Nice post. I'd agree that help to people during economic transitions would be beneficial. My cursory reading of the American Competitive Initiative doesn't reveal it is all that helpful but rather it's more of a political document. The politicians lean on math and science for K-12 and community colleges for displaced workers in the middle of their careers. This doesn't seem good enough to me. Unfortunately, my guess is that the protectionist desires of the displaced labor markets, while very popular politically, isn't going to be acted upon by the politicians. That won't stop the politician from using these emotional issues and real insecurities to obtain votes though.
Also, on your list of issues, some believe that the US current account deficit is equally troublesome or even more troublesome than the Federal Deficit. What's your opinion on that.
re: W Does Cisco>I don't understand it. What do you mean by >that? I don't believe that anybody gave >anything away. . >Should we blame the chinese that they gave away >the gun powder ?
Of course, history would have turned out much different if the chinese didn't give away gunpowder. They would have been spared 200+ years of turmoil and humiliation at the hands of the Brits and other westerners.
>Is the 'gold rush' over ? Probably. Years ago >was a poster in Cisco , something like that " >come to work , check the stock price , drink a >coffe ,check the stock price , go to restroom , >check the stock price , write a little bit of >code , check the stock price..."
As someone had stock options, You're right, there's a lot of stock price checking going on. But the gist of all the arguments here is whether one is finished as a practicing engineer sooner than say a lawyer. I, and others, believe engineers must jump through more hoops to survive to an older age than say a lawyer, who's experience matters for something.
My point is, as many engineers check their company's stock price, they are like cattle chewing on the rich grass, unaware of the slaughter that will follow.
>Is nothing wrong with engineering proffesion , >it is a decent well paid proffesion with a lot >of satifaction and I'll encourage my kids to go >for it if they like it.
Good Luck... Tell them to get an MBA, as well ...
>Lots of engineers can become CEOs (start >companies) or work on Wall Street. If anybody >things that is easy and have the appropiate >skills they can try...
Most engineer/CEO/founders come from India, where they are educated to think like entrepreneurs. The US system (except for Stanford) does non of that.
Not to quibble over fine points in your definitions, but as I am sure you are aware, foreign relations are the virtual privy of POTUS, per the US constitution.
Jefferson in 1790: GÇ£The transaction of business with foreign nations is executive altogether. It belongs, then, to the head of that department, except as to such portions of it as are specially submitted to the Senate. Exceptions are to be construed strictly.GÇ¥
And BTW, "represents" means the same thing as IOU: worthless if POTUS says so.
Just like that. Really. Yea, it might be the equivalent of a financial nuclear weapon.
>> some believe that the US current account deficit is equally troublesome or even more troublesome than the Federal Deficit. What's your opinion on that <<
Well a few quick thoughts while I am on a lunch break, maybe some more considered reflections tonight or over the weekend (after consulting some sages).
The question you ask is both economic and political (at least) so it has multiple dimensions in which to explore an answer.
Internationalist ================
From the perspective of an internalionalist, the world is inevitably moving towards a single nation state - a global state, in which entities such as the WTO are merely the precursor institutions. From this perspective, it makes as much sense to talk about the difference between China and the U.S. as it does between NY and SC; so for example there is an interesting piece of political lore (which I have not researched to see if it is true) that in the 1960's a NY senator proposed the raising of the minimum wage because he thought it would impact the south more than the north, and reduce migration of business. So regardless of how we might have separated state from state in the past, in general, we in the U.S., apart from fighting over federal pork, accept the notion that a business can move from detroit to dallas, but if the same business was to move from detroit to shanghai, an internalionalist may not have a problem with this, but a nationalist likely would. So some of this relates to a political perspective (remembering that a political perspective could easily be at a state or city level as well). From an economic perspective it is simply the market doing its thing. The internationalist might additionally believe that a distribution of wealth among the nations of the world will lead to the growth in democracy, improvement in human rights/dignity, and a decrease in international violence (war); and where the end state my include the perspective that terrorism is a domestic police problem as opposed to an international military problem.
Nationalist ===========
A nationalist on the other hand might say, well America first. Some nationalists will put on their engineering hats and say, ok what are the problems and what are the implications.
On the problem side there is the mere spectre of increased protectionism which from some perspectives is not a good thing (hurts consumers, makes domestic industry more inefficient and ultimately more exposed once the international countries eventually jump over the protectionists walls having continuously worked on their efficiency, etc.) so the deficit is to be feared just from the perspective of political reaction; then there is the pro-protectionism sentiment to consider, and expressed already on this thread.
An economist might then say well what is right way to look at the account deficit. Is it exports vs imports, or the difference between investment and savings minus depreciation? This will lead to different answers. Quickly, in the former, the only way to change the equation is to increase the price of the imports, or reduce the quantity of the imports. On the price side, fixed currency exchanges of trading partners cause an artificial imbalance and some would say ultimately this is unsustainable - i.e. the countries doing this will have a major economic problem like Japan did after its boom (currency wasn't technically fixed but there was a sentiment of protecting against yen appreciation - is the argument - I haven't personally researched). With respect to the latter definition it has been observed that there is a secular trend in decreasing savings - so the challenge is how to increase that without reducing domestic demand. Also it can be observed on the investment side that low interest rates, and a boom economy that had too much capacity in many areas, shifted investment to real estate, so as interest rates increase, and capacity decreases, investment may shift back to traded goods; and hence more exports.
So as a quick summary =====================
There are economies which have deficits for many years that continue to grow; so it is more the fear of a bad scenario playing out, than the inevitability that concerns us here (I believe). There should be continued pressure on China to not engage in an explicitly fixed or quasi fixed currency both for its own good in the long term, and to reduce domestic U.S. political issues; U.S. domestic investment would hopefully grow in the coming years in areas that will lead to things that other countries want to buy (and of course intellectual property protection plays here - think of the export dollars that are being lost now; for example when I have been in China I have seen many things that look to me like iPODs but I am told they are not). Also take a look at the current edition of Business 2.0. There is a pure electric car in a Woodside garage that goes from 0-60 in 3 seconds. I don't think there is a shortage of smart and innovative potential in the U.S. and do ultimately believe this is the answer. Invest, innovate, and protect intellectual property rights.
Summary =======
Do I think a deficit is a disaster in and of itself - probably not. Do I think the rate of growth is getting attention - yes. Do I think the rate of growth can be stemmed - yes; but the answers are both political and economic; some of the correction is likely natural, some of it will require political will (I suspect). All things being equal, economies provides signals. It is the response to signals that count, not the signals themselves - to the extent that anyone actually understands the signals of course ;-) and in that spirit, we need to reduce the SNR by encouraging other countries not to fix or quasi fix their currenices.
In terms of the political perspective, I think people should at least consider both the internationalist and nationalist perspectives before locking and loading on a strategy - there are valid issues to be considered in both perspectives (IMO).
For those that don't like the Internationalist perspective, there is an articulate rebuke by Pat Buchanan:
Note: I am not endorsing the perspective, but I do admire how well it was written, just from a pure communications art perspective. Yeah, the guy is a speech writer, I guess that is to be expected......
re: W Does Cisco4. H1B What can I say? This is nothing more than an abomination. It represents the worse of outsourcing/contracting. It brings workers into the company's core, working with its best engineers on its most valuable asset: its technological knowledge, practices, then sends them back home to countries very willing at building up their own competative companies. It represents nothing more than short sighted greed.
I can give you endless examples of people who came with H1B visa , created technology , applied for patents etc. Based on your writing I have a feeling that you believe the H1Bs are a kind of helpers @ a core technology engineers (whatever they may be). Based on what I see looking around me on my work place (no , I am not from Asia) I have a feeling that they are creating the core technology. True , after a while they'll will have green cards and citizenship but think on how many of the people who created the Interent and PC world started with H1B visa. It will be in the interest of any nation to attract talent. The other contries called what US was/is doing 'brain drain'..
re: W Does CiscoNote that I am completely against protectionism and am all in favor of companies being international in scope.
Consider a broad overview: A goal of any long lasting technological company is to develop a core competency. To develop that competency you must have be a critical mass of innovative R&D. The technology and knowledgeable R&D staff can be developed in-house or it can be acquired.
Thus: Core Competency <- R&D <- technology acquisition and innovation
Lets look at how various management approaches can affect this: 1. Overseas expansion Can lower costs and broaden the R&D efforts at a cost of extra management efforts.
As long as the international/corporate environment encourages employees to stay with the company, then it works well in developing the company's strength.
2. Contractors/Outsourcing (when contracting is done overseas it is called outsourcing). Works great for one-shot, non-core efforts.
If central R&D is done with contractors or outsourcing, then the knowledge disappears when the contract is done and the company's prime competencies go away with the contractors. If they are overseas, then the knowledge REALLY goes away.
3. Green cards Bringing in talent from overseas is an excellent way of building up a company's R&D talent
4. H1B What can I say? This is nothing more than an abomination. It represents the worse of outsourcing/contracting. It brings workers into the company's core, working with its best engineers on its most valuable asset: its technological knowledge, practices, then sends them back home to countries very willing at building up their own competative companies. It represents nothing more than short sighted greed.
5. Government R&D When government tries to pick a technology champion, as is often done in Japan, it is doomed to fail most of the time. When the R&D is in broad areas, then it can help a country develop its technology and innovation. Often companies can't afford the staff or expense of broad R&D.
DARPA was an excellent example of this. It's amazing that the government at the time realized that building up the country's technological knowledge was a good use of 'defense' dollars. TJ Rodgers of Cypress, who often speaks out against government interference in business, says great things about DARPA, which he should because Cypress was built with much of the DARPA developed research.
Note that there is no room for protectionism anywhere in this model.
re: W Does Cisco"I have a feeling that you believe the H1Bs are a kind of helpers @ a core technology engineers"
No. That is my point. They ARE part of the core. Then they go away. I am all in favor of bringing talent into a company, from anywhere. It's great. But why H1B? Why not just give them the Green card? Why make them apply for it later?
Here's why: because the H1B gives a company power over the employee--he/she can't leave without getting kicked out of the country. So they pay them less--much less. It is addictive, but short sighted. It scares kids from entering the field.
If all of these CEOs lamenting about the reduced number of students going into engineering REALLY cared, they would eliminate all H1Bs in their company and lobby Congress to abolish the program in favor of a Green Card program. And they would not outsource their core technology.
THEN students might realize that companies care about that engineering might have a future in this country, and they will re-enter the profession.
Anyone want to place any bets that this will happen?
re: W Does CiscoSo they pay them less--much less. It is addictive, but short sighted. It scares kids from entering the field
Well I am sorry that you worked @ a small company where this things may happen - even there is against the law to underpay - the whole justification of H1 is based that you pay normal salary and you didn't find anybody to do the job in US if I remeber correctly . I can assure you that there is NO difference in pay between H1B visa holders , green card holders or citizens @ a normal company (Microsoft , Cisco , Juniper , Lucent etc).
I think that we'll benefit a lot from talented people comming here with H1B and probably they should be better protected from potential abuses from companies.
Nice post. I'd agree that help to people during economic transitions would be beneficial. My cursory reading of the American Competitive Initiative doesn't reveal it is all that helpful but rather it's more of a political document. The politicians lean on math and science for K-12 and community colleges for displaced workers in the middle of their careers. This doesn't seem good enough to me. Unfortunately, my guess is that the protectionist desires of the displaced labor markets, while very popular politically, isn't going to be acted upon by the politicians. That won't stop the politician from using these emotional issues and real insecurities to obtain votes though.
Also, on your list of issues, some believe that the US current account deficit is equally troublesome or even more troublesome than the Federal Deficit. What's your opinion on that.