Neutron Bomb

http://www.cringely.com/2009/08/neutron-bomb/

by johns • 17 years ago

49 35 17 years ago

tjic2• 17 years ago

IBM is shipping jobs overseas because

... wait for it ...

(1) the complete cost of employing an American, including taxes, regulations, compliance, etc., is much higher than employing an Indian national.

That's it.

That's the complete list.

Question: when we raise taxes by 40% [ http://business.theatlantic.com/2009/08/ya_know_plus_or_minu... ] to close the budget gap, and start taxing employers even more for universal health coverage, and do X and Y and Z over the next 10 years ... will this make American workers more or less affordable as compared with off-shore workers?

dreish5• 17 years ago

This is either misleading or just confused. India funds roughly 25% of health care costs through the government, and has lower employment costs, yet you imply that if we were to incrementally approach their health-care system, the difference in employment costs would widen.

Edit: incidentally I agree with your point that IBM's issue is as simple as lower employment costs, but I'd suggest it's lower because Indians have a lower overall cost of living and lower standard of living, and the best students generally want to move to a country where they aren't climbing over mountains of trash and starving people all the time. I think we ought to let more of them do so, but in the meantime, of course companies are going to move to where the cheaper resources are.

randallsquared3• 17 years ago

Surely you cannot fail to have noticed how much Americans currently spend on health care, and how moving from private industry to state industry consistently increases the amount spent (at least in the US!)? Now, a case could be made that health care is an exception, largely because it's so heavily regulated already as to be effectively a poorly-run state industry with private profits. However, taking any other country's efficient or well-run government program and trying to build one like it in the US is probably doomed to failure. The US government has very bad incentives for "efficient" and "well-run".

electromagnetic2• 17 years ago

They do indeed have a lower cost of living, roughly 1/5 of an Americans, and almost 1/8th of a British person.

When Indians all expect to have 13000BTU air conditioners in their houses, all expect to have luxury SUV's, high-speed broadband with $2,000 laptops and $4,000 desktops and maybe a few cheaper ones for the kids (if they don't play video games) and maybe a few games consoles (because all kids play some sort of video games), and don't forget the $600 cell phones with $3000 contracts . . .

Of course their cost of living is cheaper, people there actually walk to their work. I've never seen a person in economic problems walk to their work in a western country, despite it saving them almost two hours wages a day.

tjic2• 17 years ago

> Companies like IBM that take this position [i.e. buying the most affordable engineering talent they can, even if it's off shore ] are hurting America.

B.S.

If you can purchase one apple for $1 or an identical apple for $10, failing to buy the $10 apple is (a) smart; (b) maximizes societal utility.

It's spending money uselessly that destroys valu.

swombat• 17 years ago

I think Cringely is talking about a kind of vicious cycle where since you buy your apples for 1/10th the price, you fire 90% of your workforce. If everyone does this, and if there aren't new jobs to take in that redundant workforce, you could end up in a death spiral where you find that even though your apples are dirt cheap, there's no one left to buy your expensive apple tarts. So you drive yourself out of business by reducing your costs.

Obviously this can only happen if the assumption holds, that there are no new jobs to absorb the redundancies, and that this is happening across the economy.

That said, a case could be made that these assumptions are correct - what's your argument against them?

andreyf• 17 years ago

That said, a case could be made that these assumptions are correct - what's your argument against them?

There are tons of new jobs, and a whole new middle class - in India and China. Corporations do not share your nationalistic interests - IBM doesn't owe America anything. If Germany were to have won WW2, IBM would now be a great German company. As America's broken system of government slowly bleeds this nation to death, IBM will have no remorse over becoming a company focused on India/China.

azanar• 17 years ago

Buying apples for 1/10 the price isn't the part of the cycle that is most concerning. Nor is the part about firing 9/10 of the workforce -- although that assumes the company is operating at near 0% margins, and that the employment needs of the company scale linearly with total sales in dollars. Neither of these two are that common.

The thing that concerns me most is the lack of new jobs that absorb the redundant workforce. However, my concerns are probably somewhat unorthodox in that I think this represents a number of ideological problems rooted in both the employees and the employers.

The best way to encompass all of these is by the following truism: you are only capable of one specialization, give or take, in a given lifetime. And what we've been defining as specialization has been narrowing as rapidly as specializations have been getting deeper and more involved.

To play off of the analogy above, our society would look at these people, assert that it has no further need for "apple preparation specialists," and discard this class of people into the bin of history. At best, they go through retraining in some new specialization, but that takes a long time, and they are considered entry-level in their new specialization at the end.

It is this mentality where you get the laundry-list of "key proficiencies." The unwritten assumption is that all jobs are still a matter of rote memorization and repeated execution of steps, and as the years of experience with a particular technology accrue, the unconscious memorization of these steps improves.

The problem with this approach is that it is completely wrong. We do not account for people's ability to deductively reason, and we therefore do not account for the parts of the new skillset they'll know without being told by someone. The tragedy is that people believe they can't: employers, recruiters, and even the employees. This last part is the most tragic. The rank-and-file employees who believe this philosophy are so common that I become animatedly excited when I meet one who doesn't.

So, yeah. I think it goes deeper than just saying there aren't any jobs; we should really be deeply analyzing what assumptions about the nature of skill and work ethic we've been falsely believing all this time. So far, most of the analysis I've seen has just been repetition of these assumptions, with calls that we psuh forward initatives that work around them.

astine• 17 years ago

Man, those are some cheap apples... oh, you mean fruit.

biohacker423• 17 years ago

This is a fascinating view into how Bob thinks. This article, right up until the conclusion is excellent.

It lays out in great detail how the ever rising health care costs are hurting companies. It also in detail explains how the car companies were only focused on the short term and that ended up bankrupting them. But IBM takes the long view and that's why they are still in business.

And Bob concludes that the problem is short tern thinking? That took me by surprise since it's almost the exact opposite of the case he just made.

Bob thinks this is all because of focus on short term profits and we somehow need to stop that. But how?

Isn't it obvious that instead we should make the US worker more competitive?

For labor intensive industries that may only go so far when people in the developing world work for A LOT less. But not all industries are labor intensive. And the standard of living in China is rising fairly fast. A bit slower but still rising in India.

Isn't reducing the costs of health care and pensions the most obvious answer to how to make US workers more competitive?

Exactly how to do it for health care is a political topic, so lets not discuss that on HN. But even Bob mentioned severing the pension from the company.

dkarl• 17 years ago

He's saying that what's good for IBM -- a long-term plan to outsource work and replace Americans with foreign workers -- is bad for the US and bad for US workers. So the problem for companies is short-term thinking, and the problem for US workers is that intelligent long-term corporate planning leads to some combination of outsourcing and importing foreign workers.

biohacker423• 17 years ago

OK that makes more sense then what I thought he meant. But it doesn't make that much sense when you consider that the ultimate end is economic collapse.

If corporations just put up with what ever conditions we force on them, in the short therm great, but in the long term we're screwed.

fnid• 17 years ago

Here is the problem with this debate. On one hand, people say, "We need more H1B visas to handle the engineering workload in the U.S. There aren't enough skilled americans." They also say, "We must make engineering more attractive to Americans. Stop focusing on sports, et al and focus on creating brilliant minds."

Similarly, groups argue that outsourcing jobs is acceptable, another that it is not.

The problem is that we cannot have both. You cannot convince students in america to invest 6 figures into their education if they know those jobs will be filled with immigrants or shipped overseas. If there is no opportunity for jobs or an income that can absorb the investment in the education, then students will not enter that profession.

Technology employers in America argue that limiting H1B visas is stiffling creativity and the ability of companies in the U.S. to innovate. If this is the case, rather than paying individuals from other countries less to do the same job, pay locals more to do the same job. Give them more of an incentive to enter the work force. Value the work appropriately to the difficulty and investment level needed to complete the task. Being an engineer is difficult. Not everyone in the world, can, or wants to do it. There has to be an incentive to perform these difficult tasks.

The reason that we need to curb H1B visas and the outsourcing of jobs is precisely for the same reasons that the employers say we need to increase them. We need to curb them because we need america to remain more competitive.

There is a difference between America remaining more competitive and American corporations remaining more competitive. The former means american citizens and our nation remains strong. The later does not. If, for example, we continue to increase H1B's and off-shoring of technical work, then the logical conclusion is that there are no longer any native born americans to fill these positions. If this is the case, then America -- the nation -- is vulnerable to those countries with citizens and patriots to foreign entities who do have those skills.

This will leave America at an extreme disadvantage in the long run.

If engineers, who, arguably produce much more value to society than athletes or even CEOs were to earn as much money, the professions would be more popular. Instead, we have individuals who could make lasting changes to the benefit of our infrastructure, our technology, and our culture are entering other fields because they are more lucrative and are more appreciated by our society.

If we continue to outsource the jobs, it is a big sign that those who perform these tasks are not really appreciated. Engineers are not appreciated in America. They are appreciated in other countries. Compare our culture to Germany. Germany appreciates technology savants and the result is evident in their current account. Relatively speaking, they are the richest nation in the world.

And America is the poorest.

roc2• 17 years ago

America doesn't need native-born Americans to be competitive. Our entire history has been contingent on the labor of immigrants. Surely any American will do.

The failure of the H1B program is that we bring these engineers to America, shackle them to a single employer (relying on that employer's good nature alone to not take advantage of them) and --most egregiously-- after a few years we send them home.

The H1B program should be a simple 'green cards for technical experts' program. Bring in as many technical people as you can reasonably employ: but ffs keep them.

Neutron Bomb

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