American jobs, Entrepreneurial thought and Startups

http://www.businessweek.com/magazine/content/10_28/b4186048358596.htm
Andy Grove, concerned with the alarming job situation in the US, wrote an op-ed piece that made some key points for reversing the situation. The key thrust of his argument was that startups today are overrated when it comes to job creation. Furthermore, even startups with job creation potential have a china strategy when it comes to job creation. He also argues that sending low value jobs abroad (like television manufacturing for example), cuts us off from the next generation innovations in that area of technology

I believe that this is indeed true. Another point that he does not really touch upon is the fact that R&D teams working closely with manufacturing or service teams in outsourced locations have a better chance of getting the next generation innovation right because they get feedback from real customers. Losing those jobs also causes the US to lose direct contact with those customers and any further developments in that domain.

His solution, is to levy taxes on companies that outsource jobs to other countries. That I am not sure is the right approach. Other luminaries, responding to the piece, highlight the fact that a lot of growth these days comes from those very locations whose standard of living has gone up thanks to outsourcing. The other thing that it does not address is that business does not recognize national and international boundaries when it comes to profitability. Intel itself has offshored thousands of jobs to countries like Malaysia, China and India, rightfully enjoying all of the tax benefits that the investments in those countries have provided.

Somehow the idea that innovation can be locked up behind national boundaries, even as companies and governments work hard to open new markets to cater to consumers internationally is not a very viable proposition, certainly not in the long term

So if that does not work, what could work?
The first fallacy of this thinking is that the opportunities for a strong job driven economy are limited to industries that currently exist. It does very little justice to our creativity as a society. To argue that everything that can be done is being done right now has been disproved by history, time and again.

As Grove argues in his book, strategic inflection points visit us time and again, creating opportunities that we cannot predict even a few years before they occur. Who would have thought that VMWare would come out of nowhere and own 80% of a market that did not exist until they got ensconced in it. If anything, the guys who were closest to the hardware, Intel should have been the ones creating this innovation. Opportunities exist as long as there are problems.

The opportunities that have gone offshore are best left alone.

The second reality that we need to address is that health care costs make it very hard to do business in the United States. The quality is fabulous, but so is the wasteful expenditure. Hiring employees is simply too expensive, especially if the talent is available outside the US and Europe.

The third reality is that primary education in this country is too easy and higher education is more difficult than in most other places. The first one increases our drop out rate, and the second one deters too many people from getting a education, especially if the parents are the tax paying type that hold down jobs.

How about preparing children for higher education by having a more rigorous program from the elementary level?

Instead of levying taxes on companies, what if we figured out a way to lower education costs, or created a fund to provide scholarships based on merit.

What if we could cut through the lobbying/ special interests and make some real headway on insurance costs?

Most successful entrepreneurs see problems as opportunities to capitalize on. Would we benefit from creating more entrepreneurs instead of churning out managers who are so removed from reality that most engineers dismiss them without giving them a second look?

Maybe we could teach people the mantra of "Problem = Opportunity", show them how to be entrepreneurs, and if we scaled it up, may be we would get better employees, more innovations and a population that took pride in its achievements. Success begets success and it would allow the continuity in innovations for our future generations.

Globalization is a genie that cannot be put back into the bottle. But maybe we can figure out how to harness its power to power our economy.