Goofball of the Week - Paul Otellini

US manufacturing needs revival, not political slogans

Listen to your elders, man!


Intel CEO Paul Otellini obviously doesn't like President Obama's economic policies, blaming them for creating an "environment of uncertainty" that is not helpful or productive.

Fair enough; that's a legitimate discussion worth having, although his later remarks in this particular speech leads one to believe that this guy's mind is made up already and there's not a lot that can change it. Still, that's fine.

But when he stated that "higher taxes and more regulation add an additional $1 billion to building a semiconductor manufacturing plant in the U.S. vs. overseas," and as a result "the next big thing will not be invented here" -- well, he's insulting our collective intelligence.

First, semiconductor manufacturing plants are not places of invention; they are instead places of ... manufacturing! The "invention" phase takes place beforehand, in R&D labs and consortiums.

Secondly (and more problematic) is that Mr Otellini knows (as does everyone in the Capital Region) that semiconductor manufacturing plants do get built in the US, because of the fact that various levels of government are willing to toss in many millions of dollars to make it happen. In the case of the local Global Foundries project, that fig is $1.55 BILLION (with a B) and most likely still climbing. We're not saying here that this is good, bad, or indifferent, we're just saying this is the reality. But someone forgot to mmention that little fact. Well, for that omission, Mr O, you get our Goofball of the Week award!

But we will give the gentlemen a Get Out Of Jail card. We hereby assign him some required reading, that of an essay written by his predecessor at Intel, Mr Andrew Grove, that is titled "How America Can Create Jobs."

In a much more insightful take on the troubling situation of declining manufacturing in the USA, Mr Grove contends that it's not as simple as just ID'ing lower Asian costs as the culprit. Instead, he contends, "It's our own misplaced faith in the power of startups to create U.S. jobs." Instead, it is the need to assist enterprises in SCALING their operations to a higher level.

Further, he dismisses as unhealthy the "general undervaluing of manufacturing; the idea that as long as "knowledge work" stays in the U.S., it doesn't matter what happens to factory jobs."

How to fix it? Well, in what will certainly be a disappointment to the Let Markets Rule crowd, Mr Grove calls on an Activist State commitment. Read this:

"Our fundamental economic belief...is that the free market is the best of all economic systems; the freer the better.... So we stick with this belief, largely oblivious to emerging evidence that while free markets beat planned economies, there may be room for a modification that is even better. The government plays a strategic role in setting the priorities and arraying the forces and organization necessary to achieve this goal"

He goes on to cite as one example the "Golden Projects" digital initiatives of 80's China.

Here is his specific policy recommendation:

"The first task is to rebuild our industrial commons. We should develop a system of financial incentives: Levy an extra tax on the product of offshored labor. (If the result is a trade war, treat it like other wars—fight to win.) Keep that money separate. Deposit it in the coffers of what we might call the Scaling Bank of the U.S. and make these sums available to companies that will scale their American operations."

A controversial plan, for sure. But at least someone from the Intel Family is thinking.


rm