Some people have argued that U.S. companies have a social obligation to create jobs in their own communities.

Part of me would quote Larry Ellison, who said that hiring 10,000 people in India, for instance, is a net good for the human race. I say that tongue-in-cheek.

People are getting hired. It just doesn't happen to be here. Jobs are going to Utah, and they're leaving California, right? That's terrible. Or, God, these jobs are going to the East Bay, they're not going here.

There will almost always be people complaining that they're not benefiting, and somebody else is. I'm very aware of the sort of obligation that we have, and part of it is out of self-interest, to have a healthy economy around where I live. But the challenge is that there is a thing called the law of efficient markets.

You can have artificial regulations. You can have tariffs. You can block free trade. You can say this is not in the national interest. You can put taxes on imports. But at the end of the day all of those strategies, which are basically short-term strategies to keep jobs in the United States, fail.

And there are more people penalized by those strategies than the people that benefit. But the people that get penalized by jobs leaving are a much more vocal group than all of the other people that tend to benefit.

So, when the steel manufacturing jobs were being taken away from the United States there was a very heavy union and lobby saying that's not right. And you saw the people who were out of work, and you really empathized with all of them.

The thing that you didn't see that was happening in the background was that the tariffs put in to prevent foreign competition from coming in didn't force the efficiencies that would have shocked the system, and created more efficient steel mills and processes and innovations that ultimately would have made us competitive.

And we didn't see all the corresponding price increases to all of the secondary buyers of steel, which they then had to pass on to their next purchaser in the value chain, which then got passed on to the end consumer. So, all Americans were just a very little bit worse off because of the subsidy that we imposed.

What I would argue in a very direct way is that this economic reality is inevitable, and the question is, do we embrace it, take advantage of it, and learn from it? Do we try to see how we, as engineers in Silicon Valley, for instance, move up the value chain and become much more relevant, and recession-proof, and frankly low-cost labor-proof? Do we make the United States continue to be the source of high-tech innovation, and outsource the low-value stuff to the places that will likely do that?

Most major chip companies moved to Taiwan 20 years ago. And there was a big outcry back then, saying, "This is crazy. Why are all the chip companies moving out of the United States, and so many of the great people in our communities are now unemployed?" But last I checked Intel was still doing pretty well. So, they got out of the commodity businesses, they moved up the value chain, they spent a lot of money on R&D, and now we have a lot of sort of white-collar employees here doing great chip work and innovating.

OK. But what would you say to one of these lower-end programmers who lost his job? What would you tell that person to do?

I would tell that person that it's inevitable to the extent that someone is willing to do your job much, much cheaper than the price at which you're willing to do the job, and there just isn't enough demand to hire that other person and you. In tough economic times like today, you're exposed. There's an economic reality to that.

And you could either sit on that reality and wait until the economy gets better, or hope that this problem goes away, or you can basically move up the value chain, and the way that you do that is you gain different skill sets. Because there are a lot of jobs that we're still looking for here that will frankly never go away, at least for the foreseeable future.

For instance, design engineers. The guys designing the products for quite a while will still be here. Clearly, there is a threat of India and other countries moving up the value chain as well.

Also, there may be opportunities to manage engineers that are in India, and be the interface between those low-value development teams and the very critical work that's done here. And you may be able to get paid more. Gosh, I would pay an engineer twice his salary if he could orchestrate and manage all that and lower my risk in doing that development.

So, I would only ask people to take a look as if it was your money, your personal money in your bank account, and how would you spend it? Would you pay an engineer $120,000 for a job that the exact same engineer with the exact same abilities can do for $20,000?

Do you think that the job losses that we're seeing in the U.S. now are just the flip side of the dot-com and telecom technological revolution that we were all so proudly trumpeting in the late '90s? Do you think it just took a while to catch up? And we just didn't see that this would happen?

I think that there are boom and bust cycles, certainly, especially juxtaposed against five years ago when a recent college grad might be making $75,000 a year. This is just a very painful reality. Now, it's almost unjust. Whereas people who might not have deserved a great job were paid $75,000 and got lots of stock options, now even the best engineering graduate here in the United States, who you'd argue in most markets deserve jobs, are having a tough time.

This is one of the most painful downturns in a long time, and when you couple that with this concept of outsourcing and cost-cutting that's now happening, it is sort of a double-whammy, which is very painful. Then when you say, maybe the economy will turn around, and maybe this concept of outsourcing won't, and that will continue to happen, it's tough.

I think that people are rightly concerned, and I think it's up to all of us to be as socially conscious as we can. Certainly, at the margin, hire as many people in the United States as we possibly can do. But at the same time we have to look at the financial strength and health of the companies that we're funding.

The risk is: If I was not doing everything I can to make the companies I funded economically competitive, everyone might lose their jobs. What should I say to the rest of the people in the company who are uniquely qualified to do what they're doing? And we've shut down dozens of companies in the last three or four years.

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