Former Intel CEO Spurs Debate over IT Job Growth

Ex-Intel CEO Andy Grove recently suggested policies to help U.S. job growth, including increasing taxes on products made overseas. Grove's views are fueling a debate about free markets versus protectionism.

Former Intel CEO Andy Grove has sparked a furious Internet debate with his viewpoints on how the United States can jump-start job growth.

In a lengthy column in Bloomberg Businessweek July 1, Grove outlined his belief that the United States must rebuild its manufacturing sector if the country is to regain its capacity for creating jobs, and said the federal government must be a key player.

Pointing to the vast number of manufacturing jobs in countries such as China and Taiwan-many of which have been transferred there by such tech giants as Apple and Dell-he said the United States has placed too much faith in the free market system. While these countries have built manufacturing bases that hire hundreds of thousands of people to build the technology that U.S. businesses and consumers use, the United States has let those jobs slip away.

The result of letting these jobs get moved overseas by U.S. corporations is a broken cycle of job creation and innovation, he said. As has happened with other products, such as batteries, "abandoning today's 'commodity' manufacturing can lock you out of tomorrow's emerging industry," he said.

"Our fundamental economic [belief], which we have elevated from a conviction based on observation to an unquestioned truism, is that the free market is the best of all economic systems-the freer the better," Grove wrote. "Our generation has seen the decisive victory of free market principles over planned economies. So we stick with this belief, largely oblivious to emerging evidence that while free markets beat planned economies, there may be room for a modification that is even better."

That evidence comes in the form of Asian countries that have increased their manufacturing bases over the past few decades, he said.

"These countries seem to understand that job creation must be the No. 1 objective of state economic policy," Grove wrote. "The government plays a strategic role in setting the priorities and arraying the forces and organization necessary to achieve this goal. The rapid development of the Asian economies provides numerous illustrations."

The first thing the United States must do is rebuild its "industrial commons," Grove said. That can be done through providing financial carrots to encourage keeping manufacturing jobs in the country.

Grove advised, "We should develop a system of financial incentives: Levy an extra tax on the product of offshored labor. (If the result is a trade war, treat it like other wars-fight to win.)" He added, "If what I'm suggesting sounds protectionist, so be it."