| > Is it really healthy for Silicon Valley if Apple has a factory cranking out iPhones in Cupertino You're begging the question; there is a country beyond Silicon Valley, and Grove's argument is that what is best for Silicon Valley (meaning, the bottom lines of a few tech firms which together only employ a small percentage of the U.S. population) isn't necessarily what is best for the country as a whole. Put more directly, it's not clear that there are enough IP-based jobs to keep the United States at or near full employment. To do that, which we need for social stability, because high unemployment is intensely corrosive, we need to capture some of those manufacturing jobs. And it might be worth doing things that hurt tech companies' profitability in the short term -- taxing outsourced manufacturing, for instance -- in order to achieve that. If we don't, the "rational business climate" might drive all the manufacturing overseas, leaving the U.S. with a very small number of employed people doing the design work, and hordes of disaffected, unemployable people with nothing to do. As you point out, once you have the production line set up in China, it makes sense to just scale it out there rather than build a second one here. The long-term social effects of such a 90/10 split would be very bad, and would in all likelihood eventually make it very hard to be very profitable at all. So it might make sense for IP-centric design companies to take a short-term hit and try to maintain something closer to full employment, lest they find themselves first up against the wall when the welfare proletariat they created revolts. |
In that case, it is likely that the skilled will hire the unskilled as servants, making the skilled people even more productive (every hour spent doing laundry is an hour spent not designing the latest iPhone). People will probably also work fewer hours, and take productivity gains in the form of leisure rather than money.