and monthly professional haircuts. The circle of increasing
supply leading to increased demand and thus increased supply again is a
virtuous one.

------
spinchange
I think our elected representatives need to listen a hell of a lot more to
guys like this.

------
tylee78
Completely disagree: we need technological paradigm shifts and work our buts
off... That was the way to our current standard of living, successfully copied
by the East, and it will be the successful path to future growth and
industrial/scientific advancement. Not that socialist whiny I need more money
and less work attitude a la dying Europe.

------
hga
WRT to US startups, how relevant is this anymore?

I.e. with the exception of sports (in the biological sense) like Tesla (also a
big political factor there), what new Intel like startups are going to get the
serious funding they require in today's political and economic environment.

As far as I can tell, the period of the big VC funded company like DEC or
Intel lasted between the late '50s (there's a certain bit of legislation that
pushed the concept over the top) to the early '00s, when SarBox was the last
straw that ended the game.

Pretty much all of us who are here for the startup game are here for the small
capital web/Internet/software type of companies. E.g. I don't see where the
next FPGA like think is going to come from (well, in the US).

------
robryan
The question is though, is it smarter to use some form of tariffs to create
more American jobs, lower the minimum wage, or as a third option accept that
Asia can do manufacturing cheaper than anyone else and people will be
unemployed, but tax the American companies benefiting most from the
outsourcing and redistribute the wealth to the unemployed.

Maybe at this point in time you have to accept a high unemployment rate, the
problem you have to be careful with I guess is you still want to provide
incentive to the people currently in minimum wage positions.

------
wslh
It's sad that after a nice article he ends thinking in taxing, it sounds like
a lost case when you need taxes to solve the problem!

My naive point of view sees lowering lifecost (cheaper real state, health
insurance, etc) so people needs less money to live in a good way and costs can
go down. That can't be done in Silicon Valley or NYC but thanks to the
technology and good transportation can be done in other areas of the country
with good planning.

------
_debug_
Just thinking aloud : please humour me. Since technology is getting robotized,
and even Chinese labour is at risk of losing jobs...Organ Farming. If and when
the technology matures : You take my cells, convert them to stem cells, and
workers help grow a perfect heart / liver / other organ, nudging it along it's
growth to perfection. It's like working in an iPhone factory, except, it's
really life-saving / preserving.

------
mattmcknight
He ignores the fundamental problem- the American worker is overpaid. Why would
anyone work at the wages of a Chinese laborer when you can make as much money
as a Foxconn production line worker ($1.25/hr x 60hr week) in about 10 hours
per week at minimum wage here, about 6 hours per week at factory job? We need
to find a way to avoid the sticky wage problem, and it will likely involve
inflation.

------
aero142
I find this line of thinking very disturbing. Mr. Grove follows others in
believing a common fallacy, by ignoring secondary effects, and fails to see
how issues in macroeconomics affect each other. Where to start...

The American standard of living is higher than China. In order for a worker in
the US to continue to enjoy his standard of living and salary, she must
contribute to creating something of value equal to what she consumes that is
then exchanged at a market price(which determines it's value relative to
goods/services created by others). When the US is a leader in technology and
innovation, we create things that are very valuable, because rare and
productive people make them, and trade them for other, largely commoditized
goods, from poorer countries. The reason these commoditized goods are produced
in poorer countries is because they can... The ability to produce them is well
known so there is more competition, and therefor demand, and the price drops,
along with the wages. If you work in a factory cheaply, you do so because
replacing your skills in that factory is easy. There are many other people
with that set of skills to replace you. The value you produce is cheaper,
therefor you are paid less and have less to consume .

Now, back to Mr. Grove's statements. The factory jobs left the United States
because wages were higher here than there. It's that simple, but where he goes
wrong is say that "managers were happy", which is not quite as harsh, but very
close to the usual line, which attributes the offshoring to "greed". Not
quite. If an American company has to produce it's goods in a factory where
people make 2x the salary of the same good in China, the goods will cost more
to buy. If the American company, doesn't outsource, and a Chinese company is
able to produce the same or similar good(think commodity again), then they
will be undercut in the market and go out of business. Not only will
management be un-"happy", but the US as a whole is worse off because the
profits now go to a Chinese company instead of an American one. The US has now
lost not only the manufacturing jobs, but the high value add jobs as well. Mr.
Groves proposes the "solution" that we tax imports and use the proceeds
promote American production. This merely shifts the money around. Those
imported goods were cheaper than their American counterpart. Assuming current
wages remain the same, it now cost more dollars to purchase that good because
of the tariff and American's have less stuff because it is more expensive
relative to their salary. The other option(without the tariff), is that the
American factory worker cannot find other work that will pay him more, so he
agrees to accept lower wages for performing that same job here and can
therefor buy less stuff. I believe that these, as a whole, offset one another
and are probably net a wash.

As for unemployment, I believe that it is caused by many different things,
probably many reasons that are poorly understood, but I'll address a few of
them that I think are important here. Unemployment can be caused by temporary
mismatches between market demands for goods and supply of those goods. Demand
changes, prices change, companies don't require as many employees to produce
the goods(this can also be caused by changes in the efficiency of production),
and people are fired. There may not be a job in their previous line of work.
If there is some other skill set which is in demand, that person can learn a
new skill and make whatever salary the market demand supports for that skill.
It is also possible that the market will not support the workers previous
salary. Labor costs go down, but here is where people usually go wrong. When
labor costs drop, it becomes affordable to pay people to do things that you
might have automated(for a high cost in machinery or software for example).
Or, the market might now support the cost of producing a good which _must_ be
done with tedious manual labor. Or, if the American worker is more efficient
than his Chinese counterpart, then it might be cheaper to start doing
manufacturing in the US again. In other words, as wages drop, the unemployment
rate will go down, and less will be outsourced. This is just the tradeoff. The
fact that jobs are sent to China means that cheaper goods are available here
in the US. Mr. Groves states that the trend is towards an economy where there
are high value add jobs and high unemployment. This is true only if current
wages hold. If wages drop, then outsourcing makes less sense and unemployment
picks up. What we really want is lots of high value add jobs here. This comes
through innovation, creativity, a highly skilled and motivated workforce and
outsourcing production(if it makes sense) to cheaper markets.

~~~
nl
_In other words, as wages drop, the unemployment rate will go down, and less
will be outsourced. This is just the tradeoff._

You make that sound so simple.

You left out the bit about that meaning falling standards of living, and the
social dislocation that causes.

~~~
lokiujhytyu
>falling standards of living

You mean only being able to buy a 27" TV for $1000 instead of a 50" one? Or
having to stick with a 3G phone for another year before getting a 4G one?

~~~
AlisdairO
Inability to buy gadgets is unlikely to be the main problem - it's not like
gadgets are a huge proportion of the expenditure of poor people right now. The
problem that will be created is extremely high wage mismatch between the
highly educated, and those that are not able to achieve such a high level of
education.

This is a problem for a variety of reasons. The poor are, of course, less able
to compete for scarce resources such as housing (particularly in cramped
places like the UK), healthcare, high quality education, etc. This
uncompetitiveness isn't too bad in places with reasonably limited income
inequality, but as the inequality scales up becomes a really serious issue.
All of this is a bad recipe for social stability - as being part of society
becomes less beneficial for the poor, more and more will choose to live
outside it.

Over time, income inequality also leads to poor social mobility, which is a
real issue with keeping a country competitive.

~~~
Tichy
But the next elephant in the room: suppose with a huge effort, you build a
factory that employs all the 100 million (or whatever) uneducated people in
your country. Then these people have a steady income and decide to have
children. In a couple of years, you suddenly have 400 million uneducated
people. Then what? (I don't know a proper answer - simply throwing more money
at education seems unlikely to work...).

~~~
AlisdairO
That's not really too much of an elephant. Most western countries have sub-
replacement birth rates right now, and this effect seems to occur a short
while after countries develop.

------
joubert
Although it is naive, at present, to discount (artificial) national borders
(and the patriotic sense people might feel), I look forward to a day when
countries no longer exist, similarly to how different regions were amalgamated
to form countries and their "national identities".

------
davidw
I think the 'answer' insomuch as there is one, is not a quick fix, but to
educate people in order let them compete for the 'higher level' jobs. 'Making
education work better' is a big, long, ugly, hairy and very political topic
though.

------
known
Due to Globalization, America will be saturated and will be inhabited by
people who will live on <http://en.wikipedia.org/wiki/Passive_income>

~~~
mkramlich
When I read your sentence, right before I got to the very end with the link to
Wikipedia, I was thinking you were going to end it with something like
"soylent green."

~~~
known
I think privatizing profits and socializing losses will result in passive
income society.

------
SkyMarshal
There's another proposed solution to this problem in the form of tax reform -
The Fair Tax proposal.

IANA Tax Expert, but I like how they've completely rethought the tax system
from the ground up, with the objective of making the US a tax haven for all
parts of the manufacturing process - harvesting raw materials, milling into
useful materials, manufacturing into products, transport, and sales.

In a nutshell, there are 'embedded taxes' at every point in the manufacturing
chain. Take a simplified semiconductor for example, made of sand, aluminum,
and copper:

1\. Mine the copper and aluminum, collect the sand (payroll + income + other
taxes)

2\. Purify it all, mill the copper and aluminum (payroll + income + other
taxes)

3\. Deliver to fabrication facilities (tax the transport company)

4\. Convert sand to silicon wafers, etch the microprocessors into the wafers
with the copper and aluminum, package into chips. (more taxes)

5\. Transport to OEMs (tax the transport company)

6\. Build computers (more taxes)

7\. FedEx/UPS to purchaser (more taxes).

The consumer ends up paying multiple embedded taxes in the final cost of the
product. The Fair Tax folks estimate that these embedded taxes comprise
roughly 22% of the cost of the average product manufactured in the US.

The Fair Tax would instead remove all the embedded taxes and add them in one
lump sum to the final product:

1\. Mine the copper and aluminum, collect the sand (no tax)

2\. Purify it all, mill the copper and aluminum (no tax)

3\. Deliver to fabrication facilities (no tax)

4\. Convert sand to silicon wafers, etch the microprocessors into the wafers
with the copper and aluminum, package into chips. (no tax)

5\. Transport to OEMs (no tax)

6\. Build computers (no tax)

7\. FedEx/UPS to purchaser (no tax).

8\. Consumer pays 23% tax (calculated inclusively, 30% calculated exclusively)
on the final product.

The final cost to the US consumer is roughly the same, but the incentives are
drastically realigned. It becomes much less expensive to make things in the
US, and they are only taxed when sold in the US. Products exported overseas
would be tax-free to make and sell (except for taxes in the foreign
countries).

The concept potentially solves all sorts of problems, from our trade balance
to illegal immigrants not paying taxes. Definitely worth reading more about
for anyone interested:

<http://www.fairtax.org/>

[http://www.amazon.com/FairTax-Answering-Critics-Neal-
Boortz/...](http://www.amazon.com/FairTax-Answering-Critics-Neal-
Boortz/dp/0061540463)

[http://www.amazon.com/FairTax-Solution-Financial-Justice-
Ame...](http://www.amazon.com/FairTax-Solution-Financial-Justice-
Americans/dp/1595230602/)

~~~
aero142
I really like the fair tax, but it bothers me that it is regressive. I know it
is the same % for everyone, and there is the rebate at the poverty line, but
the wealthy spend a much smaller percentage of their money at the retail
level. Why is buying a car taxed but buying a company isn't? I've heard
different answers but I'm not convinced by any of them.

~~~
brg
Everything is taxed, services as well as investments. What do you think will
become of the accumulated wealth, that it will forever remain in bank
accounts? What good would it be to have it and not have it moving through the
system? It will eventually get taxed, perhaps simple not as fast as you wish.

Its only regressive when you lose perspective on the purpose of money.

------
binaryfinery
Hear hear.

China manipulates its currency, and so does the US: to keep the rich rich. If
we were on the gold standard (not that I'm saying we should be) the dollar
would already be worthless and US labor would be competitive. But then Wall
Street 20yos wouldn't be able to afford a ferrari.

We must either begin enforcing fair trade, and fair employment, or we must
face the fact that tens of millions will be unemployed. We cannot support them
either. They will not be able to buy the iphones or the xboxes that pay our
salaries, and we wont be able to pay our taxes.

And do you imagine that they will just starve to death? Or is LA a testbed for
containing the lawless future?

I do not know what is happening to the USA. It seems as if those who should
know better are willfully ignoring the consequences of their actions.

------
CamperBob
The real elephant in the room, which Grove and practically everybody else
knows very well but refuses to talk about, is that nobody starts a company to
employ people. People start a company to _make stuff_. To the extent this can
be done with fewer people, this is _always_ a good thing from that company's
perspective, with no exceptions I can think of offhand. People suck, and you
don't want to deal with them if you can help it. Just as factory farmers would
love to be able to grow meat in vats without dealing with the messy parts of
animal welfare and husbandry, most managers would love to be able to carry out
their missions with fewer people. This is a simple reality of productive life,
not a question of social morality or human values.

Why does it make sense for companies like Foxconn to take on more and more of
our high-tech manufacturing work? Simply because, in contrast to most of the
twentieth century, most consumer products are built pretty much the same these
days. There is absolutely nothing about a PS3 that requires different
components, production lines, or assembly techniques from a desktop PC. There
is nothing about an iPhone that justifies building it in a factory that
doesn't also make pocket calculators, handheld game consoles, or, hell,
competing phones such as Droids. Massive contraction and consolidation of the
manufacturing sector, whether here or elsewhere, is both desirable and
inevitable. Right now this is true of high-tech items but soon enough, it will
be evident enough across the spectrum of durable goods.

This wasn't the case when producing a new widget required a lot of custom tool
and die work, specialized worker training, or the development of advanced
processes unique to that widget. For a drop-dead awesome example of what I'm
talking about, look at the processes Tektronix had to develop in the 1960s in
order to build CRTs for their oscilloscopes:
[http://classictek.org/index.php?option=com_seyret&Itemid...](http://classictek.org/index.php?option=com_seyret&Itemid=100&task=videodirectlink&id=1)
(Flash required)

Grove is basically saying we need to start more companies that "scale up" to
require factories where people sit doing stuff like what's seen in that video.
He's wrong. Today, if I design a better oscilloscope, I'd be out of my mind if
I didn't find a way to use the same generic LCD panels that Chinese factories
produce by the tens of millions for sale to everyone from Apple to Boeing. And
when my hypothetical design is complete, it will use at most one or two custom
ASICs (the fewer the better -- I'll use FPGAs if I can), and Foxconn can start
building it as soon as they finish their rush order of iPhone 5G Extremes.

I have a lot of respect for Grove, but as a captain of industry, he's fighting
the last war. His subtextual premise is dead-on, though: we need to figure out
how to put 200,000,000 underemployed US workers to good use, or things are
going to _suck_.

To me, it's obvious what the future of mass production will look like, but
it's not at all clear how to stave off a future where 10% of us are
shouldering the entire productivity burden for the rest of the country.

~~~
pstuart
Why not focus on how to make stuff more efficiently locally, i.e., robotics?
At least that could keep _some_ manufacturing jobs local.

~~~
CamperBob
I think that's a valid point, but it will quickly devolve into an argument as
to where the robots should be built. It still won't magically add any
objective value to your product just to have the nuts and bolts tightened in
your hometown.

~~~
rbranson
You're confusing a capital investment (the robots) with cost-of-goods-sold
(the widgets). Automated manufacturing systems are complex systems that
require highly trained individuals to maintain and operate, while reducing the
total labor cost. In addition, if more manufacturing utilized these systems,
scales of economy could be reached that would allow them to be more modular
and commoditized.

~~~
CamperBob
_Automated manufacturing systems are complex systems that require highly
trained individuals to maintain and operate, while reducing the total labor
cost._

For now.

Also, keep in mind that everything I said about it being economically
undesirable to employ human labor in production goes out the window when there
are a billion workers available who have nowhere to go but up. There is no
(natural) law that says that our robots will be any more economical than low-
cost Chinese workers, even though they might be more economical than high-cost
American workers.

~~~
rbranson
It's all "for now." Eventually we will exhaust the Earth's resources and
possibly become enslaved by a race of artificial intelligence, but I'm not
pretending to even think about solutions to those problems.

It'd also be cheaper to have slaves, but we don't do that either. The ends do
not justify the means. In order for capitalism to be effective at increasing
standard-of-living across the board and allocate resources and capital
efficiently, it must be tempered with rules that set limits on what avenues
are pursued for profit.

------
signa11
> Not only did we lose an untold number of jobs, we broke the chain of
> experience that is so important in technological evolution...

wow ! just amazing.

