JimPinto.com - Connections for Growth & Success™
No. 148 : 26 March 2004

Keeping an eye on technology futures.
Business commentary - no hidden agendas.
New attitudes, no platitudes.

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American Innovation faces many international challenges

Over most of the past century, American technology has been America's greatest asset. In the history of the US technology, 2004 will be remembered as the year that outsourcing hit home. Gartner Group estimates that US tech companies will send 500,000 jobs overseas this year - and indeed, hardly a week goes by without a major announcement of new job-shifts to Asia. As outsourcing hits high-salary jobs in software and tech services, there is a wider fear - that US dominance in high tech Is starting to disappear.

US research institutions have long been the best in the world. And the US capital-formation machine has turned their discoveries into one breakthrough after another in semiconductors, communications, computers, and just about every other key high-tech field. Major players (IBM, Microsoft, GE, CISCO) have risen from this culture to dominate world markets.

Although the US is still the overall technology leader, it is beginning to fall behind foreign competitors in several key areas. The shortage of science and technology graduates threatens the US economy. The depressing reality is that when it comes to education, America has fallen far behind Western Europe and many Asian nations. This trend has disturbing implications, not just for American technological leadership but for the US economy. Already, we have developed a shortage of highly skilled workers and a surplus of low-skilled workers, and the problem is getting worse.

To emulate America's success as a worldwide technology leader, countries like Ireland, China, South Korea, India, and Israel are feeding their R&D capabilities with lavish resources to generate huge Benefits for their economies. The US lead in telecommunications, Nanotechnology and other key tech arenas is disappearing fast.

We cannot simply complain - we must act! Fast!

Click Business Week - Gunning for the U.S. in Technology

Click Innovation is a "Symbiotic" Cycle

Click America's Failure in Science Education

Click Challengers to America's Science Crown

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More thoughts on productivity improvements & outsourcing

I received a lot of feedback on the subject of more jobs being lost by productivity improvements, than by outsourcing to low-wage countries. Some people even thought that was a political "spin" on the problem, to avoid the outsourcing backlash.

Consider this: When jobs are transferred overseas, there is a clear cause and effect. To save money, jobs are transferred to low-wage countries. Several magazines have published pictures of the sad faces of Americans who have lost their jobs, and the happy people who replaced them at approximately 10-20% of the cost. The clear culprit is the short-sighted, greedy executive who has chopped heads to save a buck!

The assumption is that lower-wage workers will not produce equal quality. But, this is NOT the case - often the quality and quantity of work is better! Sure, there are some examples of shoddy workmanship, but those are exceptions. The reality is that equal or better work is produced at a better price; namely, better productivity. In the economics of the global village, location is irrelevant.

Beyond that, is the current "jobless recovery" being caused by outsourcing? Or has improved productivity in the US itself caused the decline? Forrester Research (quoted in Business Week) estimates that a productivity improvement of 1% causes a loss of about 1.3 million jobs. And US productivity has improved by 3-5% annually since the start of the millennium. So why the uproar about the loss of "only" 300,000 jobs to outsourcing?

Here's the problem: Most people consider layoffs to be caused by revenue and profit shortfalls. But this is only partially true. When companies become more productive, fewer people can do the work and so fewer people are re-hired. There is no clear culprit to take the blame - who can fault a company for hiring only as many people as they need? By comparison, "outsourcing" is a clear target.

But, there a more basic, insidious problem here. In the past, many people thought that productivity improvements would bring a shorter work-week, and more leisure. In most western countries, this happened - the work-week was shortened from 6, to 5-1/2, to just 5 days. Even 4-day weeks were being considered, and leisure industries boomed.

But, with profit as the primary objective, most companies are NOT interested in shortening the work-week - they simply fire a few people and make the remaining workforce work harder. Why allow 30-hour-weeks, when you can fire 25% of the workforce and still get the work done?

The outsourcing drive is just another wrinkle in this scenario. Productivity is now a global race, an international competition between regions and nations. It is the source of wealth, the key to improvements in living standards. Those who can make things cheaper, faster, better will win! It is the incessant drive for profit has caused joblessness - not outsourcing.

Click Business Week - Where Are The Jobs?

Click USA Today - Economy races ahead, leaving jobs in the dust

Click Job losses caused by improved productivity, not outsourcing

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E-voting - serious conflict of interest

I am NOT one who favors "conspiracy" theories - but seriously, I don't know what to make of this. You tell me what you think.

Walden O'Dell, CEO of Diebold, the company that manufactures many of the e-voting machines the US will use in the 2004 Presidential election, is a big Bush fan! He told Republicans in a recent fund-raising letter that he is "committed to helping Ohio deliver its electoral votes to Bush."

O'Dell attended a recent strategy session with other wealthy Bush benefactors at the president's Crawford, Texas, ranch. The following week, he sent out invitations to $1,000-a-plate fund-raisers. This was days Before Ohio qualified Diebold to sell electronic voting machines to Ohio Counties for the 2004 election. With no paper trail, or traceability!

Diebold is making campaign contributions, while at the same time it is making the machines that count the votes. It has been proved thst the Diebold machines are not secure from tampering. And everything inside the machines is secret. And no one is allowed to see how the votes get counted.

Many election judges have reported that there are numerous party activists who believe that "the end justifies the means".

What do you think? Should we be worried about this? Or, should we simply shrug it off?

Click Will Bush Backers Manipulate Votes to Deliver GW Another Election?

Click Voting Machine Controversy

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Hewlett & Packard - architects of the info age

Two engineers, Bill Hewlett and Dave Packard started their company in 1938, in the garage of a ramshackle little house at 367 Addison Street in Palo Alto, California. A small sign now identifies this as the "birthplace of Silicon Valley".

HP was more than just another startup - it was the beginning of a new approach to management, the California alternative to the traditional, hierarchical corporation. Some 65 years later, the management style of HP remain the "dominant DNA" for tech companies, and a major reason for US leadership in the information age.

You know, in America, you can pick up the telephone and talk with just about anyone. Some 35 years ago, when I had only just arrived In California, I called Bill Hewlett, one of the founders of famed Hewlett Packard, in Palo Alto, California. After the usual exchange with the secretary-watchdogs, I heard him come on the line, "Bill Hewlett..." I told Mr. Hewlett I was an engineer (like himself) and wanted to start my own company. Could I come see him to get his advice? He agreed, and I went to visit.

I've got to tell you - that visit was one of the highlights of my life! Here he was, the founder of the then $ 1.5b HP, sitting with his feet up On the desk saying, "Call me Bill." I rattled off a million questions: When did you start? What were your first products? How much did you pay yourself? When did you get your first full-time financial manager? Which products are you the proudest of? And Bill answered openly and directly, with a smile that showed understanding of my wish to learn.

At the end of our 2-3 hours meeting, I told Bill I owed him a lot for his help. He replied, "You can pay me back by talking freely with other young engineers when they come to see you."

I founded Action Instruments a couple of years later, and always felt that Bill Hewlett helped me with the founding principles of this once great company (now destroyed by Eurotherm, part of Invensys). I have tried to pay Bill Hewlett back by talking with other engineers and company founders, passing on the wisdom I received from a great American guru.

Read this wonderful tribute to Bill Hewlett and David Packard in Business Week (March 29, 2004) - weblink below.

Click Hewlett & Packard: Architects Of The Info Age

You might also enjoy reading about Action Instruments, the company I founded with the people orientation and employee-participative management style I learned from my visit with Bill Hewlett.

Click Interview with Jim Pinto on the founding of Action Instruments

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Pinto editorial - "smoking gun" evidence

Former Chairman of Alcoa Paul O'Neill was George Bush's Treasury Secretary. In a book "The Price of Loyalty" by Ron Suskind, published just 2 months ago, O'Neill talked about his two years inside the Bush administration. In their first hour-long briefing at the White House, he was stunned by the president barely responding to the matters he brought up. At cabinet meetings, the president was "like a blind man in a roomful of deaf people." He states clearly that, immediately on coming to office in January 2001, far before the 9/11 attacks, the Bush administration was focused on attacking Iraq. He provided Detailed memos and meeting notes.

This week, Richard Clarke, former counter-terrorism chief to Bush, and a registered Republican who has worked in every administration since Reagan, exposed Bush's mishandling of 9/11 and the war on Iraq. His book "Against All Enemies" states clearly that, in spite of his repeated warnings about Al Qaeda, Bush was focused on Iraq.

On Wednesday, March 24, I was glued to the TV as Richard Clarke testified in a public hearing before the 9/11 commission. He too stated bluntly that the Bush administration was focused on Iraq immediately after inauguration, And ignored Al Qaeda. In a September 7 memo, just a week before 9/11, he specifically warned of serious ad imminent terrorist threats. And he was ignored. All the things he recommended to be done, were done - AFTER 9/11.

I listened to every word of Clarke's responses, to both Democratic as Well as Republican members of the commission. I was impressed by his intelligence, experience, demeanor and candor. He apologized for The administration failures, and his own failures to prevent the awful 9/11 events from happening. No one had done that before!

Instead of refuting Clarke's claims, the Bush Administration launched a campaign of character assassination, hoping that the story will just go away. I decided that I would try hard to be objective, and I listened carefully to the Press Secretary and others, and then finally to the President himself. I'm afraid I was not convinced.

In my mind, this is "smoking gun" evidence that will not go away. O'Neill stated and Clarke confirmed (from the inside) that Iraq was top priority well before 9/11, and bin Laden and Al Quaked were simply ignored. In his testimony before the 9/11 commission, Clarke stated, "By attacking Iraq, Pres. Bush greatly undermined the war on terrorism."

At an interview in his office, Bush huffed and puffed, beat his chest and thumped the table with empty claims that terrorism has always been his top priority. I couldn't help feeling - is THIS his rebuttal?

President GW Bush has a tendency to mangle words and syntax. He says "nuculer" when he means "nuclear", and "subliminate" when he means "subliminal", and mixes up "perseverance" and "preservation". He reduces facts toward simplistic black or white - shades of gray cause him discomfort. "You are with us, or against us!" He feels he cannot ever be wrong - never once have we seen him even remotely admit to any kind of error. He ignores errors - expecting them to go away. He shows immediate annoyance or anger if confronted with an opinion with which he doesn't agree.

On a hunch, I went to Google and found this on the web: a list of the intelligence-quotients (IQs) of the past 12 US Presidents.

Note from Jim Pinto:
    The list of Presidential IQs shown below are NOT correct.
    The link I had provided below: On G.W. Bush's IQ (or Lack Thereof)
    indicates that this was really a hoax.
    I had included it as a satirical note, which offended some people.
    It was done in poor taste. I was wrong, and I apologize!

IQ President
182 William J. Clinton (D)
175 James E. Carter (D)
174 John F. Kennedy (D)
155 Richard M. Nixon (R)
147 Franklin D. Roosevelt (D)
132 Harry Truman (D)
126 Lyndon B. Johnson (D)
122 Dwight D. Eisenhower (R)
121 Gerald Ford (R)
105 Ronald Reagan (R)
98 George HW Bush (R)
91 George W. Bush (R

Is this scary, or what? The President of the US is less intelligent than the average American!

Click Richard Clarke book - "Against all enemies":

Click Ron Suskind (Paul O'Neill) - "The Price of Loyalty":

Click "Analyzating" Bush's Grey Matter

Click Gray Matter: Rove is Bush's brain

Click On G.W. Bush's IQ (or Lack Thereof):

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Dr. Ted Mohns [tedmohns@yahoo.com] wrote about the politics of outsourcing, jobs, wages and taxes:
    "Outsourcing is the blame-buzzword du jour, as you point out. It's also the case that the present recovery is far from robust, and may even now be losing some steam. GDP growth in the second half is now projected by many to come in at about 3%, much of which will again be accounted for by productivity gains. Wishful thinking and Chief Whistler-In-The-Dark Greenspan aside, there is little reason to expect employment numbers to improve substantially this year. Further, real wages, adjusted for inflation, are flat over the last three years. The profits from the recovery have thus far principally gone to corporations.

    "When the last of the tax cut refunds have been spent, and the last of the cash-out re-fi money has been spent, what will become of consumer spending then?

    "The other day someone used the term "fascist" in a political discussion. Out of curiosity, when I got home I looked up the definition in the dictionary. The only required element in the definition which the US is presently lacking is that we still have two political parties. The current Republican party intends to fix that, of course.

    "I cannot tell you how bizarre it feels for me to have had that experience, and to be saying what I'm saying here now."

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Jim Fox [fox.james@att.net] is sounding the alarm on the seriousness of US manufacturing job losses:
    "Job losses in the USA can be critiqued by examining the HUGE import business and the HUGE trade IM-balance. Just look at the turmoil created when the dock workers went on strike. No imports for the manufacturers who buy from China, Inc. for their supplies. There was a subsequent Shutdown of much of our JIT manufacturing (assembly).

    Why don't we focus on the extent of imbalance in this 'free' trade scenario. If we allow freely buying from the lowest bidder, we will decimate our environment, labor laws, physical manufacturing plant space and our superb manufacturing skill base.

    "As chairman of the Industrial Engineering Technology Advisory Committee At Milwaukee Area Technical College (65,000+ students) I know that our mfg. base is RAPIDLY eroding. Graduating students cannot find jobs in their field today, where as a few years ago they were turning down employment so as to graduate. This is a very sad situation as we are transitioning our programs toward hospital applications (for Industrial Engineers) and away from manufacturing. How can a buyer justify purchasing US parts when they can get equivalent parts overseas for 1/3 the ? The US MUST balance this serious trade problem.

    "There may be a mis-perception that buying from China is not outsourcing. This is 'second tier' outsourcing at it's best. Wal-Mart buys from China. GM & Ford the same. Even Caterpillar, my manufacturing alma mater, is being forced to buy cheap foreign labor (build plants there) to remain competitive. This is going on EVERYWHERE and it must be controlled or we will lose our standard of living in the US!"

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Leon Michaud [Leon_Michaud@steris.com] on the politics Of "civil unions" for homosexuals, versus marriage - and right to free-speech:
    "I too was disappointed to hear democratic presidential candidates say that they personally approve of civil unions for gays, but not marriage. My gut feeling is that the democrats are fearful (spelled cautious) after big losses in the Senate, in Congress, not to mention the Florida ballot boxes. Still, it would be nice to vote for a candidate based upon what their stated policies are, and not what they are supposed to be. Maybe US citizens are ready to listen objectively again?

    I am still smarting from the loss of freedom of speech after 9/11 and the overwhelming smugness of the US citizenry. Yes we have the right to grieve, we have the right to be angry, but no situation warrants the amount of arrogant intolerance that I have seen exhibited by the citizens of this country in recent years. My father fought in World War II so that I would have the right to speak my beliefs. I cherish that right and will defend the right to voice my opinion, no matter what any group labels it with their vengeful agenda."

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