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Intel Co-Founder Calls For Tax On Offshored Labor
theodp writes "Intel co-founder and ex-CEO Andy Grove calls BS on the truism that moving production offshore to locations with much lower wages is a sound idea. 'Not only did we lose an untold number of jobs,' says Grove, 'we broke the chain of experience that is so important in technological evolution. As happened with batteries, abandoning today's "commodity" manufacturing can lock you out of tomorrow's emerging industry.' To rebuild its industrial commons, Grove says the US should develop a system of financial incentives, including an extra tax on the product of offshored labor. 'If the result is a trade war,' Grove advises, 'treat it like other wars — fight to win.'"
The first thing companies will do is spin off "Offshore Labor, Inc" to a separate corporation headquartered in the Cayman Islands or wherever, then import the products for sale here. No offshored labor here!
If I have been able to see further than others, it is because I bought a pair of binoculars.
I am completely sick of being screwed over by the corporatist plutocrats.
Make sure everyone's vote counts: Verified Voting
This is an excellent point. Offshore labor is why I cant understand tech support anymore. I would rather pay a get more for the product to ensure I get good customer support.
... and enter it with reckless abandon and no exit strategy; that last part is crucial.
As usual, the only solution the small-minded can come up with is to tax something into oblivion
If you send work off shore, you no longer get all the corporate welfare tax breaks that US companies get.
"Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"
(regime uncertainty will hopefully get better after November)
If our government did not make it so expensive to hire people, companies would hire more people. (Obvious 101, but apparently not to the current leadership)
ERROR: Null
Military, courts, social security, welfare cost money. Working Joes pay for it. Walmart and Steve Jobs don't. Time to redirect.
That's anti free trade and will only hurt the consumer. If USians can't compete in the open market maybe we don't deserve to have a 'chain of experience'. The only thing we need to teach our children is how to collect a government handout and shop at WalMart. Andy should be haunted by the spirit of Reagan in the church of Limbaugh.
(sorry, too much energy drink!!)
try { do() || do_not(); } catch (JediException err) { yoda(err); }
every american businessman inevitably refers to business process in terms of war.
Good people go to bed earlier.
The trouble with these type of taxes is that the corporations simply pass it onto the customers. Unless a huge tax is placed on the products, it will still be cheaper overall to offshore labor and charge consumers more. There are three scenarios:
1) Low tax, say taxing the corporations for 20% of the difference between US cost of labor and offshored cost of labor. Consumers will pay more in the US, but get no new jobs, and are worse off. The government earns taxes and is better off. The corporations sell slightly fewer products due to slightly higher cost, and are slightly worse off.
2) Medium tax rate, say taxing the corporations for 80% of the difference between US cost of labor and offshored cost of labor. Consumers will pay more in the US, but get no new jobs, and are worse off. The government earns lots of taxes and is better off. The corporations sell fewer products due to higher cost, and are noticeably worse off.
3) High tax rate, say taxing the corporations for 120% of the difference between US cost of labor and offshored cost of labor. Consumers will pay more in the US, but get some new jobs, and are worse off unless they would be unemployed otherwise. The government earns very little in taxes and is barely better off. The corporations sell fewer products due to higher cost, and are much worse off.
Of course, the corporations lose less money if the goods in question are price inelastic (demand doesn't drop that much if price increases) and there's a social benefit from more employment and technical expertise, but the government gets the most money in case 2, where everyone except for the government is made worse off by the taxes. In real life, there's a huge time in cost and effort needed to move manufacturing back to the US, what with hiring new managers, building or reopening factories, establishing entirely new supply lines, canceling contracts, etc. Because of this, companies are unlikely to move manufacturing back to the US even if the tax makes hiring offshore workers the same as hiring American workers; the slight gain in quality and public respect is canceled out by the upfront cost of moving.
I for one sincerely doubt that the US government will tax corporations with a high enough rate to make most of them move back to the US, as the tax income is the lowest in that situation. Sadly, even if this knee jerk reaction goes through, social benefit to consumers and citizens will likely take a back seat to corporate interests and government revenue collection.
Signatures are the new names.
It'll never happen , but it's good to hear from someone in the industry.. freaking sweet !
Of course this ever happening in the US this is a pipe dream, but I like to visit these dreams every once in a while and yes it makes me feel better.
CS: It is all sink or swim...oh and did I mention there are sharks in that water?
Now, I would consider myself fairly conservative. Usually the argument goes "they're taking our jobs!! We need to enact protectionist policies to protect American workers!"
Doing this blindly, I have a problem with it-- it doesn't make economic sense. If we are more efficient at producing one good, and they are more efficient at producing something else, then it doesn't make sense for us to waste money trying to produce it ourselves in the States.
However, I cannot economically justify free trade when
1). the trade occurring is uni-directional (IE, we're buying from them and they're not buying anything of ours-- I don't count China's investment in Treasuries as real goods-based Trade [even though financial trade is _technically_ trade])
2). one of the countries (China) involved in the trade refuses to let their currency's value be determined by the market.
In other words, what we have now is not true "free trade". If it were free trade, China would be buying our products [unfortunately much of our product is now Intellectual Property and it's difficult to enforce consumption of these goods], and China would not be fixing the value of their currency. If they weren't fixing the value of their currency relative to ours, then any trade imbalances would be slowly corrected as it becomes more and more expensive (in dollars) to outsource labor/manufacturing to China.
The Intel guy is mostly right; we just differ on how the imbalance should be corrected. I'd much rather a natural, market-driven return to mean, than a politically dangerous (taxing imports) one.
I wonder where the good Mr. Groves stands on Intel's large R&D base in Israel... Should we be taxing that, or is this only a tax for his dirty competitors who are fabbing with TSMC?
When Grove was CEO of Intel, HE was the one who moved much of their R&D overseas because they were "unable to get qualified Americans."
RIP America
July 4, 1776 - September 11, 2001
The funny thing about outsourcing is that the outsourced company/branch is avoiding (taking back) the taxes, simply because the main company is based here (or some other tax trick). Or to make it more clear, if a company MicroHardware for example, with main office in USA, offshore 100% of its business in India, for example, then Microhardware will NOT pay taxes in USA (for the obvious reason), and will NOT pay taxes in India (for some another obvious reason). Win-win situation, but as usual, for the big pocket guys, not us, regular people.
As a conservative, I always felt it was the corporation's responsibility to insure the highest possible return on investment to the company owners. However, if no one has work, then who will buy the products produced? Perhaps free trade has gone too far. Of course this will not be popular with our trading partners and treaty signers (NAFTA, etc.). With that said, I refuse to buy inferior products JUST because they are made in the USA. Detroit was handed their lunch by producing Pintos and Vegas when Civics and Corrolas were SO SUPERIOR.
Conservative, mod down for violating
The 3-prong assault on freedom includes:
-Socialism (limit economic growth)
-Homosexual education in high school (or before)
-Apple-style culture
The second amendment is the true and only guarantee of freedom for the American people in the entire Constitution. Please do not forget that if you're going to vote DemocRat.
The US is not the only economy in the world, and Americans are not going to stay in the US if there are no jobs. The policy of the Federal and State governments should be to work to attract high-wage jobs by cutting taxation, regulation, and the deficit, and returning to hard currency. Trying to fence jobs in will only result in foreign employers even more strenuously avoiding the US, while the most capable Americans will strive even more vigorously to escape.
Slashdot: Playing Favorites Since 1997
Some years back, my uncle got an MBA at UC Berkeley's Haas school of business, and the commencement speaker was none other than Andy Grove.
He basically told them they were all fscked. "Somewhere in India," he said, "there's someone willing to do what you do and more for 1/10 your salary. Sitting next to you are people who will do anything to beat you at your own job," and so on. He talked on and on about how much you have to compete to survive, effectively saying, "your work needs to be your life and you need to expect nothing from it."
And that'd all be well and good, but that same year, he was compensated over $100M, partially because of the cost savings of outsourcing, of forcing his employees to compete ruthlessly for each other, and so on. It seemed disingenuous at best to say, "This is the reality," when it's the decision of him and people like him to enforce that reality.
What this change in tone says to me is that he feels that other companies are beating Intel at the outsourcing racket. Maybe he's upset that Samsung is making Apple's A4 for the iPad and iPhone, and he wishes it had been Intel ARM chips going into those millions of devices over the last quarter or so. Maybe it's something else, but this rings of the spoiled kid down the block leaving the game with his football because his team is losing.
There is another way to run your company. Treat your employees like valued contributors. If they don't contribute, find out if they want to be in another role, or another company and let them do that. But if you're always looking to get the cheapest workers, you're in danger of losing your best people, and being beaten at the bottom dollar game as well.
OK, end of rant.
The CB App. What's your 20?
"We broke the chain of experience that is so important in technological evolution..." Darn straight. I sure wish more company management understood that.
You can document a little, you can document a lot, but you can't ever document everything. Every company relies on stuff in peoples' heads. Reading other peoples' code and then being able to ask them about it. Solving problems at the time they occur by talking to the right person for five minutes in the hallway, instead of writing thirty-page memos and scheduling a series of weekly hour-long meetings, which eight people attend so that two of them can talk.
The guy who says "Well, it worked well when we did it thus-and-such way on the Dash-Twenty-Twos."
Even more important, the guy who says, "Well, the reason we're doing it that way now is because of concerns X, Y, and Z that we had on the Dash Twenty-Twos, but those reasons don't apply any more.
"How to Do Nothing," kids activities, back in print!
'Not only did we lose an untold number of jobs,' says Grove, 'we broke the chain of experience that is so important in technological evolution
ding ding ding ding ding ding
Give that man a cigar.
The problem with offshoring all the entry level jobs is that in 5 years, all the folks with 5 years experience will be somewhere else, in 10 years, all the folks with 10 years experience will be somewhere else, and in 15 years there will be few folks around qualified to do more than ask if you want fries with that. (yes, I know that we've been offshoring entry level work for many years, the only reason that we aren't all phone sanitizers by now is that we haven't thrown _everything_ overseas.)
Senior folks, capable of sustaining interesting, cutting edge work don't fall out of the sky. They need to get a first job somewhere. A country that doesn't invest in new hires is sacrificing tomorrow for today.
Can you stop the free flow of capital? If you are planning to build a centralized socialist economy, maybe. But what the U.S. actually needs is better education and less bureaucracy so it (at least some of the states) can compete in the world market. Stop whining for the lost jobs like a spoiled child.
"If the result is a trade war treat it like other wars -- fight to win" What an asinine statement. It sounds all gung-ho but as any economist knows trade wars, even more so that regular wars, contain only losers. This idea is thankfully unenforceable (without an outright ban on trade) because it would be terrible if put into practise.
The movement of "commodity" manufacturing from the U.S. to China is overstated in it's importance, and much misunderstood. What no-one seems to have the courage to say is that we are better off as a result. Consumers are the real winners to the tune of $trillions.
Trade is a positive sum game.
Industrial policy of the sort Grove advocates rarely works. Occasionaly you get successes but 9 times out of 10 you breed industries with more expertise in lobbying the government for protection than producing goods.
muCh as Windows
How is it that China, and Japan before them, are able to peg their currencies? This is a question rarely discussed. The easiest and most effective way to accomplish this is by purchasing U.S. bonds, which we sell in abundance to cover our enormous debts. In effect, the politicians railing about how unfair the Chinese currency policy is actually contribute more to the problem than anyone else.
'Outsourcing' allows smaller firms to take on projects that they otherwise could not afford to do. I own a small business and at least two of my products I could never hope to bring to market if my only option was to use domestic resources. Those products make money and allow me to expand. This is not a burden on the U.S. economy; it is a positive contribution.
I once took an excursion to Reddit, and later HN. Unlimited up/down voting sucks when dealing with a hive-mind.
I'd tax all foreigners living abroad.
Jeez...doesn't anybody know any basic Economics? I mean, some places, like China, have an absolute competitive advantage in manufacturing, and that's where certain things will be manufactured because of it. The off shoring mostly a "comparative advantage" and it is still better to have things produced where this comparative advantage exists. What Andy Grove is talking about is a tariff...the worst idea of all (except for, maybe, subsidies). As much as I admire Andy Grove, this is a BAD idea.
"The mind works quicker than you think!"
Of course he is now they have exploited it for over a decade. You have to make sure you are shutting out any up-and-coming companies from leveraging it. Now that Wipro and other contracting shops makes outsource as easy as a phone call and some basic contract negotiations they have to lock out startup from getting access to cheap labor. ONLY US MEGACORPS ARE ALLOWED!! F*#$&%( UPPITY PEASANTS!!!
You'll notice the same two faced bullshit when it came to the Internet.
A: Internet is novel.
B: Oh shit there is money to be made, get on it
C: Now that we are on it we need to lock out competition from getting on it
D: Buy up bandwidth...
E: Shit they network keeps growing....
F: Quick get those political whore we own to pass some laws so we can lockout the competition on the Internet
In short: We don't mind regulations so long as we are ones controlling those regulations to our benefit.
More BS from an elite that thinks nothing more then 'cattle' when looking at the common human.
-=[ Who Is John Galt? ]=-
I don't understand why so many people can't understand fundamental economics. If you tax the corps, they will just pass that cost down to us consumers.
Quit being stupid.
Holy fuck, Andy.
Where were you when Carly and your boy Craig were agitating to move jobs offshore at the beginning of this millennium?
You didn't say a fucking WORD when Bush cut the outsourcing tax to let them do it.
You'd better start campaigning against those people, because now that they've ruined their companies and our economy, they're running for public office.
Your proposed solution to general social economic problems will fail because:
[X] It requires investors to care about something other than short term profits
[ ] It requires corporations to care about something other than short term profits
[X] It requires politicians to care about citizens rather than corporations
[X] It requires laws without loopholes
In case nobody's noticed, we win wars on technology.... made abroad in China and India. One day, either may not like us so much, or may like another country more.
So all you "free flow of capital" guys can tell me about it when the bombs are falling and the troops are standing at your door with dogs and guns at 5 am. This happened to my Uncle and Grandfather when the Russians stopped by to chat. Think it can't happen here? Think again.
Right now, there's no tax or any other incentive to produce in the USA, so corporate executives who can afford to live comfortably in any country they wish were, and still are, quite happy to accumulate money while selling people who work in the USA (i.e. peasants) down the river. An invasion or economic depression here won't bother them. There's always another country.
Please do not read this sig. Thank you.
In his book "Only the paranoid survive" (1996) he has actually predicted the offshoring boom. If I remember correctly he actually said it was fair game and everyone should up to face the competition. Was probably hailed as a visionary then but he probably never anticipated that things would evolve so fast with the innovation culture moving offshore as well.
I think you vastly overestimate the competence of the legislative and executive branches of our government, Mr. Grove. Judging by the results of the wars we're currently involved in, the best we can hope for is a trade stalemate. Our leaders act like an empire that loathes itself.
There are some companies, such as Dell, that sell "Enhanced" tech support that promises USA-based tech support staff.
Grammer Nazis - I mod you "troll" unless you actually add something on-topic. Yes, I know I have mispellings in my sig.
That makes no sense in a capatalistic society. Trade is fine and dandy but once country cannot have such a huge trade defecit that it imports everything. Know why? Because in Capatalism there is profit. Know where that profit is flowing? Out of the country is where. But it's not so much making things which is the problem as outsourcing the service sector. Usually this results in all kinds of negative externalities which get swept under the rug and ignored. There are even some negative internalities like increased spending on training and travel and culture awareness etc. The point is that it is not cut and dry. At the least the taxes should be the same for onshore vs. offshore production or services.
If the world operates as one big market, every employee will compete with every person anywhere in the world who is capable of doing the same job. There are lots of them and many of them are hungry. -- Andrew Grove
another titan of industry with a foot on both sides of the ship's rail. to make this startlingly obvious statement, he must have looked at Intel's innovation pipeline and found it dry.
if this is supposed to be a new economy, how come they still want my old fashioned money?
It's a huge fallacy (but something the left loves to sell to people who are susceptible to anti-business propaganda) that corporations pay taxes. They really do not, every tax they pay is passed down to their customers, or borne by their employees in salary and benefits they do not get. In the end, everyone except corporations pay corporate taxes, it's really a HIDDEN tax on everyone.
That said, you could use taxes to incentive companies (foreign and domestic) to employ American workers. And it's very simple, allow companies a 200% tax DEDUCTION for the salaries they pay non executive employees who work at locations in the US.
This way companies could would pay no additional taxes but there would be incentive (and a competitive advantage in our markets) if the product is produced with American labor.
Corporatism != Free Market
The WTO is going to balk at any attempted tax like this.
This would be equivalent to a tax on imported products as it would seriously hurt the economy of places like India and China. That is clearly within the relm of the WTO. So unless the US wants to be subject to trade sanctions, this isn't going to happen.
Even though it might be a good idea.
Well, this debate is kind of one-sided, with a (probably) all-American current of opinion streaming here as I read the comments.
Just to make things clear from start: I am one of the so-called "offshore" employees. I got hired by a large USA-based corporation as a call center analyst; basically I took calls for 9 months in a row.
I am not located in India, but in Eastern Europe (Romania, to be more precise). My English is very good, and although I do have an accent, I sound just fine on the phone. I got a shitload of praises from callers during my time spent taking calls. Some got to as high as my LOB VP.
Then I got promoted to a Team Lead position in the same Help desk organization. I didn't take calls anymore but had to practically manage the whole Romania team. I have been acting as a manager, with manager's responsibilities, except for setting wages and approving leaves. Then I got promoted again as a Service Delivery Manager within the same organization, and now I am expecting yet another promotion. Until now, that's the background. Now on with some things you should consider...
My salary is 6 to 8 times less than an US-based employee gets for a similar position. My compensations practically don't exist (except for health insurance). I've had 0% raise ever since I got hired and I can't do anything about it (there's a huge competition here as well). And by all means, I do more than an US-based employee is willing to do, because I'm not inclined to yell "murder!" whenever my manager tasks me with something extra. I do large amounts of coding (although I shouldn't), I design processes (although I shouldn't), I create trainings and documentations (although I shouldn't) and the list can go on. Prices here are similar to prices in the US (for clothes, houses, electronics, computers, cell phones) and higher for certain commodities(e.g. a gallon of gas costs 8 dollars). I work from 5 PM to 2 AM local time to be in sync with US business hours.
But Andy complains that off-shoring takes jobs away from the US. Guess what, it doesn't. Off-shoring generally finds the most economically-competitive people to do things that are usually frowned upon by people from other countries.
Simply put: you would love to talk to an American dude when calling for support, but you would hate working in phone support yourself.
Now I can also compare my approach towards work to an US-based citizen's. I often find myself having an idea but get slowed down to a halt by people from the US (such as my direct manager and his peers), because they need enormous amounts of time to have meetings, come to an agreement, provide approvals, analyze, digest the idea, think about it, think some more, forget about it, remember it, talk some more, discuss a bit more... until times change and they figure that, if everything used to work OK (translated: no major disaster occured because that idea wasn't implemented), the idea doesn't really need to be implemented anymore.
There are many examples to be given, but I'll just stick to one. An application was in the process of being decommissioned. We used that application but didn't own it, so we (2 off-shored guys) were asked to identify a replacement. We needed 5 days to identify 4 solutions, out of which 2 were external, one was an application built by the corporation itself and the least desirable one was using spreadsheets as a workaround (bah! spreadsheets! we stuck this in to show how worse it can get if we don't act soon). We presented this list to higher management together with comparison charts, some Powerpoint presentations they use to love, live demos (we installed all the demo apps, etc). They said thank you and were never heard from again. Our attempts to get this going to one direction or another were answered with "wait, the decision is to be made soon". Six months later, the application went offline (the fact that it stayed up for this long shows that even app decommissioning is as slow as tectonic plates movement). All of a sudden, everybody panicked. They swiftly
...gis sdrawkcab (usually not responding to ACs; don't bother posting as AC)
Intel was founded by Gordon Moore and Robert Noyce. I think Andy Grove was employee number 5.
You know, just say a bunch of shit without any testable theories, and as long as you reach the conclusion that government is bad, congratulations! You're an economist in the eyes the Austrian school.
When he was Intel CEO, no less, he was singing a different song because benefited from outsourcing. Now, he doesn't get a penny if some CEO does the outsourcing, but with US economy in downward spiral he is playing the Patriot card.
I have designed a widget. I need a factory to make the widget-making tool and then produce x number of widgets. Where is the profit flowing out of the country? My widget did not exist before and now I am making a profit.
Long-term total (not per-country) trade deficits are bad, but taxing does not repair the problem.
The following is from my own A.C. post. Obviously it was before the current Euro crisis, but given the Euro's rapid increase against the dollar since the recent market crash, we can see that the dollar is actually in bigger trouble than the Euro.
At the end of WWII the industrialized world had been literally blown to pieces, except in the U.S. because the war hadn't reached any of our industrialized regions. Additionally, major powers such as China and Russia began to experiment in earnest with Communism. The U.S. was able to supply the world with what it needed and it prospered greatly, with 1950-1965 being one of the most prosperous periods in our history. From the wealth gained out of this temporary position we decided that we would build a 'Great Society' that would guarantee minimum standards for all citizens.
However, Communism failed, and its leaders knew they had to make changes or suffer a revolution with them on the receiving end, so they began to embrace certain aspects of Capitalism to increase the standard of living and gainfully employ the citizens.
China was one of those countries. It had the most people, the most unemployed, uneducated, impoverished people and loads of land worth next to nothing, with lots of resources to boot. It employed its capitalism through free-trade zones. These zones were actually as difficult to leave and enter as the country's border itself, with fences and checkpoints the whole way along, although this policy would change later, it illustrates how they did not truly embrace Capitalism.
As if the advantages of a huge population of desparate workers and millions of acres of available land weren't enough, the Chinese Government drew up a clever scheme to make their production costs even lower on an international scale. They required all foreign transactions to be transacted in U.S. dollars. Since they had a huge trade surplus, especially when considering this was for all transactions with customers from all countries, they could quickly amass a significant number of U.S. dollars. They then used the dollars to purchase U.S. debt. This debt could then be used to maintain an artificially low exchange rate on the Chinese currency (called Yuan or Renminbi (RMB)) with respect to U.S. dollars, conveniently the only currency the factories could use.
Meanwhile, the cost of doing anything in the U.S. increased substantially, spawning from things such as the Great Society initiatives, laws to encourage unionizing, and various other policies that made sense only for a nation with no industrialized competitors. For all intents and purposes we stopped allowing legal immigrants to come to our country, cutting off a key labor supply used throughout the Industrial Revolution.
(I always like to point out that "Made in America" all too often really means "Made by Illegal Aliens").
So with high costs to employ people, a nearly non-existent bottom-end production workforce and deficits to build and maintain pegged currencies, substantial amounts of production has moved offshore, with much of it going to China. China is really just the most visible because of its size. Many people talk about all the things they purchase that are 'Made in China', but the real test is to look at all the things people purchase that are not made in China. After posing this question to a friend he declared that the only thing in his house that was Made in America was the house itself. China is often just the final assembly point for a manufacturer, who probably gets chips and other components from Taiwan, Malaysia and Singapore. The very, very bottom product
I once took an excursion to Reddit, and later HN. Unlimited up/down voting sucks when dealing with a hive-mind.
It is not only not good common sense but it is actually bad economically. The protectionist law Smoot-Hawley Tariff Act, which became law in 1930, led to the Great Depression. When one country enacts protectionist laws other countries pass their own protectionist laws in retaliation which shuts down trade. Economies then collapse causing recessions and depressions.
If you want to help create US jobs, reduce if not get rid of Payroll taxes. Besides all the taxes employers have to deduct from employee pay checks, employers have to also pay taxes. The FICA or Medicare and Social Security tax, employers have to pay half of it. They have to pay federal and state unemployment taxes as well. Not only that but they have to pay accountants to calculate how much has to be paid in taxes. These taxes are paid for every employee, reduce the number of employees and the taxes are reduced as well. Reducing, I'd prefer them to be abolished, federal income and payroll taxes would allow employers to hire more employees and or pay them more. And more people making more money will boost the economy. They will have more money to buy more, driving demand, and or they will invest more thus creating more jobs.
I am completely sick of being screwed over by the corporatist plutocrats.
So hold them accountable, just don't shut down trade.
Falcon
Should there be a Law?
Get rid of the HB1's!!!!! and the BS that HR does to lock out US workers.
Because we don't have a truly nationalized Federal Reserve Bank. http://en.wikipedia.org/wiki/Federal_reserve They make the money. The US Treasury (which is nationalized) does not. So the president or congress cannot 'peg' our currency effectively.
I should say "they set the value of the money' whereas the treasury simply prints it.
'Outsourcing' allows smaller firms to take on projects that they otherwise could not afford to do. I own a small business and at least two of my products I could never hope to bring to market if my only option was to use domestic resources. Those products make money and allow me to expand. This is not a burden on the U.S. economy; it is a positive contribution.
The fundamental reason you can't produce your products using domestic resources is not that it would cost too much. It's because you couldn't sell them for enough to cover the costs and make a profit. The reason for that is because Americans today are by and large earning less, because the jobs that paid better are gone. Thus those Americans consume less and so cannot be a source of much profit for business. This is a big reason why the financial services sector has ballooned to 1/3 of our economy, because the other sectors of our economy are dying out and one of the only way to earn large amounts of money is to aggregate other peoples' money (e.g. their savings) and use it for investments. This, however, only makes a small number of people all that much richer, while everyone else continues to participate in a race to the bottom.
The very real problem that perhaps not you, but your children, will need to worry about is this - will Americans be able to afford ANY products our businesses produce? Of course, we all need food, clothing and shelter, but you can't grow an economy if people are only buying the bare necessities. When lots of companies outsource, they're not just reducing their operating costs - by laying off the Americans they used to use to do the job, they're also reducing the number of people who have discretionary income to spend on their products! In small numbers, this is not a horrible thing, but in the past twenty years, something in the range of tens of millions of jobs have been lost, and lots of people have moved from working in factories to working at McDonalds and often working two jobs. In 1960, how many families had two parents working two jobs to make ends meet? It's not uncommon today. Why is that? Obviously, as you yourself have realized, most things Americans can do can be done by people in other countries cheaper, and that mostly just leaves what jobs people MUST be in the US to do, and those jobs tend not to pay very well because they're mostly butt-in-seat jobs.
Unfortunately, each individual company sees in the short term an increase in profits and can't see the long term damage they're doing to themselves, and so they all rush to outsource in search of bigger profits. The big problem facing us is that people like yourselves do not think about the big picture, or, you perceive it as not your problem - you add up the dollars and cents, and if it equals profit, you think it's good. You might want to brush up on your Chinese though, soon they'll be the ones with the money to afford your product. Except that, if the Chinese decide to produce your product without your help (they don't really care about IP), they can probably charge quite a bit less and make an even bigger profit since they don't have to deal with paying an American wage.
us health care costs to much and that is job killer. As out side the usa The workers do not have to get there health care from there job!
Could this idea really work? For a quick heuristic analysis, answer one question:
How would things change if EVERY product we use were manufactured in the USA at existing labor rates?
If you still need help - Answer.
TFA is just run-of-the-mill pro-Intel propaganda. "We employ lots of people!" "People who say start-ups are better than entrenched players are dead wrong because I say so!" etc.
The only point he makes is that newer companies have fewer (domestic) employees. Never-mind that automation has been the rule since the start of the industrial revolution. Before China opened wide, it was those "dammed robots" taking our jobs... Think of how many more jobs there would be if bulldozers were outlawed, and roads had to be leveled by hand!
This all ignores the fact that wages for those fewer people nearer the top are rising drastically, and as the labor pool opens, more jobs are created in other industries, which might have been uneconomical before such automation was possible. Instead of having full employment, with everyone working themselves to death farming day-in, day-out, we now have some level of unemployed people, but the rest are making far more than they would have under the old system. And incidentally, the unemployed benefit greatly from the same system as well, not just because when they are working, they earn a lot more, but also because prices of necessities are so low, you can feed yourself on less than 50 cents a day, modest enough that collecting cans would get you through. And never mind government unemployment pay/welfare which will afford you a vastly higher standard of living higher than a farmer in China.
Yes, the business world is in turmoil right now, but it's only a matter of a few years before the bubble in China has to burst. Then everything should (eventually) settle down, and result in higher standard of living for all.
Slashdot gets worse every day... Pipedot: News for nerds, without the corporate slant
As a degreed tech professional with 14+ years of experience, I agree with Andy completely. In 2005, I was laid-off from a large company...After 8 years of loyal service and dedication, my job was outsourced to Taiwan.
That's slippery-slope nonsense. Market-based economies have employed tariffs and other restrictions on trade for hundreds of years without falling into Communism.
And the markets with tariffs and regulations are not free markets.
I'm advocating for tariffs and regulations and you're arguing against a centrally planned Soviet-style economy.
What are tariffs and regulations if not central planning?
Falcon
Should there be a Law?
But don't grant them any tax breaks if they send jobs offshore, why should they get the benefit of a tax break if they arent actually contributing to the American economy/job market
Thanks to file sharing, I purchase more CDs
Thanks to the RIAA, I buy them used...
There are a few assumptions you are making which are not correct.
The reason I cannot produce the product in the U.S. is because I simply don't have the finances. It has nothing to do with the sale price; I just haven't got the money. The cost of doing it in the U.S. is literally thirty times higher. I was blown away by the cost difference.
Every business owner I know is very cognizant of the damage they are doing to the economy, but we are subjects of the same forces that everyone else is. We must make decisions that keep us alive. It is not out of malice nor with ignorance that we take such actions.
If you really want to see my opinion on how to repair our failed manufacturing sector, check out my blog post at my home page. It was written in haste and mostly just to elaborate a discussion I was having with some friends in an email, but the concept is there.
I have been to China many times and I have friends, some not Chinese, who own businesses there. I am certainly planning on investing in their economy when I can afford it.
I once took an excursion to Reddit, and later HN. Unlimited up/down voting sucks when dealing with a hive-mind.
"This is one thing Obama should be lauded for ..."
The Treasury is auditing those companies? Link please?
College-Pages.com - Online Colleges, Degrees, and Programs
You are correct that the President and Congress cannot 'peg' our currency, but it is not our currency that is pegged. It is the Chinese currency that is pegged to ours. The reality that the Chinese are poorer because of this policy. Now that the RMB is floating, they're going to see their incomes effectively rise as the costs of products produced in China remains the same and imported products fall in price. This will also encourage more overseas investment by Chinese investors.
I once took an excursion to Reddit, and later HN. Unlimited up/down voting sucks when dealing with a hive-mind.
> but those reasons don't apply any more.
Heh. I'm guessing you're still fairly young.
Trust me - those reasons still apply.
If you're lucky, whatever you're screwing around with will be something in which the older concerns have been dealt with.
If you're really lucky, they will be dealt with so well that the process itself makes future occurrences of accidents due to risk x,y & z really, really unlikely.
If you're not very lucky, you will assume they've been dealt with and represent archeology. Meanwhile, risks never, ever go away. They only get smothered in assumptions and optimism, generally provided by people who have never experienced a given phenomenon and therefore assume it doesn't occur. The entire history of mankind points out the folly of this attitude, and yet we persist.
Why? Because sometimes we get lucky and manage to avoid the consequences of our actions. Sometimes fortune favors the ignorant.
This attitude is important for our ability to adapt as a species, but it also gives us teen pregnancy, HIV, heroin addicts, pilot error, periodic banking crises and lots and lots and lots of crappy computer software. Yay team!
I agree that the USA needs to learn how to be competetive in the global workforce. I think that has to be balanced though with encouraging everyone else to raise their standard of living. Unions have time and time again negotiated themselves out of a job. Its so silly. They should advocate for fair wages and job practices but not take side in individual people's jobs or try to negootiate benefits that 99% of the rest of workers in the USA don't get. I think we need more LEGAL immigration while at the same time actually enforcing the illegal immigration laws.
If you send work off shore, you no longer get all the corporate welfare tax breaks that US companies get.
Most corporations shouldn't be getting subsidies period!!! And when they do the subsidies should only be temporary.
Falcon
Should there be a Law?
Reducing, I'd prefer them to be abolished, federal income and payroll taxes would allow employers to hire more employees and or pay them more.
Over the past decade or so, we've had great expansion in worker productivity in America, and we also boasted a high GDP. We also had anemic wage growth vs. inflation (especially against the prices of goods such as college education and health care) and nearly non-existant job growth. And this was after two separate substantial tax cut packages near the beginning of the decade. The lessons of the last decade appear to be that there is not always a direct link between job growth and increased business profits / lowered taxes - often, the business's shareholders just pocket those increases. So forgive some of us for being skeptical that additional cuts on payroll taxes will have any major effect.
Libertarians somehow believe that private businesses should be stronger than governments but weaker than individuals.
Which one, the Dutch East India Company or the British East India Company? Or do you mean the fictional one in the Pirates of the Caribbean (film series)?
Falcon
Should there be a Law?
First make it a law that ANY company OWNED by us citizens (IE: 50.00001 percent of the stock holders) is a US company regardless of where it is based or incorporated. Then the IRS should demand payroll and income taxes on all salaries paid by the corporation to individuals or by third party holding companies paid by the corporation in question. These payroll and income taxes will be based on what a US citizen would be paid NOT what a third world employee was actually being paid. The reason is that the IRS should declare that a US company (see above) that off-shores their labor is CHEATING the IRS out of tax revenue that would have been collected had a US citizen been doing the work.
The trouble with these type of taxes is that the corporations simply pass it onto the customers.
I'm not sure how true this bit of common wisdom is. Another trope of the free market is that the price of goods is whatever the market will bear. That is to say, if a corporation thinks that people will pay more for whatever it is that they're selling, they'll charge more for it. Which is to say that if corporations were going to raise prices on their goods, they wouldn't wait for an increase in taxes to do it - they'd do it now to increase profits.
If corporations raise the price of their goods due to a tax increase, that could mean less sales as some customers balk at the price, or less sales as some customers go to purchase from competitors who aren't hampered by the same restrictions. And so the corporation has to bring prices back to where they were in order to keep business up, meaning that they either eat the loss out of their standard profits or they look for other ways to cut costs. That's an unproven anecdote, of course, but it's just as feasible as "more taxes = higher costs passed to consumers."
Libertarians somehow believe that private businesses should be stronger than governments but weaker than individuals.
If the Chinese workers can manufacture more efficiently than US workers, why should consumers be forced to support US workers? The products would have to cost more. If the efficiency disparity is an effect of US companies participating in the unfair treatment of Chinese workers, or the exorbitant cost of doing business in the US, perhaps due to certain union activities or ridiculous health care cost, then those are in themselves issues to be surfaced and addressed, and not simply that Chinese workers are getting jobs and US workers are not. Yes, Grove's position sounds like a populist one to me.
Many of you pointed out that many companies will just move offshore.
Fine!
If your HQ is abroad, and manufacture the products abroad, you are technically a foreign company.
So you pay import/export taxes.
Want to cut labor costs in the U.S.?
The U.S. could cut its overall health care costs by 40% if it implemented true universal health care, and would extend the average lifespan by a couple years as a bonus. Canada, England, France, Germany, Switzerland, Sweden... all have UHC, all spend around 55% of what is spent in the U.S., and all have longer life expectancy, lower infant mortality--basically they all beat the U.S. on any aggregate measure.
In the U.S., the standard calculation for the cost of an employee is 140-150% of wages--the overage covers the costs of administration and benefits. In Canada, it's 110-115%.
Your fucked up health care system is far more expensive than it needs to be, and doesn't give you better health care. Want America to regain a competitive advantage on the world stage? Implement real UHC.
Anyone who loves or hates any language, platform, or manufacturer, doesn't know what they're talking about.
Just asking. I never thought I'd hear this from someone like Grove.
I may not be a smart man, but I know what an inode is.
Ah, somebody else who recognizes that the middle class is being gutted by off-shoring. Now take it one step further. If one of the big groups of consumers is the American middle class, then who is going to replace them when they are gone? While the middle classes of other countries may be increasing, are these increases enough to overcome the losses in America? And will they spend enough to make up the differences?
The idea will not work and will result in US entities licensing "products"/IP from offshore entities.
Wow, how did the 1930 act trigger the stock market collapse in 1929? Also, explain the economic growth in the 1800's during periods of HIGH tariffs, but Laissez-Faire internal policy.
On immigration we are truly in agreement. I attempted to make a blog post on my homepage which discusses this very issue, but it was in haste and not well edited.
I once took an excursion to Reddit, and later HN. Unlimited up/down voting sucks when dealing with a hive-mind.
Corporations hold the cards. Taxing them makes them reserve what cash they have to pay new taxes. It makes them less likely to hire when they may have some huge government imposed burden to pay down. It sucks, but we might want to consider what would work best for the US worker. For instance, taxes based on proportion of US workers. If you have more US workers in proportion to your total company workforce, then you will get decreased taxes. Sort of like, if you invest in our nation, we will tax you less. It isn't perfect, but we need to propose tax incentives that are tied to workers to make them effective, not just blatant taxes that piss off the corporate hoards and leave them laughing while they send away more and more. We need to make the incentive a no brainer. Maybe tax the decision structure so that those who stand to benefit, such as the management or shareholders, are the ones who receive the brunt of the taxes. After all, the most routine line we hear is that they are just doing their duty for shareholders. So tax the shareholders.
All that tax revenue needs to go directly back to the people who are being exploited, working for lower wages than their would-be American counterparts. If the U.S. government starts making money through this offshoring, it would be reprehensible!
I think a better solution would be to require that any company selling products in the U.S. abide by all of our laws with regard to their own employees, specifically with regard to the federal minimum wage...
Alternative : he learned from the experience and now knows that it is better to have only a few qualified american engineer than a lot of unqualified engineer. Just sayin'.
buying products from companies that are shipping jobs overseas. I think that there are enoucgh people that are sick of this kind of $h!t that if they quit buying products from these companies they would soon feel it in their pocket books. I know this as been said ad nausem but it still holds true.
The Truth is a Virus!!!
With some exceptions in the IT field people are far from being exploited e.g. in Ukraine as an example avg slry for developer is around 1500USD/month (amount after all the taxes) while it is obviously less then US considering cost of living and especially cost of medical care things are fairly equal.
Taxing offshore labor will just force companies to incorporate offshore, thereby avoiding the tax and taking all their "knowledge jobs" with them.
The reality is that most of the innovation of the 21st century, slated to take place in the medical industry, could have created plenty of jobs in the USA. Unfortunately, our country is doing everything it can to eviscerate innovation in biotechnology, pharmaceuticals and medical devices.
If you got rid of the FDA, untold jobs would be created, and millions of people would benefit from improved, less expensive care.
Instead, we have an arbitrary gatekeeper that colludes with big pharma to shove toxic drugs across the counter. Remember, you are only "statistically safe" following an FDA trial, which typically consists of 200-300 people. With the average cost to market of a new drug around 1 billion, only big pharma can release drugs. And, unfortunately, the only products that get to market are the result of spending millions of dollars lobbying and intellectually bribing the FDA. Don't get me started on the AMA and the artificial restriction in supply of MDs. The whole system is a criminal, mafia-like cartel, and with this new healthcare legislation, which is just a giveaway to connected corporations, costs will skyrocket for less and less effective care. Rationing will take place, and small biotech and medical device firms will die on the vine waiting for the CER to issue a comparative efficacy opinion to support reimbursement. At least in Silicon Valley, you can raise money, build a product and sell it. In the USA today, small medical device/pharma may need to raise money and run deficits for 10-15 years before they can sell their product. It's pure lunatic facism designed to reinforce their oligopolies.
We don't need some hybrid, mercantilist or protectionist system as Andy Grove suggests. We just need sound money, direct transactions between customers and providers, shared responsibility (i.e., no lack of liability), and clear anti-trust provisions. In a word, capitalism.
Well if those people are really making $15,000, then they are already earning the U.S. minimum wage, so it's fine. It's the people in China and other 3rd world countries that are earning $1/day that need to be helped. Ukraine is actually rather well-off in comparison.
"'Outsourcing' allows smaller firms to take on projects that they otherwise could not afford to do. I own a small business and at least two of my products I could never hope to bring to market if my only option was to use domestic resources. Those products make money and allow me to expand. This is not a burden on the U.S. economy; it is a positive contribution." - by MyFirstNameIsPaul (1552283) * on Friday July 02, @02:44PM (#32777616) Homepage
Exactly what A. Grove is saying now? I said nearly EXACTLY THE SAME on a forums around 7++ yrs. ago when this economic madness began:
Outsourcing/Offshoring is B A D, because it takes jobs from folks that spend far more as a COLLECTIVE MIDDLE CLASS MASS INSIDE THIS VERY NATION (USA, which in effect keeps others alive too because they buy their neighbors' goods & services), & as a whole that collective "middle class mass" pays more taxes by far than a SINGLE WEALTHY ROBBER BARRON DOES, again by far...
You take that system that worked away?
Again, you get what we have, now (the few "haves" & TONS of "have nots")... of course, impoverishing an up & coming wealthy middle class stops competitors in the future too, now doesn't it??
That in turn, again also allows those with monies to "push around" those who do not have them, even in courts of law (where, let's face it - there IS NO JUSTICE: Only how much "justice" you can afford & buy!).
I mean, these people @ the head of these companies, don't THEY understand economics???
It's a SYMBIOTIC system, and it's dependent on ALL of its parts, both the producers & the consumers... but, if the consumers can't afford to purchase the produced good due to lack of disposable income, what good is producing it period?? It will become unprofitable, & yet another business will close, because its consumer constituents are no longer able to buy their good or service they produced, period!
Sure, you as a business, can then "chase other markets overseas", but that's been tried too... has it worked, & turned the U.S. Economy around? Look around you! No, it has not!
(The current system offshoring & all, has only allowed the thieves @ the top to continue this madness & ruin!)
APK
P.S.=> NO solid long-term economy thrives in that scenario where all you have is "haves" & "have nots", NONE (RICH & POOR ONLY, no middle class - which is what we are starting to see now, today & for imo @ least, around 5-7 yrs. now... but the short term profiteers, who suddenly join the "haves" vs. the "have-nots", surely do)... apk
I know what you mean. It won't be China or India. What scares me is that we are looking more and more like them with a huge low-paid underclass and a small middle class and tiny rich upper class.
There is no "-1 offended" or "-1 you don't agree with me" mod options for a reason.
It is no small surprise that America is hurting. We have suffered from way too much product inflation for way too long. Yet labor has been raped. Unions have been crushed. Companies decided not to share the wealth with employees. The idea that there should be a lock between the highest paid CEO and the lowest paid part time employee was not even considered. I am not saying that all should earn the same sums but the pay should not be so far apart.
The consequence is that those that labor can not buy product and that means that the fat cats can not sell product. And if we must do finger pointing it was managements job to design superior products and superior production facilities. That did not happen.
We probably will have to endure the nightmare of deflation in order to straighten things out. But even then we will need superior designs and production so that American workers can buy homes and cars while out producing China, Japan, India and others. If we can not produce we will starve.
Much more straightforward than any additional taxes or other protectionist measures trying to compensate for the institutional discrepancies in cost between employing domestic and foreign employees, why not just correct those institutional discrepancies?
Require any company doing business in this country, be they foreign or domestic, to provide the same standards to their employees, foreign and domestic, as domestic companies are required to offered domestic citizens working domestically.
So if there's a minimum wage that domestic companies have to provide domestic employees, then domestic companies with foreign employees or foreign companies (with foreign employees) doing business here must provide at least that minimum wage to all their employees. If there are health care or vacation or other benefits required for domestic companies to offer their domestic employees, then they must also offer those to their foreign employees, as must foreign companies (with their foreign employees) doing business here. (Debate about what kinds of required benefits, minimum wages, etc, should apply is a separate issue: my only point is that they should apply the same to both domestic and foreign workers).
This way, you can say to the foreign states who might otherwise accuse you of waging economic war, and retaliate with their own tariffs etc, "We're not trying to hurt you economically, we're just looking out for the well-being of your citizens exactly as we look out for the well-being of our own." The side-effect (and self-interested reason why greedy people domestically would vote to do this to begin with) is that domestic employees are suddenly not so much more expensive to employ than foreign employees, so there's much less incentive to hire foreign workers over domestic ones, more jobs and more money stay in the country, etc.
Of course, there are less-institutional factors in the cost of domestic vs foreign workers too, such as the cost of living in one place vs another, but there's not an awful lot that can be done about that without being straightforwardly protectionist, which as plenty of others are pointing out in this thread, has a big slew of its own problems.
-Forrest Cameranesi, Geek of all Trades
"I am Sam. Sam I am. I do not like trolls, flames, or spam."
The biggest problem there is that if you don't have people to BUY your stuff, how can you survive either?
No jobs? No money.
No money? No stuff bought.
No stuff bought? You lose.
I am not merely a "consumer" or a "taxpayer". I am a Citizen of the State of Texas
1) Smoot Hawley came after start of great depression; therefore DID NOT CAUSE IT.
2) Fordney McCumber tariffs of previous decade were much higher, yet there was prosperity.
3) Foreign trade was 1% of GDP in 1929
"We can't tax imports cuz it'll cause a depression" is a myth. We financed the government for the first 150 years on taxing trade and did fine. We don't tax imports and now we have a depression.
They myth is busted.
that occur when a worker gets injured. In the US the cost is staggering. A major cost of doing business in the US is not just labor, but legal and insurance, along with health care. Overall, the cost of building a widget in the US is similar than in China. The differences are the other factors that do not exist in a Communist country.
The government has made it illegal for the American worker to compete. What is 'free' about that.
I have said many tymes there is no free market or free trade. Can you point out when I said we do have them?
Falcon
Should there be a Law?
Haven't you heard of the Smoot-Hawley Tariff Act? When the US passed it in 1930 other nations passed their own protectionist laws. That made the Great Depression worse than it would have been.
And yes, I do support getting rid of a lot of the free trade stuff (NAFTA, etc.) and imposing more tariffs.
And no, NAFTA is not and never was free trade. If you want to complain about NAFTA complain about how because of the billions of dollars agricultural businesses receive in farm subsidies they are allowed to dump corn in Mexico cheaper than Mexican farmers can grow corn.
Falcon
Should there be a Law?
Except for maybe the Ferrengi
In Australia we have free trade agreements with China, Thailand etc etc. The net effect has been Chinese and Thai companies buying our companies up. Closing them down. Shipping the machinery across to their country and restarting the manufacturing there and then sending the finished products back to Australia. As a result we have stuff all low paid jobs left in the major cities where the youth have nowhere to get basic work skills except as waiters and waitresses at the restaurants the execs dine in. In the meantime to make our economy work we dig up iron ore and ship it overseas in it's raw state to be turned into steel. We also dig up the coal to ship overseas to turn that iron ore into steel. We convert gas into liquid to ship overseas to power the factories which send us the goods made with our old machinery. The ships that run overseas in some cases used to be Australian ships which we sold overseas to be reflagged in Panama etc to ship the same goods with foreign crews and less stringent safety.Because we have no pathways for the younger generations to learn trades we instead import people (many of them from those same foreign countries) to do the work on our mines in the semi-skilled and skilled areas. Occasionally we allow areas of our country (Gorgon gas fields) to be classed as 'offshore' so that the companies doing the work there don't have to employ Australian residents/visa holders or even pay Australian wages. You could probably point to many examples in England, Ireland, Europe etc etc. Any so called industrialised nation is in the process of busily de-industrialising at the behest of some sort of theoretical belief by bunches of economists who have never lived in the real world. Free Trade does not exists except in the deluded depths of economists minds and as such what countries should be looking at is how best to maximise trade while minimising the HARM it does to their own people.
And to raise import tariffs will cause many more jobs to be lost. Caterpiller, General Electric, and other businesses employ thousands of workers, about one in five. And they depend on exports. "Caterpillar sells China some of its most sophisticated, and therefore expensive, American-made equipment, including giant bulldozers, large mining trucks and gas turbines." GE has been providing the turbines for China's Three Gorges Dam. They, and their employees, can say goodbye to their exports.
Falcon
Should there be a Law?
Surely that would create lots of jobs.
Warning: this article may contain humor, sarcasm, parody, and perhaps even irony. Read at your own risk.
This is like shutting the barn door after the horse has run off. Where the hell has Andy Grove been for the past quarter century? He liked "free trade" while he was doing well. Now he doesn't think so much of it. Newsflash Andy: the damage is done. Most of the electronic industry was airmailed to China in the 90s. Plants were shuttered, supply chains dismantled and expertise scattered.
The "chain of experience" is a dim memory. Most who knew how to manufacture electronics are nearing retirement age. Well into my 50s, I'm probably one of the youngest engineers you'll find who has significant transformer design experience.
Semiconductor foundries like TI, Harris and other began offshoring their operations 4 years ago. Now suddenly Andy Grove is looking around and finding he has few competitors still in the US. He's not finding as many new engineering grads to staff his operation with. He has extrapolated this trend to it's logical conclusion and doesn't like what he sees. Well, Andy, I came to that conclusion 20 years ago. I was shouted down by the likes of you and other libertarian fools.
Take a good, long look at Detroit. That is what's in store for all of the United States.
Wansu, th' chinese sailor
I don't know if this is the right thing to do or not, because some of you have brought up very good arguments about how it would actually do harm, not good. But I gotta say, at least he's talking about it and trying to do SOMETHING. Just the fact that there is discussion about it opens the possibility for positive change. This coming from an INTEL dude... right on man ! I no longer have a preference for AMD cpus over intel, and I buy A LOT of cpu's... it just a drop in the bucket really.. but I'm really impressed by the fact that he said anything at all.. so cool man..... so cool !!
Intel had a disaster with the P4 "Prescott" desktop processor. It was such a power hog the AMD desktop chips were much better. Then Intel did the right turn and based everything on the mobile architecture out of Israel.
By the way -- Andy Grove was the only Intel executive who was not full of ---- when he talked.
Religion is the main cause of atheism.
Since it's international, half of the tax should go to the U.N. - to be used to supervise and act to improve worker's rights and working conditions all over the world. Not just in the U.S.
Ditto for education. Then, offshoring will become less attractive. Or equally attractive. The best - most educated, prepared, efficient, experient, and up-to-date labor will be hired, irrespective of where they live. Or were born. Or how long their pony-tails are.
And the U.N. could receive other international taxes, as well. It's annual budget is twice what the G20's one week in Candada cost - monetarily. The social and civil costs are astronomical and exponential. The political fallout is going to be sour the fasci.... er, "conservative" ballot box and stain the public consciousness for decades.
And I'm not sure we even have Casblanca, anymore.
Why should a poor person pay a greater percentage of his income as tax then a rich man?
On the contrary, the poor should be consuming less not more than the wealthy. The poor should be investing their money to improve their economics, by say going to school and getting trained then by investing some of the new money they're making. Ask yourself, how did the wealthy who did not have their wealth handed to them on a silver platter earn it? They earned it by working for it. By struggling to get an education or pinching pennies to invest.
Better tax system:
Everyone gets $X government check, this replaces all other government handouts. Everyone gets it.
Oh, come on. You can't really be seriously suggesting this. Government handing a couch potato the same amount of money as someone who breaks their backs in construction or the one who spends 4, 6, or 8 years in college to get a degree before getting a job. If a person can sit there watching TV all day why would they work? And why should I, you, or anyone else, support them?
Falcon
Should there be a Law?
I'm sorry, was it the US that was complaining about the protectionist policies of other countries?
Due to Globalization, America is saturated and will be inhabited by people who will live on http://en.wikipedia.org/wiki/Passive_income
I'd like to buy homeland for our 10 million people. http://twitter.com/mahadiga
Fascinating Andy Grove discussion.
But the shift of manufacturing offshore happened because an American worker is $20 an hour and an offshore worker is $.50 to $5 per hour.
Why don't we look at other dimensions of the American and "western" industrial system that we can twiddle to help move into the future?
By "twiddle" I mean something like this: change the velocity of consumption to 1/3 or 1/5 by increasing the lifetime of consumer products by a factor of 3x or 5x.
Stipulating a longer the lifetime for a product pushes a lot of changes in directions appropriate for the future: less waste, less trash, less CO2 emission, more value as an asset and less value as an expense. For long lifetime items, the original factory has a relatively smaller economic place.
Funny, how I got this idea. I have noticed a change in the failure modes of coffee makers that parallels the shift of manufacturing to China. The older domestic coffee makers would blow a thermal fuse. Radio shack sells replacements. The last two imported coffee makers failed with sophisticated unrepairable open circuits that developed a few months after the warranty expired. I think there are some very smart Chinese manufacturing engineers tuning their products for a specific life duration.
Labor law evasion is just like tax evasion, and that is exactly what large corporations are doing when they offshore their labor costs
I think he is referring to the USA rather than his own company. His excuse for using offshore labour is that he needs to do it to remain competitive. When are people going to realise that countries don't matter that much any more in the 21st century. We are all part of the same community and we all benefit from advanced in technology wherever they happen.
U.S grown rice doesn't even meet my fucking standards.
You're getting the wrong rice. Try wild rice from Minnesota. That or other wild rices.
Falcon
Should there be a Law?
Free trade hasn't gone anywhere, we don't have free trade. Or free markets. If we did bad banks would have been allowed, or forced, to declare bankruptcy or be bought out. AIG would be gone. The same with Detroit auto makers. Then better run companies would have risen to the top.
Falcon
Should there be a Law?
I believe that some manufacturing jobs can be exported, but it should be prohibited from exporting designs and technology that can result in loss of domestic jobs. When you take away domestic jobs, you take away the opportunity for purchases of your product. You actually lower the average standard of living, in the originating country (USA). In fact, the USA is today much poorer then it was before BUSH and Global manufacturing. Others have brains. No country has exclusivity on knowledge. So, Intel says it should be taxed. What should be taxed are the bosses, and not the shareholders.
Leslie Satenstein Montreal Quebec Canada
Not sure if anyone mentioned this, but Grove's example of TVs is incorrect. Our TV industry imploded not because TV became a commodity - it was because the Japanese made higher quality, more innovative, more efficient, and cheaper televisions. That war was over in the 70s and 80s, and had nothing to do with outsourcing/offshoring. It had to do with American companies being out-innovated by the Japanese. That also undermines his argument about batteries - again, it had nothing to do with outsourcing. I think the basis of Grove's argument is faulty.
Had a few this weekend but I think you peeps don't really understand world finance. Simple fact is that the US isn't even close to competitive in the world market when it comes to finance, holding earnings, inventment in r&d, and running a corporation. ... but it's what we can spend that counts, right? ... how to compete? Yeah, I know, most of us are running around with the wacky ideas that Asia hasn't changed in 30 (or 50) years, but it has. The infrustructure, wealth and ideas in Asia today leave the US hard pressed to compete on a level playing field. And it's not a level playing field. The US is behind on just about everything but work ethinc. We work 80 hard hours when Asia sit's on their collective ass for 50-60 of those same hours. And that's it. We charge 100x more for 3-5x the productivity and that just doesn't balance out at the end of the day.
The real solution is to end corporate welfare (fat fsck'ing chance) and lowering the effective tax burden to 20% or less -- the competition is at 10% effective flat taxation.
In reality there is no flat tax jurisdiction. Even HK is tax free for your first 16000 USD (single) 30000 USD (with dependent) and there is *no* VAT or sales tax on top.
As a comparison the US tax rate starts at 5000 (federal) + state tax + city tax + property tax + with state sales tax (3-10% for most of the country). For most of the software writing and hardware designing workforce we are at 50+% effective tax burden. So at the end of the day a US citizen/resident is so tax burdened our 'socialist' neighbors [Canada, Europe] are taxed far less than us, of course many of them can't make the same raw income numbers
Now Asia where taxation is still sane
Of course in most of Asia I can maintain my standarnd of living (or better) for 1/3 of the income (which comes to 10x the income for 10x the productivity) works out. Unfortunatly the tax reverses the mess so now I make 5x the wage for 10x the productivity. Ouch.
There are many ways to slice and dice the mess; I see it as:
- kill corporate welfare
- drop the effective tax burden
- drop the entitlement programs
- restore competition.
If we do it on our schedule it will be much less painful that when it is done when we have no choice. The list really isn't optional, it will happen in less than 10 years. period. no choices. if we do it intentionally then the middle class will retain some wealth and/or maintain it's existance.
I honestly believe that the middle class the the US is doomed because we/they don't, won't or can't exercise the power to push this agenda forward.
All of that is fine if you intend to sell your product mainly to the people producing your offshore product - indeed, that is the responsible thing to do.
If you intend to sell your product mainly to people in your own country - sorry, you're too late to feed off of the carcass of the American economy.
Offshoring worked when only a few companies performed offshoring. At this point there aren't enough Americans to buy your product to support your transition to a big business, because the pay difference between Americans and Chinese drops by the month.
The problem with businesses nowadays is that they don't think about the environment they are in. They act like the environment (i.e. the economy, income of consumers, etc...) will not be affected by their actions, because the market will absorb everything they do. Guess what - the "invisible hand" of the market is now coming to bear, by reducing the price that can be paid for products because people don't make enough to pay for them. Hope you enjoy living overseas - because soon you will have to move somewhere cheaper so that you can live on the profits at the new price-point for your product.
War is a risky business, that's why it's called war. Trade war is no exception. How about infuriated China dumping 900 billions worth US treasure notes? US already have couple of wars on its hands, which are not going spectacularly well, do it need another one?
If the labor/money doesn't come to you
go to the labor/money.
I used to work for a subsidiary of emerson manufacturing generators- of 330 people at the company there are maybe 170 left. Those jobs- Good jobs mind you- may never return. And when or If they do, it is going to cost an awful lot of money to find the people who know how to operate and build the things that they used to
I graduated in May, of 30 people in my graduating class of Mechanical Engineers, 4 currently have jobs-- what does that tell you -- A job that used to demand $60,000 or equivalent right out of school gets you nothing now, A degree that back in the 60's was "the shit" I looked for 3 months in the states leading up to graduation.. All I ever got was an automated e-mail telling me no and to "not e-mail back" WTF.. for the $100K + that we pay HR managers I would hope that one of them could actually give me a phone call in appriciation for my efforts.
I am one of those lucky 4- What did I do? I moved, To the Cayman Islands... why? because I can take a lot less pay for the advantage on taxes- I pay no federal, State, SS or Medicare here. which I consider a $20,000 incentive to what I could make in the states. - So if I can make 40K here - it all kind of evens out, If I can work here- Over the internet- for a company or individual in the states or elsewhere and charge 2/3 of the prevailing rate it will be easy for me to get business. If I can make more- well now thats all the better.. now what does this do to the prevailing rate...
So, the point of all this. it is absolutely imperative that The United States becomes more globally competitive, there is no stopping the Inflow or outflow of talent and money. If the cost of business increases, people will move- there is no stopping that. Everybody loves the free market-- well that is until the prevailing rate of labor decreases.. then they demand regulation.. in the end- they are still disadvantaged.
If the jobs are no longer in the united states MOVE
.... work, directly or indirectly, with the militay industry, that seems to engulf everything in the US.
... you still have the guy in India or China that can do the same that you do for a fraction of the cost.
People in the Western World should be planning for that reality, not wishing that CEOs will become humanists all of the sudden (people in rich countries contribute to this: by buying based only on price, they favour produce from cheap loactions, and why people should do any ddifferently?)
Workes in rich countries may be great contributors to a company, the reality is that if you are paid 5 to 10 times more than somebody else doing the same, the allure to move your function elsewhere is unavoidable, even if your company is caring.
Those fairy tale jobs in the US in the 50s were financied by the misery of other peoples elsewhere.
Now that those peoples are joining the economic party the US economy (and those of other rich countries) will be scaled back down to a more realistic size, unless you think that the 1/3rd of humanity in CHina and India can continue to lead substandard lives while people in the West gorge in wasteful consumerism (if people in rich countries scaled back on spending, from the food that make them over fat, to more energy efficient cars and homes, they would realize that they can earn less and still lead a fairly comfortable life, the problem is that rich people, but particularly the US, want to continue wasting resources and living in debt, without suffering any of the natural consequences that such reckless attitude would ensure. Folks, the good times of economical irresponsibility at the personal an d national level will not be back, so scale back your spending down, which will make you more competitive, or suffer the consequences).
I work for a company with HQs in the US, and the amount of red tape one has to deal with is pretty much in line with what this Romanian chap has described.
Sorry to say, but many jobs in US based companies have become dead weight and their only function is to keep people in the payroll that would otherwise have to go.
They can do more, one I had left me more than $1000 in debt, and that was more than 15 years ago.
I do not even have any live in girlfriends. I could do that at one time but now I've been a bachelor too long.
I never had a live-in girlfriend though I'm not opposed to it. While in some ways I could handle having any roommate in other ways I think it will be much harder. Because of my disability I've been living in isolation and do little socializing. However I'm hoping to change that, in the next few weeks I hope to be starting a back to work program.
Falcon
Should there be a Law?
Perhaps it IS time for a trade war. Because if we wait for china to start it, we may find it un-winnable. But lets also add something different to the mix. I think we're at the peek of 'world trade' and its going to soon decline for completely different reason than most expect. You see the day of the factory..even in china... is numbered. Large bulk items like Cars and Refrigerators will probably be coming out of factories for a while yet, but in 5-10 maybe 20 years on the outside, 3d printer like technology will make 'build at point of sale' or 'build on demand' technology common place. All the 'too cheap to make in the US' plastic junk you buy at Walmart will come not from a ship from China or Japan, but out of a 3d printer in the backroom of the store. If not your own personal one in your utility-room/kitchen. We should plan for a world were trade will drop perceptibly, and be mostly for bulk raw materials (and even that will be mostly the bulkier stuff like carbon and raw plastic, with only trace amounts of the more exotic metals needed) and luxury goods. Such a change will mean a lot of the relationships between ... well.. everyone will change. Future trade wars...in both directions...will be more about IP (Intellectual property) rather than PP (Physical property)
But governments will also have to deal with 7-8 billion people who will need 'constructive' things to do with their time...or idle hands will find other, probably less sociable, activities to fill their time.
True, and if it truly possible to avoid the war indefinitely then that the wisest policy.... BUT the status qua is not one that would avoid war. It's leading us more or less there. The question is when, not if. So we have two choices change the status qua so that it doesn't lead to war, or FIGHT that war in your own terms before the enemy sets their terms.
meetup.com
Thanks. One place I was interested in is the Loft. However I went there years ago and it seems more for classes than simple writers meetings. In Florida I was a member of 3 writers groups, at the college I attended, at a Barnes and Noble, and at a public library. Each one was run differently but at all of them we could just talk or share what we were working on. I also attended meetings of other groups such as the local kingdom of the Society of Creative Anachronism, SCA. Speaking of which, I'm looking forward to the Renfest.
Falcon
Should there be a Law?
I guess the root cause is privatizing profits and socializing losses.
I'd like to buy homeland for our 10 million people. http://twitter.com/mahadiga