Tuesday, May 01, 2007

Engineers R Us

Yesterday NPR’s Morning Edition interviewed Vivek Wadhwa, a Duke researcher and former tech executive who examined the statistics underlying the popular assumption that America has a shortage of trained engineers. Corporate executives have cited the alleged shortage as the reason they seek out engineering talent overseas. NPR played an audio clip of Bill Gates citing the shortage as the reason Microsoft has a campus in India.

The Duke study disputes the notion that America’s engineering talent is insufficient to meet the needs of American employers, either in quantity or in quality. Wadhwa concludes that the engineer shortage (at least in aggregate) does not exist. While it is true that India is turning out large numbers of engineers, many of them are unemployable, Wadhwa himself alleges. The training available to US students still exceeds the education students acquire there. His concern is that the continued loss of research and development jobs to offshore locations will eventually erode America’s competitive edge.

Corporate executives Wadhwa spoke with admit privately that the number one reason for offshoring is "cost, cost, cost." When he ran a tech firm, Wadhwa had outsourced to India and Russia for that reason. NPR asked, if he should ever find himself running a tech firm again, what he would do differently.

“If I was a tech entrepreneur I would act in my own company's interests,” Wadhwa replied unapologetically, “and I would find the cheapest labor, the best quality I could, and I would go overseas right now. That's where the problem is with the system ...”

The interviewer was taken aback.

“Well, that's what the problem is. That's capitalism. The system rewards you for doing what's in your own interest."

For example, the interests of Gates the philanthropist and Gates the chairman of Microsoft are different, Wadhwa argues. Gates "doesn't get paid to worry about U.S. competitiveness and to worry about social issues as the chairman of Microsoft."

And that's the problem as Wadhwa sees it. The system forces managers into making decisions based solely economic interests. It forces the champions of public morality into arguing that greed is good (for business). Please, check your conscience and patriotism at the door.

But Wadhwa is describing the nature of the public corporation, not capitalism itself. Capitalism existed millennia before the appearance of the corporate model for organizing businesses. It is only one model, but its success has made it so ubiquitous that we have come to accept it without examination as the model.

Politicians celebrate the mom-and-pop small business as the engine behind American prosperity and job growth, but our model of success is Wal-Mart. Since it went public Sam Walton’s five-and-dime chain has morphed into the world’s largest public corporation, bringing to communities what Hillary Clinton diplomatically described as a “mixed blessing.” That mixed blessing includes lower-cost consumer goods made in China, not here and – owing to Wal-Mart’s take-no-prisoners pricing – rapid death to its small competitors in towns across the country.

Would Sam recognize or approve of what his creation has become? Once he went public, Wal-Mart’s visionary creator lost control of his creation to its absentee landlords: the shareholders. The public corporation already exerts more control over human affairs than the people who created it or serve it.

As I have written before, our creation seems to have already grown beyond our control.
“The citizens of the United States must effectively control the mighty commercial forces which they have themselves called into being. There can be no effective control of corporations while their political activity remains. To put an end to it will be neither a short nor an easy task, but it can be done.”

— Theodore Roosevelt, 1910

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