Andy Grove is the personification of an immigrant who came to America as a young man, took advantage of the opportunities here, and made good - really, really good.
Grove immigrated to the U.S., escaping the 1956 Hungarian Revolution, when he was 20 years old. He earned both a BS and PhD in chemical engineering and became only the third employee at the newly-formed Intel Corporation. He took over as the company's president in 1979, its CEO in 1987, and its Chairman and CEO in 1997.
This is a man who knows whereof he speaks when it comes to high tech, company start-up, and growing the company into a multi-national corporation.
Grove has written an article for Bloomberg news that everyone at Daily Kos should read, How to Make an American Job Before It's Too Late. For that matter, everyone in the country who is concerned with where the Jobs, Jobs, Jobs are going to come from - especially those in a leadership position, from mayors to the President of the United States - should read, ponder and discuss this article.
In this article, Grove takes on the conventional wisdom that the key to job creation is encouraging start-ups, which he describes as a myth.
New York Times columnist Thomas L. Friedman recently encapsulated this view in a piece called "Start-Ups, Not Bailouts." His argument: Let tired old companies that do commodity manufacturing die if they have to. If Washington really wants to create jobs, he wrote, it should back startups.
Grove knows quite a bit about starting a company from scratch and how few employees that actually requires. He states flatly that Friedman is wrong, and goes on to discuss the steps required to take a brilliant idea from prototype to mass production. This process is called "scaling," and Grove makes the case that this step is where job creation happens.
This is the phase where companies....work out design details, figure out how to make things affordably, build factories, and hire people by the thousands. Scaling is hard work but necessary to make innovation matter.
The scaling process is no longer happening in the U.S. And as long as that’s the case, plowing capital into young companies that build their factories elsewhere will continue to yield a bad return in terms of American jobs.
Grove gives a short summary of how Intel managed to go from start-up to mega-corporation and gives examples of how other companies, some successful and some not, went through the same process. He also explains how many of them took their manufacturing business to Asia, believing that the cheaper the products could be assembled, the happier their shareholders would be and the more profitable the company would become.
But Grove, as well as the leaders of some of the other companies that had found success and profitability in this approach, began to realize another consequence - that the U.S. job machine began "sputtering."
Today, manufacturing employment in the U.S. computer industry is about 166,000 -- lower than it was before the first personal computer, the MITS Altair 2800, was assembled in 1975. Meanwhile, a very effective computer-manufacturing industry has emerged in Asia, employing about 1.5 million workers -- factory employees, engineers and managers.
Grove then carries these consequences to their logical conclusion, something Thomas Friedman and other purveyors of the conventional wisdom have never bothered to do.
You could say, as many do, that shipping jobs overseas is no big deal because the high-value work -- and much of the profits -- remain in the U.S. That may well be so. 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?
Since the early days of Silicon Valley, the money invested in companies has increased dramatically, only to produce fewer jobs. Simply put, the U.S. has become wildly inefficient at creating American tech jobs.
Describing this outsourcing mindset as a "tragic mistake," Grove gives examples of other industries, from alternative energy to advanced battery technology, that are making the same decisions, with the same unfortunate results for the U.S. job market.
But Grove doesn't stop with a cursory explanation of the mistake of taking manufacturing of American ideas offshore. He goes on to disagree vehemently with those who consider such examples of "free enterprise" to be in the least advantageous to the U.S. economy in the long run.
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.
The answer to the dilemma we have made for ourselves by unquestioning belief in "the free market is the best economic system, the freer the better" is also explained. Very simply, it is in seeing the need for the country to have an industrial policy that has as its core a different dynamic than we have ever tried before. This dynamic is being used by other countries that are currently enjoying job growth at the expense of our domestic workforce.
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 [and that] the government plays a strategic role in setting the priorities and arraying the forces and organization necessary to achieve this goal.
There is much more to this article. It is a must-read for anyone who has been so brainwashed by current American business practices, as well as U.S. economic policies as they have evolved over the past half-century, that it has become impossible to think of another way forward. It is full of ideas that defy conventional wisdom and actually elevate the American worker to the status he deserves, rather than buying into the "he's lazy" or "he's going to have to compete with overseas workers" meme. Not to be missed.