Yes, thanks to Arthur for the Grove article. Never mind what Grove calls a solution - as Arthur says, we in the 'developed' countries' better start asking some fundamental questions about how our economic system works. Time to stop castigating the Chinese for being such poor consumers (i.e. they save their money rather than go into debt buying stuff) and start coming up with better ideas for economic arrangements that put the economy where it belongs: in the service of human welfare and the environment.
Thanks again, Arthur, for reminding FWers what the list was all about to begin with. Sally ________________________________________ From: [email protected] [[email protected]] On Behalf Of Arthur Cordell [[email protected]] Sent: Saturday, July 03, 2010 10:50 AM To: 'Keith Hudson'; 'RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION' Subject: Re: [Futurework] FW: [ PFIR ] How to Make an American Job Before It's Too Late: Andy Grove I think that Grove was giving an example of the way in which capitalism can lead individuals to seek short term gains without considering longer term outcomes or costs. Or as Lenin said, "The Capitalists will sell us the rope with which we will hang them." by: Vladimir Ilyich Lenin<http://quotes.liberty-tree.ca/quotes_by/vladimir+ilyich+lenin> [Vladimir Ilyich Ulyanov] (1870 - 1924), First Leader of the Soviet Union The article contains other things which you skipped over. The extent to which venture capitalists routinely include the need to have investment in China as part of any investment. True, it might be that Chinese workers will increase wages, join unions and “join the developed world”, but for the moment the Chinese govt is doing quite well by skirting environmental and labour laws , controlling their currency and playing to the investor’s desire and greed for bottom line results. That our govts allow and encourage this will only lead to short and perhaps longer term political disruption in western countries. I think that Grove is telling it like it is. Perhaps his remedy is a bit stark and clumsy but his diagnosis seems to be correct. We can wait it out and see what happens or we can slow down the process in such a way that our own workers are able to make the transition in such a way that dignity and jobs are maintained. We are at a serious juncture point and it is difficult to be sanguine about outcomes, but it seems that a national dialogue is needed on what is going on and the costs and benefits from the current course of action. Arthur From: Keith Hudson [mailto:[email protected]] Sent: Saturday, July 03, 2010 2:43 AM To: RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION; Arthur Cordell Subject: Re: [Futurework] FW: [ PFIR ] How to Make an American Job Before It's Too Late: Andy Grove Arthur, At 17:07 02/07/2010 -0400, you wrote: "How to Make an American Job Before It's Too Late:" Andy Grove http://bit.ly/9bJfNW The Bloomberg article by Andy Grove is well worth reading. There are few people in the world with his vast lifetime experience of the IT industry, and one can understand, and sympathize with, his personal anguish that his own industry has been affected so egregiously. His diagnosis of the lost jobs in that industry (those that have now gone to China) is superb. Unfortunately, his solution (high tariffs against Chinese products) is fallacious. What he says is: "We should develop a system of financial incentives: 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.) Keep that money separate. Deposit it in the coffers of what we might call the Scaling Bank of the U.S. and make these sums available to companies that will scale their American operations. Such a system would be a daily reminder that while pursuing our company goals, all of us in business 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." For one thing, Andy Grove has forgotten that the customer is king. When I worked in the automotive industry in Coventry 45 years ago, the car workers in the many factories there strongly supported the Labour government's constant pleas, "Buy British". They supported the idea emotionally, even politically at election times. But, in fact, the number of Japanese cars in the factories' own workers' car parks rose and rose. In practice, Coventry car workers would buy products of others -- if they were cheaper -- rather than their own even at the risk of damaging their own employers. (Eight large automotive factories did, in fact, go belly-up in the next 10-15 years.) If America applied high tariffs against Chinese goods, what would happen? On the one hand, the cost of living of the average American consumer would go up. So much for any government's ideas of getting consumer spending going again! Consumers may be mute most of the time but they're far more numerous than those workers and employers who clamorously seek protection and, in the end, the cheque-book of the consumer is more decisive. On the other hand, Chinese industry, with smaller markets for their goods in America, would all the more seek consumer markets elsewhere. That would be particularly dangerous for America at the present time. The American market for Chinese goods is only about 14% of the total annual exports from China. The potential markets for Chinese goods in south-east Asia, Africa and South America (Brazil particularly) are huge and they've hardly begun to be exploited yet. And there's one big fact that Andy Grove chose not to mention. This is that about half of the consumer product industry in China is owned by American corporations! Any tariffs applied against Chinese-made goods would also affect American shareholders and pension funds. As we all know from reading about the increasing numbers of strikes in Chinese factories, wages are beginning to rise. If Japan in the 1960s and South Korea in the 1980s is any guide then, within another 5 or 10 years, the typical Chinese worker will be earning quite as much, if not more, than the typical American worker. In the not too distant future, like Japan and Korea already, China will be re-implanting factories back in America. By then, Chinese equivalents of Andy Groves, will be complaining about the cheap labour in Kenya, or Argentina or Burma. If America wants to become poor as quickly as possible, then Obama should do exactly as Groves wants. And if the American administration did, in fact, build up a large "Scaling Bank" fund, can we imagine for one minute that the politicians won't want to lay their hands on it for other purposes? Even if they knew how to choose suitable new industries to "scale up" with American labour, it's far more likely that they'll raid the fund to pay off American government debt or help another bank "that's too big to allow to fail". The real solution to the problem lies much further in the future than Andy Grove can possibly imagine or that governments can possibly plan. This will be when every country, according to its population and talents, has its own proportionate share of the essential industries. There is no reason that this should not happen in due course, but it will be a long time hence! Keith Keith Hudson, Saltford, England _______________________________________________ Futurework mailing list [email protected] https://lists.uwaterloo.ca/mailman/listinfo/futurework
