Grove: The Tragic Mistake of Offshoring

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Do you have to be rich to be progressive when it comes to manufacturing? (Credit:Getty)

The head of Intel is having a hard time digesting the unemployment in Silicon Valley.  He writes in Bloomberg BusinessWeek that successful start-ups these days have their manufacturing done on the cheap in Asia - and that this trend doesn't support the US economy. "What kind of a society are we going to have if it consists of highly paid people doing high-value-added work -- and masses of unemployed?"

Ummm, yeah. It would be fair to say a large number of Americans are aware of this trend.

The question remains: how do you get a company to ignore the tremendous cost differential between the US and Asia?  Should a software engineer living in Santa Clara be willing to work for $13,359, (the average salary in China according to payscale.com)? Regulatory climate issues aside, that's a hard number to beat.

Maybe Grove is hoping to convince the capitalism-red-in-tooth-and-claw crowd that manufacturing is more important than we thought it was when globalization hit the big time. And that our laissez-faire approach to business development isn't holding up well against the employment-conscious, strategic approach of the Chinese government.

Intel began making chips 42 years ago. It may be time to update what we mean when we say outsource.  But it would seem Grove is putting his money where its mouth is. One thing's for sure: it's far easier for the world's largest chip maker to move than the US government.  Let's set a stopwatch and see how long it takes Capitol Hill to move on Grove's proposal to tax the products of off-shored labor.

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About Rachael Myrow

Rachael Myrow hosts the California Report for KQED. Over 17 years in public radio, she's worked for Marketplace and KPCC, filed for NPR and The World, and developed a sizable tea collection that's become the envy of the KQED newsroom. She specializes in politics, economics and history in California - but for emotional balance, she also covers food and its relationship to health and happiness.

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