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Chris Murphy
Chris Murphy
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Andy Grove: Knowledge Work Isn't Enough

Intel co-founder Andy Grove doesn't have all the answers in his Bloomberg column on "How to Make an American Job Before It's Too Late." But he makes one opinion clear: The U.S. can't innovate if it doesn't also build stuff.

Intel co-founder Andy Grove doesn't have all the answers in his Bloomberg column on "How to Make an American Job Before It's Too Late." But he makes one opinion clear: The U.S. can't innovate if it doesn't also build stuff.Among many intriguing ideas in the full column, which you should read, Grove attacks the notion that the U.S. can focus on knowledge work, doing the design and engineering and feeling comfortable leaving the manufacturing to lower-cost countries.

He offers two main reasons. One, that approach just doesn't create enough jobs. Writes Grove:

Startups are a wonderful thing, but they cannot by themselves increase tech employment. Equally important is what comes after that mythical moment of creation in the garage, as technology goes from prototype to mass production. This is the phase where companies scale up. They work out design details, figure out how to make things affordably, build factories, and hire people by the thousands. Scaling is hard work but necessary to make innovation matter. The scaling process is no longer happening in the U.S. And as long as that's the case, plowing capital into young companies that build their factories elsewhere will continue to yield a bad return in terms of American jobs.

And two, the U.S. won't create enough great startups if it's not also manufacturing. He cites the advanced battery market, which is poised to boom with the growth of electric cars:

A new industry needs an effective ecosystem in which technology knowhow accumulates, experience builds on experience, and close relationships develop between supplier and customer. The U.S. lost its lead in batteries 30 years ago when it stopped making consumer-electronics devices. Whoever made batteries then gained the exposure and relationships needed to learn to supply batteries for the more demanding laptop PC market, and after that, for the even more demanding automobile market. U.S. companies didn't participate in the first phase and consequently weren't in the running for all that followed. I doubt they will ever catch up.

Grove offers some prescriptions that will rankle any free trader, including taxing foreign-built goods and banking that money to help companies that scale up U.S. production. But more broadly he argues for "job-centric political leadership" and "job-centric economic theory."

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