16 Hard Truths

Tom Peter’s (refered to as … the father of the post-modern corporation … business’ best friend and worst nightmare) is coming to Malaysia on 3 March. For RM2995 you get to hear him on “I got (some of) it really wrong”. Would his “Off-shoring” Manifesto/Rant get closer to reality? Decide for yourself.

“Off-shoring” Manifesto/Rant: Sixteen Hard Truths

TomObservation 02/21/2004

1. “Off-shoring” will continue; the tide cannot be reversed.

2. Service jobs are a bigger issue than manufacturing jobs, by an order of magnitude.

3. The automation of business processes is as big a phenomenon in job shrinkage as off-shoring.

4. We are in the middle of a once every hundred years’ (or so) productivity burst — which is good for us … in the long haul.

5. Job churn is normal and necessary: The more the better … in the long haul.

6. Americans’ “unearned wage advantage” (Born in the U.S.A.) could be erased … permanently.

7. The wholesale, increasingly upscale entry of 2.5 billion people (China, India) into the global economy at an accelerating rate is virtually unfathomable. Unfathomable = Unpredictable, exceptional challenges, amazing opportunities.

8. Free trade works. Period. It makes the world a safer place … in the long haul. The process is not pretty at times. (Sometimes long times.) Those who dutifully followed yesterday’s rules yet are displaced must be helped when the “rules change.” Such help must not be in perpetuity — it demands a sunset date.

9. Big Companies are off-shoring/automating almost exclusively in pursuit of efficiency and shareholder value enhancement. (This is not new or news.)

10. Big companies do not create jobs, and historically have not created jobs. Big companies are not “built to last;” they almost inexorably are “built to decline.”

11. Job creation is entrepreneurially led, especially by the small fraction of “start-ups” that become growth companies (Microsoft, Amgen, FedEx et al.); hence entrepreneurial incentives including low capital-gains taxes and high R&D supports are a top priority.

12. Primary and secondary education must be reformed, in particular to underscore creativity and innovation — the mainstays of high-value added products and services. Children should be nurtured on risk-taking, with a low expectation of corporate cosseting.

13. Future success rests upon … Excellence in Innovation. Hence, among other things, research universities must be vigorously supported.

14. National/global protection of intellectual capital-property is imperative.

15. Broadband EVERYWHERE is a National Priority … akin to the priority placed on combating Global Terrorism.

16. All economic progression is a matter of moving up the “value-added chain.” (This is not “management speak”: Think farm to factory to R&D lab.) The good news: Technology change is so vigorous for the foreseeable future that those who can “seize the moment” have lots of room to play.

17. Worker benefits (health care, re-training credits, pensions) should be portable, to induce rather than impede labor mobility.

18. Workers have the ultimate stake. And thus the ultimate personal responsibility. (Think: Emerson, self-reliance.) “Workers”/we/all must “re-imagine” ourselves — take the initiative to create useful global skills, not imagine that large employers or powerful nations will protect us from the current (and future!) labor market upheavals.

Quotes worth noting/quoting:

“Fourteen Million Service Jobs Are in Danger of Being Shipped Overseas.” (UCal study)

“One Singaporean worker costs as much as three in Malaysia, eight in Thailand, thirteen in China, eighteen in India.” (Straits Times)

“The proper role of a healthily functioning economy is to destroy jobs and put labor to use elsewhere. Despite this truth, layoffs and firings will always sting, as if the invisible hand of enterprise has slapped workers in the face.” (Joseph Schumpeter)



“The world has arrived at a rare strategic inflection point where nearly half its population — living in China, India, Russia — have been integrated into the global market economy, many of them highly educated workers, who can do just about any job in the world. We’re talking about three billion people.” (Craig Barrett, CEO, Intel)

“The notion that God intended Americans to be permanently wealthier than the rest of the world, that gets less and less likely as time goes on.” (Robert Solow, Nobel Laureate in Economics)

“The new organization of society implied by the triumph of individual autonomy and the true equalization of opportunity based upon merit will lead to very great rewards for merit and great individual autonomy. This will leave individuals far more responsible for themselves that they have been accustomed to being during the industrial period. It will also reduce the unearned advantage in living standards that has been enjoyed by residents of advanced industrial societies throughout the twentieth century.” (Governor, Bank of England)

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