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63 Comments
- BetaMe, on 10/12/2007, -1/+10Wow.. this deserves tons of attention, if even moderately plausible. Huge economic and policy implications..
The original report the article talks about but does not link to, is available in full text.
http://www.isn.ethz.ch/pubs/ph/details.cfm?id=19603
or
http://www.eastwestcenter.org/stored/pdfs/SR010.pdf - jbenson2, on 10/12/2007, -2/+9Not a pretty picture
1.) First, we moved our low skilled manufacturing assembly jobs overseas.
2.) Then, we allowed the overseas operations to take over the purchasing responsibilities.
3.) Then, the overseas operations took over alternative sourcing of components
4.) Then, the actual design process of new products has moved overseas.
5.) And now, the R&D process is moving overseas.
There is no solution. Unfortunately, this is how the market works.
. - riquelme, on 10/12/2007, -0/+5@Spyntek - Its called Greed OR making a living - depending on who you ask. The American companies you talk about are run by people like you and me. We take minimum wage as a god given right and globalization is proving us wrong slowly but surely. As a CEO of a company, I'd rather ship some jobs overseas to retain relatively more people while still being profitable and competitive. I vote for banning CNN & FOX for 2 years, listening to the BBC/any foreign media will do, teaching my kid MATH, kicking his ass if he thinks graduating from high school is an achievement! AND all of the above ignores the billions of people Asian countries have. China's growth won't last forever, but India is the youngest its ever been. The # of kids between the ages of 8-12 = $200 million. Thats more than half of us here already! my $.02!
- Spankenstein, on 10/12/2007, -4/+8I have an idea--let's offshore consumers! That way, we don't have to buy anything either. And, with the complete lack of jobs in the US, it works out perfectly!
- williamdyer, on 10/12/2007, -0/+4It's tough to say "no."
I can only afford to hire engineers with unique creative and design expertise in the U.S.
For the price of one U.S.-based engineer, I can afford to:
1. Take an intensive course in Mandarin
2. Hire a translator in China
3. Fly to China once a month
And I still have enough money left over to hire at least FIVE engineers in China with elite credentials. Of those five, odds are I will find at least one with the kind of exceptional talent that it takes for me to justify a hire in the U.S.
This is not without limits or problems. China and India do not have enough capacity in their elite universities to educate all the people that have high potential. You find a lot of mediocre engineers in India that come our of second and third-tier universities. You find people that do things that are rare in the U.S., like faking their educational backgrounds.
Still, it is hard to tell your shareholders to forego a 5X productivity gain by going overseas. - sbrown123, on 10/12/2007, -0/+4I doubt ATI will ever buy AMD. Expect a graphics card price drop in the near future. Remember when sound cards were really expensive? Believing less sophisticated GPU's will cost several magnitudes more then the complex CPUs of today is just silliness. The $500 graphic cards will eventually become a thing of the past.
- sbrown123, on 10/12/2007, -0/+4@hostilefreak- If I think ahead 100 years, Whites would be a minority in the United States!
- Spyntek, on 10/12/2007, -1/+4I hate to break it to you, but atrocities are not limited to "White" society. Rwanda, Uganda, Sudan, Somalia, Pakistan/Kashmir, Malaysia and indoneisa. All of these countries have tribal warfare and or islamic fundamentalist problems NOT caused by "WHites"
Better know your history before you speak you racist ***** - streak, on 10/12/2007, -2/+5Pharmaceutical drug testing has become big business in China and India, too. Few governmental controls exist to protect citizens in those countries and the lure of $100 or $200 is too much for the poor to pass up. To top it off, foreign "scientists" in the same countries are doing the data collection and analysis and the U.S. FDA accepts the results for drug approval in the U.S.
- eclectro, on 10/12/2007, -3/+6We'll always have McDonald's.
- hostilefreak, on 10/12/2007, -2/+5ubertroll has a point. Try to think 100 years ahead. Western civilization has a huge decline in cultural aspect.
- geronimo, on 10/12/2007, -1/+4And according to the Economist, the middle class has been shrinking since 2000. Related?
Who knows. - chicksdigme, on 10/12/2007, -0/+3Great. More xenophobia!
- geronimo, on 10/12/2007, -0/+3What both of you say is correct. This should all be obvious to everyone by now.
I think companies like google will stand the test of time while those who outsource too much will whither away. I'm no google fanboi, but they seem to pay / reward their employees very well and have no allusions that they are an engineering company so they treat their engineers well and don't rely on outsourcing. And their profits keeep doubling every year. Google gets it at least.
The key is, after all the innovation and productivity, you are the one of the few providing the productivity. You're either at the top making people productive(google) or at the bottom chasing pennies with workers on guest worker visas fleeing the 3rd world. This is the dark secret of the new economy and this is why I put in 70+ hours a week with my own business. Things will be either really good or really bad in the future depending on where you position yourself. Either be part of the elite or mop floors. - williamdyer, on 10/12/2007, -0/+3The cost of living is high in the U.S. because we have a very high regulatory and tax burden. We should outsource our bureaucrats and cut taxes in half or more. THEN we would have an economic golden age in the U.S.
- Spyntek, on 10/12/2007, -1/+4Unfortunately the problem is only going to get worse.
Technology is a job/career killer. High tech careers are slowly replacing manufacturing and farming jobs of the past. But these same jobs and the industries that create them require fewer employees. These employees work with equipment that that makes them more productive and efficient. This equipment is also being upgraded and improved upon all the time, requiring less and less maintenance, which means less people needed to repair/maintain this equipment.
Computers and the software that runs on them will soon be able to upgrade themselves and become "self healing," requiring fewer people to maintain them. Same with service sector jobs and even the "fast food" industry. McDonald's has been working on replacing cooking staff with robotics and self-serve restaurants, much like the self-checkout lanes in supermarkets.
Technology will render the average worker useless, further widening the income gap as less and less people hold more and more of the world's wealth.
Just ponder your home/social/work environments and you will soon understand what I am discussing - sbrown123, on 10/12/2007, -0/+2@streak - No, I was talking about R&D. I have seen far more foreign drug tests, many of which looked really promising, ***** canned by the FDA for the smallest infractions. The FDA does not have two seperate guidelines for inspecting research and drug production, so foreign tests have to be on par with those done locally. And every inspector I have ever met always seemed more concerned with tests performed overseas as compared to those done domestically (which results in more scrutiny and increases the chance of problems being found). I can only guess that a nightmare situation for the FDA is a product being recalled because some test performed overseas was innacurate or incomplete in some fashion and they missed it.
- piratearggghhh, on 10/12/2007, -0/+2Does this mean we'll get a chance to be the ones who will bootleg Asian stuff?
- geronimo, on 10/12/2007, -1/+3Usually companies outsource their core business overseas to cut costs and do well in the short run. But in the long run a competitor rises up, with the same technology, and puts its former employer out of business. The key problem causing this is treating employees who are important to your business like wage robots. You're better off in the long run rewarding such employees, giving them ownership and sticking through it. You can outsource other positions that aren't so essential of course, but more often than not companies outsource a ridiuclously key position/pay someone overseas $5/hour and they can see the entire source tree.
Then they wonder why in 5-10 years they went out of business. - riquelme, on 10/12/2007, -0/+2@ williamdyer says: This is not without limits or problems. China and India do not have enough capacity in their elite universities to educate all the people that have high potential. You find a lot of mediocre engineers in India that come our of second and third-tier universities. You find people that do things that are rare in the U.S., like faking their educational backgrounds."
Your assumption here is that all engineers coming out of schools is the US are as smart as you.i.e: smarter than engineers in china & India. these countries send more people to university. In absolute numbers, they will produce more of a genuine product exponentially. You're right about faking credentials, but in my opinion that is temporary and won't affect the bigger picture. - XopherMV, on 10/12/2007, -1/+3Ya know, that might be true if there were no such thing as nations and governments. However, there is such a thing as the United States, as well as a thing called China. Sure, things may be going fairly well between the two things called US and China now, but they're not always friendly with each other.
A few years ago, the US lobbed a missile by "accident" into a Chinese embassy. Then, a couple years later, a Chinese fighter "accidentally" bumped a US spy plane gathering intelligence over international waters off the coast of China, forcing the plane loaded with sensitive military secrets to crash land in China.
US and China may be "friends" now, but that may not always be that way. Because of that, it actually DOES matter where the US and China get their technical innovation.
Remember, Great Britain and Germany were also each other's largest trading partners... before the start of World War I. - streak, on 10/12/2007, -1/+3sbrown123: You're thinking of drug production. I'm talking about the R&D that goes into drug development. The FDA can approve drugs based on the results of studies conducted in foreign countries. Big pharmaceutical companies are using this as a means of significantly reducing their R&D costs, but this comes at the cost of the health of foreigners who participate in the studies and may indicate a risk to U.S. consumers if the data collected are wrong.
- aleandro, on 10/12/2007, -0/+2To those pointing out that china has more graduate. Sure they produce more people with degrees, but there is a reason why. they technically push their student to certain fields like computing and engineering. All those people who come out w/ such degree don't really love the field, but just do it because it was the only way to go to college for free. Now we all know that these wont amount to anything when it comes down the real world positions.
Now there is no doubt as infrastructure evolve we will see increases in things like this but remember it also offer a new playing field for the US to grow business and create new businesses for the developing world. Anyone who thinks that the US will come out unscratched out of this is dreaming, but it also doesn't mean that the US is dead. There is too much to loose. At this point of time a decrease in living standards in the US is pretty much due... - megaloid, on 10/12/2007, -1/+3i got ball i went to public scool and i work the fryolater at Mcdonalds
- aleandro, on 10/12/2007, -0/+2Also one perfect example of talent>wage is Jonathan Ivy. Could Apple out-shore design and save money? Sure..but look at what a man of great talent brought to them...
- williamdyer, on 10/12/2007, -1/+3You hit the nail on the head. Some outsourcing is good. But a lot is done by jackass management that does not give a ***** for quality and has no idea how software is created.
- fauxXenophanes, on 10/12/2007, -0/+2McDonalds and Freedom to go, what's that cost overseas ?
- stylerm, on 10/12/2007, -1/+3As long as they don't violate our patent squatters......
wait...dang, foiled again - etnu, on 10/12/2007, -0/+2That and China has 4 or 5 times as many people as the U.S. If they're not producing something like 4 or 5 times the number of people in ANY given field (and at similar or better quality rates), then they're still behind.
- spinchange, on 10/12/2007, -0/+1Oh if only the talk of "Education" were more than a platitude heard only during the political campaign season.
- RobCowie, on 10/12/2007, -3/+4Catching up? "Challenge to US innovation"? What do you mean? It's not a sodding race, nor an Inter-nation competition. Whats wrong with you people? Technological innovation is technological innovation - it doesn't really matter where it comes from. And as for being a challenge... it might be construed as a business challenge, but isn't that one of the things the US likes to say it exported to the World - freely competative business markets?
- williamdyer, on 10/12/2007, -0/+1Elite universities in China are more competitive than MIT, Standford, and Caltech because there is a larger pool of high potential individuals feeding into a smaller system of elite schools. The people coming out of these schools are the best on Earth, creatively, or otherwise.
Sometimes you see people who got in because of connections. But often you get people you would not be able to hire in the U.S. at any price. - etnu, on 10/12/2007, -1/+2Companies who offshore thier R&D have essentially said that the only function of American businesses is marketing -- and most companies don't even do their own marketing in the first place.
ANY business that thinks that they can stay alive this way is dead wrong. Their partners will usurp them, their competition will destroy them, and they will die.
On the other hand, though, this isn't really what's going to happen anyway. Smart companies have already realized (or will realize soon) that there's no substitute for face-to-face contact. They will fail. Most likely their failure will come when their workers realize that they could form a local company and just export the products, and avoid the huge overhead of a $100m/yr.+ executive team.
If Microsoft moved all of it's R&D and production to India, you would suddenly see a huge new Indian software company that would destroy Microsoft.
Beyond that, of course, there's a breaking point. Anyone who thinks "competent" engineers in India are "cheap" is either completely ignorant or just living in denial. It's certainly true that an Indian of similiar education and skills to their American counterpart will make less, but it's not orders of magnitude. One-half to one-third is common for truly talented people. No offense to anyone here, but if you're an Indian software engineer and are only making $500USD a month, you probably aren't really all that good at what you do (or you really need to find a new job...I can point you to plenty of people who are interested), and there are plenty of costs (both direct and in terms of lost productivity) that offset this for the typical business.
On top of that, if all U.S. employers were only concerned with absolute salaries of their programmers, there's no way in hell that they'd be primarily located in areas like Silicon Valley. Why on earth would I start a new business in SV and hire engineers at $75k/yr.+ (and that's low-end) when I could just as easily start it in somewhere like Phoenix or Cleveland and pay about half that? The answer is simple: talent trumps cost every time. The gap between good engineers and bad is huge, and a really good one can easily be worth 1000 bad ones.
Most of the bitching that I hear from programmers about offshoring comes from people who have old, useless skills and who refuse to learn new technologies. If you find yourself frequently complaining about people using and how inferior they are to programmers, you'd better be willing to move internationally to keep doing what you're doing for a living. - Matieq, on 10/12/2007, -0/+1We should innovate more..
- OBKenobi, on 10/12/2007, -2/+3Not just Asia, but Europe, Canada, Russia and South America. The rest of the world is catching up.
How much RAM tech is now being developed outside the US? What about GPU tech? ATI is a Canadian company. Unless AMD buys them. Canada should hold out, in a few years ATI might be able to buy AMD! - williamdyer, on 10/12/2007, -0/+1@Narrator
You present a false choice. My point is that the burden of government is the U.S. is a big contributor to cost of living.
Also, you should check out how Chinese live now. Living in a company dormitory may not be the U.S. way, but conditions at major manufacturers in China are not brutal. They are in general much more attractive than the circumstances the workers in those dormitories comes from. If you are a knowledge worker in China, you live comfortably. Not affluently, but but you can buy a nice apartment, furniture, and appliances, and send your kids to college.
We have to get our ***** together before we run completely out of excuses. Let's start by firing half our bureaucracy and giving ourselves a nice pay increase in the form of a BIG tax cut. We COULD have an economic golden age here if we had the will to do what is needed. - streak, on 10/12/2007, -2/+3Perhaps you mean imperialist endeavors?
- inactive, on 10/12/2007, -2/+3i've visited the USA, and whites are minority there now.
you can't throw a stone in the dark without hitting a ***** in the head.
besides this idea that "white" (racist right there) people are the origin of all the atrocities in the world comes from the same idiots pushing this affirmative action crap. any race can be found to be both agressor and victim if you want to trace back far enough. - streak, on 10/12/2007, -0/+1I don't know how strict the FDA is on foreign studies, but I would say the FDA overall has a lot of room for improvement. A poster child is the product named "Botox Cosmetic" which contrary to its name is not a cosmetic. FDA scrutiny of cosmetics is lax compared to drugs that are ingested or injected. Yet Botox Cosmetic is injected and significant adverse reactions frequently result, along with the possibility of death. The active ingredient is stabilized by albumin purified from human blood serum. The albumin can induce shock when injected into cross-reactive patients. Theoretically use of the purified blood product can result in infection with HIV, as well. (It's listed on the liner notes).
- potee, on 10/12/2007, -1/+2I really don't think that there will be a major shift in R&D jobs to Asia (at least not on the scale of manufacturing jobs) simply because their school systems are not designed to foster creativity and design.
Asian students "learn" through rote memorization. They may spend 16 hours a day memorizing every formula they can, but that still means jack when you have to apply that knowledge to a real-world problem. Anyone can build and even improve something that's already been designed. It takes skill, creativity and ingenuity to create a totally new design. Americans tend to be good at that, hence the phrase "American ingenuity."
Richard Feynman has written some brilliant stuff on the issues in foreign schools (especially those in Brazil). When he was in Brazil, he discovered that most the science students there couldn't apply their memorized knowledge in a way other than was shown in the definition or theory they had memorized. - Noein, on 10/12/2007, -0/+1Sound cards are still expensive, the most recent Creative lines are mostly $100+
I remember I read some where that the GPU transistor counts have already surpassed CPU complexity, so I don't think overall GPU price is going to ever drop. - riquelme, on 10/12/2007, -0/+1@Spyntek - I concur with part of your assessment. Although I don't think I'd go as far as blaming only American business for our difficulties in raising economic status. Ignorance will get us nowhere.Unless we don't ourselves stop thinking of people in Asia as people who earn 1/4th of our salaries( which FYI is more than enough for them to live comfortably in their own right), we're trapped into blaming everyone else for what essentially is our ignorance. Fact is that we DO NOT have enough nurses here. Education is not only good, but without it we lose whatever little chance of competing with countries where a lower cost of living is producing a relatively higher output. - Our discussion digresses from the R & D article. I rest my case - going back to basking in the 'Tour De King Floyd' glory.
- kramer3d, on 10/12/2007, -0/+1Rs. 50 in India
- nayrX, on 10/12/2007, -1/+2We've moved our skeleton, muscle, and increasingly our brain overseas. What's left here besides the digestive system? Which are you? A mouth, gut or anus?
- Narrator, on 10/12/2007, -1/+1In China and India you have millions of people who are happy to work hard manual labor jobs and live and work in conditions that would be illegal and morally outrageous in the U.S. All these people support the cheap food/cheap housing/cheap construction/cheap medical care/cheap transportation/cheap services infrastructure that the overseas workers use to live very inexpensivley and thus undercut U.S workers. The only way to compete would be to raise our productivity dramatically, or reduce the lower classes to similar consumption standards and living conditions of the poor in those countries.
- Spyntek, on 10/12/2007, -4/+4THe problem is not with China or India, it is American companies who choose to outsource to these nations to satisfy shareholders here. Unfortunately business and economic priniciples trump morals and overall respect for the American worker every time. While there are a few companie trying to buck the trend, they are few and far between.
End corporate welfare - riquelme, on 10/12/2007, -0/+0http://news.bbc.co.uk/2/hi/programmes/from_our_own_correspondent/5181024.stm
A side note as to how far behind India is to China, let alone to the US - williamdyer, on 10/12/2007, -1/+1Very true. If you can't code better than some Indian guy from a local tech school, you should get out of the business.
- CountSessine, on 10/12/2007, -0/+0"Believing less sophisticated GPU's will cost several magnitudes more then the complex CPUs of today is just silliness. The $500 graphic cards will eventually become a thing of the past."
Nobody buys expensive sound cards anymore because they aren't needed anymore. It's hard to make a convincing case for a more powerful sound processor. How many channels do you need? How complicated are the algorithms you want to run on them? Even 3D positional sound doesn't demand all that much processing time (at least not by today's standards).
3D graphics has no performance ceiling - you could make GPUs many orders of magnitude more powerful than they are today and sell them for $25 a piece in budget computers, and there are still going to be a lot of people who will pay $500 for a graphics chip that's still another order of magnitude faster. - BullTaco, on 10/12/2007, -0/+0India and China have substantial corruption inherent within their economic systems.
You will not find the level of start-up activity (primary driver of innovation) in these countries that you find in the US until these problems are resolved.
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The US could improve its competitive edge by leveling the edge possessed by large corporations in relation to patent enforcement.
Make it easier for start-ups and individuals to gain rewards from innovation (truly non obvious patents) and you will see young people attracted to science and engineering as opposed to entertainment and sports personalities. -
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