
Andy Grove’s Warning to Silicon Valley - hvo
http://www.nytimes.com/2016/03/26/opinion/andy-groves-warning-to-silicon-valley.html?action=click&pgtype=Homepage&clickSource=story-heading&module=opinion-c-col-left-region&region=opinion-c-col-left-region&WT.nav=opinion-c-col-left-region&_r=0
======
luso_brazilian
> "There was room for improvement, he argued, for what he called “job-centric”
> economics and politics. In a job-centric system, job creation would be the
> nation’s No. 1 objective, with the government setting priorities and
> arraying the forces necessary to achieve the goal, and with businesses
> operating not only in their immediate profit interest but also in the
> interests of “employees, and employees yet to be hired.”"

Although a valid concern putting "job creation" as a goal for governments can
(and in a lot of occurrences in recent history, did) backfire spectacularly.

In the most reductive analogy it creates incentive for the government to
create "hole diggers" and "hole fillers" type of jobs that, in aggregate,
generate very few useful work while fulfilling this basic goal of job
creation.

I believe this "job creation as priority" approach is inferior to both the
"laissez-faire" capitalist alternative and the "basic income" social
democratic one.

As an example of its dangers it suffices to see the kafkaesque process of fund
allocation (and sourcing) for the public funded aerospace industry, both the
military procurement (fighter jets, bombers) and the civilian NASA one.

~~~
zanny
I think there is a significant confluence among those who find prosperity and
purpose through jobs to conflate the concepts of employment and purpose. That
to not have a job is to not have a purpose, and vice versa. If we had a
planned economy built around peak employment, we would have many fewer
entrepreneurs and many more, as you say, hole diggers.

Socially we already do that. We have created a gargantuan advertising industry
that has zero net material gain for society, whose sole purpose is to redirect
dollars already in circulation to their employers. We have dramatically
expanded bureaucracy in almost every industry to micromanage risk at the cost
of tremendous overhead in the time of human beings spent on it. We maintain
many institutions in the service industry more-so because the marginal cost of
having all the participants unemployed (and thus hungry, destitute, and
dangerous) is worse than just paying them do to work nobody practically would
need done if not for the negative impacts of simply dropping people out of the
workforce.

But this is entirely the wrong way to approach economics. It is absolutely
antithetical to the human condition to start from the presumption that people
need to do something for someone else for their life to have meaning. That is
where entrepreneurism comes from, and we need more of it going forward, not
less, as we systemically eliminate the repetitious work in our lives through
technological advancement. To aspire for peak employment is to aspire for the
death of aspiration. Rather than seeing a "problem" of unemployment, when the
practical cause is derived from the lack of anyone willing to pay people for
their time considering the skills that they have, see it as an opportunity. If
we have unemployment it means everything worth doing is being done, and we
should be trying to enable those who are not needed to keep society running to
improve that society through innovation than to fabricate busywork for them to
do to keep all the cogs in the machine in tune with one another, even if a
large segment of said cogs are redundant.

And probably the best example is how I imagine most people would read that
previous sentence - but there is a ton of things _I_ want done! But
practically, capitalism does not care what _you_ want, it cares about only
what those with the dollars to make their voices heard want. The unemployed
should be those free to listen to the wants of people rather than money,
rather than those who society condemns to poverty.

~~~
hitekker
I am reminded of what George Orwelles wrote in "Down and out in Paris and
London":

> Beggars do not work, it is said; but then, what is work? A navvy works by
> swinging a pick. An accountant works by adding up figures. A beggar works by
> standing out of doors in all weathers and getting varicose veins, bronchitis
> etc. It is a trade like any other; quite useless, of course — but, then,
> many reputable trades are quite useless. And as a social type a beggar
> compares well with scores of others. He is honest compared with the sellers
> of most patent medicines, high-minded compared with a Sunday newspaper
> proprietor, amiable compared with a hire-purchase tout-in short, a parasite,
> but a fairly harmless parasite. He seldom extracts more than a bare living
> from the community, and, what should justify him according to our ethical
> ideas, he pays for it over and over in suffering.

EDIT: On a side note, I agreed halfway with what you're writing but the second
half of your comment seems a bit more unclear/I'm not sure what you're
discussing there. Could you clarify what you mean?

~~~
digi_owl
> but, then, many reputable trades are quite useless

Brings to mind Graeber's article on "bullshit jobs".

[http://strikemag.org/bullshit-jobs/](http://strikemag.org/bullshit-jobs/)

------
p_monk
Adam Smith was making this same argument the only time he ever used the term
"invisible hand." Smith assumed (incorrectly) that capitalists would always
prefer their own domestic markets. For Smith, his conception of capitalism was
good because it offered the best chance at achieving equality. However,
globalization of capital has proven that his underlying assumptions were
incorrect, so it may very well be that Smith today would have been seen
alternatives to capitalism as better suited to provide equality. I believe
Smith's beliefs would have led him to be something like what we call a "market
socialist" these days.

The original passage from Wealth of Nations:

"He generally, indeed, neither intends to promote the public interest, nor
knows how much he is promoting it. By preferring the support of domestic to
that of foreign industry, he intends only his own security; and by directing
that industry in such a manner as its produce may be of the greatest value, he
intends only his own gain, and he is in this, as in many other cases, led by
an invisible hand to promote an end which was no part of his intention."

~~~
boreas
I think you may be wrong in your interpretation of the present situation.
Instead of concluding that, because modern capitalists are happy to invest
abroad, Smith was wrong about their preferences, you could conclude that the
world is becoming so integrated that the difference between foreign and
domestic is less relevant than ever. In other words, the entire world is
"domestic".

I think this could be a reasonable conclusion given the increase in the
strength of property rights for foreigners ("he intends his own security") and
the decrease in transportation costs and time, the two things I assume Smith
was reasoning about.

------
awakeasleep
> “All of us in business,” Mr. Grove wrote, “have a responsibility to maintain
> the industrial base on which we depend and the society whose adaptability —
> and stability — we may have taken for granted.”

Thats the money quote to me, and so much of what is overlooked when talking
about industry and to a large extent, social welfare programs. I wish the
overton window included the concept of the costs required to maintain a
useful, stable society.

~~~
HillaryBriss
Yes. And not only business leaders, but also the economists who've been giving
these business leaders intellectual cover (and advising presidents) for
decades now.

It seems that today's high ranking economists, who are highly influential and
defend their intellectual turf aggressively, rely on models which ignore/omit
Mr. Grove's industrial policy insights.

US consumers get cheaper manufactured goods if the US economy just simply
outsources all orders for these goods to factories in East Asia. And that
seems to be about as deep as these economic analyses go.

But where is the economic analysis that recognizes and quantifies the cost of
losing so much domestic manufacturing capability?

When I see how long it takes Indiegogo and Kickstarter hardware makers to
actually create their finished products -- because they have to travel to
China to meet with part suppliers and manufacturers -- I wonder how much US
innovation has been crippled by the policies top US economists have
confidently articulated and defended for the last 30 or 40 years.

~~~
eli_gottlieb
>When I see how long it takes Indiegogo and Kickstarter hardware makers to
actually create their finished products -- because they have to travel to
China to meet with part suppliers and manufacturers -- I wonder how much US
innovation has been crippled by the policies top US economists have
confidently articulated and defended for the last 30 or 40 years.

Yeah, it's actually a bit vexing when we lose one of the members of my team
periodically for trips to China or Taiwan to deal with new hardware.

------
afarrell
There is a conflict of values to consider here: Do we we place a higher value
on preventing relative poverty in the United States or extreme poverty around
the world?

"""Poverty rates started to collapse towards the end of the 20th century
largely because developing-country growth accelerated, from an average annual
rate of 4.3% in 1960-2000 to 6% in 2000-10... China is responsible for three-
quarters of the achievement."""[1]

[1]
[http://www.economist.com/news/leaders/21578665-nearly-1-bill...](http://www.economist.com/news/leaders/21578665-nearly-1-billion-
people-have-been-taken-out-extreme-poverty-20-years-world-should-aim)

~~~
ArkyBeagle
I think that Americans place a higher value on preventing extreme poverty
around the world.

When faced with picky eaters, before around 1970, parents all over the USA
would use the cliche that "children are starving in China."

~~~
rgbrenner
"before around 1970"

You know what happened shortly before 1970? The Great Chinese Famine--where up
to 45 million people starved in the span of 3 years.

[https://en.wikipedia.org/wiki/Great_Chinese_Famine](https://en.wikipedia.org/wiki/Great_Chinese_Famine)

I'm not sure how saying facts out loud indicates a value preference.

~~~
ArkyBeagle
It was said on a time interval from a very long time before 1970 until around
1970. This was not a direct reaction to the Great Famine ( which wasn't widely
discussed in the US ).

If you're not familiar enough with American culture to know what I mean, then
don't worry about it.

~~~
rgbrenner
ok, that's interesting. China had a lot of famines though: 7 from 1900-1962:
[https://en.wikipedia.org/wiki/List_of_famines_in_China](https://en.wikipedia.org/wiki/List_of_famines_in_China)

So I wouldn't be quick to rule out the idea that the phrase started with a
famine in China.

I am American btw. But I wasn't alive in 1970.

------
narrator
The mystery at the center of all this is "Why is it so astronomically cheap to
do the x in Asia vs the U.S?". Not just cheap as in low wage, but cheap as in
finished goods costing less than the cost of materials delivered to the
American factory. It's not just manufacturing.

In Thailand you can live in a high rise condo with a gym and maid service and
eat out every day and do some traveling for $2000/month. That life style is 8x
more expensive in San Francisco. In Argentina before the 2002 crash, the
country was very expensive, but it wasn't some luxurious paradise, so it's not
just that it's a developing country. AFter the 2002 crash the prices were
absurdly cheap. Something just doesn't make sense, and there's an enormous
amount of denial that anything's amiss. Prices are a mystical sacred
phenomenon it would seem. American companies don't care why prices are cheap,
they just build stuff where the prices are cheap and sell it where they are
high. They couldn't care less about the mystery, neither could the
politicians. It's just the magical mysterious market.

Health care prices are also a mystical sacred phenomenon. Why are they 10x in
the U.S what they are in other countries? Other people get sick and die there
and are willing to pay whatever money they have to get better. Prices don't
necessarily scale with income per capita either. I am sick of pat answers to
this question and "just-so" stories. Someone should take some cost accountants
and figure out where all the money is actually going for these kinds of things
and write some journal articles. It would probably reveal a lot of bizarre and
interesting rough edges on the economy and maybe a fair amount of business
opportunity.

Some researcher should go look at the cost to build an Intel fab in Taiwan vs
the U.S and start asking why. Start with why is it 1/5 the price to build the
fab in Taiwan: 1. Because the construction company charges that much. Why? 2.
Because the labor is 1/2 and the materials are 1/3\. Why? Because the labor's
rent is 1/5? Why? Because the land for the apartment building was 1/10 the
price? Why? Because there are no mortgages and the land had to be bought with
savings from an export business, etc, and follow it all the way down for
everything. Depth first search! Piles of fascinating economic nuggets are just
sitting there untouched.

~~~
tim333
Any source on "1/5 the price to build the fab in Taiwan"

Googling I found:

"Taiwan Semiconductor, the world’s biggest custom-chipmaker, plans record
spending on plants and equipment this year. It’s lavishing $12 billion on
factories -- more than Intel Corp. has ever spent in a year"

Which looks more like Taiwan being enthusiastic for building tech stuff rather
than dirt cheap. I'm recently back from Taiwan and I'm not sure the costs are
much lower than rural USA.

~~~
narrator
As I said in my other reply, that's just speculation to provide an example as
to what they might find. I would really like someone to do some scholarly work
on the subject to get to the real answers.

------
e0
Here's a direct link to the Andy Grove's opinion piece referenced in the
article: [http://www.bloomberg.com/news/articles/2010-07-01/andy-
grove...](http://www.bloomberg.com/news/articles/2010-07-01/andy-grove-how-
america-can-create-jobs)

~~~
_yosefk
From that piece: " 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.)"

I don't claim to have good/better ideas on this issue, but starting a trade
war and fighting it to win does not sound very promising, especially since
trade wars can develop into, well, plain wars (the decade from 1929 to 1939
had its fair share of protectionism and ended pretty badly.)

Theoretically (very theoretically), a better approach for any two countries,
and eventually it might become the only workable approach, is to act to
maximize the benefits for the citizens of _both_ countries. How to get there I
don't know.

~~~
lisper
> fight to win

What exactly does victory in a trade war look like?

~~~
yongjik
...Consumers are forced to buy your expensive product instead of cheap
imported ones?

~~~
xenadu02
The idea that there are "consumers with money to spend" hinges on the
availability of jobs that pay good wages. People without jobs aren't good
consumers (most government benefits are parsimonious or heavily restricted to
certain items).

Free trade unquestionably allows companies to offshore jobs to countries with
cheap labor, no environmental regulation, high corruption to enable bribes, or
all of the above.

As a consequence, wages stagnate as more and more of the profit accumulates at
the top. Those at the top divert a much larger percentage of their wealth into
investments, driving a surplus of capital seeking return. Meanwhile wage
earners' purchasing power decreases. This trend can be masked for a time, as
marginal people drop out of the labor force, older people retire early, the
cheap overseas labor gives wiggle room to drop some prices, and other
technological advances make some goods cheaper to produce.

In the long term the consumer class is gutted. Capital is misallocated due to
lack of investment opportunities, financial volatility increases, and the
concentration of wealth enables a handful of people to command a vastly
outsized influence on government.

For the record, this was the Gilded Age in the USA where we jumped from
financial panic to financial panic and the monopolists and .01% literally
decided entire elections in back rooms. The same old arguments have been
reborn (free market, regulation strangles business, etc).

I'm pretty sure things will continue to get worse before they get better. It
took the fear of Bolsheviks to force change last time.

~~~
yongjik
Your scenario may be applicable in other cases, but in the particular context
of semiconductor industry, it sounds rather silly. Intel isn't a family farm
raising chickens, and its competitors aren't exactly hiring subsistence
farmers to draw silicon diagrams in a dim factory building 16 hours a day.

E.g., even though I'd be the first to say that Samsung is as corrupt as fuck,
its fabs aren't exactly spewing toxic gas into the neighborhood (probably not
any more than silicon valley companies did in the 60s), and it still (sadly)
remains a choice opportunity for job seekers in Korea.

Also you have to factor in that the existence of a strong consumer class in
other countries (those pesky workers in Samsung) allows many American
companies to hire more people than they could if they only had the American
market.

------
paulpauper
The lump of labor fallacy is a pervasive one

Despite all the hype over outsourcing, the number of Silicon Valley jobs is
close to the 2000 highs

[http://www.spur.org/sites/default/files/wysiwyg/u168/Screen%...](http://www.spur.org/sites/default/files/wysiwyg/u168/Screen%20Shot%202015-02-10%20at%202.27.13%20PM.png)

Silcon Valley job growth has pretty much tracked the rest of the nation
[https://upload.wikimedia.org/wikipedia/en/8/8e/US_Labor_Forc...](https://upload.wikimedia.org/wikipedia/en/8/8e/US_Labor_Force_and_Employment_Numbers_-
_v1.png)

Job creation and destruction is an inescapable part of a dynamic economy.

------
Alex3917
If the U.S. really had a shortage of prosperity then this would make sense.
The problem is that the U.S. already has more wealth than it knows what to do
with, it's just that it's completely misallocated.

And given the fact that sending our designs to China to get manufactured is
basically the only thing stopping them from going to war with us, I'm not
convinced it really makes sense to give up this benefit in order to 'fix'
domestic problems that don't really have anything to do with globalization.

Certainly there could be more domestic manufacturing than there is currently,
but just because the current system is causing some problems doesn't mean we
should discount the benefits.

~~~
ctvo
The article IS about the misallocation of wealth?

The concern is there will be a class of highly paid individuals in the US and
a class of unemployed (replace with underemployed, low income) because we're
sending all our manufacturing jobs overseas.

Grove's argument is whatever benefits you're getting for sending jobs
overseas, there's a societal cost (increase inequality), as well as unforeseen
future costs when innovation and technical excellence is located elsewhere.

No idea about the rest of your views.

------
cleandreams
I think the rise of Trump reflects the reality of a declining middle class and
the overall problem of political stability in the face of declining
opportunity and economic security for most people. In business it is easier to
focus on the short term win. Corporations have profited from being stateless,
from offshoring and outsourcing. But it remains to be seen what the long term
cost will be. I suspect the backlash will be strong because when people have
their backs to the wall they lash out.

~~~
MicroBerto
We already HAVE seen what the long term cost is. It's great for corporations,
shareholders, and board members, yet terrible for the middle class, and thus a
net negative on the country as a whole.

It will only continue. That is the "long term effect".

This guy is basically telling everyone from the grave to vote Trump, or Trump-
like economic policies... but never utter such a thing around these parts!

~~~
eli_gottlieb
>This guy is basically telling everyone from the grave to vote Trump, or
Trump-like economic policies... but never utter such a thing around these
parts!

I know this is going to sound tiring, but: why not Sanders?

* He's not as blatantly evil as Trump.

* He's not at all a bourgeois globalist.

* He's constantly banging on about what trouble the working class and middle class are in.

I don't see why everyone's supposed to consider Trump the default vote for
people who care about class issues, since he's actually an objectively
terrible candidate.

~~~
MicroBerto
Because he's smart, and thus not a socialist

------
jakelarkin
Consumers will pick the best cheap gadget regardless of origin. Investors want
maximal profits in a 1-3 years time frame. The system unfortunately does not
afford much wiggle room for ethical and national duty when working with those
constraints.

Grove's outlook also colored by difficulties of semiconductor industry. Asia
in addition to having cheap labor, governments would prop up barely profitable
fabrication companies as national champions, give them subsidized loans and
regulatory favors. American investors & management, perhaps rightly, balked at
trying to compete on that front.

~~~
ethbro
_> The system unfortunately does not afford much wiggle room for ethical and
national duty when working with those constraints._

This is strictly true, which is one of the reasons I think the onus of long-
term thinking has sadly but rightly shifted to regulation over altruism.

Whereas in the past you might have had a titan of industry decide that dumping
chemical byproducts of manufacture into the water supply of surrounding farms
was "wrong", now the CEO will be voted out if he or she fails to make the
profitable choice.

------
dmritard96
There is supposedly some reshoring in the US but I don't really see it from
hardware startups unless they have something bulky/specialized/low volume. The
bigger question is not whether we should employ in one taxation region or
another to concentrate wealth as we see fit, but rather how quickly
generalized arms, machine vision and new manufacturing processes will impact
our ability to rely on labor as a source of societal stability.

~~~
look_lookatme
The concept of a revival of American manufacturing is a myth promulgated, for
the most part, by one company: Boston Consulting Group.

(pdf warning)

[http://www2.itif.org/2015-myth-american-manufacturing-
renais...](http://www2.itif.org/2015-myth-american-manufacturing-
renaissance.pdf)

~~~
YokoZar
Questionable revival or not, the fact remains the US manufactures more in
terms of dollars than it ever has -- it just does it with dramatically fewer
people.

------
jmspring
Maybe I've been around Silicon Valley too long (born here), but the key
paragraph of the whole story really is this --

Mr. Grove acknowledged that it was cheaper and thus more profitable for
companies to hire workers and build factories in Asia than in the United
States. But in his view, those lower Asian costs masked the high price of
offshoring as measured by lost jobs and lost expertise. Silicon Valley
misjudged the severity of those losses, he wrote, because of a “misplaced
faith in the power of start-ups to create U.S. jobs.”

MBAs and money people look at immediate costs, managers look at engineering
costs, lost in the off-shoring debacle is...you actually aren't saving money
in the long term.

There are specific exceptions in the case of leveraging specific expertise --
for me, looking for a WinMo optimized two way DH key handshake in assembler,
send the code and email Dec 23, receive the results Dec 25, was great. But
most outsourcing isn't targeting specifics, it's the generalities and that is
a big issue. Costs are masked.

------
Nutmog
This makes no sense from a global perspective. Why was Andy keen to reduce job
growth in Asia and also reduce technology growth in the whole world? Did he
think Americans were more deserving than Asians? That should have been clearly
unethical from a humanitarian point of view considering the higher poverty
levels that are still present in Asia.

If local=better then perhaps he should have focused on job growth in
California and worried about companies that export their growth phase jobs and
expertise to other parts of the US - especially underdeveloped parts which
won't contribute much back except cheap labor. That's also costing
Californians their jobs. What makes Iowa or Arkansas more important than a
booming megacity in China?

------
redwood
Germany sets a great example here with its local industrial production base
and culture.

~~~
ArkyBeagle
I have to wonder what other price is paid for that state of affairs. Is that
the result of some sort of ... rigged game?

~~~
DasIch
Not at all. However Germany has a massive trade imbalance because it's
exporting all these products. There are only so many countries this can work
for.

Recently-ish Germany is also aided by the fact that the rest of the eurozone
isn't doing so well economically keeping the euro lower in value than a German
currency would be.

~~~
borvo
You're saying that Germany doesn't control the ECB I think. So I guess it's
just coincidence that ECB policy has been consistently and primarily in favor
of German economic interest, and has been an unmitigated disaster for
everybody else. The trade imbalance is in part a symptom of this.

~~~
DasIch
The primary ECB objective is to maintain an inflation of 2%. Everything else
is secondary to that.

The ECB is currently making cheap money available. That's exactly what they're
supposed to do and the only thing they can do, to reach their primary
objective.

This happens to help Germany economically but I don't see what else the ECB
could possibly do that wouldn't help Germany economically.

Also the German Bundesbank - famously paranoid about hyperinflation that
definitely occurs any day now and starts the apocalypse - is strongly against
the current ECB policy. So clearly the Bundesbank isn't controlling the ECB,
not as much as they want to anyway.

In any case focussing on monetary policy alone and maintaining a inflation of
2% can cause issues economically but is nevertheless agreed upon to be good
policy. That's why the ECB is independent, to prevent people from influencing
or controlling it at times like these. It's operating exactly as designed.

Unless you're entertaining conspiracy theories, I don't see how one could
argue that the ECB is controlled by Germany to somehow screw everyone else
over for Germany's benefit.

Disclaimer: I'm German.

------
kelukelugames
I majored in circuits because back then that's where the money and talent went
in _Silicon_ valley. Many of my classmates have since switched to software.
The few remaining IC and fab people make pennies compare to the programmers.
They also have PhDs to our BS and Master degrees.

Software seems more robust but I don't trust myself to make predictions.

~~~
Cyph0n
I'm starting a PhD in circuit design this Fall. What I've read and noticed is
that there will be a shortage in strong hardware researchers in a few years
due to the rising popularity of AI and ML. What do you think about this?

However I also have working experience in software dev, just in case this
prediction doesn't pan out in the long run.

I'm actually going to work on a small business idea (likely SaaS) before my
PhD starts, with the aim of scoring a modest source of income.

~~~
tcbawo
My advice is to find something you enjoy doing, rather than what you think is
marketable. You might guess incorrectly and have neither money or job
satisfaction. But, don't stress too much about choosing a path. Your career
will evolve over the years.

~~~
Cyph0n
I agree. I enjoy both fields (CS and EE), so I think I should be OK in that
regard. I'm going for a PhD because I'd like to teach eventually, but I'm not
sure about what I want to do in between.

------
jboydyhacker
Another way to view what Andy Grove was saying was we neither have capitalism,
socialism, or central planning. Rather we have a toxic mix in many industries
like Health Care, Defense, Drug Development etc. i.e the comment that what we
have is inferior to "lasssez-faire" or free market.

China has used central buying/orders to drive up artificial demand/buying and
as a result has a massive over capacity and debt problem that appears to
actually be stickier and worse than ours.

I think the best learning is it's better to make a clear choice on the system
to allocate resources rather than hybridize it. US Example? Healthcare--
Either go completely public like those in Europe which spend 4-6% of their GDP
to cover health or go 100% provide and move government out of it . These
hybrid systems have us spending 20% of our income on healthcare so we get the
worst of both worlds.

------
hbt
Note he didn't provide a solution to scaling companies domestically other than
taxing offshore products.

That type of protectionism may work domestically but it means that American
companies cannot compete overseas if they are being undercut on price.

It looks like technology will fix the problem in time. American companies will
start manufacturing in the US but there will be no jobs, just automation.

The focus should really be: how can we increase the intelligence of the
average worker so they can compete in the new economy and not just "live life
on basic income" or "get an overseas job waiting to be automated".

------
kushti
“that the free market is the best of all economic systems — the freer the
better.” - the US is following this principle only until "too big to fail"
guys have problems.

------
wahsd
It is the biggest flaw of the existing instantiation of Capitalism in the USA,
that major non-financial factors are simply left out, ignored, or simply
unrealized in the calculation of value. There is massive damage being done to
the USA by not just Silicon Valley, even though it plays a major roll, that is
very short sighted and trades of massive profits and gains and power in the
future for short term gains that are primarily financial. It's very much a
kind of monopolistic system that is leading to and not many people realize the
astronomical cost of the deadweight loss to the American people. To put it in
other terms that Silicon Valley types may understand, we have nothing even
close to market fit and are operating at negative gross margins if you take
all factors into account. It is easy to fool oneself that all things are well
when you cherry pick your parameters and measures.

------
ilaksh
Technology can help us to make the fundamental economic structures more
sophisticated in order to handle more complex goals.

The problem with running everything with simple money is that it is like
running a body on doped water alone. I can't even say blood because money is
one dimensional and blood has many useful components.

I think something like Ethereum is going in the right decentralized and high-
tech direction. If we can have a common information platform then we can wire
up our systems to be more decentralized and also have the capability to do
holistic calculation and goals as well as evolve the system.

So I think having society integrate common information platform is key to
turning this from a bunch of monopoly games into more like a wired game of Eve
Online, or at least something where we can keep track of more than one stat
($) per entity.

------
Ericson2314
Very simple, in the short turn as others have mentioned, the US's infra is
absolutely shit and we need to poor money into that. In the long term,
automation will break the Keynesian feedback loops that underlie such new-deal
programs, and we should switch to basic income instead.

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nxzero
Often find it troubling that people find it so easy to cast an opinion on a
topic they so poorly understand. Yes, this topic is important, no, I don't
understand it. What is the best way to understand the current situation?

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hyperpallium
Well, most people need employment, so of course that should be a priority of a
government for/by/of the people.

The article skipped what he meant by "priorities" and "forces". Presumbly,
it's not forcing companies to make up jobs, but by things like lowering
employment transaction costs and making the people more valuable.

Education is the obvious one, but it needs to be education that actually does
make one more valuable. Also make sure the people are healthy. Better
infrastructure - pretty much all those "government" things.

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matchagaucho
I love Andy, but it can be difficult to reconcile this article with the pro-
globalization message in his book "High Output Management".

Had Intel outsourced the manufacturing of their memory chips during their
"scale-up" phase, it's conceivable that they may have established more
"partners" and less "competitors"... similar to what Apple has accomplished
today with iPhone manufacturing.

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majewsky
"High Output Management" was released in 1983. The article referenced here is
from 2010. Maybe he has just changed his opinion.

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yasky
Dear Hacker News - after scrolling 3 pages I still haven't seen the 2nd
comment. Can you please implement collapsable comments? Please!?

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DanBC
There are a bunch of plugins that provide collapsable comment threads.

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dredmorbius
They don't work on numerous browser options, including Chrome on Android
(which AFAIU doesn't support extensions), or, last I checked, Android.

It's a badly needed basic function.

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x5n1
No one cares. People with capital looking to make profit see employees as
interchangeable machines and as a cost center. They don't want to pay for
training, i.e. 2 years experience for a junior position. They don't even want
to employ people, i.e. contract work forever. They don't care if there is a
loss of skills in the local market, they only care about what they have to pay
now to get where they are going in the next 6-12 months. After that is
anyone's guess. Don't expect them to do anything but increase their own well-
being at the cost of everyone else.

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Negative1
Truly an inspiring man.

Jobs for the uneducated are disappearing and saying "well lets just educate
everyone" is not enough. I'm racking my brain trying to come up with ways that
tech can solve that problem but it seems like an upward battle (e.g. Uber
makes anyone a cab driver, but in a few years, will fire all those people when
automated cabs hit the road).

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rchaud
In my mind, this isn't a problem requiring a complicated tech-based solution,
but one that requires a mindset change. Community colleges have long offered
the sort of "job-ready" technical skills related to using machine tools, auto
and home repair, electric, HVAC, aka the types of services that cannot be
offshored.

But at least in America, public consciousness is still fixated around this
Cold War illusion of the American Dream that necessitates a 4-year college
education. America seems to prize entrepreneurialism, only when it's the
white-collar, Mark Zuckerberg variety because of the promise of fantastic
wealth; people running their own businesses in plumbing, home repairs etc.
don't get anywhere close to that level of respect.

To some extent, technology-based solutions are already in play, with hundreds
of thousands of people using online resources to learn web development and
other skills. The vast majority however are learning these skills to simply
keep up with the needs of their job or the job market, as with shorter average
job stints these days, employers won't find it worth their while to provide or
pay for that type of training.

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sbardle
Manufacturing isn't coming back. Do you think your average American would put
up with the conditions in a Chinese iPhone factory?

~~~
rleigh
That's the wrong question. Would they put up with the conditions in a _US_
factory?

It's common to see negative opinions of manufacturing jobs here and on other
tech sites. I've worked in one the UK, doing 12 hour long day and night shifts
(as a lab tech; I now have a PhD). It was long and hard work, being on your
feet around a huge complex collecting samples from all the stages in
production and then analysing them to strict deadlines. But you know what, I
had greater job satisfaction from doing that than any other job to date,
including the position I have now at a university. When I left the factory
gates at the end of a shift, I was done, and could head home and relax in the
knowledge that I'd done a good job, done my bit to keep the site and
production running, and made a small but net positive contribution to the
world. And got paid a decent wage for it. And working on a site with a big
workforce can be very friendly environment with a lots of camaraderie with
everyone working to the same goal to keep production running. You can have a
lot of fun while on the job, while also working hard. As a software developer
in acadaemia, and I suspect for many software developers in general, work
never ends. When I leave work, the unfinished problems and backlog of
untackled problems don't go away, which when coupled with deadlines and team
communication, admin etc., can lead to significant amounts of stress and
unhappiness and depression which I never encountered before. I suspect the
lack of physical activity also contributes. And working in an open plan office
with everyone plugged into headphones and on IM all day is much less social;
at times I think it's like working with zombies!

In the UK, factory workers have strong legal requirements for safe working
conditions, limits on hours, union representation if desired, and a host of
other protections. The US has less strong employment protections, but I
understand health and safety rules and maximum work hours etc. are decent. But
would people want to work in a modern purpose-built manufacturing facility in
the US? Hell, yes. Working on something like that can give real meaning and
purpose to one's life, to be doing something real that actually contributes
something physical to the world. Even if you're a small cog in a giant
machine. As you head out of the factory gates and see the stream of lorries
heading out loaded with product, you know that without your work that shift,
they wouldn't be going, and that can give you genuine satisfaction. Ask the
millions of people who lost their factory jobs to offshoring if they would go
back for an answer with real meaning. I strongly suspect you'd have a majority
vote yes.

I know this might not be a popular opinion, but I'll say it anyway.
Manufacturing is what made the UK and the US into industrial powerhouses,
which lead directly to the prosperity and quality of life we have enjoyed for
decades, and its rapid decline has lead to a steep decline of both for many
people, and a whole host of social problems. While the idea that a service
economy will take over has been strongly pushed on both sides of the pond,
it's obvious to anyone with an ounce of common sense that this isn't self
sustaining; these are not wealth-creating industries since unlike
manufacturing, they only transfer existing wealth around.

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kwhitefoot
Well said. I wish I could give you more than one upvote.

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nolepointer
Make America great again.

