Neutron Bomb(cringely.com)
cringely.com
Neutron Bomb
http://www.cringely.com/2009/08/neutron-bomb/
39 comments
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.
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.
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?
... 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?
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.
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.
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.
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.
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".
I don't think you get to just make assertions like that without any facts.
Medicare, which is already a government-run health insurance plan, and one whose customers are so satisfied they are militantly protective of it, has lower administrative costs than private insurance companies:
http://wallstreetpit.com/7500-does-medicare-actually-have-hi...
Medicare, which is already a government-run health insurance plan, and one whose customers are so satisfied they are militantly protective of it, has lower administrative costs than private insurance companies:
http://wallstreetpit.com/7500-does-medicare-actually-have-hi...
I don't have specific data on Medicare, but you aren't exactly arguing against what I said, I notice. One would expect the beneficiaries of a government program to be militantly protective of it, and the less efficient, the more so -- no one hires lobbyists to reduce money or services they're getting.
I am if you read the link, which is actually a good survey of what turns out to be a somewhat complicated question, due to the differing populations served. I don't think it's fully settled, but I think the assertion "Medicare has lower administrative costs that private insurance" has a much better shot at surviving than the negative of that assertion.
The government is unbeatably efficient at writing checks. I don't know where you get this notion that somehow the government would be an inefficient purveyor of health insurance. It simply isn't true.
The government is unbeatably efficient at writing checks. I don't know where you get this notion that somehow the government would be an inefficient purveyor of health insurance. It simply isn't true.
> I don't think it's fully settled, but I think the assertion "Medicare has lower administrative costs that private insurance" has a much better shot at surviving than the negative of that assertion.
It doesn't matter whether that assertion is true. It's almost a dumb a question as wondering about whose check writing costs are lower. (I've never seen someone wonder about that wrt defense spending.) The closest relevant question is whether govt healthcare is more effective. The folks currently covered by US govt paid healthcare aren't being covered for less and aren't having better outcomes than the folks covered by the private system. (I'm ignoring horrorshows like the Indian Health Service. They'd almost be better off if we gave them blankets infected with diseases and cases of whiskey.)
Then there's the "fairness" question. I know several folks who pay a lot of taxes who are "heavy" and/or old. On what basis are you planning to deny them govt funded healthcare?
On the other end of the scale, your choice to subsidize an activity does not obligate the recipients of that subsidy to minimize your costs.
It doesn't matter whether that assertion is true. It's almost a dumb a question as wondering about whose check writing costs are lower. (I've never seen someone wonder about that wrt defense spending.) The closest relevant question is whether govt healthcare is more effective. The folks currently covered by US govt paid healthcare aren't being covered for less and aren't having better outcomes than the folks covered by the private system. (I'm ignoring horrorshows like the Indian Health Service. They'd almost be better off if we gave them blankets infected with diseases and cases of whiskey.)
Then there's the "fairness" question. I know several folks who pay a lot of taxes who are "heavy" and/or old. On what basis are you planning to deny them govt funded healthcare?
On the other end of the scale, your choice to subsidize an activity does not obligate the recipients of that subsidy to minimize your costs.
You're drifting far, far away from the issue that was raised at the beginning of this thread. tjic asserted, I believe as an article of ideological faith, not based on any facts or evidence, that the proposed medical insurance bills in Congress would raise overall employment costs in the U.S. That assertion is what I took issue with, because I hate to see people blindly voting up stuff they agree with without thinking about it. Nothing else.
In any case, I don't think your "closest relevant question" is well-formed. For one thing, no one is proposing "govt [sic] healthcare". For another, though what you write is frustratingly vague, it looks like you're proposing to compare outcomes between those 65 and over who are covered by Medicare with those who are young and healthy and covered through their employers -- obviously the populations are going to have very different outcomes.
In any case, I don't think your "closest relevant question" is well-formed. For one thing, no one is proposing "govt [sic] healthcare". For another, though what you write is frustratingly vague, it looks like you're proposing to compare outcomes between those 65 and over who are covered by Medicare with those who are young and healthy and covered through their employers -- obviously the populations are going to have very different outcomes.
> the proposed medical insurance bills in Congress would raise overall employment costs in the U.S. That assertion is what I took issue with
Your response was to claim that the govt could write checks cheaply. It's fair to point out that that response isn't relevant to the question.
> For one thing, no one is proposing "govt [sic] healthcare".
Sure they are - that's what the "govt option" is.
We have experience with lots of experience with "govt healthcare" in the US outside of Medicare and the VA. We have the Indian Health Service. We have the various state programs. and so on.
Besides, proponents of ObamaCare can't honestly ignore Medicare. They're fond of saying "we can save 30%". Since the elderly get 70% of today's spending, getting close to 30% savings means that Obamacare must reduce the cost of Medicare or it has to cut all other healthcare spending to near 0.
I'm actually all for letting Obama experiment on folks who get healthcare from govt funding (both actual govt programs and govt employees who get private healthcare). If you include federal, state, and local, that's about as many people as are currently in the private system
I think that he should have free rein to do whatever he thinks will work with those folks and the amount of money that we're spending on them today. However, in 2011, 2012, 2013, and 2014, the per-person budget should be cut by 5%. Since that's less than 20% and he's promising 30%, that's a slam dunk, and he can even use the savings to bring more people into the program.
If he's right, folks on this govt plan will be healthier and so on and the savings will be too big to ignore. If he's wrong, govt employees and the like will revolt.
Deal?
Your response was to claim that the govt could write checks cheaply. It's fair to point out that that response isn't relevant to the question.
> For one thing, no one is proposing "govt [sic] healthcare".
Sure they are - that's what the "govt option" is.
We have experience with lots of experience with "govt healthcare" in the US outside of Medicare and the VA. We have the Indian Health Service. We have the various state programs. and so on.
Besides, proponents of ObamaCare can't honestly ignore Medicare. They're fond of saying "we can save 30%". Since the elderly get 70% of today's spending, getting close to 30% savings means that Obamacare must reduce the cost of Medicare or it has to cut all other healthcare spending to near 0.
I'm actually all for letting Obama experiment on folks who get healthcare from govt funding (both actual govt programs and govt employees who get private healthcare). If you include federal, state, and local, that's about as many people as are currently in the private system
I think that he should have free rein to do whatever he thinks will work with those folks and the amount of money that we're spending on them today. However, in 2011, 2012, 2013, and 2014, the per-person budget should be cut by 5%. Since that's less than 20% and he's promising 30%, that's a slam dunk, and he can even use the savings to bring more people into the program.
If he's right, folks on this govt plan will be healthier and so on and the savings will be too big to ignore. If he's wrong, govt employees and the like will revolt.
Deal?
You're obviously not serious. I'm done wasting my time on this.
I'm completely serious. I think that Obamacare should be given a large scale trial, to see if it can deliver what he promises.
Why don't you want to give him a chance?
Or, are you still trying to argue that check writing efficiency determines health care cost and quality?
Why don't you want to give him a chance?
Or, are you still trying to argue that check writing efficiency determines health care cost and quality?
The government is unbeatably efficient at writing checks.
I think we have different ideas about what economic efficiency entails. I'm not sure that "efficiency" at wasting money is a good thing, nor is it usually what is meant in the context of providing services. (I have not yet had an opportunity to read your link, however, so perhaps this is answered in it).
I think we have different ideas about what economic efficiency entails. I'm not sure that "efficiency" at wasting money is a good thing, nor is it usually what is meant in the context of providing services. (I have not yet had an opportunity to read your link, however, so perhaps this is answered in it).
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Take a look at the VA health care system: it's best in class on almost every imaginable metric, including cost. Totally government run. It's time to realise that governmental organizations can be just as efficient or inefficient as private ones. Name me a government organization as badly managed as GM!
The British government is a disaster at efficiency, the French system is outright appalling and has one of the best health care systems in the world. By this progression, if the US had universal health care you would pay a penny and live forever.
> 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.
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.
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?
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?
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.
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.
That is certainly not an argument that IBM's actions are not "hurting America"
But if IBM doesn't "hurt America", it will "hurt the world".
I would suspect that many Americans would be willing to make such a sacrifice.
There's a big difference between "hurting America" and "hurting Americans".
Maximizing societal value may mean moving industry to places where the government is less of an impediment to efficient value creation. In the long (and usually, short) run, that's good for people. But it may mean that American jobs move to India, and American workers can a) follow their jobs, b) create new jobs by starting a new company in America (and deal with whatever caused their old job to leave), or c) whine and moan until someone gives them a handout.
Move, build, or cry about it. Doesn't sound like anyone's really being hurt. It's not like IBM is stabbing their workers, they're just telling them that they can work somewhere else, or get another job. Seems fair enough to me.
Maximizing societal value may mean moving industry to places where the government is less of an impediment to efficient value creation. In the long (and usually, short) run, that's good for people. But it may mean that American jobs move to India, and American workers can a) follow their jobs, b) create new jobs by starting a new company in America (and deal with whatever caused their old job to leave), or c) whine and moan until someone gives them a handout.
Move, build, or cry about it. Doesn't sound like anyone's really being hurt. It's not like IBM is stabbing their workers, they're just telling them that they can work somewhere else, or get another job. Seems fair enough to me.
> "Maximizing societal value may mean moving industry to places where the government is less of an impediment to efficient value creation."
Sure. Because after all, China is a paragon of good government.
Sure. Because after all, China is a paragon of good government.
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.
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.
Man, those are some cheap apples... oh, you mean fruit.
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.
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.
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.
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.
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.
The ultimate end is more likely a new equilibrium, in which the difference between the cost of living in the BRIC is closer to the industrialized Western world than it is now. Also, don't forget productivity gains are fueled by new technologies, and the US are still way ahead of the competition in research.
I don't understand your point.
There's not a huge barrier to new discoveries in the US being utilized in other countries, and our only advantage in conducting research is infrastructure for distributing money. Over the next ten years, that could be closed by a cash-rich nation that wanted to (China).
There's not a huge barrier to new discoveries in the US being utilized in other countries, and our only advantage in conducting research is infrastructure for distributing money. Over the next ten years, that could be closed by a cash-rich nation that wanted to (China).
But as they close the gap over the next 10 years, their standard of living and their wages are also going to keep rising. And at some point the gap is small enough that the extra cost of shipping it from China to the US isn't worth it.
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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.