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Hitting the Iceberg at 4.75 Knots

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  • #31
    Re: Hitting the Iceberg at 4.75 Knots

    Just one anecdotal data point, my younger brother (in banking operations) and a family friend (PhD in biochem, does completely new drug investigation, not designing analogs to take market share from existing drugs) have gotten job offers from Indian companies paying the same wage (one in US dollars, the other in Canadian dollars) that Canadians/USians get

    I don't know exactly what that entails - whether these companies are trying hard for a short period to get important knowledge, and once that knowledge is obtained, they'll reduce the pay back to normal Indian levels,

    or
    whether this is a permanent state of affairs, that beyond a certain level of expertise they'll always be willing to pay a premium for those job titles.

    Originally posted by c1ue View Post
    Foreign labor in IC (out of BRIC) will not EVER even approach US levels in cost.

    As a scholar from the Chinese Academy of Sciences noted - it would require the resources of 4 Earths to permit all of the Chinese population to achieve a US-like standard of living at present economic/material efficiencies.

    Would it be possible to get 90% of the US standard of living while using far fewer resources?

    I suspect that most resource use does not produce a lot of happiness,

    so,

    If one could apply an 80/20 analysis to the things that make people happy (which 20% of resource use produces 80% of happiness), then do all the things in the 20% that are cheap to do, could you get a very high standard of living at 1/2 or 1/4 the resource use?

    Just one example - bike commuters score much higher on happiness than car commuters - how about designing communities that encourage bike use, and have work close to home? (I write this knowing that most of the world is going the opposite route, increasing their dependence on the auto and reducing bikes ... this is, after all, a "what if" question)
    Last edited by Spartacus; 09-23-07, 07:35 PM.

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    • #32
      Re: Hitting the Iceberg at 4.75 Knots

      Originally posted by Spartacus View Post
      Just one example - bike commuters score much higher on happiness than car commuters - how about designing communities that encourage bike use, and have work close to home? (I write this knowing that most of the world is going the opposite route, increasing their dependence on the auto and reducing bikes ... this is, after all, a "what if" question)
      See Portland: Celebrating America’s Most Livable City

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      • #33
        Re: Hitting the Iceberg at 4.75 Knots

        Originally posted by Rajiv View Post
        Originally posted by Spartacus View Post
        Just one example - bike commuters score much higher on happiness than car commuters - how about designing communities that encourage bike use, and have work close to home? (I write this knowing that most of the world is going the opposite route, increasing their dependence on the auto and reducing bikes ... this is, after all, a "what if" question)
        See Portland: Celebrating America’s Most Livable City
        I would say that all of the things featured in the video do contribute to making Portland a happy place. It can be difficult to narrow down just what it is exactly that makes a place "livable", and hard to put a price on how that affects people's mood and wellbeing. If you are interested in making your city/town more livable, especially with regards to transportation alternatives, I would encourage you to look at what has been done here.

        That said, the video paints a rosy picture that suggests that everyone here is completely supportive. In reality, there is a very vocal minority who constantly complain about public money going towards mass transit, bike lanes, etc. Voters have repeatedly rejected paying for extensions to our light rail system. Our urban growth boundary has been a contentious issue since it was established in the late 1970's. Also, at times there is considerable conflict between bicyclists and drivers, with bad apples on both sides.

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        • #34
          Re: Hitting the Iceberg at 4.75 Knots

          Originally posted by Spartacus
          Would it be possible to get 90% of the US standard of living while using far fewer resources?
          I'd like to see how you'd built 90% of a house with fewer resources.

          Ditto food consumption.

          Even fuel - were everything to switch to something with an efficiency of a hybrid - we're still only talking about 75% reduction in fuel.

          Since there are a lot of people already on and using this one Earth besides Chinese, not sure where they'd all go if the 'only' 1 Earth needed were expropriated by China :rolleyes:

          Think of this another way: India with everyone living in a suburb.

          Is this possible? I think not.

          Or conversely: India with 60% of the population living in a New York style city.

          Is this possible? Somewhat more so, but you're talking about a shift that makes the population shift from the creation of Pakistan seem like a walk in the park - even excluding the cost aspects. Just think of the infrastructure building and industrialization India would need to do to achieve US style food production efficiency...if it is even possible with the land there (I don't have any idea so this is not a value judgement)

          As I said - unless we get Star Trek, it ain't gonna happen.

          As for your example of your siblings and friends are getting US style wages in India:

          Ex-patriates in Japan in the bubble, even myself from 1998-2001, were getting US wages PLUS benefits equalling 3x to 5x US standard of living.

          Even today there are companies and governments willing to (often foolishly) pay extra for perceived talent needs. It is, however, true that the superstars in any profession get premium pay.

          Not to belittle your sibling, friend, or myself as a former ex-pat, but honestly I just don't see how much delta almost ANY individual can contribute to the bottom line.

          As an example - while I was pretty cheap being single at the time, one (of several) of my ex-pat co-workers brought his 4 kids and wife. He was costing upwards of $1.5M/year between his own pay and his ex-pat benefits. Was he really generating $1M net profit over and above what anyone else could do? I think not. Note this is not even a President/Vice President type executive.

          I personally cost the company around 500K/year, of which more than half was ex-pat compensation. Despite closing 3 - $1M plus deals, the 30% or so margin on the 2 deals which probably would not have occurred without my contribution barely pays for my ex-pat costs.

          In any case, the issue is the average wage - and I don't see that reaching parity in my lifetime.

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          • #35
            Re: To GRG55

            [QUOTE=GRG55;16467]Gosh Andrew. Look what we started...

            Just touching on what I've highlighted, it strikes me that the natural human tendency is to extrapolate trends from recent experience.

            =======================

            Hi GRG. There are elements of extrapolation in my gloomy prediction, but I prefer to think that I'm mainly calculating equilibrium rather than extrapolating a trend. The distinction I'd make is that when one extrapolates from a trend, one observes the recent rate of change and assumes that it will obtain far out into the future. When trying to calculate equilibrium, one thinks about the forces driving the process, and tries to determine the configuration of the system in which those forces balance. If my conclusion is wrong, it's because I don't actually understand how things work -- not because I'm blindly extrapolating a trend. ;-)

            My supposition about the long-term value of my labor (or that of my as-yet hypothetical kids) is a supply-and-demand proposition. I think that in the long term, the supply of workers with my cognitive ability and education will increase faster than the demand for the associated labor. I think the supply will increase because the raw material is there (underutilized smart people in other countries) and because there are clear national and personal economic motives to develop it (economic growth and a leg up). On the other hand, I think demand won't keep pace because you can't increase the rate of innovation arbitrarily. Past a certain point, you've picked all the low-hanging fruit, and your return on investment in R&D drops.

            For instance, I presume that there are about four times as many Chinese as Americans who have my basic cognitive ability because there are about four times as many Chinese total as Americans -- but most haven't had the opportunity to train to the Ph.D. level, so right now my labor is valued against a smaller pool of labor than the potential size of the market. However, just judging from my observations in graduate school, both individual Chinese and their government are working pretty hard to close that gap in education. The same is true of Indians, and all sorts of other nationalities. Thus, I assume the pool of laborers with my skill set will expand as the developing world develops, until either everyone with my general level of ability has been educated to my skill level, or the ratio of supply to demand drops to the point that training to this level is no longer economically attractive. (Here enters the extrapolation -- I'm assuming the Chinese will be able to continue to train their people, but maybe their built-in demographic problem will hit before this goes to completion.)

            What about demand? I do expect demand for high-tech workers to rise over time as the economy grows, but I don't expect it to be linear with the increase in market participants. Briefly, if your market for cell phones increases by 50%, that doesn't mean you need 50% more engineers to design cell phones -- you probably just need 50% more cell phone manufacturing capacity. In order to generate demand for 50% more engineering capacity, you actually need 50% more engineering problems worth working on. (Worth it to whatever company or society is funding the research; not every good idea leads to a product in a time horizon agreeable to investors, and with the world's governments facing huge entitlement liabilities, it is reasonable to suppose that the public money available for research may decrease as we live hand-to-mouth supporting the retired.) I'm a big cheerleader for innovation and the fruits of investment in better mousetraps, but -- and maybe this is cynicism from working at a high-tech startup -- you can't increase the rate of good ideas arbitrarily just by throwing money at nerds.

            Now, I admit I may have this wrong. None of my arguments actually prove that supply will go up faster than demand -- I've really only illustrated my intuitive sense of the relative importance of the effects in play. Maybe it will turn out that even though the raw material exists, the world will perpetually lack the capacity to educate people for high tech as fast as they are required. That's actually sort of plausible, since in the near-term there's likely to be an increase in demand for engineers (and workers of all varieties) as the baby-boomers retire. Still, my underlying assumption seems pretty safe: there are a bunch of people who are like me in ability, but whom I haven't had to compete with yet in the labor market. One day they will be competing, and my labor will be less rare -- and therefore less valuable.

            Cheers,
            Andrew
            Last edited by ASH; 09-25-07, 06:06 PM.

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            • #36
              Re: Hitting the Iceberg at 4.75 Knots

              Originally posted by ASH
              For instance, I presume that there are about four times as many Chinese who have my basic cognitive ability as there are Americans, but most haven't had the opportunity to train to the Ph.D. level
              Good thread and discussion.

              I just wanted to point out that there are more than 4 Chinese for every one of you or me - the demographic differences when considering population, education preferences, etc lead to a much higher ratio.

              Then there's India...

              Another good point is that volume growth is not predicated on engineering talent growth. The corollary I drew from this conclusion long ago is that the offshoring we are seeing in the technical fields (and now increasingly finance) is not due to a lack of talent or inability to deliver, it is a pure cost reduction play.

              This again feeds into my thesis that the multi-nationals who offshore are really just disintermediating the local economy where there former employees worked - not actually creating any new value.

              While this is perfectly understandable from a selfish corporate perspective - it is not a net gain from a societal or governmental perspective.

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