Here’s a letter to Bloomberg:
Intel’s legendary founder Andy Grove worries that America’s economy isn’t creating enough jobs (“How to Make an American Job Before It’s Too Late,” July 1). His analysis, however, suffers from several flaws. Perhaps the deepest of these is Mr. Grove’s conclusion that, because the amount invested per worker today in U.S. high-tech industries is much higher than it was in the past, “the U.S. has become wildly inefficient at creating American tech jobs.”
Mr. Grove wrongly gauges the efficiency of investment by how many workers it employs. This is like gauging the quality of a restaurant, not by the taste of the food it serves, but by the number cooks and waiters working there. Sustained economic growth happens only when fewer and fewer resources – including labor – are required to produce a given amount of output. And increasing capital investment per worker has always been, and remains, a principal means of achieving such efficiencies in resource use. Far from being a sign of “wild” inefficiency, the growing ratio of capital-to-labor in U.S. industries is a source of spectacular efficiencies.
It’s ironic that a pioneer in an industry that has done so much to make workers more efficient – to enable a small handful of workers today to produce what in the past required many workers – now calls for public policies (such as trade barriers) to reverse many of the very efficiencies that his own entrepreneurial efforts have made possible.
Donald J. Boudreaux