No New Jobs in Silicon Valley

Had a brief conversation with my brother-in-law last week about the jobs created by a successful product such as Apple's iPad, etc. I was of the opinion that the actual job creation was on the order of 1000 in the U.S.A. with the vast majority being created in China (all those Apple products are made by Foxconn in China).

Read this article today by Andy Grove, co-founder of Intel, which talked about the changes in Silicon Valley and the tiny number of jobs actually created by the technology industry. Some quotes:

Today, manufacturing employment in the U.S. computer industry is about 166,000 -- lower than it was before the first personal computer, the MITS Altair 2800, was assembled in 1975. Meanwhile, a very effective computer-manufacturing industry has emerged in Asia, employing about 1.5 million workers -- factory employees, engineers and managers.

The largest of these companies is Hon Hai Precision Industry Co., also known as Foxconn. The company has grown at an astounding rate, first in Taiwan and later in China. Its revenue last year was $62 billion, larger than Apple Inc., Microsoft Corp., Dell Inc. or Intel. Foxconn employs more than 800,000 people, more than the combined worldwide head count of Apple, Dell, Microsoft, Hewlett-Packard Co., Intel and Sony Corp.

... and ...

The job-machine breakdown isn’t just in computers. Consider alternative energy, an emerging industry where there is plenty of innovation. Photovoltaics, for example, are a U.S. invention. Their use in home-energy applications was also pioneered by the U.S.

Last year, I decided to do my bit for energy conservation and set out to equip my house with solar power. My wife and I talked with four local solar firms. As part of our due diligence, I checked where they get their photovoltaic panels -- the key part of the system. All the panels they use come from China. A Silicon Valley company sells equipment used to manufacture photo-active films. They ship close to 10 times more machines to China than to manufacturers in the U.S., and this gap is growing. Not surprisingly, U.S. employment in the making of photovoltaic films and panels is perhaps 10,000 -- just a few percent of estimated worldwide employment.

He advocates tariffs and other "trade-war" type policies to incent companies to do more than just hire marketing people here in the U.S. and sell things designed and built overseas.

I have a hard time disagreeing with him despite my free-market leanings.