Friday, July 2, 2010

Andy Grove's thoughts on the American Jobs

I'm not sure why outsourcing is so surprising.

Back in the colonial days, nations derived most of their wealth through colonies that created sugar, salt, tea, tobacco, and other precious materials.  The labor force employed were not the colonists, but rather slave labor from Africa or indentured servants native to the colonies.

It is no different today.  Companies large and small chase after the almighty dollar (and profit) by producing more with less.  Competition in pricing drives companies to relocate their manufacturing and operations oversees to areas where labor is cheap.  Companies that failed to produce more with less go bankrupt and are squeezed out by competitors that can.

We can't blame the companies for this practice.  We are all guilty.  Anyone who does comparison shopping is guilty of contributing to this.  Would you buy a $1,000 iPhone 4 if you could get it for $199?

You can't prevent the globalization of our economy by being protectionist.  That's the same as saying I want to stag with my horse drawn buggy and be safe on the highway with automobiles going over 65 mph.  Protectionist policies will only hurt us in the long run.  The only way to compete with this is to continue to innovate.

If individuals cannot innovate and add value to the system, they too will be obsolete.

Excerpt of Andy Grove's article:

"Recently an acquaintance at the next table in a Palo Alto, California, restaurant introduced me to his companions: three young venture capitalists from China. They explained, with visible excitement, that they were touring promising companies in Silicon Valley. I’ve lived in the Valley a long time, and usually when I see how the region has become such a draw for global investments, I feel a little proud. 

Not this time. I left the restaurant unsettled. Something didn’t add up. Bay Area unemployment is even higher than the 9.7 percent national average. Clearly, the great Silicon Valley innovation machine hasn’t been creating many jobs of late -- unless you are counting Asia, where American technology companies have been adding jobs like mad for years."

Full article here.

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