Intel CEO Blasts Washington, Warns that Tech's on the Brink

[TheWebHead]

Source: CBS News

Intel chief executive Paul Otellini offered a depressing set of observations about the economy and the Obama administration Monday evening, coupled with a dark commentary on the future of the technology industry if nothing changes.

Otellini's remarks during dinner at the Technology Policy Institute's Aspen Forum here amounted to a warning to the administration officials and assorted Capitol Hill aides in the audience: Unless government policies are altered, he predicted, "the next big thing will not be invented here. Jobs will not be created here."

The U.S. legal environment has become so hostile to business, Otellini said, that there is likely to be "an inevitable erosion and shift of wealth, much like we're seeing today in Europe--this is the bitter truth."

Not long ago, Otellini said, "our research centers were without peer. No country was more attractive for start-up capital... We seemed a generation ahead of the rest of the world in information technology. That simply is no longer the case."

Read more: http://www.cbsnews.com/8301-501465_162-20014611-501465.html

[nadinbrzezinski]

1. Well I agree with his conclussion, but not the cause

indeed Bangalore and points East are places were now R&D is going up at stratospheric rates.

You guys want to pay American (and European) Engineers the same 1000\month, best case, you pay your young talent in Bangalore.... that said, it IS those same policies that you decry that ahem encouraged you to go there.

Go cry me a fucking river by the way.

[Go2Peace]

20. Kind of hypocritical considering Intel has been laying off Americans while

bringing in non-citizens. They have been a major party to the phenominon.

[Newsjock]

2. It's on the brink because of CEOs like you

... who believe in shipping your jobs overseas rather than supporting American workers. Shame on you.

[OhioChick]

4. +1000 n/t

[BadgerKid]

17. To be fair, Intel recently upgraded U.S. chip plants (OR, NM, AZ)

http://www.computerworld.com/s/article/9127708/Obama_lauds_Intel_plan_to_invest_7B_in_chip_plants_

[Go2Peace]

21. re-engineering for new chips is not unusual. Intel sent factories

overseas that had been planned, land even bought and still sitting idle. They changed their plans in 2002 and sent the resources to China and other locations instead, and left the locations undeveloped.

[PSPS]

3. "The U.S. legal environment has become so hostile to business"

The U.S. legal environment has become so hostile to business, Otellini said, that there is likely to be "an inevitable erosion and shift of wealth, much like we're seeing today in Europe--this is the bitter truth."

This is where I stopped reading. This is code for "give my billionaire self more tax breaks, immunity from prosecution for my various crimes, and continued public financing through tax breaks when I deign to build a domestic plant. After all, I'm obscenely wealthy!!1!"

[xxqqqzme]

49. amend - 'domestic plant

w/ imported workers because the education in this country is second rate'

And that is because asswipes like you are stealing money through your business 'incentives'. That money was 'a generation ago' spent on education. The future of our children and grandchildren is being stolen before our eyes.

[notadmblnd]

5. Of course we're not a generation ahead anymore.

They laid everyone off and off-shored it.

[The_Casual_Observer]

6. What's the bottom line, more H1-B visas?

[IDemo]

18. Think Moore's Law for H1-B's/corporation instead of transistors/chip. nt

[truedelphi]

7. this OP is so troubling, and comments one through six are

Spot on.

[EFerrari]

40. It's bizarre to see Intel traveling down this road.

When it was a baby, my sister in law went to work there while she got her accounting degree. In fact, I think she worked for this guy. The company was so employee friendly, everyone wanted to work there. They were opinion leaders here in the valley. Sad.

[truedelphi]

50. Intel has had its dark side.

They have been claiming for decades that they provide "only" ten percent of Israel's needs for its wars.

I used to work for them too, and believe me, requests from individuals for components needed so that the engineer could develop innovative products were often thrown aside, and never answered, while anything Israel defense wanted was answered ASAP.

And BTW, they are the main reason I left the Valeey.

Though the decision had nothing at all to do with Corporate Politics about Component Distribution.

The Day of the Spring 1984 Morgan Hill earthquake, I ended up beneath my standard issue office desk. Meanwhile the 3 ton air conditioner units strapped to the flimsy frame below the roof were swinging wildly above me and all my co workers.

I saw all previous eight lives flash before me.

I realized I really did not want to be in the Valley the next time a big one hits.

Management's response to all of us running for our lives and going out to the parking lot also influenced me. Although the phone lines were inoperable and 92% of everything I did involved phones, and although the After Shock phenomena was something to seriously consider, we were ordered back to our desks to work.

That engineer's astute scientific judgment: "It's over now. And you belong at your desks where we are paying you to work."

[EFerrari]

51. Omg. I remember that one.

I was trying to run into my sons' room to grab them and the force of the quake pushed me in the other direction.

Don't know if Judy still worked there at that time. She may have. I was in the process of going back to school and moving to Berkeley.

I don't know how people survive in corporate culture. I tried at AT&T after I was hired out of Operator Services and into management. It was stultifying. The lady that trained me retired and drank herself to death two weeks later. It just didn't seem very friendly to human life. Actually, it was much easier to work for half the salary processing calls and being timed two or three times a week and work every holiday in Operator Services than it was to sit in that office and pretend to work. I was so out of there and got chewed out very loudly by everyone in my family. Oh well. :)

[bemildred]

8. Orwellian bullshit from another CEO. nt

[msongs]

9. why is there no competition for lower priced Intel CEOs??? nt

[Canuckistanian]

43. They should outsource Their CEO jobs to Bangalore

Then they'll REALLY become competitive.

[L0oniX]

10. Go ahead Intel ...move your shit to China ...you know you want to.

That's ok though because after all the jobs are gone WE WON'T BE ABLE TO BUY ANYTHING ANYWAY!

Oh and "U.S. legal environment has become so hostile to business" fuck you ...businesses have become hostile to workers! Go ahead corporate america ...keep handing out ya millions in bonuses ...and don't hire anyone ...unless they are from China or India.

:mad:

[jtuck004]

12. They don't need for us to buy things that badly any

longer. That's the problem. The developing countries are providing record profits for companies that are international, like Coke, Disney, most of them. Look at their annual reports - profits are up, even though they are down in the US. They are up in China, Brazil, Russia, India.

China is spending billions to put up polysilicone plants and become the world leader in alternative energy. Applied Materials, our largest chip maker, is in the process of doing exactly what you said, and they are building the largest polysilicon plant in the world in a city in China (just had lunch the other day with the engineer teaching them the process - they really need some of our expertise. He needs a job, and they are gone here).

They don't need us. So now what are we gonna do?

[JDPriestly]

29. Well, our Constitution permits our government to "take" anything they leave behind

for just compensation. What do you suppose is the just compensation for properties that have been pretty much abandoned by their previous owners? Not much, I should think.

It sounds like the heads of these big companies hate our democracy. They prefer countries like China which are dictatorships or countries like India with a long history of a system of castes.

We will be just fine. Americans will form cooperatives and devise new ways to work together to provide for ourselves. We settled unknown territory when we came to this country. We are now entering unknown territory in terms of the kind of economy we will ultimately have. I don't think we will be socialist, but I don't think we will be capitalist in the sense of corporatist either.

Once this initial shock period is over, once we realize that we have been screwed and have to find our way on our own, we will be fine.

By the way, what kind of environment will China have after it has built all those polysilicone plants and got them working? Will anyone be able to live there in a hundred years? Quality of life is worth something too.

[jtuck004]

34. We can take property all day long. But then who pays the property

taxes that pay for the schools, police, fire - all the public jobs?

So they leave, and we think the teabaggers and democrats are gonna form a collective 'cause that's how the Pilgrims did it? We do know this is 2010, right? I am wondering how that structure is going to support medical and biotech schools...

Why do Americans think China is just blowing smoke out the stacks like we do? They are growing much faster, and do have issues similar to ours, but China is investing money to work on the environmental problems. Some of the latest advances are coming from them. Even other countries are purchasing technologies from them - U.S. included, here...

Actually, we have historically been better at innovation than they are, and with a little investment in schooling and some capital from the gov, we could be selling them some of those same advances.

[JDPriestly]

39. "China" is investing. No successful country relies solely on

private investment for innovation. The free-market influence here has prevented a lot of government investment in basic research and development. We need to change that.

If the companies leave, our governments, local, state and federal will take over their properties and turn them over to others for productive uses.

As for collectives -- that's how things have been done in some parts of the country for a long time.

Here is an example: The Bank of North Dakota

The Bank of North Dakota is the only state-owned bank in America—what Republicans might call an idiosyncratic bastion of socialism. It also earned a record profit last year even as its private-sector corollaries lost billions. To be sure, it owes some of its unusual success to North Dakota’s well-insulated economy, which is heavy on agricultural staples and light on housing speculation. But that hasn’t stopped out-of-state politicos from beating a path to chilly Bismarck in search of advice. Could opening state-owned banks across America get us out of the financial crisis? It certainly might help, says Ellen Brown, author of the book, Web of Debt, who writes that the Bank of North Dakota, with its $4 billion under management, has avoided the credit freeze by “creating its own credit, leading the nation in establishing state economic sovereignty.” Mother Jones spoke with the Bank of North Dakota’s president, Eric Hardmeyer.

Mother Jones: How was the bank formed?

Eric Hardmeyer: It was created 90 years ago, in 1919, as a populist movement swept the northern plains. Basically it was a very angry movement by a large group of the agrarian sector that was upset by decisions that were being made in the eastern markets, the money markets maybe in Minneapolis, New York, deciding who got credit and how to market their goods. So it swept the northern plains. In North Dakota the movement was called the Nonpartisan League, and they actually took control of the legislature and created what was called an industrial program, which created both the Bank of North Dakota as a financing arm and a state-owned mill and elevator to market and buy the grain from the farmer. And we’re both in existence today doing exactly what we were created for 90 years ago. Only we’ve morphed a little bit and found other niches and ways to promote the state of North Dakota.

. . . .

Members of my family were very active in that progressive movement. I think we will return to that sort of model -- self-help.

[jtuck004]

44. I said in #12 that china is investing. And you can take all the property

you want, but if you take a look around there is lots and lots of property sitting idle, as well as millions more foreclosures of residential and commercial property to be done over the next year or two. The only reason it is not being done faster is that banks are carrying it on their books at mark-to-myth prices, allowed to by FASB rules because otherwise there would be hundreds more insolvent banks. There is no one to turn it over to because there is not enough production or work as it is. There is almost no city of any size that doesn't have property they will give you, with tax breaks, to start a business. But there is no demand, so no one is taking them up on it. Until the gov steps in and starts something much bigger than just prop up the greedy and avaricious financial sector, or some new technological era drops in on us, we are going to continue to fail.

I am familiar with the Bank of North Dakota. They are doing well precisely because they are so small and focused - but they don't compete on a global level, not even close. I am a big fan of theirs, as well as companies like Springfield Remanufacturing and dozens of others. But in a country with a population of 300 million people who have been used to living and eating in a certain way, it is going to come as a great shock when they can no longer do that. Will there be some collectives and others? Sure. But basing the future on how people lived in the past may not be the wisest thing - there were no manufacturing empires in China or many other countries, and Iran didn't have nuclear power as they do today.

We no longer have enough arable land to grow enough food to feed the population of this country, and a seriously questionable tie to future financial markets. In the process of trying to set things up like it was done in 1950 millions of people could die, needlessly, simply from food or water shortages. We saw what happened in New Orleans, and that was just one city. Israel lobs some bombs on Iran, which could easily happen within a year according to Israel, and life here could change drastically for the worse.

Why would a smart group of people let it happen? Sitting around bitching at each other, pointing fingers, instead of doing the hard work of figuring out what needs to change.

Regardless, we are gonna get what we engineer. We need to figure out what changes need to be made and get on with it.

Or continue to invest in China, while we open more phone centers in North Dakota.

[jtuck004]

11. So what's the answer? Because we are going to be overtaken

by China in just a few years, millions of Americans are going to enter retirement with little to no social security and no housing, millions more of the young are going to wonder why they should go to anything beyond high school or community college, and we are going to be beholden to developing countries going forward. We have a national debt, China has $2 Trillion U.S dollars in reserve (perhaps soon to be worth less, but we will see).

His personal tax rate needs to go up, but perhaps the country needs to make the capital expenditures that keep people working.

Maybe we need to teach more people about business, and get them comfortable with other structures that pay less at the top and keeps jobs here for a patriotic, other than profit reason. Maybe the country makes the capital improvements and holds title to the structure?

What are the answers to this? 'Cause if we don't have any, someone better come up with a way to survive with no growth, something we have never had to do in the history of this country. Watching your pension default, your house value drop by half or more, any investements drop by 60%.

Grove and others are quite correct about the outcome, but paying engineers $800 a month, and rebuilding our homes so they are all 600 sq feet apartments that are surrounded by smog, fast trains, and vast slums made from the wreckage of old neighborhoods just doesn't sound like a great future.

[glitch]

15. We send the CEOs to China, since they love it so much.

No more American perks, they can helicopter over the vast slums through the smog over there. Of course, if they mess up and get caught they'll have to commit suicide. It's just a different way to avoid legal hassles anyway, it should be no problem.

[jtuck004]

23. Uh, they are already there. Screw the American perks. 500 companies,

including Kraft and Disney, opened regional offices there last year. They make far more than the average Chinese, and you can feel free to ask people on this board what life is like in China - quite nice, apparently. And the suicide thing - not so much anymore ;) The one's you hear about now are desperate workers, but the rate doesn't appear to be higher than it is here. Water is a problem, but China is investing in solutions for that as well.

Our future, however...

From a U.S. News article here...,

"Imagine if the U.S. economy grew just 1 percent per year over the next 20 years. The Dow Jones Industrial
Average would plunge by 60 percent, to less than 4000. The average price of a home would fall by nearly 50
percent, from $184,000 to about $100,000. The economic carnage would make the Great Recession seem gentle,
upending families, devastating communities, and transforming America for generations."

Given the tenuous state of things, all it would take is one bombing mission on Iran (which Israel is sounding perilously close to since the reactor went on line in Iran) and the U.S. may just slam into the wall.

But, perhaps, since Americans burned up much of what they had accomplished with their SUV's, McMansions, and profligate lifestyle, too lazy to turn off the t.v. and take a class or get involved, (except when they are blaming, pointing fingers and bitching), this will be their reward. The grownups go global and leave everyone else to their huts.

Just sayin'...

[glitch]

28. I mean actually physically send the CEOs. And not let them come back.

Too bad about the suicide, maybe once the Chinese have to deal with the CEOs regularly they'll bring it back.

[Still Waters]

33. I've thought about this too

Too bad we can't pass a law, that any corporations that close American facilities and send the jobs overseas are then obligated to send their CEOs and upper management to live in whatever country they sent the jobs to. You show no loyalty to us, then you cannot live with us.

[glitch]

42. Wouldn't that be sweet? Welcome to DU! nt

[jtuck004]

35. LOL. You could have a point there.

Actually they are spending billions to attract them there.

The thing is, maybe we need to quit looking at the structures which encouraged these tax-dodging assholes to use people up and throw them away.

All the indications are that we are on a long slide down. We have nothing to lose by trying to invest in some re-education in science and economics, injecting some capital, and distributing stock so employees are owners and board members in cooperative business - businesses that can compete with anyone in the world.

Then the current CEO's will have a real problem when their shareholders drive the price down while they move to the new structure.

[Still Waters]

30. You have expressed the same thoughts I have

This is a great and frightening post, jtuck004. Things look so bleak now and I just really don't see the way out for us. The jobs just are not there. With other recessions I have lived through, you could see the light at the end of the tunnel. The computer/internet revolution, increased military spending, and real estate bubbles were able to lift us up (temporarily, as it turns out.) But we have no worth to these corporations now. They are interested in the middle class, all right...the burgeoning middle classes of China and India. We are to be discarded by them like yesterday's newspaper.

What are we to do? There is no politician out there addressing these issues. There is no politician that is confronting these corporations that drum out their 40- and 50-something employees, and fighting for people that are facing 15 years of unemployment before they can qualify for SS and Medicare. There is no one fighting for the young people struggling and hoping to get a decent job to give them their start on life's journey.

Just feeling very despairing and hopeless. How do we cope with millions of people with practically no income, who have exhausted the little bit of savings they had years ago? I don't know what the answers are...I know we need new ideas and bold leadership, and we sure aren't getting it.

[jtuck004]

48. We will cope with it like we always have - we will do what we can

with what we have ;)

I think the politicians are wasted in all this, except when they have their feet held to the fire by those who need for them to do something different.

We have 30 mill unemployed or underemployed. Unless something changes, that will near 40 million by next Spring - and with a little organizing, 10 million people can be a formidable force in pushing for action.

And maybe it's not a time for despair. Maybe we have gotten so used to depending on others that a little whack up the side of our collective heads could be just the ticket for a new awakening.

Don't despair...organize. Educate yourself so you know what is needed, (more training in higher technologies and business perhaps, a push for alternative engergies so we are not so dependant on others, more ideas for what we could manufacture, here, for the 21st century). Then talk to 4 or 5 people, get them to talk with 4 or 5 more, etc. We have always been able to figure out an answer, but the first step is recognizing that we have a challenge.

[Terry in Austin]

45. Systemic change happens

The system goes along by its own rules. Government policy can tweak it somewhat, as long as it's in the same general direction, and throughout the 20th century, this gave us the illusion that government could guide the economy and "answer" economic problems.

Now, the system is nearing the end of its 150-year growth phase as the fossil fuel-dependent industrial economy literally starts running out of gas, and the growth-dependent logic of capitalism approaches its logical conclusion. This, IMO, presents a fundamental change in direction (i.e., down), one that governments just simply won't have the power to shift.

The power lies in a shift in the paradigm, away from one that depends on endless growth, endless accumulation of capital, and endless supplies of cheap energy. Nobody really knows just what shape it will take, but it's a safe bet that sheer necessity will shape it.

Since globalism is also on the outs, the potential of China and others as "overtakers" will probably be a moot point. Cold comfort, maybe, but there's gotta be some good in this mess!

[mike r]

13. Every "warning" from high-tech executives in the last 20 years has been self-serving bullshit

The semiconductor industry routinely issued "warnings" for years. They got all kinds of work visas, tax incentives and grants. And then slowly moved most of their factories - and jobs - to other countries.

[JDPriestly]

32. If they go to places like China and India, they will ultimately look back

fondly on our legal system. We actually enforce contracts. Does China? Does India? We don't behead polluters. Americans don't cheat much (compared to people in many other countries). Intel is likely to find after maybe 25 years in China that it would have been better off staying in the U.S. in spite of our legal system.

Evidence is our friend. And in the American legal system, Intel gets to present its evidence. In China or India, who knows? Even in Europe the legal system is less favorable to business than here. Here, if a company pays good defense lawyers, its chances of winning a lawsuit are very good.

[ShamelessHussy]

14. they won't be happy until we are all slaves again, i suppose

what am i talking about, we Americans are practically slaves now, and they still continue to beat up on us, even as they take all our jobs to other nations, as they've been doing for decades.

these folks are only in it for themselves, they could care less about weTHEpeople, they are now all having wet dreams about the HUGE chinese market they've been building up... to put in debt and enslave.

and so it goes...

[Mr. Sparkle]

16. This is the same guy who just bought Mcafee for $7.6 billion dollars last week.

Mcafee, for those who don't know , is the biggest load of horse manure ever to infect a computer.

[bemildred]

19. Good point. nt

[madrchsod]

22. wow...that crap is actually worth 7 billion?

[jtuck004]

25. You got that right. How do they get record earnings of ~$2 Billion/year? n/t

[Dead_Parrot]

41. That was my first thought, too... nt

[Blackhatjack]

24. Just more proof that 'Corporations' are not and will never be 'Patriotic' and that is why...

... it is ridiculous to treat them like 'persons.'

They are going to chase the dollar, and gut everything that gets in their way. American workers are just a hindrance to that goal. Thus the pronouncement that the US Govt is 'hostile' to them.

[blackspade]

26. Hey douche! Yeah, you Otellini!

How about being specific about how the 'U.S. legal environment has become so hostile to business'
What? Can't do it?

What bullshit.

[Prometheus Bound]

27. Well, there's some good news in that rant.

He says the problem is not higher U.S. wages but anti-business laws. He seems to focus on the R & D tax credit. And he points out that these various laws he complains about add 25% to the cost of setting up a factory.

I'm not familiar with these laws or the R&D tax credit issue, but at least he's not blaming the problem on American labor costs. I find that a bit encouraging.

[matt819]

31. Simple question

How many jobs has Intel outsourced? I mean that. I don't know the answer.

Now, I suspect that it's quite a few, and I'll be the response would be that they could find no skilled American workers.

Hmmm. If you not part of the solution, you're part of the problem.

[Safetykitten]

36. Translation: I need more visas.

[mrdmk]

37. Nothing like a major contradicton

1) U.S.A. has a lousy educational system...

2) Foreigners get an education "a degree" in the U.S.A., then have to leave "kicked out!"


<from OP link>
For instance: In 2005, midway through the Bush administration, Microsoft's Bill Gates told a Washington audience that curbs on immigration and guest workers would provide a boost to research institutions in China and India. A year earlier, then-Intel CEO Craig Barrett warned that the U.S. must dramatically improve its education system.

That never happened. Nor did politicians follow Gates' advice to rethink laws that led to foreign engineers being kicked out of the country as soon as they finish their degrees.
<end of snip>

This is a glaring example of bullshit. There is no better way to describe the proceeding. How thick can it get?

An old mrdmk proverb, 'a person who gives out knowledge has no loss what-so-ever, because they still retain the knowledge given for themselves to use, if they wish.'

obtw: What part of Europe was Mr. Otellini talking about? Russia, Poland, The former Yugoslavia Counties, Greece, Iceland, whoever else did the Milton Freedman genuflect?

[OhioChick]

46. Nice catch! n/t

[primavera]

38. You mean...

... the kind of shift in wealth that has European economies prospering while ours sinks back into feudalism? Yeah, okay, I'll go along with that.

[rocktivity]

47. TORO TURD!

Unless government policies are altered, outsourcing, domestic labor undermining, and corporate personhood is what will continue!

:nuke:
rocktivity

[harun]

52. "We still subsidize trains and agriculture"

Yah, food and transportation are so OLD SCHOOL!!!!

What a flippin moron, no wonder their company is getting beat by AMD and no wonder they had to lay off my brother in law in the Philippines. POOR MANAGEMENT!

This article could have as easily been titled:

Intel CEO says of Obama Administration: "I really think they're trying"

Which he does state in the article, but instead we get "Intel CEO blasts stimulus" (CNN Money).

[wordpix]

53. "U.S. must dramatically improve its education system" Sadly, it's still not happening

I teach and I see math books for middle schoolers focused on converting pints and cups to quarts and gallons, inches to feet, etc., and NOTHING about the metric system until upper middle or high school. RIDICULOUS! Metric is the one and only System Internationale for scientific measurement but the US still insists on using the English system, even though metric is so much easier to use and calculate.

Yesterday, I was helping a 6th grader figure out what columns the digits were in for numbers like

314,009,687,215,498.85402934 Seriously. This is a stupid waste of teachers' and students' time. Use metric, for FSM's sake!

If we don't teach children metric from an early age, some will not be able to "get it" later and as for converting Eng. to metric, it will be worse. :crazy:

[PassingFair]

55. They mean teaching them to be automatrons that will work for near nothing.

And be happy about it.

[ProudDad]

54. Pot calling kettle black...film at 11

This fucker, along with Bill Gates, Larry Ellison and a few others are the MAIN reason that tech innovation has been stifled in this country.

I was in the computer business from 1965 until I was terminally outsourced on in 2005. I was there in the 80s when there were choices. When M$ software and Intel chips were shit, they had viable competitors and I could STILL RUN THE SAME APPLICATION DEVELOPMENT SOFTWARE on other platforms. Their (normal capitalist) behavior that included buying up, dumbing down and finally eviscerating or removing better products stifled innovation.

Hey, asshole, it's NOT government regulation but your own greed that fucked up the tech business...