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The U.s. Computer Industry Is Dying And I’Ll Tell You Exactly Who Is Killing It And Why

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This is my promised third column in a series about the effect of H-1B visa abuse on U.S. technology workers and ultimately on the U.S. economy. This time I want to take a very high-level view of the problem that may not even mention words like “H-1B” or even “immigration,” replacing them with stronger Anglo-Saxon terms like “greed” and “indifference.” The truth is that much (but not all) of the American technology industry is being led by what my late mother would have called “assholes.” And those assholes are needlessly destroying the very industry that made them rich. It started in the 1970s when a couple of obscure academics created a creaky logical structure for turning corporate executives from managers to rock stars, all in the name of “maximizing shareholder value.”

Lawyers arguing in court present legal theories – their ideas of how the world and the law intersect and why this should mean their client is right and the other side is wrong. Proof of one legal theory over another comes in the form of a verdict or court decision. We as a culture have many theories about institutions and behaviors that aren’t so clear-cut in their validity tests (no courtroom, no jury) yet we cling to these theories to feel better about the ways we have chosen to live our lives. In American business, especially, one key theory says that the purpose of corporate enterprise is to “maximize shareholder value.” Some take this even further and claim that such value maximization is the only reason a corporation exists. WatchCNBC or Fox Business News long enough and you’ll begin to believe this is the God’s truth, but it’s not. It’s just a theory.

It’s not even a very old theory, in fact, only dating back to 1976. That’s when Michael Jensen and William Meckling of the University of Rochester published in the Journal of Financial Economics their paper Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure.

Their theory, in a nutshell, said there was an inherent conflict in business between owners (shareholders) and managers, that this conflict had to be resolved in favor of the owners, who after all owned the business, and the best way to do that was to find a way to align those interests by linking managerial compensation to owner success. Link executive compensation primarily to the stock price, the economists argued, and this terrible conflict would be resolved, making business somehow, well, better.

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Rubbish article. The author seems to the think the US computer industry is HP and IBM, and doesn't seem to have noticed that they already have Asian competition in the form of Wipro, Infosys, Tech Mahindra et al.

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Well I enjoyed it crashy even if you didn't - it resonated with plenty of my life experiences and provoked some thought.

Canny post Mr macbeth.


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If Apple ever get around to offering business services, they will crush both IBM and Microsoft.

They haven't done it because they know it isn't easy.

Not only is it not easy but it's not Apple's culture at all. Having become the dominant player in premium devices they make enough money from businesses buying iPhones.

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