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Why Intel’s Andy Grove is right (and so completely wrong) about US Jobs

Andy Grove, the businessman and entrepreneur who built Intel into what it is today, has written a thought provoking opinion piece for Bloomberg about making (or perhaps re-making) jobs in America where he argued that the USA should levy an extra tax on the use of offshore labor and if this results in a trade war, then America should fight to win it. What makes the article all the more interesting and perplexing (also noted in the Wall Street Journal by James Altucher) was how Andy could be right about so many things and still manage to develop a completely wrong conclusion. Here is what Andy is right about and what he also fails to mention:

• The scaling process (where new companies buildup factories and manpower) is no longer happening in the USA as its being done in Asia and often by subcontractors. However, Andy failed to note just how expensive, bureaucratic and difficult the government in the USA and especially places like California, can make things when it comes to creating new jobs.
• Without scaling, the USA looses jobs, its hold on technologies and its capacity to innovate. However, Andy failed to note the increasing difficulty that foreign born brainpower is facing if they want to work in the USA as its immigrants who have probably contributed the most to this innovation – especially in the area of technology.
• The USA has become wildly inefficient at creating jobs for American tech workers and Andy noted that the cost of creating jobs by Silicon Valley companies has increased from a few thousand dollars to US$100,000 today. However, Andy failed to mention the cost of doing in business in a place located in a state with an inept government, high taxes, high cost of living and a poor education system.
• There is a general undervaluing of manufacturing jobs in the USA and so long as “knowledge work” stays in the USA, no one seemed to care what happens to factory jobs. However, Andy failed to mention that many states in the South such as Texas and North Carolina (places where they also have right to work laws, less regulations and lower taxes) have managed to lure global manufacturing firms like Toyota into creating 100,000s of jobs (and for that matter, create new technology companies like Dell).
• Asian countries understand that job creation must be the number one objective of state economic policies and governments there play a central role in aligning the necessary forces to achieve this goal. However, Andy failed to mention that nearly all of the Asian countries that have been successful in doing this (Singapore, South Korea and Taiwan comes to mind) were not true democracies at the time they laid the ground work for this and do not have Western style welfare and transfer payment schemes in place that need to be funded.
• Abandoning today’s “commodity” manufacturing (such as television sets) can lock you out of tomorrow’s emerging industries and break the chain of experience that is critical in the evolution of technology. However, Andy again failed to mention that many of the developers of these new technologies are foreign born and are increasingly locked out of the USA. 
• The USA needs to rebuild its industrial commons though financial incentives. However, Andy does not propose incentives to encourage production at home but instead he proposed punishment via an extra tax what is produced by offshore labor.

Taking the above into consideration, we want to ask what you our readers think: Is Andy right about what has gone wrong when it comes to the creation of American jobs but just wrong with his prescriptions? What can be done to restart the American job engine?

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