OUTSOURCING RESEARCH AND DEVELOPMENT

Engardio, Pete, et. Al. (2005) Outsourcing innovation, BUSINESS WEEK,
3/21, 86-90.

At first, it was blue collar jobs, then white collar jobs, now it is
folks that are involved in research and development. Innovation is more
profitable if it is done in India. You save money on R&D and you make more money.

In the short term, that is right. However in the long term, whoever is
doing the innovation quickly makes a "knock off." That imitation goes to a
local company within the country of India and the product goes international
for a lot cheaper. Inadvertently, the American company outsource innovation
begins to destroy themselves by funding new ideas that can be stolen by 3rd
world competitors.

Alas, innovative types in the states lose out and go elsewhere. The
American dream is soured and the whole thing begins to smell. Globalization has
its limits. The pie continues to get smaller for Yanks (in real dollars) as
more money goes to the rich and their property or investments in India and
China. At home consumers first feel the cheaper prices and then imperfect
competition sets in and prices stabilize higher. Overtime, overcapacity
and debt push standard of living downward.

You then create 2 Americas. Those that own it and the others.