Reading this article in the LA Times today, I could not help but think of all the hollowed out semiconductor equipment companies in Silicon Valley. The SEMI heavyweights have been outsourcing for years, shedding ever more employees and expertise. Is it any wonder that there are no leading-edge vendors of lithography equipment in the U.S. anymore?
In a related vein, Gio Wiederhold (Stanford Univ.) details the process by which U.S. companies set up foreign subsidiaries strictly for the purpose of holding the company I.P. (patents, for example). Why? Simply to fluff up the finances and avoid U.S. taxes. (The paper is also available from Prof. Wiederhold’s home page.)
We can rest assured that all the hot air about job creation will come to naught until the rules of the game change.
Serendipitous update: See the just published article by Dominic Barton in Harvard Business Review on “Capitalism for the Long Term”.