19 ms·

Andy Grove’s Warning to Silicon Valley

376 points by hvo 11y ago

cleandreams 11y ago
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 11y ago
  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 11y ago
    >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 11y ago
      Because he's smart, and thus not a socialist
kelukelugames 11y ago
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 11y ago
  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.
  - Chronic51 11y ago
    The demand for AI and ML is increasing faster than the number of qualified graduates and workers. This is not true for semiconductors.
    - Cyph0n 11y ago
      I see, but won't demand likely increase in the near future, given that we're hitting the limits of silicon?
      - smaddox 11y ago
        There's plenty of PhD's working in semiconductor materials and devices. The US Gov is currently funding lots of research into so called 2D materials, e.g. graphene and MoS2. Personally, I'm skeptical that any of it will ever find anything more than tangential commercial application, e.g. graphene as a semi-transparent, high mobility conductor.
  - tcbawo 11y ago
datumit 11y ago
Silicon Valley people are assholes. Who the fuck cares about Android and Apple, and all that jazz and drama when they just offshore all the jobs? Or when they just import workers even when they knew there was problems several decades ago? Also why India and China when the US doesn't even have an alliance with them, you guys put our job security in their hands? You guys suck. Silicon Valley can burn.
awakeasleep 11y ago
> “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 11y ago
  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 11y ago
    >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.
x5n1 11y ago
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.
luso_brazilian 11y ago
> "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 11y ago
  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.
e0 11y ago
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-how-america-can-create-jobs http://www.bloomberg.com/news/articles/2010-07-01/andy-grove...
- _yosefk 11y ago
  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 11y ago
    > fight to win What exactly does victory in a trade war look like?
    - yongjik 11y ago
      ...Consumers are forced to buy your expensive product instead of cheap imported ones?
      - deleted 11y ago
        [deleted]
      - xenadu02 11y ago
        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.
Alex3917 11y ago
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 11y ago
  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.
- ArkyBeagle 11y ago
  To some epsilon, the Pareto Distribution describes income. There's only one parameter to a Pareto Distribution - the alpha. In at least US income distribution, we have also a curious "bump" up the food chain in addition to what a pareto distribution would predict. Isn't that the entire nail on which income inequality hangs? "Bump" at around $250 k in this chart: https://commons.wikimedia.org/wiki/File:Distribution_of_Annual_Household_Income_in_the_United_States_2011.png https://commons.wikimedia.org/wiki/File:Distribution_of_Annu... Other have also said that in terms of real, physical , tangible wealth there is no disparity - that all of the stock options and bonus plans have less physical referent than even a paycheck. That seems to doom us to this state of affairs. Er, it would if the map was the territory, but the fact that this distribution exists implies the existence of forces that cause it. Are we then repeating the error of the Levellers with this?
jakelarkin 11y ago
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 11y ago
  > 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.
redwood 11y ago
Germany sets a great example here with its local industrial production base and culture.
- ArkyBeagle 11y ago
  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 11y ago
    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 11y ago
      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 11y ago
        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.
afarrell 11y ago
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-billion-people-have-been-taken-out-extreme-poverty-20-years-world-should-aim http://www.economist.com/news/leaders/21578665-nearly-1-bill...
- ArkyBeagle 11y ago
  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 11y ago
    "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 11y ago
      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 11y ago
        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.
p_monk 11y ago
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."
- ArkyBeagle 11y ago
  I strongly suspect that Smith was right and that the rise of global capitalism has more in common with Mercantilism than actual Capitalism. Then again, Smith may well be my One True Scotsman :) Isn;t there a baby in that bathwater? I do recommend the bookTv ( CSPAN anyway ) presentation of Peter Whybrow on his book "The Well-Tuned Brain".
- Spooky23 11y ago
  Another issue is the scale that modern business can operate at. A free market with two players isn't really "free" in a meaningful sense of the word.
- boreas 11y ago
  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.
matchagaucho 11y ago
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.
- majewsky 11y ago
  "High Output Management" was released in 1983. The article referenced here is from 2010. Maybe he has just changed his opinion.
Negative1 11y ago
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).
- rchaud 11y ago
  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.
- rorykoehler 11y ago
  It's not a tech problem, it's a social and political one. The first issue to deal with is to ask; what is the purpose of the job? If the purpose of the job is to provide a stable society then we can look at other solutions to providing a stable society too. The job does not necessarily have anything to do with the problem. It is only lifelong conditioning that would lead anyone to start from the premise that we must have jobs in order to solve the problem of maintaining social stability.
dmritard96 11y ago
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 11y ago
  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-renaissance.pdf http://www2.itif.org/2015-myth-american-manufacturing-renais...
  - YokoZar 11y ago
    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.
- tim333 11y ago
  Lithium batteries are perhaps an example. Grove had: >The U.S. lost its lead in batteries 30 years ago when it stopped making consumer electronics devices. >Unlike with microprocessors, the U.S. share of lithium-ion battery production is tiny But now the cutting edge seems to be Tesla's Gigafactory https://en.wikipedia.org/wiki/Gigafactory_1 https://en.wikipedia.org/wiki/Gigafactory_1
paulpauper 11y ago
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%20Shot%202015-02-10%20at%202.27.13%20PM.png http://www.spur.org/sites/default/files/wysiwyg/u168/Screen%... Silcon Valley job growth has pretty much tracked the rest of the nation https://upload.wikimedia.org/wikipedia/en/8/8e/US_Labor_Force_and_Employment_Numbers_-_v1.png https://upload.wikimedia.org/wikipedia/en/8/8e/US_Labor_Forc... Job creation and destruction is an inescapable part of a dynamic economy.
sbardle 11y ago
Manufacturing isn't coming back. Do you think your average American would put up with the conditions in a Chinese iPhone factory?
- marshray 11y ago
  When I was 20, I worked washing dishes in restaurants. I applied for a job at a semiconductor manufacturer but didn't get it. I jumped at the opportunity when it came to work with electronics at a small shop. I would have tried manufacturing. But I don't know what "conditions" you're referring to.
- rleigh 11y ago
  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.
yasky 11y ago
Dear Hacker News - after scrolling 3 pages I still haven't seen the 2nd comment. Can you please implement collapsable comments? Please!?
- DanBC 11y ago
  There are a bunch of plugins that provide collapsable comment threads.
  - dredmorbius 11y ago
    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.
  - kwhitefoot 11y ago
    This one works well on FF 45 on Linux: https://github.com/tomkel/hn-collapse https://github.com/tomkel/hn-collapse. But surely a GreaseMonkey script should be able to do the job too?
hyperpallium 11y ago
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.
deleted 11y ago
[deleted]
jboydyhacker 11y ago
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.
kushti 11y ago
“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.
ilaksh 11y ago
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.
nolepointer 11y ago
Make America great again.
hbt 11y ago
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".
narrator 11y ago
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.
- littletimmy 11y ago
  Can you elaborate on your last paragraph please? What is the fundamental cause in your opinion? Or are you saying it's like turtles all the way down?
Ericson2314 11y ago
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.
Nutmog 11y ago
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?
jmspring 11y ago
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.
nxzero 11y ago
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?
wahsd 11y ago
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.

376 points by hvo 11y ago

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 11y ago
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 11y ago
  >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 11y ago
    Because he's smart, and thus not a socialist

kelukelugames 11y ago

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 11y ago
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.
- Chronic51 11y ago
  The demand for AI and ML is increasing faster than the number of qualified graduates and workers. This is not true for semiconductors.
  - Cyph0n 11y ago
    I see, but won't demand likely increase in the near future, given that we're hitting the limits of silicon?
    - smaddox 11y ago
      There's plenty of PhD's working in semiconductor materials and devices. The US Gov is currently funding lots of research into so called 2D materials, e.g. graphene and MoS2. Personally, I'm skeptical that any of it will ever find anything more than tangential commercial application, e.g. graphene as a semi-transparent, high mobility conductor.
- tcbawo 11y ago

datumit 11y ago

Silicon Valley people are assholes. Who the fuck cares about Android and Apple, and all that jazz and drama when they just offshore all the jobs? Or when they just import workers even when they knew there was problems several decades ago? Also why India and China when the US doesn't even have an alliance with them, you guys put our job security in their hands? You guys suck. Silicon Valley can burn.

awakeasleep 11y ago

> “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 11y ago
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 11y ago
  >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.

x5n1 11y ago

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.

luso_brazilian 11y ago

> "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 11y ago
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.

e0 11y ago

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-how-america-can-create-jobs http://www.bloomberg.com/news/articles/2010-07-01/andy-grove...

_yosefk 11y ago
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 11y ago
  > fight to win What exactly does victory in a trade war look like?
  - yongjik 11y ago
    ...Consumers are forced to buy your expensive product instead of cheap imported ones?
    - deleted 11y ago
      [deleted]
    - xenadu02 11y ago
      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.

Alex3917 11y ago

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 11y ago
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.
ArkyBeagle 11y ago
To some epsilon, the Pareto Distribution describes income. There's only one parameter to a Pareto Distribution - the alpha. In at least US income distribution, we have also a curious "bump" up the food chain in addition to what a pareto distribution would predict. Isn't that the entire nail on which income inequality hangs? "Bump" at around $250 k in this chart: https://commons.wikimedia.org/wiki/File:Distribution_of_Annual_Household_Income_in_the_United_States_2011.png https://commons.wikimedia.org/wiki/File:Distribution_of_Annu... Other have also said that in terms of real, physical , tangible wealth there is no disparity - that all of the stock options and bonus plans have less physical referent than even a paycheck. That seems to doom us to this state of affairs. Er, it would if the map was the territory, but the fact that this distribution exists implies the existence of forces that cause it. Are we then repeating the error of the Levellers with this?

jakelarkin 11y ago

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 11y ago
> 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.

redwood 11y ago

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

ArkyBeagle 11y ago
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 11y ago
  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 11y ago
    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 11y ago
      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.

afarrell 11y ago

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

ArkyBeagle 11y ago
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 11y ago
  "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 11y ago
    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 11y ago
      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.

p_monk 11y ago

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."

ArkyBeagle 11y ago
I strongly suspect that Smith was right and that the rise of global capitalism has more in common with Mercantilism than actual Capitalism. Then again, Smith may well be my One True Scotsman :) Isn;t there a baby in that bathwater? I do recommend the bookTv ( CSPAN anyway ) presentation of Peter Whybrow on his book "The Well-Tuned Brain".
Spooky23 11y ago
Another issue is the scale that modern business can operate at. A free market with two players isn't really "free" in a meaningful sense of the word.
boreas 11y ago
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.

matchagaucho 11y ago

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.

majewsky 11y ago
"High Output Management" was released in 1983. The article referenced here is from 2010. Maybe he has just changed his opinion.

Negative1 11y ago

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).

rchaud 11y ago
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.
rorykoehler 11y ago
It's not a tech problem, it's a social and political one. The first issue to deal with is to ask; what is the purpose of the job? If the purpose of the job is to provide a stable society then we can look at other solutions to providing a stable society too. The job does not necessarily have anything to do with the problem. It is only lifelong conditioning that would lead anyone to start from the premise that we must have jobs in order to solve the problem of maintaining social stability.

dmritard96 11y ago

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 11y ago
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-renaissance.pdf http://www2.itif.org/2015-myth-american-manufacturing-renais...
- YokoZar 11y ago
  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.
tim333 11y ago
Lithium batteries are perhaps an example. Grove had: >The U.S. lost its lead in batteries 30 years ago when it stopped making consumer electronics devices. >Unlike with microprocessors, the U.S. share of lithium-ion battery production is tiny But now the cutting edge seems to be Tesla's Gigafactory https://en.wikipedia.org/wiki/Gigafactory_1 https://en.wikipedia.org/wiki/Gigafactory_1

paulpauper 11y ago

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%20Shot%202015-02-10%20at%202.27.13%20PM.png http://www.spur.org/sites/default/files/wysiwyg/u168/Screen%... Silcon Valley job growth has pretty much tracked the rest of the nation https://upload.wikimedia.org/wikipedia/en/8/8e/US_Labor_Force_and_Employment_Numbers_-_v1.png https://upload.wikimedia.org/wikipedia/en/8/8e/US_Labor_Forc... Job creation and destruction is an inescapable part of a dynamic economy.

sbardle 11y ago

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

marshray 11y ago
When I was 20, I worked washing dishes in restaurants. I applied for a job at a semiconductor manufacturer but didn't get it. I jumped at the opportunity when it came to work with electronics at a small shop. I would have tried manufacturing. But I don't know what "conditions" you're referring to.
rleigh 11y ago
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.

yasky 11y ago

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

DanBC 11y ago
There are a bunch of plugins that provide collapsable comment threads.
- dredmorbius 11y ago
  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.
- kwhitefoot 11y ago
  This one works well on FF 45 on Linux: https://github.com/tomkel/hn-collapse https://github.com/tomkel/hn-collapse. But surely a GreaseMonkey script should be able to do the job too?

hyperpallium 11y ago

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.

deleted 11y ago

[deleted]

jboydyhacker 11y ago

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.

kushti 11y ago

“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.

ilaksh 11y ago

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.

nolepointer 11y ago

Make America great again.

hbt 11y ago

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".

narrator 11y ago

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.

littletimmy 11y ago
Can you elaborate on your last paragraph please? What is the fundamental cause in your opinion? Or are you saying it's like turtles all the way down?

Ericson2314 11y ago

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.

Nutmog 11y ago

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?

jmspring 11y ago

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.

nxzero 11y ago

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?

wahsd 11y ago

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.