About Jobs And The Great Recession
By Hilbert Morales – El Observador

Two recent articles will give you a global perspective about jobs and this Great Recession.  One is by Andy Grove, CEO of Intel, published in Bloomberg Businessweek magazine. The other is entitled “They Did Their Homework (800 Years of It), Business Section, page 1, New York Times, July 4, 2010. Both articles are recommended reading. The work of economists Kenneth S. Rogoff and Carmen M. Reinhart (maiden name: Carmen Castellanos. a Cuban immigrant at age 10) was first presented in a book entitled “This Time is Different”, Princeton Press. September 2009. The collection and analysis of 800 years of economic activity throughout the world is presented here. Unlike traditional economists who rely on untested theory, Reinhart and Rogoff base their observation on the fact that this Great Recession is not the first of its kind. The 800 years of historic economic data collected by Carmen Reinhart is the basis for this assertion.
The Andy Grove article is entitled “How to Make an American Job”. The very first assertion is that Thomas L. Friedman is very wrong because while startups are wonderful, they do not create employment. This is followed by a very convincing presentation which quantifies Grove’s experiences and observations that following technological developments, a scaling process is required. Grove states, “The scaling process is no longer happening in America.” This scaling process builds the manufacturing capability which provides employemnt to the American labor force. Investment risks are taken by venture capitalists who would provide the capital needed. The cost of scaling up to make a job in America rose over the past forty years from thousands of dollars to billions. Also, the rise in the cost of labor, health care, and retirement benefits rose significantly.
Grove says, “Today, manufacturing employment in the U.S. computer industry is about 166,000 lower that it was before the first PC was assembled in 1975.” Since that time a very effective computer manufacturing industry has emerged in Asia, employing about 1.5 million workers…factory employees, engineers and managers.” One example is Foxconn (aka, Hon Hai Precision Industry) with operations in Taiwan and China, which today employs 800,000 individuals and realized revenues of $62 billion. This business employs more people than Apple, Dell, Microsoft, HP, Intel and Sony.
Apple employs 25,000 in the U.S. while  250,000 Foxconn employees in Southern China produce Apple’s products. For every one American employee, ten employees are working in China producing products. This same 10:1 relationship holds for Dell, Seagate, and other U.S. tech companies.
In summary, high tech industry has been shipping jobs overseas to Asia while retaining the so-called ‘high-value jobs’ and profits. Grove asks,”What kind of society are we going to have if it consists of highly paid people doing high-value-added work  and masses of unemployed?”
It is my observation that corporate leaders of high-tech firms, much like those of the financial industry, have focused on enhancement of profits. In the past corporations were operated to make profits for its stockholders as well as create and provide jobs for the masses of American employees. Today, jobs are outsourced to an extent that is detrimental to maintaining an American consumer economy. All of this is the result of opportunities to generate higher profits in those locales where scaling-up costs and labor costs are much lower than here in America. Grove suggests that government become involved by assessment of a fee onto profits and jobs outsourced. This will require the adoption of ‘job-centric economic theory’ rather than ‘profit oriented economic theory’.
This is a very different paradigm than that currently used by those members of Congress who have been in office for too many years. It also requires capitalists to consider more than profiteering. Capitalists must now focus on creating jobs.
In a recent discussion with Assemblyman Joe Coto, I pointed out to him that government does not create jobs. It is our creative industries. Government is doing the right thing with its deficit funding of shovel-ready infrastructure projects. However, our capitalists must begin to commit to re-creation of the American manufacturing base that has been shipped overseas. It is that manufacturing base which will provide the employment needed by those 8,000,000 unemployed American laborers. A final note: Labor union leaders need to ‘get it’ in that they must lobby Congress to pass the legislation which re-establishes the manufacturing base which provides employment to their union membership. The global economy has forced America to reconsider its profit oriented public policies.∆