Schneier on Security

Clive Robinson • September 15, 2006 10:03 AM

@Chris

Retired Director of the DGSE, Pierre Marion told CNN once about industrial espionage,

“This espionage activity is an essential way for France to keep abreast of international commerce and technology. Of course, it was directed against the United States as well as others. You must remember that while we are allies in defense matters, we are also economic competitors in the world.”

You can also find a number of other usefull quotes and refs at,

http://web.textfiles.com/software/sfs6.txt

However treat the rest of the artical as you would any document of unknown provinence.

Clive Robinson • September 15, 2006 9:01 PM

@Monkey Suit

“The way I see it, the US has the most advanced technology and wealth,”

When you talk about technology you have to be careful.

First off a lot of “US Companies” are not infact owned by U.S. interests but those abroad (think Britain, Germany, Japan Korea and one or two other countries more recently China and Middle Eastern all be it indirectly through intermeduary companies).

Likewise technology development, although a lot of “High Tec” may be made (initialy) in the U.S. it is quite often designed in other countries where there is greater expertease).

As the USD weakens against other currencies as it is almost certainly to do over the next year or so (despite the up turn in the U.S. economy) You will see an influx of work to exisiting high tec plants from other parts of the world to fill spare capacity.

The simple fact is that “Global outlook” organisations will where possible, use spare or existing capacity where it best suits them world wide. As the usuall business driver is “share holder value” seen as either growth/profit you will see these organisations take advantage of the weak USD. However the trend will quickly reverse if other developing countries (China India Tiwan Philapiens etc) give better shareholder value.

Unfortunatly this “outsourcing” abroad whilst providing nominal “share holder value” actuall critically damages a home economy.

A simple example assume you are an information based organisation like an Insurance company. Cheep global communications alows your call center to be just about anywhere in the world you would like it to be.

So as a CEO/CFO etc you think hey I have a call center with 100 staff on 15K a year and the building etc costs are another 2M a year (total 3.5million). I get a call from a company in India who after negotiation offer a package that costs only 2million a year. The apparent share holder value is increased by 1.5M if you outsource to India.

However you are taking between 2M and 3.5M (depending on the shareholders location) out of the home economy and ditching 100 jobs. This hits both the local economy and the national economy quite hard. Various economists indicate that each unit of currency outsourced has the effect of taking upto ten units of currency out of the national economy. DO you as a CEO/CFO care, no even if the company does show a downturn as a result, you are likley to have moved on to another organisation within 18 months so you will have jumped. If you cann’t jump you probably have a Golden Parachute to make a nice soft landing so no it does not effect you.

The problem gets worse, as the loss of jobs in the home country means less people able to spend money with the company (how many US car workers drove US cars then ditched them for non US manufactured when they suffered enforced down sizeing?).

Secondly how many of the new Outsorced workers in the other country will actually buy the product of the “home country” companies in prefrence to those made in their own country?

Oh and when it comes to wealth, a weakening currency usually encorages finacial investment to move else where in the world, keeping the weakening trend going. If organisations are going to increase capacity, they will try to raise money via job initiatives (ie local or central Gov money grants / tax breaks) borrow in the depriatiating currency and move money made out of the depretiating currency as quickly as possible.

About the only thing that stops the USD falling through the floor at the moment is that it is still used as a major international trading currency. However organisations are seeing the advantages of other currencies so the use of the USD outside of trade with the US is where possible decreasing.

Imagine if you will what would happen if one or two of the larger oil producing nations decided to sell oil not in USD but say Euros…