Andy Grove: How To Make An American Job Before It's Too Late • Hacker News Board

Re: Andy Grove: How To Make An American Job Before It's Too Late

#131

Post by say_ » Fri, Jul 02, 2010, 12:56 PM UTC

codexon wrote: post #85

CamperBob wrote: post #35

The real elephant in the room, which Grove and practically everybody else knows very well but refuses to talk about, is that nobody starts a company to employ people. People start a company to make stuff . To the extent this can be done with fewer people, this is always a good thing from that company's perspective, with no exceptions I can think of offhand. People suck, and you don't want to deal with them if you can…

To me, it's obvious what the future of mass production will look like, but it's not at all clear how to stave off a future where 10% of us are shouldering the entire productivity burden for the rest of the country. Extrapolating your logic, that 10% will probably shrink to 1%. And chances are, you or your descendants probably won't be part of that 1%. Grove isn't saying that we should have more mundane manufacturing…

The solutions are welfare and subsidies for education.

Creativity in business requires a fair amount of luck. The successful 1% will need to be drawn from a large, educated, middle class. Even if most people end up striking out, it will be in our best interest to keep as many people within striking distance as possible.

Re: Andy Grove: How To Make An American Job Before It's Too Late

#132

Post by ja30278 » Fri, Jul 02, 2010, 1:10 PM UTC

Hubbert wrote: post #12

dcb wrote: post #8

Earlier quoted context omitted.

No, Aaronontheweb makes a good point. Of course he's not arguing in favor of environmental disasters or slavery-in-all-but-name. Pay attention to his main point: attack high labor prices here, rather than low prices elsewhere. Andy Grove can be protectionist if he wants, but just because he's not ashamed of it doesn't make it any better of an idea.

"High labor prices" = "High wages." THIS MEANS YOU! Unless you are worth >$10M, are retired, or live off a trust fund, admit that you're labor not capital: just like highly paid executives, surgeons, and name-brand attorneys are more "labor:" they generate more earned income than asset income. Go ahead: pull out your 2009 tax return: is the "income from wages, tips, and salaries" greater than the "interest income" an…

"Hig labor prices" = "High Prices"

Imagine the cost of a Big Mac in a hypothetical world in which fast-food workers are paid 10x as much.

Re: Andy Grove: How To Make An American Job Before It's Too Late

#133

Post by cia_plant » Fri, Jul 02, 2010, 1:20 PM UTC

anamax wrote: post #92

rbranson wrote: post #4

Earlier quoted context omitted.

Oh yes, the EPA and Department of Labor, with their obnoxious "don't fuck up the environment" and "don't treat people like shit" rules. God damn them.

That would be the EPA that is blocking the use of many oil skimmers in the Gulf and forcing the ones that they approve to run at about 1/6th efficiency. And that's the department of labor that is keeping experienced crews from running the skimmers that the EPA approves. I forget which department decided that oil in sensitive wetlands was better than putting up sand berms.

Citation?

Re: Andy Grove: How To Make An American Job Before It's Too Late

#134

Post by Roboprog » Fri, Jul 02, 2010, 2:14 PM UTC

CamperBob wrote: post #35

The real elephant in the room, which Grove and practically everybody else knows very well but refuses to talk about, is that nobody starts a company to employ people. People start a company to make stuff . To the extent this can be done with fewer people, this is always a good thing from that company's perspective, with no exceptions I can think of offhand. People suck, and you don't want to deal with them if you can…

I believe he was talking about a national policy, not a corporate policy.

The idea that we, as a nation, somehow resist the neo-colonialism known as "free trade", and, as Mr Grove says, fight a trade war TO WIN.

Corporations are legally obligated to make the biggest profit they can, which implies cutting costs any way that they legally can (so long as the cuts do not disproportionately impact gross incomes). No one is suggesting that we ask companies to invent charitable make-work.

I believe what he finally gets to at the end of the essay is to suggest that we, as a society, provide financial disincentives to offshore work, and incentives to do the work within our own country.

People making $40,000 per year are much more likely to buy your stuff than people making $20,000 (or $0), and are less likely to crash your gated villa, even if it costs 20 to 50 percent more. He also mentions that doing the grunt work trains (st least some -- enough) people to do the more creative stuff later.

Don't worry, though. The multi-national corporations so own our government, so it's doubtful our national self-interest is going to have much influence anyway. You can continue living the libertarian dream. Unless you end up being one of the untouchables. Ouch.

Re: Andy Grove: How To Make An American Job Before It's Too Late

#135

Post by AlisdairO » Fri, Jul 02, 2010, 2:38 PM UTC

Tichy wrote: post #128

AlisdairO wrote: post #124

Earlier quoted context omitted.

Inability to buy gadgets is unlikely to be the main problem - it's not like gadgets are a huge proportion of the expenditure of poor people right now. The problem that will be created is extremely high wage mismatch between the highly educated, and those that are not able to achieve such a high level of education. This is a problem for a variety of reasons. The poor are, of course, less able to compete for scarce res…

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

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

Re: Andy Grove: How To Make An American Job Before It's Too Late

#136

Post by Hubbert » Fri, Jul 02, 2010, 3:01 PM UTC

CamperBob wrote: post #35

The real elephant in the room, which Grove and practically everybody else knows very well but refuses to talk about, is that nobody starts a company to employ people. People start a company to make stuff . To the extent this can be done with fewer people, this is always a good thing from that company's perspective, with no exceptions I can think of offhand. People suck, and you don't want to deal with them if you can…

If your prediction is correct, then the location of these SuperFactories is even more essential then they are today.

You are also skipping over the part of Grove's thesis that the IP ("knowledge-work") jobs follow manufacturing. The vast majority of motherboard engineers today are in Asia near the Foxconn factories, not in the US. And the iPhone 5G Extremes are probably NOT going to be engineered in Silicon Valley either.

Re: Andy Grove: How To Make An American Job Before It's Too Late

#137

Post by Hubbert » Fri, Jul 02, 2010, 3:09 PM UTC

Kadin wrote: post #103

CamperBob wrote: post #91

Earlier quoted context omitted.

My real point, though, is that consolidation is inevitable. Production jobs ("Scaling," etc.) are going to become less important over time, not more important, whether they're in China or America. Any forward-looking argument that doesn't take that fact into account is flawed from the outset, and I think Grove's piece falls into that category. Is it really healthy for Silicon Valley if Apple has a factory cranking ou…

> Is it really healthy for Silicon Valley if Apple has a factory cranking out iPhones in Cupertino You're begging the question; there is a country beyond Silicon Valley, and Grove's argument is that what is best for Silicon Valley (meaning, the bottom lines of a few tech firms which together only employ a small percentage of the U.S. population) isn't necessarily what is best for the country as a whole. Put more dire…

To your excellent point, I will also add that a) the IP jobs follow manufacturing, which is bad for Silicon Valley design work in the long run and b) why not crank them out in Flint or Youngstown?

Re: Andy Grove: How To Make An American Job Before It's Too Late

#138

Post by aero142 » Fri, Jul 02, 2010, 3:12 PM UTC

nl wrote: post #90

aero142 wrote: post #59

I find this line of thinking very disturbing. Mr. Grove follows others in believing a common fallacy, by ignoring secondary effects, and fails to see how issues in macroeconomics affect each other. Where to start... The American standard of living is higher than China. In order for a worker in the US to continue to enjoy his standard of living and salary, she must contribute to creating something of value equal to wh…

In other words, as wages drop, the unemployment rate will go down, and less will be outsourced. This is just the tradeoff. You make that sound so simple. You left out the bit about that meaning falling standards of living, and the social dislocation that causes.

I really hope that things don't change and the US continues to be a location for these high value jobs. Yes, this is very hard to maintain. I couldn't agree more. The point I am trying to make is that outsourcing is a sign that the US has a high value workforce because they can make more money doing things other than working in chinese style factories, which are very low value add jobs. All the consequences you list are correct, and I don't want them to happen, but tariffs are not going to lock in our current high standard of living.

Re: Andy Grove: How To Make An American Job Before It's Too Late

#139

Post by vessenes » Fri, Jul 02, 2010, 3:38 PM UTC

Aaronontheweb wrote: post #2

Andy makes an excellent point: when we outsource the manufacturing and scaling processes to another country, what we lose in addition to jobs are the innovations and experience necessary to maintain a strong defensive econosystem with respect to our economy. However, I disagree with Andy's recommendation that we should tax offshore labor - we should focus on making labor in the United States less expensive. Neuter th…

Actually, Andy is suggesting the same thing, cheapen job creation in the US, although he would do it through inflation, which is always more politically popular than deflation (except among people who live off their accrued wealth).

Tariffs on chinese goods would up the cost of those goods to slightly higher than what US-made goods could be sold for.

This will create jobs in America as companies create factories here.

There will be more jobs, and more money in the economy.

On the downside, everything just got a lot more expensive, maybe 50% more.

This is inflation. People don't notice it as much as they notice a 33% to 50% wage cut, especially since the most discontented members of society, the un and under-employed are no longer un(der)employed.

Re: Andy Grove: How To Make An American Job Before It's Too Late

#140

Post by vessenes » Fri, Jul 02, 2010, 3:56 PM UTC

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

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

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

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

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

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

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