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PuterGeek
One last point, higher education is failing miserably. The costs have ...
PuterGeek
You have some valid points Bob but I think you are overlooking a bigger ...
Why can't the U.S. be more like IBM?
By Bob Pavey
10/10/2012 8:04 AM EDT
I have been in the investment and high tech job creation business
for almost 50 years, and I have learned a very fundamental lesson:
When someone tells me they can solve my problem, I don’t believe him
until he can tell me what caused my problem. Neither of our
political parties can do this and, thus, their solutions in this
presidential election season are clearly not credible.
So what is the fundamental cause of continued high unemployment? It is because we are being out-competed by other countries. They are winning and we are losing. Their employment in productive jobs is growing while ours barely grows at all.
Why is this?
We live in an increasingly interconnected world. We cannot change this or stop it; no one can—certainly not Republicans or Democrats. We now have a lot more potential customers but a lot more real competitors, too. And the rules are the same as the rules of competition between companies in the U.S…the rules that I have lived with as a venture capitalist for 50 years. When the winners get too big and too fat, more nimble competitors come along and knock them off. In our domestic economy this is a good thing, even though it means that people lose their jobs all the time. It’s called creative destruction, because we create more jobs than we destroy.
Big Blue lessons
This is how we grow and how we create more jobs through the creation of many new companies (a few even backed by my firm). Some big companies like IBM get knocked off their game (by companies like Apple) but become more creative and find new ways to compete. Others like Univac (a big competitor of IBM in the computer mainframe days) lose out.
In the competition between countries we need to be IBM and not Univac, but like IBM we have to be willing to change. If we simply want things to be the way they were in the “good old days” we are destined to have high unemployment.
How do we be more like IBM? The answer is simple, but hard to execute: we have to find new ways to become competitive. This means:
Yet, in the face of this, what are both political parties talking about?
Next: Political paralysis
So what is the fundamental cause of continued high unemployment? It is because we are being out-competed by other countries. They are winning and we are losing. Their employment in productive jobs is growing while ours barely grows at all.
Why is this?
We live in an increasingly interconnected world. We cannot change this or stop it; no one can—certainly not Republicans or Democrats. We now have a lot more potential customers but a lot more real competitors, too. And the rules are the same as the rules of competition between companies in the U.S…the rules that I have lived with as a venture capitalist for 50 years. When the winners get too big and too fat, more nimble competitors come along and knock them off. In our domestic economy this is a good thing, even though it means that people lose their jobs all the time. It’s called creative destruction, because we create more jobs than we destroy.
Big Blue lessons
This is how we grow and how we create more jobs through the creation of many new companies (a few even backed by my firm). Some big companies like IBM get knocked off their game (by companies like Apple) but become more creative and find new ways to compete. Others like Univac (a big competitor of IBM in the computer mainframe days) lose out.
In the competition between countries we need to be IBM and not Univac, but like IBM we have to be willing to change. If we simply want things to be the way they were in the “good old days” we are destined to have high unemployment.
How do we be more like IBM? The answer is simple, but hard to execute: we have to find new ways to become competitive. This means:
- Our citizens must be as well or better educated than our competitors’ citizens.
- We have to reinvigorate what has been a core U.S. comparative advantage: our capacity to innova
- We have to be more productive than our competitors – this requires continuing to invest in infrastructure which we have failed to do enough of.
- And we have to be willing to work as hard as our competitors and accept the same pay for producing the same output.
Yet, in the face of this, what are both political parties talking about?
Next: Political paralysis
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vapats
10/16/2012 7:34 AM EDT
"so people with capital in the U.S. will invest"
Q: So, why doesn't Warren Buffet's secretary have any capital to invest?
A: because she pays a higher tax rate?
Get real...
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PuterGeek
10/18/2012 6:33 PM EDT
You have some valid points Bob but I think you are overlooking a bigger problem--most executives and corporations have no interest in anything more than a year or two into the future. But given how they have structured their contracts, what would we expect?
Top executive compensation is not only obscenely excessive, it is based mostly on short term performance and has little downside when they fail to perform. We've all read the stories where the CEO tanked the company or otherwise screwed up but still walked away with millions (HP, Home Depot, etc.). The millions wasted aren't available for R&D, employee retention or capital expenditure.
Of course Wall Street would punish companies 'wasting' money on such frivolous 'overhead' with no immediate payback (i.e., hurt the quarterly numbers). Unfortunately Wall Street financial firms now 'own' almost everything thru the huge sums in mutual funds, pension and retirement account they 'manage'. I say 'manage' because the only thing they seem capable of is insuring they get enough thru investment expenses to keep buying off the politicians. While they tell the public to 'buy and hold for the long term' their computers autonomously churning sub-second trades accounting for over half the daily trading volume. Fortunately the new NYSE data center conveniently has room to co-locate the computers to keep the trading delays to a few milliseconds.
With their focus on the immediate, is it any surprise their 'employee' politicians aren't interested in infrastructure investments, education, global warming or clean energy? The only reason they support the military is the huge redistribution of taxes from the 99% into corporate revenues. And they support privatizing Social Security, converting Medicare and education to vouchers so they can 'invest' the only big source of funds they don't already control.
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PuterGeek
10/18/2012 6:34 PM EDT
One last point, higher education is failing miserably. The costs have skyrocketed so far above the inflation rate it is virtually impossible to graduate without enormous debt. And engineering students without a master's degree end up working tech support at best. Here again we see the influence of Wall Street. They 'donate' to the universities, sit on the university boards and own the companies providing the student loans. Is it any surprise student loans cannot be discharged in bankruptcy and are passed along to the your estate after your death?
The unfortunate truth is we have all become indentured servants to the very few at the very top. The 0.1% own us in everything short of having a clear title. They have kept us distracted with political theater, corporate owned media, mass marketing, dumbing us down with horrid education and calling us 'excessive overhead' while they outsource manufacturing and any other job.
My friends, we have been had!
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