Saturday, April 23, 2011

Is Silicon Valley's Resurgence a Sign of Good Things?

We saw this piece from Bob Wenzel and the Economic Policy Journal: demand and salaries for software engineers in Silicon Valley are going through the roof these days. Great, right?

Do you know the way to a great engineering gig?
Well, according to Wenzel, not so much. Bob is one of the sharper economic analysts we know of, and he points out that "software engineers in the wage sector are similar to what oil is in the natural resource sector, a product/wage that is in demand across the structure of production." In other words, if you believe basic Austrian monetary theory, in which new money finds some people before it finds others (and some people get the chance to cash in before inflation brings the rest of the economy back to earth), what this news may mean is that software engineers are just at the front of the QE curve. So, if you're in a less-sexy profession, you may be facing the possibility of seeing the prices of essential goods go up dramatically without a corresponding increase in your income. Dang!

This downer is only exacerbated by the results of a survey of Silicon Valley business leaders, which were released last Thursday. According to the San Jose Mercury News, CEOs in the Valley continue to be leery of California as a place to invest for the long-term. While over half the CEOs surveyed expect to be hiring this year, a large number are concerned about California's "sustainability". Their concerns run the gamut from budget gridlock and unfunded pensions to regulations and the associated difficulty of raising money. And include high taxes, the high cost of living and labor, traffic, and the pitiful quality of education in the state.

So, business leaders in Silicon Valley are trying to find good engineers, and they're not finding it hard to find the funds to hire them. But they're on record expressing their skepticism that they can do business in California over the long haul.


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