Perspective: America's tech moment of truth

perspective I'd like to deliver my first State of the Union speech. I don't hold public office, but as a citizen, I figure that I have this prerogative. My message: We're doomed, people.

I was actually hoping for something more upbeat in my inaugural address, but why beat around the bush? In the past few years, other nations have caught up with, and in many ways surpassed, the United States in reaching important milestones, and the future is probably going to get worse.

Part of the reason I cover international technological trends is to suck up to my future masters. Here are just some of the ominous signs:

• Asia became the center for industrial manufacturing several years ago and is now making inroads into high-technology, cutting-edge manufacturing for things like chips, according to George Scalise, president of the Semiconductor Industry Association, which keeps tabs and sends out alarms on America's decline. (I came up with this gloomy prognosis after speaking with Scalise. Because of the nature of his job, he can have that effect on people.)

A decade or so ago, roughly 35 percent of the investments in leading-edge chip technologies were made in the United States. In the last five years, only about 10 percent to 12 percent of those investments landed stateside.

Because I'm a San Francisco journalist, some of you will conclude that I'm inherently biased against America. You couldn't be more wrong.

"We're falling behind rather rapidly," Scalise said.

Many of these overseas investments are made by U.S. corporations. Initially, many of the engineers running an overseas operation are U.S. transplants, but soon, by osmosis, these plants become the creations of their native lands.

It's not just China, either: Thailand is the No. 1 producer of hard drives, according to Joel Weiss, president of the International Disk Drive Equipment and Materials Association.

• U.S. universities are going international. Cornell has a medical school in Qatar, and Carnegie Mellon and Texas A&M have four-year engineering programs there. The Massachusetts Institute of Technology is currently helping Abu Dhabi build a graduate school dedicated to alternative energy. In Singapore, the government has enticed several big-name professors to come to its Biopolis biotech hub and has enlisted Duke University to build a United States-style medical school.

For the universities, this is a way to get students who otherwise couldn't get to the States because of financial issues or visa problems. It's also a way to take advantage of well-known brand names in nations filled with ambitious and wealthy people. But for U.S. citizens, it's not the best news: now you don't have to live here to attend our best schools.

• Pop culture has gone global. Except for a few weird exceptions, like ABBA and that Turkish guy who played ping-pong, cheesy pop culture has been a monopoly of the English-speaking peoples. Not anymore.

Anime dominates cartoons. In China, more than 200 companies have taken the YouTube model and outdone it. Google is losing to Baidu there. That golden opportunity to expand into emerging markets has already vanished.

Because I'm a San Francisco journalist, some of you will conclude that I'm inherently biased against America. You couldn't be more wrong. When I come through customs, I want to hug the security guards. In Dubai, citizens have to deal with an omnipresent secret-police force. (A plainclothes agent even followed me one morning.) In India, there's relentless bureaucracy. China has aggravating censorship. And in Germany, they are still trying to wrap their minds around the convenience store concept.

I grew up in Reno, Nevada, land of the free and home of the 99 cent breakfast. There's a lot that the world can learn from us. Is there any way out? Here are some ideas:

1. Embrace failure. In Silicon Valley, venture capitalists and others often say, "Failure is a badge of honor." Failure, it's said, teaches an entrepreneur how to avoid mistakes on the next start-up. In reality, it means, "We went to Stanford B-school together, and he needs a job."

Biography
Michael Kanellos is editor at large at CNET News.com, where he covers hardware, research and development, start-ups and the tech industry overseas. He has worked as an attorney, travel writer and sidewalk hawker for a time share resort, among other occupations.

More Perspectives

[cnetter001]

FUD

The same FUD that was written in the '80's when Japan was
taking over the world and Japan was making all the computer
chips and....

1) When we have a budget deficit, we have a trade deficit. When
we have a trade deficit, many of the things of which you are
speaking happen.

2) All your examples of investment are for making hardware.
This should be expected. See (1). Also, and perhaps less
obvious, if you look at modern economic history, as 2nd world
nations industrialize, they go through cycles that repeat
themselves. First they make clothing, then tvs, then cars...then
they become a first world country. A first world country
generally is a service economy. That the US is becoming more
and more a service economy should not be surprising.

3) International trade is not a zero-sum game. If you treat it as
such you end up with bad analysis and bad policy.

4) Most importantly, I actually do think this country is in
trouble! It is just that your article points to facts that have
nothing to do with such a thesis, or are actually arguments
against it.

[suyts]

Good article

Thanks for pointing out the insanity that is going on in this country.

[HughShudnoe]

It's even worse...

Great article that only frames the beginning of the problem. Our economy thrives on innovation. It's what we do best, but when something gets commoditized we either offshore it ourselves or surrender it. We invented cars and assembly lines and were good at it for a while now it is a dying industry in the US. Same thing with chips. Now we offshore writing software. It's all OK as long a we keep inventing the next big thing. Only it's not looking that good. Cleantech? Well China will need 90 million barrels/day in a decade to support their economy; the world currently only produces 80ish for EVERYONE. They are likely to lead that revolution while we screw around doing corn ethanol for the Farm lobbyists. Genomics? There is an artificial Biology revolution on the horizon. Engineering microbes that can manufacture fuels, materials, and powerful new pharmaceuticals is just over the horizon. Look at the absurd debate of stem cells. All of our best talent will move to China, Singapore, Israel etc. This revolution will happen elsewhere while our dysfunctional Government argues about it for years.

We are rapidly being outnumbered. Last year China and India graduated together graduated 500,000 engineers and scientists while the Us graduated 60,000. Our K-12 public schools rank among the lowest in Industrialized nations. Our Universities are the best. Everyone comes from around the world for their grad and post grad. They USED TO STAY. Now they go back to China and India and start companies to compete with us.

But fear not. All is not lost. We have a secret weapon that creates lack of motivation and star lust. It's a virus called "Generica." And it's acute symptoms are Starbucks, MacDonalds, and Pizza Hut.

[hguerre]

There is more....

The huge expenditure in arms and wars all over the world depletes the resources for science and investigation. Imagine how much EEUU can gain if it reduces the military budget say by 10%. The war on terror is a misleading way of saying the war for oil..Its bigger gain is generating enemies al over the world. The moral issue of steem cell investigation I just can´t imagine what it is all about. You will loose precious time and edge with the political and religion interfiering with research. I thought that was part of past history. I dont think is a question of greencard lottery only. You have to stop and breath deeply...solve the huge internal problems that EUA has (Example: huge oil consumers´which generates wars, drugs, etc), then you can talk about a pleasant enviroment for study and investigation and living there
Sincerelly yours
(sorry for my English)

[Codonology]

Please join Codonology Society

As a part of countless threads talking about future technology or say "knowledge industries", I like draw your folks attention on Codonology. Please visit my web site at www.Codonology.com. Then, let's discuss what the future knowledge related society should look like. I mean the society of whole world. Thanks.
Hua Fang MD

[JadedGreg]

Moment of truth?

Here's a moment of truth.

Take your kids and go to India and get rich with your fellow nabobs!

Stop trying to take jobs away from Americans and stop trying to hype your political education as being worth anything.

Feel free to throw around all of the bogus statistics you want.

[Penguinisto]

...and?

It boils down to two items:

* Thanks to globalization and international scientific
cooperations, it doesn't matter too awful much... technology
progressions outside the US finds its way into the US. IOW,
technology, discovery, and innovation is almost 100% fungible.

* There is still a HUGE inflow of people from outside the US
wanting into the US (see also the political H1-B Visa brawls in
the US Congress and Administration).

Like it or not, we're slowly becoming a global community, where
politics will matter less and business will dominate. Where once
nations spent the majority of their efforts on things like war and
treaties, now they spend most of their time wrangling w/ each
other over economics. There are few exceptions to this (which
we all get to hear about on the nightly news), but for the most
part, these involve small belligerancy by and towards out-of-
the-way nations.

In, say, 100-200 years, nation-states simply won't matter if
things continue as they are. By then we'll likely become a single
global political entity.

/P

[alainassaf]

What?

So because India and China manage to graduate so many more engineering students we should encourage them to come to the U.S. and stay. The law of averages says that graduating thousands of engineers doesn't mean you get thousands of top level workers. Do we really need hundreds of candidates applying for jobs here in the U.S.? It's no wonder that fewer U.S. students bother to enter into the sciences. All the spots at the university and corporate level are getting snagged by foreigners. Don't get me wrong, this is what has made the U.S. so strong in the past, but we are dealing with a sinking ship now and can't take on more passengers without fixing it. What are we American's supposed to do. Emigrate to China and India and then apply for jobs in the U.S. as H1B's?
The notion that we have to go outside our boarders to fill low-skill and high-skill jobs in our country is bogus. We produce enough talent here to fill any and all jobs. The corporations prefer to hire foreign workers because it means a lower bottom line for them. Our middle-class is getting squeezed out. The boomers are set, but gen X and Y are going to wonder what the hell happened to their American dream.
We have all failed miserably to hold our elected official accountable. The education system is getting worse, because we allow it to happen. The corporate and political powers that be don't want us to realize that we do have the power to vote these jokers out of office. The media is expert at keeping us divided on trivial issues so we don't see the big picture.

Check out: http://www.youtube.com/watch?v=TCbFEgFajGU
to see how skilled U.S. workers are being passed over for positions they are qualified for so business can hire H1B's.
Another site to check out:
http://www.kickthemallout.com

Wake up! Vote. Contribute time and/or money to issues you believe in. We can make things change.

[Jake Leone]

Evidence of discrimination against U.S. citizens applying for U.S. jobs

Listen Kannellos,

U.S. employers openly discriminate against U.S. citizens in the hiring for U.S. jobs. Don't believe me, just look at the evidence, the motive, and the video:

http://www.informationweek.com/news/showArticle.jhtml?articleID=199905192

Patni associates underpays its h-1b Visa workers, so much that the U.S. government has fined them million of dollars:

http://news.com.com/8301-10784_3-9727975-7.html

That the Indian government calls the h-1b Visa the "Outsourcing Visa":

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/05/27/H1B.TMP

That h-1b Visas are used heavily by Indian IT Outsourcing companies to remove whole departments:

http://www.msnbc.msn.com/id/17048048/

Let's also not forget that when 2 congressman asked these outsourcing companies a question about their hiring practices, India started threatening the United States with Trade sanctions.

The reason, Karmal Nath and Nasscom want to continue to discriminate against U.S. citizens. They don't even look for U.S. citizens to fill jobs. Only hiring one class of people (h-1b holder from India) is discrimination, and has to be stopped.

Currently there is open-discrimination against the U.S. workers for U.S. jobs. The reasons are clear. H-1b workers earn 20% less than their U.S. citizen counterparts:

http://timesofindia.indiatimes.com/articleshow/1967955.cms

Employers like to hold the Green Card over their h-1b employees. You see the Green Card must be sponsored by the employer, and if the employee leaves before the process is complete, the Green card process must start over again with the new employer. This amounts to indentured servitude. And when employers learned that the new immigration bill took away their Green whip, the started actively working against the immigration Bill:

http://news.com.com/Tech+seeing+red+over+green-card+proposal/2100-1028_3-6188899.html

Look people, we've all got write our congress people and get some meaningful immigration reform. Don't let industry buy your congress.

Americans face a hostile employment environment from employers who will not hire them. This open discrimination against U.S. citizens has to be stopped.

[Cyrus_K]

Reason for US falling behind is lack of REAL democracy

Number 1 reason that the US is falling behind the rest of the world, specially Europe, is that US
does not really have a democracy. Instead what the American people have is a dictatorship by Big media who are made up of a handful of people that control every source of media/information in US, ranging from WallStreetJournal, to CBS, to NBC, to CNN, to Google, Yahoo, Hollywood, etc., lying to us over & over & over, as exemplified about the war on Iraq. Anyone with half brain and half a consciousness would have seen that the
war on Iraq was unnecessary, unjustified and criminal but the Big media in US portrayed
it as completely opposite of that and 5 years into this Genocidal war 95% of reporting is
how brave our soldiers are and support them and how "sectarian civil war is raging in Iraq...".
Of course failing to state that if you really want to support the troops then bring them home
from this unjustified and criminal war and that there was no "sectarian civil war raging in Iraq..." until US invaded and destroyed that country. In fact of all Arab countries Iraq was the most secular and non-religious based country until this Genocidal war that US/UK waged on them.

Now of course the unjustified and criminal war on Iraq is just one example of how the US government
acts against the interest of average American, the other clear examples are that although we
Americans pay as much if not more TAxes than Europeans, specially when you consider
property Taxes, we get non of the following:
1- Universal Health Care for free
2- Higher Education, up to PHD, for free
3- Day care for free
etc.

Instead what we get is a Government much bigger than any European Government controlling
many more aspects of our lives than European Governments control their citizens lifes but
giving us few of the social benefits, as listed above, which are essential for a society to succeed. After all if you can not have Health care and access to education for free, well for MASSIVE, taxes that we already pay, while Europeans have these for free, for taxes they pay, then what do you think is going to happen to American people? Of course I am not talking about the minority that has received VC funding or been a part of an IPO or is a CEO like Google CEO
who gets $500Mill compensation via stock options, etc,. I am talking about average American
living with $60K or less in Annual income. What is going to happen is that the Europeans, and
all countries that follow the European model, are going to get further and further ahead, they are
going to get richer & richer while Americans will get poorer and poorer, as evident by many
indicators with the best and clearest one being the ever falling Dollar against the Euro.

Now do we have to "be doomed"? Is there nothing that we can do to change the situation in US? Sure there is. But 1st and foremost we need to realize that at the root of all problems here is the control of the media by a handful of people as a result of which they will tell any lie that they want to us. So what we need 1st and foremost is to not get our information from Big media but from independent sources, such as these Blogs for news:
http://www.dailykos.com/
http://www.huffingtonpost.com/

and this search engine for searching:
http://www.anoox.com/

Since all of the above are powered by the knowledge of the People rather than the Big media.

If we the people wake up to the damage that the Big media lies are doing to the American people
and society, we can put in place a government in the next election which will end the war in
Iraq in 2 weeks, make sure we will not engage in another unjustified and criminal war, and provide
us with such essential services as free Universal Health Care, free Higher Education, free Day care, etc. for the HIGH Taxes that we already pay and still cut the size of the US government down by 30% by cutting the size of the US military down by 50% and operating Health Care and Education as non-profit organizations as Europeans do, and as a result we will not be "Doom anymore.."
and in one generation will surpass Europe.

P.S., For sake of honesty I should state that I am a proud community member of Anoox search engine, the "People Powered search engine".

[jsmith2007.lol]

I Agree too

It works like this, most Indian outsourcing firm low pitch the contract job that companies want and send their best staff there, after couple weeks or months they will replaced them with some new H1B or L1 fresh from India, so they can send the original best programmer/project manager to another company. And they will introduce more cheap labor there until they take over all the jobs. It works because those poor engineers salary 40K/yr is about 8 times of their salary in india and the green card is the final trophy, so they worked 40 - 50 hours weekday and sometimes worked through the weekend. We should assign visa quota to all countries, for country that keep on breeding like India should get less visa or green card, this is to punish them from over populating the earth. Or else US will be soon be India ver. 2.0, I'm serious.

[AlexanderNY]

Bell Initiative: American Technology Agenda

Bell Initiative, first introduced in 2003 and now topping Google ? search list, outlines the US Technological agenda and, among other ideas, it provides balanced and constructive approach to the H-1B and outsourcing issues. In a simple form its main provisions include:

1. Mandatory Certification of non-immigrant foreign IT Workers.
2. Creating the nationwide Government-supported Job posting Web site and USA Technology Workers database (?Talent Pool?)
3. Increasing the social obligations of the C-Level folks (CEO and likes) of all publicly traded US Companies by trimming their compensations depends on the corporate layoffs and outsourcing (in inverse proportion, of course, i.e., for example 10% layoffs and 15% outsourcing should lead to 25% decrease in C-Level annual compensation).

The full text of Bell Initiative is available online at: http://www.alexanderbell.us/Initiative/IT.htm

Alexander Bell, US

[C_G_K]

Things will balance out over time

As nations continue to develop, like India and China, and as their standard of living improves, wages will increase over time, making the disparity with the U.S. in terms of employee costs smaller and smaller. This is already happening in software production where the savings from outsourcing is shrinking as labor costs go up as competition for good workers becomes more intense overseas. No need to panic about globalization. Economically, it is good for everyone in the long run.

Protectionism is fools gold. Capital can go just about anywhere on short notice. This includes excluding the best and brightest from other countries from entering the U.S. to "protect" American workers. In this sense I agree with the author.

[navsimpson]

Deprive Other Countries of Talent?

This sounds vaguely like a middle-class white male complaining about affirmative action... America may be becoming less competitive but is still exponentially larger than the economies it claims to compete with. The idea that America should actively work to deprive other countries of talent they need to build sustainable infrastructure and IT developments is a roundabout way of saying one wants to oppress other countries in the process of defending one's own. While many of the points in the article are good, that one stuck out as poorly thought-out, callous and short-sighted. How someone can in good conscience wish to perpetuate the massive disparities of income in a place like India, or the exploitation of labour in a place like China is utterly beyond me.

[mikemis1]

An unthoughtful analysis

The proposals for stemming the decline in the US ranking in
technology are shallow, fraught with bad ideas and actually
oxmoronic.
1) It's wrong to support issuing green cards to PhD holders in all
areas of science and technology. Fact is, there are many bright
American math PhDs who are unable to find suitable positions -
it's been that way for years. If industry were interested in hiring
such people, all they need do is recruit them. It would even help
stimulate the role of mathematics as a potential career.
2) The idea to promote how easy our schools are is oxymoronic.
Bright people value education more than anything else, and the
idea that they'd be attracted to a country where their children
would not receive a top education is a sure way to dissuade
them from coming here.
3) Offering business more tax breaks is stupid - they don't need
them, and besides, their penchant for offshoring that reached
even white collar jobs always considered to be safe is a major
reason we're in the position we find ourselves, with so few
Americans pursuing science and technology as a career.
That, by the way, is the real problem - ever since the tech wreck,
enrollments in CS in particular, and in science and technology
has fallen to the point that the CS enrollments are now where
they were in the mid-1970s. The cure is not to open the doors
to import the expertise we aren't generating ourselves. That's a
short term papering over of a long term problem. To really solve
the problem, government and industry should do more to entice
students to pursue science and technology careers - it starts by
making sure everyone who earns a science and technology
degree in this country gets a good job. It's also necessary to
stop bribing business with more tax breaks, try giving them
incentives to generate real jobs in this country, instead of
outsourcing them, and penalize them when they send such jobs
elsewhere.

[tindian]

eye opener

Its true that America instead of improving the
schooling standards is looking out for people
from Outside.I also know that people on H1 are
paid lower compared to American counter parts.
I am surprised by the fact that In India where there is lot of protest to allow WalMart to open the store how can American companies hire lot of Indians.I myself many times felt sorry for many
of the good American engineers getting laid off for cheap indian labour.In Indian companies for each American job outsourced they allocate 0.9 person and with the horrible infrastructure and travel times i believe any company is interested
in just making profits nothing else.Country and its citizen should be guarded first and then all this globalisation etc ..

[HansinYabutay]

Booooooooooooooring

I'm thinking CNet will publish this guy's shopping list. Oh wait, they just did.

[suyts]

WATCH THIS!!!

http://www.foxnews.com/video2/player06.html?062207/062207_sr_garrett&Special_Report&Cheap%20Labor%20101&Cheap%20Labor%20101&Politics&-1&News&154&&&exp
This is a Utube posting that shows the business practices of various employers across the nation.

[CompEng]

A Hard Choice

Your essential premise is that the American tech industry has enough benefits that if subsidies and full openness to global labor are required for its success, then America should provide them.
I'd love to have a long enough discussion on this not to be dominated by sound bytes, but I'll take a quick stab at the issue.

By point:
#1. Full openness to global labor
PRO: It will improve competitiveness of the American tech industry and its global integration, generating jobs and possibly new industries. Caveat: "body shops" and other non-open hiring practices do not have these benefits, either for the industry or the company that employs them.
CON: For a qualitvative analysis only: While increasing jobs, it will reduce payscales in the industry, reduce border security, and discourage those in America from planning to enter tech (feeding a long-term cultural dependency on imported labor -- if you doubt it, stop and consider why there are some jobs "Americans won't do"). Also consider seriously that the practice helps reduce information security: for example, Chinese industrial and military espionage through employees is both real and effective, and I doubt they're the only country employing the practice. The global integration this encourages also leads to global information storage.

#2. Improve American Education
While a common target, the American education system is fairly effective at what it is designed to do, given the climate in which it exists.
The American education system is designed to give a "general" education to a minimum standard, where that standard is what >95% of the students can be expected to meet in an environment where a sizable minority of the customers don't have perceived need or interest in the product (because they don't expect to need most of the skills they are being provided in the workplace). Further complicate this with the fact the primary, secondary, and tertiary recourse to performance or disciplinary problems
is pure psychology, yet schools are still expected to provide self-esteem over performance.
We can't improve education without rethinking the goals of education, and without having a very hard public discussion about priorities in a country where we can't have a hard public discussion about values for fear of offending others. Plus, what the industry is increasingly demanding is pre-trained employess, requiring a very specialized rather than generalized education, something the American educational system is not remotely prepared to offer except in a college atmosphere (and a couple of the reasons why are good ones). I mean, the simplest "solution" is we could completely privatize all schools and no longer enforce attendance if we were willing to totally dump on the poor and "working class". That would probably work for everyone else. But a decision that the majority of people in America could be convinced will work for everyone? Don't hold your breath.

In short, don't look for a solution here anytime soon, and don't think money will help much.

#3. Subsidies and tax breaks
PRO: The tend to work
CON: They're expensive to taxpayers, they produce dependencies (like any welfare can), and they're essentially predatory behavior. In the future, we'll hopefully understand economics well enough to come up with standard rules of behavior that are fair. The WTO is an utter failure in this regard because it treats trade as a wholly political rather than scientific process, and so the current rules of engagement are a conceptual disaster. In the mean time, current variations of "free trade" are far more damaging than they appear, again largely because there is insufficient dialog about values to allow us to plan to serve those values.

To sum it up: the actual level of dialogue required to understand the problems at hand is several levels deeper than I've actually encountered, and any solution is predicated on either agreeing on what we actually want or having government butt out completely (and fighting it out in a different arena than discourse!). That's one reason why business tends to run the show in America: it exists for the sole reason of profit (generally short term profit), and it's not too hard to optimize decisions for one simple variable.

[TomMariner]

We aren't serious

In my county both the police and teachers reach six figure incomes with full retirement at an early age. There were 30,000 applicants to take the police exam to fill 100 posts.

Although both professions are vital to our present and future, the shipping of creative talent "over there" jeapordizes our very existence. Not only are we not building anything that we can ship out of the country and ship money in, but wars are won by technology.

So until we decide that a talented, home grown design and manufacturing techie is worth as much as a lawyer or doctor, you're going to see us donating our past lead to other countries. The quick fix is to take the best and the brightest from other countries while the real answer is to promise prestige (read money) to those who are our next generation.

Those of you who are techies, be honest -- Would you rather have your kids or grandkids go into a program that would make them a physician or lawyer or rather into the same field you now occupy? I have Phd computer scientist friends who can create saleable miracles but can't find work, while H1B visas are demanded by their former employers.

We meticulously track every penny in copier supplies but have no firm way of valuing intellectual property, nor is it reported on a regular basis.

Michael is right about the spineless "venture capitalists".

We ain't serious and won't be until we become France -- A pretty country that used to be influential on the world stage. By then it will be too late. Before the start of the twentieth century France was dominant in politics and technology. The US took over the crown in both through much of the twentieth century. It is no coincidence.