Job creation: What Andy Grove giveth, Deng Xiaoping taketh away

Excellent article (“How to Make an American Job Before It’s Too Late”) on job creation by ex-Intel CEO Andy Grove on Bloomberg. He highlights how the US tech industry has been cannibalising itself, potentially cutting America off from future streams of innovation by the pursuit of higher profit margins now. While Silicon Valley remains a hub of innovation, the jobs that spring from that innovation increasingly go to Asia and not to the USA.

The story comes to mind of an engineer who was to be executed by guillotine. The guillotine was stuck, and custom required that if the blade didn’t drop, the condemned man was set free. Before this could happen, the engineer pointed with excitement to a rusty pulley, and told the executioner to apply some oil there. Off went his head.

He argues that it’s not enough to be the engine of innovation while outsourcing the bulk of the jobs (Apple employs 10 contract-workers outside of the US for every US employee), it’s vital that at least part of the scaling occur in the host country.

Consider this passage by Princeton University economist Alan S. Blinder: “The TV manufacturing industry really started here, and at one point employed many workers. But as TV sets became ‘just a commodity,’ their production moved offshore to locations with much lower wages. And nowadays the number of television sets manufactured in the U.S. is zero. A failure? No, a success.”

I disagree. Not only did we lose an untold number of jobs, we broke the chain of experience that is so important in technological evolution. As happened with batteries, abandoning today’s “commodity” manufacturing can lock you out of tomorrow’s emerging industry.

Our fundamental economic beliefs, which we have elevated from a conviction based on observation to an unquestioned truism, is that the free market is the best economic system — the freer, the better. Our generation has seen the decisive victory of free-market principles over planned economies. So we stick with this belief, largely oblivious to emerging evidence that while free markets beat planned economies, there may be room for a modification that is even better.

Such evidence stares at us from the performance of several Asian countries in the past few decades. These countries seem to understand that job creation must be the No. 1 objective of state economic policy. The government plays a strategic role in setting the priorities and arraying the forces and organization necessary to achieve this goal.

The rapid development of the Asian economies provides numerous illustrations. In a thorough study of the industrial development of East Asia, Robert Wade of the London School of Economics found that these economies turned in precedent- shattering economic performances over the 1970s and 1980s in large part because of the effective involvement of the government in targeting the growth of manufacturing industries.

Consider the “Golden Projects,” a series of digital initiatives driven by the Chinese government in the late 1980s and 1990s. Beijing was convinced of the importance of electronic networks — used for transactions, communications and coordination — in enabling job creation, particularly in the less developed parts of the country. Consequently, the Golden Projects enjoyed priority funding. In time, they contributed to the rapid development of China’s information infrastructure and the country’s economic growth.

, , , ,

  • Anon

    I think there is some truth in what he is saying. What you give away today as commodity might be the precursour to tomorrows innovation. And you may lose the skills associated with it, so even if you innovated and wanted to build here, you can’t.

    But I think the last paragraph is wrong. The Chinese made a bet. Suppose it had have been wrong. They would have been screwed. But a market economy allows a lot of people to make bets, even big ones. If a few lose, then it is okay, the system doesn’t collapse. the government should in general avoid getting too innvolved unless there is a natural monpoly or particular social need beyond business.

  • Mack

    If a few lose, then it is okay, the system doesn’t collapse. the government should in general avoid getting too innvolved unless there is a natural monpoly or particular social need beyond business.

    Yeah, I agree. I don’t think there is anything controversial in that. For China, which didn’t have a modern industrial infrastucture, the government acting as a Venture Capitalist and funding a number of bets in the hope that some come good probably make sense.

    In the US, today, their main issue would seem to be – how to keep at least some of the jobs at home? I think he is right in that it needs government intervention. He’s probably got the exact method that will work wrong though..

  • willis

    “But what kind of a society are we going to have if it consists of highly paid people doing high-value-added work — and masses of unemployed? ”

    Nasty brutish and short

  • lamhdearg

    What we need is a good old black death or something like it (hopefully over there)as bird flu did not quite cut it then we “the workers” will fill all the emety job places, I however will not count on that and intend learning cantonese.

  • slappy

    If this is a repeat of what is stated in the linked piece, sorry, but I haven’t yet had the chance to read the piece and in any event, I am fairly certain that I have my own conclusion. And so, the answer here is tariff and taxation. Any good made by a US company or a company related to a US company (as it were) gets slapped with a tariff. I have no problem with US companies employing foreign workers to make goods for sale in foreign countries. However, I do have a problem with increasing executive compensation by shafting the American worker via shipping his job overseas for labor there paid a pittance. And that’s what it boils down to, as there is nothing present in the US economy that would justify the extreme increase in executive compensation over the last few decades (wage stagnation for American workers doesn’t begin to explain it, and in addition to continuing job losses in certain industries over the last two decades, wage stagnation is the order of the day and decade(s)).

    Next is taxation. You earn the money overseas, you keep it overseas, or else that money is taxed to the high heavens on its return. They’ll cry about not being able to reinvest the money back here at home, problem for them is that they aren’t doing that now. And if you haven’t been doing it for the last two decades, forgive me for thinking that you didn’t suddenly have a change of heart or a pang of conscience.

  • Mack

    The problem with a bird flu or similar epidemic over here (the West) rather than in the mercantile East, is that it would also kill demand. You’d just end up with less workers employed in the East. Even bird flu over there, would probably just push wages up slightly in the East.

    What’s needed is probably two things – China needs to let it’s people consume, let wages rise and domestic demand fuel growth for a while. The USA (and other Western companies – it’s reasonably common now in Dublin for tech startups to use Indian or Eastern European labour) should encourage it’s companies for strategic reasons to keep some portion of the jobs at home as they scale..

  • willis

    “The USA (and other Western companies – it’s reasonably common now in Dublin for tech startups to use Indian or Eastern European labour) should encourage it’s companies for strategic reasons to keep some portion of the jobs at home as they scale.”

    Or perhaps our best graduates get on the first plane.

  • Glencoppagagh

    The challenge for managers like Grove is how to make domestic manufacturing profitable. It’s a task requiring a fair amount of ingenuity.
    From a little Ireland perspective, it’s worth bearing in mind that food manufacturing, where the jobs can’t be moved abroad, relies on imported labour.
    I don’t see how the problem can be overcome without a substantial negative adjustment in real wages which would have to be accompanied by a reduction in social welfare payments. It’s hard to see any way around it.

  • Mack

    That’s the olde race to the bottom argument. It won’t work for a number of reasons – prime among them, it would destroy the market for premium products such as iPads, iPhones, iPods that leads to all those Foxconn jobs in the first place.

    Germany and Japan have large domestic manufacturing bases and high wages. They can afford them because they produce innovative products that command premium. The Americans do to, but they outsource the production and hence the jobs to a much greater proportion.

    Given that they state has to pay welfare benefits to the 9% unemployed or so, it might be better if they offered tax breaks to companies on dependent on the proportion of domestic economy jobs they create. They could raise or reduce the tax break available with the unemployment rate to minimise the cost. Failing that they could regulate (stipulate a certain percentage of local jobs per market share and the like) – which would force the Chinese and Indian outsourcers to hire more Americans too. Europe could follow suit. I prefer the first option as it’s less intrusive on the market. Though the second is probably fair game. If you want access to markets you should be willing to employ people.

  • SDLP Man

    An excellent post/article. I can’t help having a sinking feeling about how this is going to affect Ireland North and South in the new few years.

    In NI, with state expenditure retracting and a reliance on an out-dated industrial development policy based on giving grants (bribes) to often-flaky inward investment or already-established inward investment which holds a metaphorical gun to the government’s head for continuing grant assistance (think Bombardier). the greatest illusion would be that low corporate tax rates will somehow be a panacea.
    I think there will be a race to the bottom. Expect further tumbling house prices and massive local deflation.

    In the South, it’s somewhat different. Unlike the North, it’s a very open economy with few natural resources. If Ahern/McCreevy/Department of Finance/Central Bank/Other Banks hadn’t committed national sabotage over the last 15 years, RoI would have had quite good prospects. What we do lack are maasively successful companies providing internationally tradeable goods or services like Finland’s Nokia.

    Starting a new business in internationally tradeable goods and services is the most challenging activity in the world and that is why guys like the late Sir Allen McClay are such heroes.

    In the North we need to radically downsize the civil service and state agency bureaucracy at all levels, especially from Assistant Secretary upwards and put a cap on all salaries paid for out of the public purse. The only guy who has hinted at this is Alex Attwood. It is crazy that our two Vice-Chancellors, for example, are paid more than the Prime Minister,

  • Greenflag

    SDLP man,

    ‘I think there will be a race to the bottom. Expect further tumbling house prices and massive local deflation.’

    Probably . The expected inward investment from outside is not going to happen in NI at least not in any amounts that would have any major impact on the overdependence of NI on public sector spending to maintain current levels of economic activity

    Starting any business never mind one dependent on internationally traded goods and services is the most challenging activity . Those in NI who have the psychological mindset as well as the access to capital along with the energy and ideas are and will be few in numbers probably fewer than ROI or other countries in the EU and the developed world and this is at least partially due to the ‘dominance’ of the State sector in NI . It was possible during the hey day of the NI industrial economy when the large traditional industries of shipbuilding , textiles and engineering were to the fore’ to ‘disguise’ the State’s input into the economy but since the 1970’s and the collapse of communism and the advent of the new ‘global ‘economy – NI’s economic cupboard is laid bare for all to see .

    ‘In the North we need to radically downsize the civil service and state agency bureaucracy at all levels, ‘

    Under present economic conditions all that will achieve in the short to medium term i.e 3 to 5 years out will be a further drop in demand for goods and services and that coming on top of an already deflated property market will serve only to increase unemployment , emigration and put even more pressure on Northern Ireland’s small ‘private sector’ .

    Putting a cap on all public sector salaries seems sensible at this time .

    NI is of course ‘different’ to other regions within the UK in that the local political accomodation which has ‘won’ the peace is a fragile instrument at best . One can imagine that if there was a major economic downturn and unemployment were to double or treble that the local political institution so laboriously built up over a period of almost two generations would disintegrate .

    While I would agree that it’s necessary for NI to move away from such dependence on the state sector for it’s local economy in practice and particularly in today’s economy thats a lot easier said than done .
    There is no instant panacea neither for the North nor is there one for the Republic or the UK . Economic recovery if and when it comes will have to be based on perceived and actual political stability and certainty , foreign direct investment of private capital to provide the kickstart, and local NI entrepreuneurs taking advantage of the above factors to grow the local private sector .

    All of the above will also be dependent on a general recovery in the USA and UK and ROI and as of now the USA is looking like it’s in for a double dip recession while the UK may have cut too much and we in ROI may have done the same .

  • Greenflag

    ‘If a free society cannot help the many who are poor, it cannot save the few who are rich. ‘

    J F Kennedy .

  • Mack

    There’s a good response from Tyler Cowan on Marginal Revolution

    http://www.marginalrevolution.com/marginalrevolution/2010/07/the-andy-grove-essay.html#comments

    1. The current results on trade, wages, and jobs do not support his basic claims. Those results are not definitive, and might be wrong, but so far they’re better than anything Grove serves up. And his entire argument depends on the assertion that trade is a major factor hurting the U.S. job market.

    2. Only he who first shows he understands comparative advantage has license to partially reject it.

    3. There is so much talk about scale, scale, scale. The big exporting success these days is Germany, which has less “scale” than does the United States. What is the evidence that lack of scale is the problem, rather than a symptom, even assuming it is a generalizable symptom? I don’t see it.

    4. He doesn’t once mention that we might get useful ideas from China and other countries, or that their prosperity is good for America.

    5. I would like him to state how Asians enter into his social welfare function.

    6. He calls for a tax on Chinese imports; at best, given the logic of his argument, this would imply a tax only on the increasing returns industries, not a general tax. He doesn’t seem to realize this.

    7. Is he assuming that the whole world works like his sector — semiconductors — does?

    8. An innovation shortfall may well be a serious problem today, as every reader of Michael Mandel should know. But what are Grove’s solutions? The government tries to pick winners, on a massive scale with public funds, and we start a big trade war against China? The evidence for these proposals is one citation to Robert Wade. Sorry, I’m not convinced. I heard that in the 1980s except China was Japan. We ignored that advice in the 80s and in the 90s the job market was fine. Grove is writing from a time warp in which these debates never happened or never were settled or never something — I don’t know what.

    I think Michael Grove’s solutions were probably over the top (trade war with China), but relatively unintrusively working to keep some jobs (and hence skills) in the US is a good idea. I don’t think you have to have the government pick winners as Tyler Cowan suggests, just encourage each company to keep slightly more jobs domestically when there is high unemployment..

  • Glencoppagagh

    “Germany and Japan have large domestic manufacturing bases and high wages…”
    Until such times as the Chinese learn how to make the technically advanced products that only the Germans and Japanese manufacture at present. After that it’s reliance on the brand name.
    At the same time I’m bewildered that pencils (high-quality pencils admittedly) continue to be made in Germany.

  • Greenflag

    mack ,

    ‘just encourage each company to keep slightly more jobs domestically when there is high unemployment’

    Why would they do that ? Have they ever done that anywhere ?

    Even during the British Industrial Revolution jobs were ‘exported ‘ as well as millions of people ?In today’s western world there is nowhere to send the millions of unemployed or underemployed . The “agricultural ‘ workforce has been hollowed out to but a small percentage of total population -and now the ‘industrial ‘ and manufacturing element is at maybe 10% and falling . Next up the public sector ‘middle’ and lower income tiers and their private sector equivalents -the pattern has already been laid down in the USA .

    The USA lost 8 million jobs in the past two years . They need to create some 285,000 jobs a month for the next five years to get back to the economy of 2000 AD . On what basis can any American political party pin such hopes ? There is none . The republican policy appears to be the creation of a new ‘slave ‘ class who will exist on ‘food stamps ‘ (already some 35 million ) and titbits of occassional ‘free market’ minimum wages jobs as recessions come and go over the next decade or more .

    The system in short is ‘broken ‘ When you look at the deteriorating infrastructure -the growth of the mindless right Tea Party and the failure of the political status quo to come up with the policies that will provide hope for that 60 to 70% of the USA population for whom there are no answers to the current economic predicament .

    And what holds for the USA is replicated for other western countries in particular the UK and Ireland .

    Our policymakers .a.k.a emperors are nude of raiment and mind 🙁

  • Mack

    Greenflag –

    ‘just encourage each company to keep slightly more jobs domestically when there is high unemployment’

    Why would they do that ? Have they ever done that anywhere ?

    Almost every country, certainly Ireland, and even the United States have an Industrial Development Strategy. Tax breaks are targetted, subsidies paid, regulations loosened or tightened, companies flirted with, sometimes even the solvency of the country is risked to bail out whole industries!!

    The issue here is whether retaining technical jobs & skills should form a greater part of that strategy than it currently does.

  • Mack

    Thought this was worth a separate reply

    Even during the British Industrial Revolution jobs were ‘exported ‘ as well as millions of people ?In today’s western world there is nowhere to send the millions of unemployed or underemployed . The “agricultural ‘ workforce has been hollowed out to but a small percentage of total population -and now the ‘industrial ‘ and manufacturing element is at maybe 10% and falling . Next up the public sector ‘middle’ and lower income tiers and their private sector equivalents -the pattern has already been laid down in the USA .

    The agricultural workforce has fallen because higher yields (orders of magnitude higher) can be delivered by a fraction of the workforce. We could all still have the food supply medieval serfs today and sit around and do nothing. Worse, we could go back to land and do the backbreaking work of serfs for ourselves. But we don’t – we produce other, more useful, stuff instead.

    Manufacturing is being replaced by services. We either have greater mechanisation (a la Germany / Japan other Western nations) or outsourcing to cheaper economies. But sophisticated modern products create new service sector jobs. E.g. If one set of workers build a computer – that then creates service economy jobs for programmers developing software to run on that computer (the bulk of software development is in the bespoke service industry or in the customisation of off-the-self products), it creates service industry jobs for graphic artists, for search-engine-optimisation ‘experts’, social media ‘experts’ and other marketers.

    Service industry jobs aren’t necessarily inferior to manufacturing jobs. In fact very often the opposite. It doesn’t necessarily make sense for every citizen to purchase outright their own version of a product, especially as they get more sophisticated (require expert users) – in that case it very often makes more sense for citizens to purchase the output of a product from an expert service sector worker. That is, in a modern economy it often makes more sense for consumers to purchase a service than a product. This is in fact what has been happening. We don’t have our own data centres in our backyards (which would reduce the demand for data centres relative to products like cars which everyone does tend to own) . We use the services provided by Google, Microsoft, Amazon, Facebook, Yahoo or whoever instead.

    The move from manufacturing to services is inevitable as the economy becomes more advanced and sophisticated. It enables resources to be used more efficiently and citizens to consume much more of the fruits of others labours for less work themselves.

  • Mack

    Glencoppagh

    Until such times as the Chinese learn how to make the technically advanced products that only the Germans and Japanese manufacture at present.

    It’s unlikely they’ll be able to unleash a similar level of innovation without

    1/ A sophisticated domestic market for such products (i.e. until their consumers have been unleaashed which requires higher Chinese wages).

    2/ Paying something approaching German or Japanese wages to their would be innovators. The poorly educated factory workers of the new Chinese cities today, won’t fuel that type of endeavor.

  • Greenflag

    mack ,

    ‘The issue here is whether retaining technical jobs & skills should form a greater part of that strategy than it currently does.’

    While that may be the issue and concern Andy Grove re the USA economy or indeed off his Irish or UK equivalents the real issue is that there are some 200 countries on the planet many of them now bound into regional trading blocs with the overall emphasis around the world on ‘free trade ‘ ‘free markets’ at least in theory . If we had ‘free trade’ in practice the Japanese would be food dependent (at least for rice ) on the USA and most African countries could forget about becoming self sufficient in food production given USA and EU economies of scale .

    The assumption – your assumption seems to be that ever more growth and ever more technological progress and innovation will by themselves create both higher rates of employment everywhere and ever higher levels of skilled employment .

    I guess it’s a matter of faith . While I do see continuing technological progress I also see continuing emisseration for large numbers in the developed west and an increasing economic divide between the both the haves and have nots world wide but also an increasing gap within developed societies at least in the USA /UK/Ireland and the other anglophone societies .

    I’m aware of the stages of economic growth a la Rostow among others . I’m also aware that the economic system while a determinant of our politics is in itself amoral – the market does not care -its ethic is in large measure what works or what can be got away with both within and between nations .

    What I’m suggesting is that our present ‘politics’ both within developed countries and between regional groupings of developed countries may be swept aside if the increasing gaps within developed societies are seen to be increasing even more and the politicians fail.

  • Greenflag

    Mack ,

    Thanks for the market economy 101 – superflous for me I’m afriad but you may have wised up others 😉

    You can assume that your comments and content above are not unknown to me . There is nothing there that is new -it’s conformation of what has already happened and what will most likely happen as this particular world economic crisis either worsens or gradually eases .

    During the first Industrial Revolution millions of people were forced off the land -from the commons clearances in England and Wales to the Highland clearance in Scotland . The commons clearances which took part in a non democratic age removed unsightly peasant and farm worker cottages from the land and thus allowed the new wealthy and the older aristocracy to gaze out on beautiful vistas of manicured estates unemcumbered by the sight of the hovels and pig styes of the agricultural labour force .

    In Scotland the crofters as late as the 1850’s were being forced off their traditional lands and packed off to Nova Scotia and elsewhere . The Irish famine provided a huge opportunity for another mass removal of unwanted and potentially violent labour .

    I mention the above examples not to discuss them but to point out the obvious comparisons with today . In the USA in Michigan formerly a prosperous manufacturing region of the USA official unemployment is circa 15% to 20% -real unemployment which takes into account those who have dropped out of the labour force simply because there are no jobs is probably close to 35 or 40% i.e at levels which can be found in parts of developing Africa .

    The 20 to 30 million Americans will not be employed by the downstream add ons of the IT revolution . And when their welfare benefits run out that will be another 20 million on food stamps . This at the same time as Bank of America executives and Goldman Sachs reap ever greater bonuses for ‘market ‘ performance .

    In short IMO it can’t last . Already the pips are squeaking . The troops are being pulled back from Iraq and despite assurances re Afghanistan the USA will be forced to quit that ill considered adventure . Where will the jobs be for the demobbed veterans in an America where every major city and urban centre is cutting costs , jobs , teachers , police and other services ???

    The outward spiral economy is turning in on itself and as it continually declines in circumference the political system will be squeezed to breaking point . Once it gives anything can happen and if it does the USA will not be mindful of anywhere else bar it’s own immediate interest and ditto for the other major economic powers .

  • Mack

    I don’t make any assumptions about higher rates of employment everywhere. Unemployment will always be a problem one way or the other.

    Free trade is a different beast to free markets and should be treated as such. The key thing to remember there is comparative advantage. Imports have to be paid for by exports (or borrowings). What a country should produce is what it is best at producing internally (regardless of what other countries are doing) and then trading that (if it can). So if an African country is better a producing agricultural products than anything else – that is what they should expend their resources producing. They should sell any surplus on the world market for whatever price they can get (this is profit remember) which they can use to purchase whatever imports they chose. Just because another nation can farm more efficiently won’t undercut they’re farmers at home as foreign farm produce has to be paid for somehow. (Obviously dumping food into local markets will undercut farmers, in this simple example, as it doesn’t have to be paid for.)

    The wikipedia definition of comparative definition is quite good.

    http://en.wikipedia.org/wiki/Comparative_advantage

    In economics, the law of comparative advantage refers to the ability of a party (an individual, a firm, or a country) to produce a particular good or service at a lower opportunity cost than another party. It is the ability to produce a product with the highest relative efficiency given all the other products that could be produced.

    It’s not the lower cost of production of goods in China that matters but the lower opportunity cost of pursuing the production of particular goods and services in Ireland / UK / USA that matters. (Of course China can still force us out of export markets if we’re unfortunate enough to share the same comparative advantage/s as them).

  • Mack

    Well, I don’t mean to be patronising. Your original comment didn’t attach an emotion (fear, annoyance, historical interest or whatever) so readers could easily interpret what you were saying as something to be avoided. My guess is most would.

    The rise of services over manufacturing is a subject of regular complaint. Just as the rise of manufacturing itself was, and no doubt the hunter-gatherers bemoaned the pastoralists who bemoaned the farmers..

  • Mack

    By the way the employment rate in the UK stands at a very impressive 72%

    http://www.statistics.gov.uk/cci/nugget.asp?id=12

    It is 60% in Ireland http://www.cso.ie/releasespublications/documents/labour_market/current/qnhs.pdf

    By the way, that is still a good 5% higher than it was 15 years ago. Which was also probably an all-time high.

    http://www.cso.ie/newsevents/pressrelease_measuringirelandsprogress2005.htm

    It is 58.5% in the USA, which would put it somewhere around 1997 Celtic Tiger Ireland. Not yet the depression of your fears!

    http://www.hrmguide.net/usa/employment_situation.htm

    Although this is a big drop from the 72% or so that it has been in recent years (Which would suggest to me the notion that you can no longer have high employment in the USA is wrong).

    http://en.wikipedia.org/wiki/Employment-to-population_ratio

    But still better than almost every year between 1968-1980

    http://www.bls.gov/opub/mlr/1981/02/art4full.pdf

  • Greenflag

    mack

    ‘just as the rise of manufacturing itself was, and no doubt the hunter-gatherers bemoaned the pastoralists who bemoaned the farmers..’

    Of course but those transitions took place in non democratic societies and when the world was not made up of 200 or so national states or with 7 billion mouths trying to be fed .

    The statistics lie . 15 years ago in Ireland the number of under 18s would have been greater as a percentage of the total than today and ditto for the USA at least among the non immigrant population .

    I did’nt quite get the meaning of your first paragraph in your 10.32 pm post but I do accept your non patronising intentions .

    I guess you have more faith in the ‘system ‘ and it’s inherent flexibility to reform itself and come up with a new departure than I do . And believe me I’ve looked at and read all the optimistic economic soothsayers as well as the harbingers of doomsday .

    Simply put the entire western and developing world have climbed or been forced upon a new Titanic and none of the senior officers on deck quite trusts his colleagues and moreover while they spend all their waking hours watching each other none are looking for icebergs .

    They are all guessing and hoping for the best but there’s not a one of the dismal scientists or politicians who knows more how the economic future will evolve from this point at least . Those who profess to see light at the end of the tunnel are hoping that they’ll have retired before the economic and political lights go out .

  • Mack

    Greenflag –

    The stats don’t lie. They’re for working age populations. If anything the much greater number of kids going to college (working age) should push them down today relative to 15 years ago.

    There is still a lot of pain – the employment level has fallen 7% from peak in Ireland and a whopping 13.5% in the USA. In the UK it is still respectable and has only fallen 3 or 4% (and Gordon Brown lost????). Most of the ‘double-dippers’ reckon the US economy will continue to grow – just not fast enough to make the required dent in the unemployment rate this year..

  • Mack

    Slappy –

    Sorry about the delay in approving your comment it was marked as spam.

    Yep, the linked article proposed tariffs on American firms using foreign labour. This would mean that foreign firms could sell products cheaper than American firms in American markets. It would mean that if American firms moved jobs back to avoid the tariff they’d be facing higher costs domestically and would be out-competed in their export markets by firms not facing tariffs.

    A tax break or some other kind of subsidy for keeping a proportion of jobs in the domestic market would likely avoid this issue. American products would remain cost competitive internationally.

    Re – taxation – that is the law currently AFAIK. I went to see David McWilliams Outsiders. He says there is €3/4 trillion in the IFSC of multinational profits that can’t be repatriated because it will be taxed. He reckons this is our oil. That we should approach the firms to set up local partnerships (invest new Irish firms) and then allow the US MNCs to repatriate dividend income from those firms who would hopefully also grow their investment.

  • Mack

    Although this graph from Constantin Gurdgiev is rather more sobering. Full time employment is down from 65% in Ireland to just over 50%. Obviously a lot of workers on very reduced hours.

    http://1.bp.blogspot.com/_2TONRBOd21o/TDJKw44lYPI/AAAAAAAACp0/05vhKG_RlIA/s1600/Screen+shot+2010-07-05+at+22.09.53.png

  • Greenflag

    mack ,

    ‘The stats don’t lie.’

    I’m afraid I agree with Churchill lies damned lies and statistics . They do lie mostly by omission but sometimes by political intent . Everybody bar the headless cat population knows that US unemployment numbers are understated by as much as 7% ditto for the Consumer Price index and inflation figures . It suits both main political parties however to maintain the falsehood as to do other would be to risk their political futures .

    I understand that the number of USA college graduates finding jobs this year is the lowest on record and next year looks no better .

    In short Mack what the ‘numbers’ fraternities are about is the massaging of both ‘hope’ and ‘hype to put some gloss on woeful numbers . When you see an RTE news report that mentions the creation of 24 jobs in ballyslapadasha muckerry when Obama waxes lyrical over the creation of 1,000 ‘Green ‘jobs in Illinois as somehow indicative of economic corners being turned etc etc a certain ‘rolling of the eyes’ is required . Upcoming elections have to be prepared for -best foot forward and all that .

    Sorry mack -doesn’t wash with GF .