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Alcatel-Lucent Cuts Go Deeper — 7,500 Jobs Gone and Counting

Soulskill posted about a year ago | from the sorry-about-your-luck dept.

Businesses 78

Dawn Kawamoto writes "Alcatel-Lucent has cut 7,500 jobs since the start of the year — a couple thousand more than what employees of the embattled telecom equipment maker may have been expecting. Last summer, Alcatel-Lucent said it expected to cut over 5,000 jobs by the end of 2013. Well, cuts have gone deeper than that, and the company's newly minted CEO, Michel Combes, told Wall Street during the second quarter earnings call Tuesday to expect additional cuts and the related cost savings in the coming quarters."

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Cost Savings?? (4, Interesting)

Anonymous Coward | about a year ago | (#44430429)

"expect additional cuts and the related cost savings in the coming quarters"

What about the coming years? I'm not familiar with this particular situation but I've seen plenty of companies happy to give up everything in the long term for short term gains to satisfy Wall Street. Is that the case here?

Re:Cost Savings?? (0)

Anonymous Coward | about a year ago | (#44433343)

"expect additional cuts and the related buy-out by companies that still invest in research about 10 or 20 years down the line"

FTFY.

Cutting jobs for out-dated / legacy systems (2, Insightful)

Jstlook (1193309) | about a year ago | (#44430469)

Looks like they're dropping dead waste, and putting more money into R&D.

Good Job! Sorry if anyone here was affected.

Legacy/OutDated != waste (4, Insightful)

sirwired (27582) | about a year ago | (#44430599)

For companies with a "well-established" product line, legacy systems are often essentially "free money", especially for telco equipment with embarrassingly long lifetimes.

Re:Legacy/OutDated != waste (3, Interesting)

Anonymous Coward | about a year ago | (#44430777)

The telco gear makers would much rather that those telcos buy the new stuff as it's far more profitable. You're going to see companies like ALU and others in their space start to put the squeeze on these telcos that refuse to upgrade. The price of running your 30-40 year-old central office phone switch is going to go up.

The biggest challenge and disappointment in the telco market is that the telco companies have shown such little interest in upgrading their networks. There has been a lot of speculative investment in telco gear makers in the last 10 years or so on the basis that we would be seeing billions of dollars invested in upgrades that have not materialized. Now what we're seeing is the demise of companies like Nortel and radical changes happening at ALU and NSN to stay afloat.

No, new gear is not more profitable (1)

sirwired (27582) | about a year ago | (#44433685)

Maintenance charges are pure gold. Old gear for which development costs were paid off decades ago is pure profit. It has essentially zero R&D expense, and continuing maintenance, licensing, and often leasing charges are associated with relatively little actual expense.

All companies that want to continue on indefinitely as a going concern need new product to sell, of course. But that doesn't mean the stuff they sold a long time ago isn't "The Gift That Keeps On Giving."

drop support, get crossed off the bid list (1)

swschrad (312009) | about a year ago | (#44435503)

that's how it works. much of the time, the service contracts are lagniappe for the manufacturers in every field. there are also a tangle of legal service requirements that mean long after a provider wants to dump a bunch of power-sucking light-blinking money hogs, they have to maintain it because it is tariffed and posted for resale.

wireline companies would probably like to blow the central offices out and go VoIP all the way, and the technology is now mature for everything except 911 location information at the caller's phone. but tangles of law and regulator FUD get in the way.

so failing to support the old gear in this field dooms your chance to sell new gear. and ALU has some nicely featured stuff recently out that fills a lot of holes better than Cisco.

they're in the business of walking a fine line. ITT couldn't, so they sold their telco stuff to France Telecom's Alcatel decades ago. Newbridge couldn't or wouldn't certify for Y2K, so they got dumped into the whirlwind, and Alcatel bought 'em for a song. Lucent lost the knack, so we have Alcatel-Lucent. Nortel just plain couldn't get up after falling off the wire any number of times, so they got chapter-7 firesaled in pieces.

that's the business. every 2 or 3 years, the "new stuff" is supposed to blow out the old stuff. except the old stuff is basically the foundation of civilization's communication, and it gets riveted into regulations. until it's all IP or whatever next-gen becomes with the world's consensus, that won't change.

Re:Cutting jobs for out-dated / legacy systems (1)

Billly Gates (198444) | about a year ago | (#44432043)

Looks like they're dropping dead waste, and putting more money into R&D.

Good Job! Sorry if anyone here was affected.

I can't tell if you are sarcastic or not? Most companies I know treat R&d like temps and keep the corporate jets they use once a year instead.

Re:Cutting jobs for out-dated / legacy systems (1)

Sponge Bath (413667) | about a year ago | (#44436611)

...keep the corporate jets they use once a year instead.

If you think executives only play golf in exotic locations once a year, you are mistaken.

Re:Cutting jobs for out-dated / legacy systems (1)

Billly Gates (198444) | about a year ago | (#44437379)

Well customers do not pay them to play golf or eat caviar in jets. They pay for products that R&D need to design and make. But the lifestyle is more important than long term value for the shareholders these days.

Yes, I am cynical towards upper management as many of us have seen it all and these guys have golden parachutes so when competitors deliver the death knell they saw the writting in the previous quarter and already jumped off to the next company for an even higher salary.

Re:Cutting jobs for out-dated / legacy systems (1)

Sponge Bath (413667) | about a year ago | (#44438457)

I share your cynicism. My post was supposed to be a joke that they play golf more than once a year, not an endorsement of private jets.

hey, pard, telco infrastructure lasts forever (1)

swschrad (312009) | about a year ago | (#44435361)

the requirements of the FCC for durability and failover practically keep equipment operable for longer than 15 to 20 years in the backbone. all you need to do is replace the failures, periodically upgrade the software to clear bugs and enable new services, and for that you need infrastructure partners in it for the long haul. they get paid millions of bucks a year for service contracts.

a company that does not play by those rules gets crossed off the bid list. a customer that does not renew the service contracts sees the product line discontinued. that is the bargain the players make to keep things going. kind of like the mutual squeeze in large-scale computing.

if ALU backs out, expect another Nortel.

Re:Cutting jobs for out-dated / legacy systems (0)

Anonymous Coward | about a year ago | (#44435713)

Wasn't this company run by that bitch Ruso at one time? I think she started the big decline synergy.

Pay for nothing (4, Insightful)

manu0601 (2221348) | about a year ago | (#44430545)

Big corporation reduce workforce to increase profit. At some point they will produce everything for cheap using abroad subcontractors. That means a lot of money goes straight to shareholders without having any chance to go in workers' pockets. And since workers are also consumers, this badly impact the economy

At some point we will need to find a way to tax the profit and reinject money in consumer's pockets so that they can purchase the goods produced.

Re:Pay for nothing (0)

Anonymous Coward | about a year ago | (#44430577)

Obviously the point of any business, especially publicly traded ones, is to make money. Lucent has been on the decline for a long time, it sounds like they are just trying to cut as much people and projects as possible so that they can stay in business. Just because you cut the workforce, doesn't mean you are going to make more profit. You need workers to make you money but if you aren't making enough to pay them, they need to leave until you can afford to expand again.

Re:Pay for nothing (0)

khallow (566160) | about a year ago | (#44430591)

Big corporation reduce workforce to increase profit. At some point they will produce everything for cheap using abroad subcontractors. That means a lot of money goes straight to shareholders without having any chance to go in workers' pockets. And since workers are also consumers, this badly impact the economy

The subcontractors have workers too. It just means the labor part of an economy will move to healthier places. And the workers out of a job? They can find new work.

Also, this apparent benefit to owning capital indicates to me that maybe some developed world people should think about getting some capital as a buffer against possibly getting less for their labor.

At some point we will need to find a way to tax the profit and reinject money in consumer's pockets so that they can purchase the goods produced.

Ah yes, the gerbil exercise wheel theory of economic activity being the sole reason for having an economy or perhaps even a society.

Simple question (1)

AndreyFilippov (550131) | about a year ago | (#44430667)

When Apple will completely move production from China to US - will they employ more Americans or less than now?

Re:Simple question (1)

maliqua (1316471) | about a year ago | (#44431339)

who fucking cares about apple why is apple always brought up as ac omparison to everything, they're not the shinning light of hope you think they are

fucking sheeple here recently

Re:Simple question (0)

Anonymous Coward | about a year ago | (#44433275)

who fucking cares about apple why is apple always brought up as ac omparison to everything, they're not the shinning light of hope you think they are

fucking sheeple here recently

I agree with you absolutely. Irrespective of any article topic, there will be someone inserting references to that company, or its products. There is no need for those comments 99 percent of the time, and it looks more like a marketing ploy.

Re:Simple question (0)

Anonymous Coward | about a year ago | (#44433579)

Probably exactly the same number of people, since their products are made by subcontractors.

Re:Pay for nothing (0)

Anonymous Coward | about a year ago | (#44430781)

We all know articles like this are designed to radicalize already angry, moody, bitter unemployed people.

Also, the source is dice.

Yeah...

Re:Pay for nothing (0)

Anonymous Coward | about a year ago | (#44431335)

this apparent benefit to owning capital

And there's the kicker. Of actual U.S. cash there is only about $1 trillion. 1/3 to 1/2 of which is overseas. Often held in reserve by foreign central banks. That leaves less than $2000 each. The rest of it/ That comes from banks loaning out more they have in reserve. While individuals may be able to prosper under such a system it absolutely negates the possibility that many can prosper. Sort of. There is wealth generation from debt. There's no reason for your capital to limit your growth. It's silly to not build more than a certain number of houses because there is only so much money. The house is what actually has value. The money just represents it.

As a result over 90% of the money in our economy comes from a loan somewhere down the line. The weird thing is we probably should just print money. The money supply should increase as production increases. It does through loans anyway. Loans just add the burden of interest. The trick is guessing the value of investment ahead of time. So a bank prints money on the premise that a house is worth $400,000. If the house is really only worth $200,000 the bank essentially printed to much money and the system crashes for no other reason than one side of the books now has assets worth less than the negative amounts on the other side.

In other words. Money isn't what you think it is either.

Re:Pay for nothing (1)

manu0601 (2221348) | about a year ago | (#44431367)

In other words. Money isn't what you think it is either.

And US money is special among others, as it is a reserve money: every bank in the world want to purchase dollars, which is why US has to print dollars like crazy. As you noted, that oddly leave little money for US real economy.

Re:Pay for nothing (1)

khallow (566160) | about a year ago | (#44442039)

Capital is not money.

The weird thing is we probably should just print money.

Why? You get inflation and as a result no one is actually any better off except fixed rate borrowers and the money printers.

Re:Pay for nothing (2)

manu0601 (2221348) | about a year ago | (#44431343)

The subcontractors have workers too.

But you know how it works. Big corporation will outsource wherever in the world labor is cheapest. When workers attempt to get raises, factories get moved to poorer countries

And the workers out of a job? They can find new work.

If there are jobs available... when workers are to poor to buy goods, the trend is to cut more jobs because there is no outlet for worker's production.

Re:Pay for nothing (1)

khallow (566160) | about a year ago | (#44442093)

But you know how it works. Big corporation will outsource wherever in the world labor is cheapest. When workers attempt to get raises, factories get moved to poorer countries

They're running out of choices. For example, there isn't another China with its massive industrial base to chose from. There are only so many people in the world. Any race to the bottom eventually finds that bottom.

If there are jobs available...

There are billions of jobs available. But only certain regions are trying to get those jobs.

Re:Pay for nothing (1)

manu0601 (2221348) | about a year ago | (#44442439)

Any race to the bottom eventually finds that bottom.

We have to think about what bottom we can accept. Do we accept child labour? It already happens, sometimes. Will we accept Slavery?

Re:Pay for nothing (1)

khallow (566160) | about a year ago | (#44445055)

We have to think about what bottom we can accept.

No, I think we in the developed world have to accept that our labor isn't as competitive as it used to be. Lower wages, benefits, and social program levels (particularly, lower minimum wages, pullback of laws regulating the number of hours one can work in a week, and cutting back on public pensions) are a consequence of that.

I don't see slavery as the "bottom" since even countries like China and India are well beyond that. But what's the draw for labor in the most expensive markets of the world? Not everyone wants to deal with a huge and ever increasing thicket of laws and regulations.

I find it highly irrational how the response to the most pressing issue of the developed world today, the decades long demographic increase in the supply of global labor has been met with policies that increase the cost of developed world labor.

Do we accept child labour?

I note here that we all have a vast amount of unpaid child labor through the world. For example, children in the developed world generally are required to spend a considerable portion of their lives working in a school for no pay.

Further, I don't see any evidence that we're doing our children any favors by keeping them out of the usual labor force for so long. Apparently, there's cases of people who have managed to graduate from college in the US who have never seen a real job. What sort of employer is going to take a chance on them?

Sure, I don't advocate a return to the days of 60 hour work weeks and little kids fiddling around in the middle of deadly machines because they were the only ones who could fit. But I think the actual age at which people are allowed to start working should be much lower than it currently it.

Will we accept Slavery?

There's no reason to. It's worth noting that actual slave labor isn't that competitive. You can't make quality products from slaves. That was tried in the 20th century by a bunch of fascist/communist countries without much success.

I've read much about how due to various vague climate change threats, we should make sacrifices in our standard of living. But those same people draw the line at making sacrifices in our standard of living because the effective labor force available to the global economy has increased substantially over the past 50 years. But my take is that the latter reason is a more valid reason for doing so than the former.

Re:Pay for nothing (1)

manu0601 (2221348) | about a year ago | (#44448141)

No, I think we in the developed world have to accept that our labor isn't as competitive as it used to be.

You have a bias here, you consider competition is some kind of natural law that we cannot spare. But we made tribes, societies and nations to promote cooperation within boundaries, instead of competition.

Globalization destroys the boundaries, removing huge chunks of political decisions outside of People sovereignty. Once the rule is competition, cooperative behaviors such as social welfare get impossible to enforce.

But while People sovereignty has been neutralized, it can still be reactivated. People can choose to run against the globalization trend, and add enough protectionism (note I did not said North Korean style full isolationism!) so that social welfare becomes possible again.

I note here that we all have a vast amount of unpaid child labor through the world. For example, children in the developed world generally are required to spend a considerable portion of their lives working in a school for no pay.

Did you notice that children at school do not produce goods or service? At University level, students even pay for getting taught.

Re:Pay for nothing (0)

Anonymous Coward | about a year ago | (#44450323)

But we made tribes, societies and nations to promote cooperation within boundaries, instead of competition.

We made those tribes, societies and nations so we can compete with other tribes, societies and nations. Competition within boundaries decrease only because competition with people outside of that boundary increased.

Whatever boundaries globalization destroyed merely shifted the competition to "within" the boundaries again. Instead of competing based on which country you were from, competing is based on things like price and productivity (the developed world being generally less competitive in the former, and it varies between sectors for the latter)

People can choose to run against the globalization trend, and add enough protectionism (note I did not said North Korean style full isolationism!) so that social welfare becomes possible again.

Wrong solution. Somebody has to pay for that social welfare. You lock up your borders in protectionism, other countries simply stop doing business with you and whatever businesses still in your country would just pack up and leave (many already have)

If you want social welfare, the better solution is to get all those global labor to be on your side, to globally demand social welfare. Good luck on doing that though.

Re:Pay for nothing (1)

khallow (566160) | about a year ago | (#44451113)

You have a bias here, you consider competition is some kind of natural law that we cannot spare.

Sure, you can spare it. You'll just reap a lot of unpleasant unintended consequences when you neglect competition.

But while People sovereignty has been neutralized, it can still be reactivated.

It hasn't been neutralized. But we need to keep in mind that the global labor force has expanded several fold in the last half century. Increase in supply of labor means a decrease in price of labor. This can be and is to a degree countered by a substantial increase in the demand for labor (via business creation and expansion), but that's an avenue where the developed world has been notably self-destructive.

Did you notice that children at school do not produce goods or service?

No, I haven't noticed this. They're producing educated, productive members of society. And if they really were producing nothing of value, then why do we have them in schools?

Re:Pay for nothing (1)

manu0601 (2221348) | about a year ago | (#44452777)

You'll just reap a lot of unpleasant unintended consequences when you neglect competition.

Just like you reap a lot of unpleasant unintended consequences when you neglect cooperation. A healthy economy is just a matter of equilibrium.

But we need to keep in mind that the global labor force has expanded several fold in the last half century. Increase in supply of labor means a decrease in price of labor.

Very true, and at the same time, worker productivity has increased, which means they produce more wealth. At the end of the road is an oversupply crisis. This leads us back to my initial post: we will need a way to pay people for nothing.

[unpaid children at school] producing educated, productive members of society. And if they really were producing nothing of value, then why do we have them in schools?

Because children are the school's product, not the school's workers. The teachers are the school's workers. And they are paid for that.

Re:Pay for nothing (1)

khallow (566160) | about a year ago | (#44453523)

Very true, and at the same time, worker productivity has increased, which means they produce more wealth. At the end of the road is an oversupply crisis. This leads us back to my initial post: we will need a way to pay people for nothing.

If we looking at what actually is going on, we see 1) considerable increase in labor productivity (which is predicted by your claim), 2) a vast increase in the number of people employed (which isn't really predicted by your claim), and 3) a substantial rise in mean/median wages globally (which runs counter to your claim). Given that we aren't heading to this "end of the road", what is the point of making that claim?

Instead, I see no reason to pay people for nothing.

Because children are the school's product

No they aren't. The school doesn't make children. The school system makes educated adults. And that labor is mostly shouldered by the students of the school system.

Re:Pay for nothing (1)

manu0601 (2221348) | about a year ago | (#44453635)

If we looking at what actually is going on, we see 1) considerable increase in labor productivity (which is predicted by your claim), 2) a vast increase in the number of people employed (which isn't really predicted by your claim), and 3) a substantial rise in mean/median wages globally (which runs counter to your claim).

I agree on point 1.

Point 2 is more difficult to sort, as we have first to tell if we talk globally or in first world countries. And do we talk about the last years or the last decades? I guess we can say that there are indeed more people available to work, since population increased, but are there more people employed? If you think about third world countries, you have to realize that the myriad of industrial workers we have know were agricultural workers before.

On point 3 I am sure it is wrong because you look as absolute value of wages without taking inflation into account: if we consider the percentage of GDP that goes to workers in first world countries, it has only lowered in the last decades. I have no numbers for third world countries, but I doubt the situation is better.

[children are the school's product] No they aren't. The school doesn't make children.

Right, school produces educated people.

Re:Pay for nothing (1)

khallow (566160) | about a year ago | (#44453739)

Point 2 is more difficult to sort, as we have first to tell if we talk globally or in first world countries.

Globally, of course. Those first world countries aren't isolated from the rest of the world.

And do we talk about the last years or the last decades?

How about since 1300 [berkeley.edu] ? That long enough for you?

On point 3 I am sure it is wrong because you look as absolute value of wages without taking inflation into account: if we consider the percentage of GDP that goes to workers in first world countries, it has only lowered in the last decades.

That's because once again, first world labor is competing unsuccessfully with developing world labor. If one looks at it globally, you see a global increase in wages.

It's foolish to extrapolate from the developed world and its self-inflicted labor inefficiencies and obstacles to some productivity oversupply crisis. We wouldn't make similar claims for some failing business (say for example, General Motors) that is steadily losing market share to more nimble competitors. We would just say that the business is failing to compete.

I have no numbers for third world countries, but I doubt the situation is better.

You would be wrong here. For example, Hans Rosling has given a number of talks on this issue. His relevant observation [youtube.com] is that every country, whether poor or rich now, has followed the same trajectory of increasing wealth per capita over time with the same general features (such as declining female fertility as the population gets wealthier).

Right, school produces educated people.

RIght. And one sees that the students are doing most of the work.

Re:Pay for nothing (1)

manu0601 (2221348) | about a year ago | (#44458121)

Globally, of course. Those first world countries aren't isolated from the rest of the world.

Here again you are biased toward competition. Competition is enforced by globalization. Globalization is a political choice, not a law of nature. If People want to have cooperation (e.g.: social welfare), they need some boundaries in which competition leaves room for cooperation.

How about since 1300 [berkeley.edu] ? That long enough for you?

GDP grows faster than population, that is excellent news. But how does it tells us about how many people are employed? This was your point, IIRC

If one looks at it globally, you see a global increase in wages.

Wait, wait, wait. Growing GDP per capita does not means growing wages. You have to find another study that tells us the money does go in worker's pockets. And here I am skeptical.

Re:Pay for nothing (1)

khallow (566160) | about a year ago | (#44459505)

Here again you are biased toward competition. Competition is enforced by globalization. Globalization is a political choice, not a law of nature. If People want to have cooperation (e.g.: social welfare), they need some boundaries in which competition leaves room for cooperation.

What are the alternatives here? I see you mention social welfare as an example of cooperation, but it fails in two ways - by creating tragedy of the commons situations (with the usual inept fixes for them) and zero sum games (social welfare is usually created by impairing others either via regulation or the seizure of resources).

Second, I find it interesting that you are advocating protectionism in order to protect a fragile system. Competitive systems are naturally robust. Your social welfare system is a hot house flower that withers if the conditions aren't exactly so. What's the point of embracing a system that simply won't be around very long?

GDP grows faster than population, that is excellent news. But how does it tells us about how many people are employed? This was your point, IIRC No, my point was to address your concerns about point 3, that worker wages weren't increasing. Worker wages normally track GDP per capita (the figure I actually quoted). It's unusual for them not to. You only have experience with one or more developed world economies that are experiencing some degree of wage decline despite a modest increase in GDP per capita (due to labor globalization and those social welfare policies which make developed world labor more uncompetitive). The developing world economies don't have this problem.

Re:Pay for nothing (1)

manu0601 (2221348) | 1 year,29 days | (#44467703)

[social welfare] fails in two ways - by creating tragedy of the commons situations (with the usual inept fixes for them) and zero sum games (social welfare is usually created by impairing others either via regulation or the seizure of resources).

The tragedy of commons will need more explanations. And if the game is indeed zero-sum GDP-wise, it is just because its benefits are not taken into account by GDP. Just one example: having a sick population will degrade workers performances.

Second, I find it interesting that you are advocating protectionism in order to protect a fragile system. Competitive systems are naturally robust.

You chose the right word: naturally. Building cooperating societies runs against natural laws of competition, and this is what humanity has been doing successfully for millions of years. Yes, human being are social animals. Are you going to tell otherwise? Competition is naturally robust, and cooperation is artificially robust as well.

Worker wages normally track GDP per capita

And do you have studies to back that? On the last 30 years, we have been seeing GDP increasing and GDP wage share decreasing. I am interested if you find a GDP per capita wage share plot for the last 50 years.

Re:Pay for nothing (1)

khallow (566160) | 1 year,29 days | (#44467867)

The tragedy of commons will need more explanations.

A lot of social welfare is the creation of cheap public goods (for example, farm subsidies or overly cheap flood insurance). These typically get abused unless there is a strong barrier to consumption, which usually includes monitoring of potential recipients and regulation of their behavior and activities.

And if the game is indeed zero-sum GDP-wise

My view is that social welfare collectively is a net loss GDP-wise. As I mentioned in my previous post, most social welfare boils down to taking something from one party and giving to another. That creates the zero sum game since one can then lobby government to change the balance of such wealth transfers to be more to their advantage.

Building cooperating societies runs against natural laws of competition, and this is what humanity has been doing successfully for millions of years.

Humanity has been doing both. I'll just note here that the societies that stopped competing, no longer exist.

Competition is naturally robust, and cooperation is artificially robust as well.

"Artificially robust"? That's the hot house flower right there. Sure. we can make just about any system nominally stable as long as we throw enough resources into it. That's "artificially robust". But not every system is stable even if no additional resources are sacrificed. That's "naturally robust".

And do you have studies to back that? On the last 30 years, we have been seeing GDP increasing and GDP wage share decreasing. I am interested if you find a GDP per capita wage share plot for the last 50 years.

And what about the 30 years before that?

You merely have a very provincial viewpoint on this. I already explained why the developed world is seeing a relative decline in wages [typepad.com] (note the first figure shows the US wages tracking closely with GDP per capital for 30 years until the turmoil of the mid 70s, which incidentally is also about when the US labor force was exposed to competition from developed world labor) ever since I first posted in this thread.

I should also note that a drop in average or median wages is not in itself an indication [econlib.org] that things are getting worse. The previous link describes how immigration can lower various aggregate measures of income while simultaneously increasing the income of everyone involved.

Re:Pay for nothing (1)

manu0601 (2221348) | 1 year,28 days | (#44469973)

A lot of social welfare is the creation of cheap public goods (for example, farm subsidies or overly cheap flood insurance). These typically get abused unless there is a strong barrier to consumption, which usually includes monitoring of potential recipients and regulation of their behavior and activities.

Odd examples. I was more referring to what western European countries have been doing with success since 1945, and which is getting more and more impossible to run in a globalized context: public health insurance, public unemployment insurance, public retirement pensions. Where are the tragedy of commons there?

My view is that social welfare collectively is a net loss GDP-wise.

You are right, but as I explained, GDP does not measure everything. It does not measure people happiness, nor does it take into account externalities. A sick worker is less productive, and socialized health insurance make sure that person will not chose to avoid health because it is too expansive.

And do you have studies to back that? On the last 30 years, we have been seeing GDP increasing and GDP wage share decreasing. I am interested if you find a GDP per capita wage share plot for the last 50 years.

And what about the 30 years before that?

No, I am interested in the present configuration that started 30 years ago, when globalization took over. My understanding is that is introduced a competition between workers beyond nation boundaries, that we did not need in order to have a healthy economy. My understanding is that it lowered first world worker's wealth, without increasing worldwide worker's wealth, and that in the end it is damaging to economy because it creates oversupply crisis.

Please prove me wrong. Please show me that percentage of per-capita GDP that goes to wages globally increased since 1980.

Re:Pay for nothing (1)

khallow (566160) | 1 year,28 days | (#44473677)

Odd examples. I was more referring to what western European countries have been doing with success since 1945, and which is getting more and more impossible to run in a globalized context: public health insurance, public unemployment insurance, public retirement pensions. Where are the tragedy of commons there?

Fraud is an example of overconsumption of these public goods. There's also the common matter of not having enough young workers to support the elderly pensioners. When one couples that with another common overconsumption problem of pensions, promising more than has been put into the pension, you can get shaky pension systems with any funds being drained by the pensioners dependent on the system.

Please prove me wrong. Please show me that percentage of per-capita GDP that goes to wages globally increased since 1980.

I'm not going to, because that's the reverse of what would actually what would happen in a situation where supply of labor has suddenly expanded and it also is beyond any claim I've made. My claim of "tracking GDP" means a substantial increases in GDP correlate with substantial increases in wages, not that wages are going to command greater shares of GDP for some reason.

I have found research that indicates that wages have gone up [voxeu.org] considerably globally while simultaneously showing that the developed world wages haven't done that much.

Re:Pay for nothing (1)

manu0601 (2221348) | 1 year,27 days | (#44482061)

Fraud is an example of overconsumption of these public goods.

What fraud? Do you have anything documented on pension fraud in western Europe? I am interested.

There's also the common matter of not having enough young workers to support the elderly pensioners

What is relevant is not the number of workers vs pensioners, but the wealth produced by the former and consumed by the later. And since workers productivity grows up, we need less and less workers to create the wealth needed by pensioners. The reason why it has trouble to sustain today is that workers wages do not follow GDP increase, and it even shrinks in percentage.

My claim of "tracking GDP" means a substantial increases in GDP correlate with substantial increases in wages

Numbers will tell that it is true, but at the same time you will find that the percentage of GDP that goes to wages shrank in the last 30 years. This means the economy produces more wealth, but workers reap a smaller part of it. And this is a problem because workers are huge part of the demand on the market. If they cannot afford to purchase the extra produced goods, you get the supply crisis.

I have found research that indicates that wages have gone up [voxeu.org] considerably globally while simultaneously showing that the developed world wages haven't done that much.

You extrapolate a lot from this study, the summary does not even include the word "wage". Poverty reduction may be done through wage raises, but it may also not be correlated at all. For instance give everyone an universal income based on money creation or taxes, and you reduce poverty.

Re:Pay for nothing (1)

khallow (566160) | 1 year,27 days | (#44482471)

What fraud? Do you have anything documented on pension fraud in western Europe? I am interested.

That's an awfully particular question. Perhaps you should do your own research rather than ask random people on Slashdot? I can speak of some US-side fraud such as corporations looting government-backed pensions or the ever popular dead people who never get off the rolls.

You extrapolate a lot from this study, the summary does not even include the word "wage".

Go to figure 2, "World distribution of income: 1970 and 2006". I figure "income" is a near synonym for "wages".

Re:Pay for nothing (1)

manu0601 (2221348) | 1 year,25 days | (#44504541)

That's an awfully particular question. Perhaps you should do your own research rather than ask random people on Slashdot?

Let me sum it up: I talk about social welfare, you say it does not work. I cite example of western Europe socialized insurance for health, unemployment and pensions, that has been working fine for 50 years, you say it does not work because of fraud. Since this is a recurrent FUD, I ask example, you tell me to find on my own.

I figure "income" is a near synonym for "wages".

Wage is payment for work form an employer to an employee. There are many forms of incomes that are not wages:

Re:Pay for nothing (0)

Anonymous Coward | about a year ago | (#44457355)

If we looking at what actually is going on, we see 1) considerable increase in labor productivity (which is predicted by your claim), 2) a vast increase in the number of people employed (which isn't really predicted by your claim), and 3) a substantial rise in mean/median wages globally (which runs counter to your claim). Given that we aren't heading to this "end of the road"

Actually, what you describe does lead to "end of the road", and it's because of point 2) increase in number of people employed

In a capitalist environment, over time there should be LESS people employed as we find efficiencies.

Suppose the baseline is that people work 12 hours a day, get paid $12, and things cost $12

In a capitalist environment, people figured out how to do $12 worth of work in 11 hours. Or they figured out how to reduce cost of things to $11. This pushes people to work 11 hours a day, get paid $11, and things cost $11. Then it'll be 10/10/10, then 9/9/9, ... obviously if this keeps up we just might reach post-scarcity where everything is practically free. That's a good end of the road where it is not "pay for nothing", but rather "nothing has to be paid for" (since everything is practically free)

But 2) implies the opposite is happening. Maybe people can't get $12 worth of work done in 12 hours. Maybe things cost more than $12. People have to work 13 hours to get by, then 14, then 15...

"Back in the day" only one spouse has to work in the first world. Nowadays it's just like many parts in less developed world: both spouses have to work. If this keeps up we'll go back to the third world days where the whole family has to work to sustain the household.

Continuing down this road will lead to people not having enough hours in a day to earn enough to feed themselves, at which point you (individually or society) will start to "pay for nothing", the nothing being the gap between how much people earned by working, and how much is still needed to feed them. You either pay in money (welfare), or you tell them to eat cake, and you'll pay in other more violent ways.

To prevent this end of the road, you have to rely on capitalism and reduce the number of people having to work. The fact that we have observed 2) is actually a sign that capitalism has been on a declining trend (and as your other reply hints at, it's been going on for a long time). In fact, capitalism may have never worked, and we only got here by kicking the can down the road using various other measures (like say... printing debt)

Re:Pay for nothing (1)

khallow (566160) | about a year ago | (#44459589)

In a capitalist environment, over time there should be LESS people employed as we find efficiencies.

No, that is a non sequitur. It doesn't follow from capitalist environments that demand for labor should decline. After all, if there's a lot of unemployed people, then you could just start a business and get cheap, high productivity labor. You're leaving money on the ground by not doing that.

And if we look at actual capitalism environments, we see growing demand for labor contrary to your premise.

So initial premise is wrong. Thus, the rest of your post becomes irrelevant.

Re:Pay for nothing (0)

Anonymous Coward | about a year ago | (#44448847)

I find it highly irrational how the response to the most pressing issue of the developed world today, the decades long demographic increase in the supply of global labor has been met with policies that increase the cost of developed world labor.

Increase in the supply of global labor is not an issue for the developed world. It's actually a wonderful thing as the developed world are the ones benefiting from it (i.e we can hire the labor to make stuff for us for cheap)

Raising the cost of developed world labor is an irrational response only if you assume the goal of the developed world is to look after the well being of developed world labor. That is not the case. The developed world is about holding onto its own power

Keeping its labor expensive is one way to keep control and thus power. It limits what labor the undeveloped world has access to, which in turn limits its growth, which means the developed world can keep others from rising to their status.

Re:Pay for nothing (0)

Anonymous Coward | about a year ago | (#44430681)

OK. I work for the place. We got R&D on four continents, no joke, and no, it's not all outsourced contractors, not to say that there's not a few here and there. Contract manufacturing, sure, but everybody does that.

We got products that are seriously beating up on the competition, not because somebody's getting bribed, but because the stuff has better performance, cheaper to implement, and good quality.

Remember that there are those of us who've been around since the Bell System. We may be old farts, but we're old farts who Know How To Do It Right. And it shows.

It's a big company. There may be pointy-haired bosses here and there. But I, personally, don't know of any. We're of the opposite persuasion: We got direction, we got engineering chops, and we're having the time of our lives. Dilbert's Mom is proud of him, Alice has got a half-dozen patents to her name, and we haven't seen Wally in a while.

Re:Pay for nothing (1)

morgandelra (448341) | about a year ago | (#44433303)

I deal with ALU everyday and I say that their networking designs are finest 1990's era engineering I have ever seen. Multi-state spanning tree domains, Deathly fear of routing protocols, insanely expensive routers with crappy performance and odd limitations that are designed solely to sell insanely expensive cards. And that's just their tech, the level of bureaucracy and hate for co-existing with other vendors is astounding.

Re:Pay for nothing (1)

fuzzyfuzzyfungus (1223518) | about a year ago | (#44430733)

Even before that effect kicks in, it isn't exactly rocket surgery for "cheap expendable subcontractors" to become "ODMs", then "Competitors", and finally "Eating your lunch".

Especially in markets that are heavily commodified, or heading in that direction (good thing switching and telco doesn't have a fuckton of seats concerned mostly by per-port cost or anything, Alcatel...) if you hire somebody else to have a 'core competence' in manufacturing, you end up having 'core competence' in little more than writing setup guides and inflating prices.

Re:Pay for nothing (3, Interesting)

Anonymous Coward | about a year ago | (#44430815)

This is the kind of thing that drives me quite crazy.

If a certain percentage of people don't have jobs, they cannot purchase goods or services. If the percentage gets too high, you either have a very severe recession or a revolution. This outcome is undesirable to exactly 100% of any population. (Think last possible resort before suicide...)

Either way, the economic damage this causes is immeasurable. Banks might be able to make some portion of profit even in a bad economy due to interest, but when people don't have enough money because they're all unemployed the service industry dies instantly and even the essential industries (food/fuel/clothing) see massive profit drops.

All that said - economics looks to be a zero sum game. If people don't have money, they cannot buy anything. Why can't the big corporations see this? Seems to me they're being penny-wise but pound-shy, and trading short term, immediate gains for future bankruptcy and economic collapse.

Re:Pay for nothing (0)

Anonymous Coward | about a year ago | (#44433015)

I am surprised more people don't realise this. If you need proof, just compare Australia to the USA.

Australia has a welfare system, if you are unemployed, you can get a livable income from the government. This income is enough to cover low-income housing, food and some leftover (depending on your lifestyle). When the recession hit and jobs were lost, not many people were driven to the point where they were living in the streets due to a lack of money. These people had enough money to support themselves (which helps drive the local economy through day to day living expenses) and to be able to take a new job (they didn't have to sell their cars/goods/etc to be able to get what they needed to work). Local businesses were able to retain their staff which helps prop up the economy and keep the wheels spinning.

The USA on the other hand has pretty much no welfare system, if you lose your job you are lucky to get a few weeks of unemployment benefits before you are tossed to the wolves. Food stamps don't do much to keep the wheels spinning either. The lack of money means that people cannot go to their local shops to buy what they need which results in those local businesses letting go of their staffs to remain viable. This in turns removes even more money from the local economy leading to a death spiral which spurs job losses in the national market because people do not have the money to buy anything.

Australia is pretty much out of the recession with the job market booming, housing booming (but it is still impossible to find a private rental at the moment if you do not have a job or have not held your current job for at least 6 months or more) while the USA is still suffering with high employment and high crime rates. USA cities are going bankrupt and even some state governments are tightening the strings...

Re:Pay for nothing (0)

Anonymous Coward | about a year ago | (#44436389)

Maybe its the "fuck you, I got mine" part of US culture?

Re:Pay for nothing (1)

khallow (566160) | about a year ago | (#44445381)

The USA on the other hand has pretty much no welfare system, if you lose your job you are lucky to get a few weeks of unemployment benefits before you are tossed to the wolves.

26 weeks [wikipedia.org] is more than a few weeks. And there's a temporary extension currently in place which stretched that out to about 9-14 weeks [doleta.gov] of additional payments.

Re:Pay for nothing (1)

lexman098 (1983842) | about a year ago | (#44447629)

If people don't have money, they cannot buy anything. Why can't the big corporations see this?

They do, but it's a tragedy of the commons because not every company has to support the workforce for them to profit.

Re:Pay for nothing (0)

Anonymous Coward | about a year ago | (#44432573)

It can be done directly by instituting a national maximum income and minimum income. In other words, a 100% tax rate above a certain income, and welfare without restrictions below a certain income. Capital gains income would need to be treated the same as earned income, thus would be subject to the income cap.

Not so sorry I lost my Lucent interview (1)

sirwired (27582) | about a year ago | (#44430575)

Bell Labs / Lucent recruited heavily from my school, it being one of the two nearest engineering schools to Lucent HQ. (We had Dennis Ritchie and Bjarne Stroustroup give lectures at ACM meetings, and we had several Lucent PHd's as adjunct faculty) Lucent had a minimum GPA requirement of 3.0 in order to obtain an interview. I had a 2.94, therefore being .01 short of rounding up to a 3.0. We are talking a single exam question in frosh calc here... I was very disappointed at the time.

I was substantially less disappointed after the telco crash. And lets just say the last of my regrets are now gone.

Re:Not so sorry I lost my Lucent interview (0)

Anonymous Coward | about a year ago | (#44430707)

Bell Labs is quite different from the rest of ALU. It's more like a college than an office there, and I can understand their GPA requirements.
I'm don't have any college and I'm doing quite well in a different part of the company. (carrier IP networks)

I will say these cuts we're having are finally in the bloated side of the house. The problem with an international company like this is on paper an engineer is an engineer. It's about 1000% easier to fire some one in the USA/CA than in Italy, where you basically have to pay millions to the government to lay them off.

This moved lots of engineering to Italy from the US, and they really don't do a good job in Italy. American and Canadian Engineers are some of the best in the world, while the unionized European ones know they have a job whether they work hard or slack. This means seniority is what gets people promoted there vs preformance.

We're getting rid of lots of bloat in optics and RAN, where we don't really need 50 optical people doing the job 5 people in IP do.
Many of the people in the other side of the house (other than IP/networks) stopped learning 20 years ago and are basically useless. Seniority is the only reason all these middle managers are still around.

Re:Not so sorry I lost my Lucent interview (0)

Anonymous Coward | about a year ago | (#44432321)

As a European Alcatel-Lucent engineer, I'm a bit insulted by your remarks.
Yes, we have a lot of dead weight in the company, and we need to fix that.

But your comments sound like "Yay for American engineers! They rule, and the European engineers suck!"

I don't have the impression that people can simply slack off, here in Belgium. Maybe some people manage to slip through the mazes of the net, but most people here do their very best to deliver quality and do it quickly.

But hey, I've only been here for a few years, maybe I'm naive...

Re:Not so sorry I lost my Lucent interview (1)

khallow (566160) | about a year ago | (#44445399)

I don't have the impression that people can simply slack off, here in Belgium.

Last I checked, Italy wasn't in Belgium. Unless you guys have been busy, I doubt he was talking about Belgium.

Re:Not so sorry I lost my Lucent interview (0)

Anonymous Coward | about a year ago | (#44447891)

You're right. Looks like I focused a bit too much on "unionized European ones".

Re:Not so sorry I lost my Lucent interview (0)

Anonymous Coward | about a year ago | (#44430773)

Yep, and my condolences about the narrow GPA gap there. On the other hand, Lucent was growing madly because we had customers who were showering us with orders and demands for lots and lots of bandwidth.

And they were doing that because the likes of MCI and Arthur Anderson were lying in their teeth about how much bandwidth MCI was selling; weirdly enough, Enron was also in on this game. All the other major telcos saw Arthur Anderson's signed reports saying that MCI and Enron were telling the truth. The telcos figured that there was no way that they were going to miss that boat, and promptly installed ridiculous amounts of fiber and gear and asked for more from the telecom suppliers. Hence, Lucent (and everybody else who made equipment) went on a hiring binge to support the work.

Right after 9/11 word got out that Arthur Anderson was full of it, and so were Enron and MCI. Orders collapsed in telecom everywhere and dark fiber (no point in lighting it up, there wasn't the demand) covered the land. Lucent went from 80K employees to 20K in the space of a couple of years but still existed after; Nortel did even worse and went bankrupt. So, consider yourself lucky that you stayed out of the debacle in the first place, it's a gimmie that as a spanking new hire you'd likely have been let go almost immediately.

bad 4 all of us (0)

Anonymous Coward | about a year ago | (#44430607)

This is a spiral and this will affect all of us. Take this 4 sure. These companies do evrything to have good face in the market. Lucent still will not turn around ss because of lack of product pipeline. Any quick acquisition, may be CEO is making the company lighter? Time will tell.

ALU becoming the next Nortel? (0)

Anonymous Coward | about a year ago | (#44430683)

Sure looks like the same trajectory... Successful product lines like the 7700 will eventually be sold off/spun off to get cash injections and pay off maturing debt that revenue no longer covers.

Employees with a clue have already left, leaving the same old situation behind. Layers of redundant middle management who will feed at the trough all the way until chapter 11. Lazy/disaffected employees who are happy to cash in a nice paycheck courtesy of the dotcom boom and some arcane skillset that once justified said salary will skulk around the halls bemoaning what has become of their once great employer, whilst drinking coffee and chit-chatting all day long.

Finally, the left overs - the employees that the departed did not want to head hunt and bring with them, the dead weight if you will, will sit around waiting for the axe to fall wondering why no one wants to pay them some obscene pay-packet to continue doing some job a graduate could do better for 1/2 the salary.

I wish the recently retrenched all the best - brush up your skills a bit and you will get back into it; plus you well sleep well knowing that ALU has probably done you a favor in the long run.

hope not (1)

swschrad (312009) | about a year ago | (#44435595)

ALU is doing a lot of things right, from the customer standpoint. they have the usual and expected number of "butches" here and there, as all tech equipment that does anything more complicated than put "hello, world" up on the screen does.

the trick is, how to get rid of dead weight that costs a ton and does nothing.

way I see it, there are a lot of extra VPs, senior directors, and district/area/product/country presidents that should be holding "slow" signs at a road project, for the pay they are more worthy of earning.

somehow, the C-levels don't buy the notion that when you need a tech on site at 3 in the morning, that's more precious. I guess it's because they can't reserve the whole deck of the cruise ship or the whole wing of the island resort for offsites if they don't have enough reservations.

YMMV

Its Trickle Down Economics (4, Insightful)

Bob_Who (926234) | about a year ago | (#44430695)

Screw the employee, pay the shareholders.

After they fire you they'll raid your savings and 401k, sink your mortgage under water, and let you go without viable medical options.

Profit for few at the expense of many. That the corporate way.

Time to eat the rich and banish k street.

Re:Its Trickle Down Economics (0)

Anonymous Coward | about a year ago | (#44431475)

That's only half the story. You forgot to mention the rampant crony capitalism that goes on in our political system. These people (and those that suppo...bribe them) have everything to gain by shaking everyone down to be indentured servants / slaves to both the politicians trying to corner votes into perpetuity and the corporations outsourcing labor overseas while enjoying local customers. Obviously this won't last. Mathematically, it can't if everyone including cities go bankrupt under a mound of debt. Everyone is to blame here!

Power consolidates and then implodes. It's a natural force of human nature. The cycle can't be stopped, and that's what's frustrating about it. It's like bitching that gravity won't stop being gravity.

Re:Its Trickle Down Economics (0)

Anonymous Coward | about a year ago | (#44432769)

To trump gravity you can use, for example, suspenders, rockets, whatever else. In the same way, Capitalism should be trumped by Socialism. But the first step is wanting to.

Re:Its Trickle Down Economics (0)

Anonymous Coward | about a year ago | (#44433723)

The days of working for a company for 20+ years and retire without a worry in the world is gone. In fact it's been gone since the early 80's. This is nothing new, so why are you whinning about Rich this or Rich that? Get it into your fucking skull. There isn't a gun being held to your head telling you to work at said company. You work 40 hours a week and you get a pay check. If you don't you have a choice, complain or quit.

In the end you traded your hours for dollars. This notion that the rich owe you something is ludicris. Start your own damn business.
How about you invest your money in the companys publically traded stocks? Instead of drinking it all in beer or whatever you do with your money.
If you believe in the company then put your money where your mouth is.

Otherwise go get another fucking job! I am tired of people blamming the rich for so called corporate greed. Read the writing on the wall, follow the news. buyouts are going to happen, some years profits are not so good. Save for a rainy day.

I worked at a company that did a so called merger. as soon as we saw the Org chart and none of us were on the upper echelons I told people this wasn't a merger it was a buyout, upper management didn't want to spook the employee workforce otherwsie there would have been a mass exodus of workers and the "merger" would have disintegrated. I was the 3rd person to leave the company and do you think other people followed? Nah, those that stayed are now faced with thier job moving up north. They are clossing up shop.

Re:Its Trickle Down Economics (1)

scamper_22 (1073470) | about a year ago | (#44435449)

Let's have a look at ALU stock
https://www.google.com/finance?q=NYSE%3AALU [google.com]
Price: 2.51
EPS: -1.62

Now let pay attention to this thing called EARNINGS. This is a company losing money.

Do you expect it to act like the government and magically go into more debt and print money and tax other people to keep itself going and pay its employees?

By all means, let's lobby government to fund engineering jobs and bailout companies the same way we fund the public sector and other fields (healthcare, education...). Let's lobby government to keep out competition like lawyers do. Bbut how do you get angry at a company for layoffs when they're losing money and have been for a long time... and get +5 insightful?

Re:Its Trickle Down Economics (0)

Anonymous Coward | about a year ago | (#44437097)

Because once these layoffs are done and the profits return, where do you think the surplus will most likely go?

Big hint: think pockets of expensive sports jackets.

Anyone notice we've been in a "bad economy" for like 10 years now? This is sounding like an excuse to prop up crony capitalism.

Re:Its Trickle Down Economics (0)

Anonymous Coward | about a year ago | (#44437963)

This is sounding like an excuse to prop up crony capitalism.

A: That term came about because the critics fell into either of two categories. Those who don't know a bit of actual history and those who didn't want to use the correct term because of the emotional baggage involved. "Government chooses monopolies" is the core tenant of fascism (and since the core tenant of socialism is "government owns the monopolies," you should be able to understand why some people have trouble telling the difference between the two).

B: When the government responds to a recession with massive spending, there is a depression. Proponents of government spending argue that these would've been even worse if not for the grand foresight of the government. There is a very real correlation between government interference and exasperated recessions, but I don't think the proper causation requires assuming that certain politicians are psychic.

The problem is (4, Informative)

kilodelta (843627) | about a year ago | (#44430955)

That the pbx and carrier level gear that they make is built to last 30 years or more. Kind of hard to up-sell when what's in place will provide decent service for that amount of time.

And having administered quite a few at&t/Lucent PBX's like Definity and Prologix, I can tell you I've NEVER seen one fail. Some have been in place for the better part of three decades now and they are still going strong.

Re:The problem is (3, Insightful)

Anonymous Coward | about a year ago | (#44431311)

The "big boys" only use A-L. Cisco, while decent, is enterprise grade. Carrier grade (think NEBS) is a whole different story, and is far more expensive.

A-L switches are different from Cisco in architecture. Very different. They are not meant for core work, but being able to handle tier 1 grade peering.

A-L still has a big market coming up. 10GigE is starting to go from the backbone to the internal parts of a fabric. A-L also would profit by the converged SAN/network switch trend with FCoE and iSCSI.

Re:The problem is (1)

laptop006 (37721) | about a year ago | (#44444283)

Er, No.

The "big boys" are the IP networks, and have been for years, in practice there's two major vendors (Cisco & Juniper) and a bunch of also-rans that can play somewhat (ALU and Brocade [Foundry]).

ALU kit can run core & transmission, but it's not the top tier kit.

The "big boys" are also migrating wholesale to 100g links as their multi-terabit backbones get painful to manage with trunked 10g links.

Re:The problem is (0)

Anonymous Coward | about a year ago | (#44433179)

Yeah. They also have Bell Labs there too. A lot of robust tech that was made in an era where engineers designed their systems and products to last decades. Damn Alcatel-Lucent for letting it all rot.

When tech companies start being run by business... (1)

aurispector (530273) | about a year ago | (#44433389)

Anytime a tech company starts being run by business types they tank. The business guys have no idea what really drives the company and inevitably see R&D as an unnecessary expense. HP went from a tech innovator to a company pimping branded products made in china and designed by monkeys.

It's only when you get that rare combination of technical AND business savvy that you get an Apple or HP in the first place.

This is not the way (1)

vikingpower (768921) | about a year ago | (#44435217)

Disposing of your human capital is not the way to gain market share. The way is: develop standards, innovate. Alcatel Lucent will go down if and when they persist on this heading.
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