bostonbubble.com

[balor123]

U.S. Science and Engineering Stats Tell a 'Worrisome Story'

[balor123]

[walker]

The R&D budget in the software company I work for has been flat for years, while delivering higher profits every quarter. How did they do it?

Outsourcing to an Asian country ...

It feels good to say that the Americans will do the design and "idea", and leave the low-level number crunching jobs to the others. But with all those entry level jobs gone, where will tomorrow's designers and innovators have a start in their career?

[balor123]

That's a good point. And those Asians are at least as ambitious if not more than Americans given that their lives are in general harder. Countries start with the low skill jobs and gradually build up from their to the high skills jobs. All things being equal, companies are more successful when operated in one location than spread amongst several. Most importantly, the customer base is rapidly moving to Asia, making us out of the way.

[Boston ITer]

balor, you beat me to it this time.

I was all ready to pounce on this article but you got to it quicker.

All and all, the other factor is the intense amount of capitalization (both from the west and the Asian countries themselves), happening now, to make east Asia, the industrial R&D center of the world. This is not going to reverse in our intermediate lifetimes.

The end result will be the US becoming like Brazil (during in the 70s & 80s) w/ increasing crime, growing underclass, and a real estate crash. In fact, in some of the top neighborhoods in Rio, you can almost tell that the luxury condos were built in the late 60s where modern (or was it post-modern) styles were highly sought after. There's almost a two plus decade gap, till the 2000s, in newer condo styles. Our neighbor to the north, Canada, which doesn't have delusions of American century-hood will be a commodities supplier for east Asian industrial powerhouses and will subsist as another lower middle class, but stable society. Vancouver will be the Asian outpost on North America so it's future, albeit following a major real estate crash, will be a type of diaspora haven where rich ex-pats, from east Asia can hire poorer Canadians and Americans, as servants, chefs, and drivers.

[balor123]

Well America has a lot of natural resources as well. In fact, we supposedly have the world's largest reserve of oil except that it can't be economically extracted (and we're hell bent on reducing our consumption). I don't think our it will carry anywhere near our current standard of living, though, especially if our services sectors and unions continue to suck increasing percentages of that wealth.

[Boston ITer]

The problem with US oil (Shale) or coal extraction is that it'll be more out of necessity than economics, in the decades ahead, as the petrodollar exchanges diversify into a basket where the FX value of the USD is less desirable in the purchasing of oil resources. Thus, these energy industries will basically be private-federal collaborations and perhaps even the military will be involved, in keeping it going, since it won't be competitive on the world markets.

In contrast, Canada can actually run a low grade welfare state since they have the world's largest oil sands depot as well as minerals, timber, and water and with the taxes from the above, they can effectively put a large percent of their 30 million citizens on the dole. That'll maintain a reasonably safe society (i.e. limit the no of roving bandits), and rich ex-pats from Shanghai can live peacefully in Vancouver (or Toronto, if they like the cold), as a way of diversifying their holdings, out of reach of the PRC govt. These rich ex-pats will also supply the service jobs to locals, who want to make a notch above the dole payments.

On the other hand, the US can't afford to feed 300 million w/o a real economy and at the moment, we don't have one. We have something evolving into a financial feudal state where the Hedge Fund/Masters of the Universe types have everything and the average worker is a peon for a WalMart-like faceless corporation. The problem again, w/ this model, is what stops the Masters of the Universe from moving their holdings to Bermuda or Singapore, and running their financial operations there, for either tax or market penetration purposes? Realize, the Hamptons isn't the most secure outpost if there are angry gangs in Nassau Co, looking for a handout.

[balor123]

I was going to use Feudal to describe the economy now as well. You have a number of privileged players who are granted not land but GDP. Think bankers will really move overseas? Have you noticed that the bankers in every major financial center have threatened to move if X, Y, or Z? American bankers mostly speak English. Their family is here. The more money a group seems to make the more obnoxious they become about it (present company excluded of course ). They're not going anywhere but as the US becomes poorer I think they will as well.

[Boston ITer]