August 13, 2005
-- by Thomas Leavitt
[Interesting op-ed piece in the San Jose Mercury News. Small start ups are the growth engine of the economy... what happens when most of the money flowing through them is routed overseas, instead of being used to buy locally manufactured goods or hire people here in Silicon Valley?
The other end of this is, as he commented, outsourcing isn't the only factor... technological improvements and the growth of the Internet as a marketing vehicle enable customer acquisition and rapid growth without large technical or sales/support staffing.
This is a good thing, from the standpoint of efficiency... however, if you have a persistent surplus of labor, the result is a rapid depreciation in wages... maybe even with effectively no bottom.
Classic economics doesn't permit this, supply and demand must always revert to an equilibrium - but it doesn't account for non-market factors and human behavior. I can point you to many areas around the planet with umemployment rates at or above 40-50-60%.
Posted on Sun, Aug. 07, 2005
THE NEW NEW ECONOMY
There is an abundance of ideas in the valley.
BLAME START-UPS: THEY'RE NOT SPREADING WEALTH OR JOBS -- AND THEY MAY NEVER AGAIN
By Miguel Helft
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