Bianca Steele

More on The Venturesome Economy

Fast Company has more on Amar Bhide's book The Venturesome Economy.  A lot of interesting points.  Just a few:

In claiming that those who have sounded alarms about U.S. competitiveness are “techno-fetishists or techno-nationalists,” Bhidé also miscasts their message by insinuating that they “fear catch-up” by other countries. But that’s a red herring; that camp does not fear catch-up if other nations achieve it through venturesome consumption, technological superiority, or old-fashioned market competition, what it opposes is when nations use protectionist trade strategies to gain a competitive advantage over U.S. firms by shifting the cost equation, taking technology without paying for it, or blocking or limiting U.S. firm’s access to their markets. It fears more that the United States has yet to truly grasp the serious threat posed by foreign economies and their companies, not just through their genuine technical strengths and attractive products in many cases, but also illegitimate approaches that erect unfair or protectionist trade policies that systematically disadvantage foreign competition.

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The notion that U.S. firms may offshore their manufacturing (and jobs), but that the higher-valued added (and thus higher-paying) research, design, and management jobs will remain in the U.S. is becoming increasingly inverted. Intel’s recent decision to locate a $4 billion manufacturing plant near its R&D center in Israel (so the manufacturing facility could be close to its R&D site that spawned the innovation) shows that an economy that initially controls R&D and manufacturing can lose the value-added first from manufacturing, and then R&D. In other words, economies can use a branch-plant innovation approach to quickly become powerful competitors and migrate up the value curve to rapidly achieve competitiveness in high-value added industries, when once they were thought only to be low-skill, low-cost manufacturing centers.

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But in the new global economy, knowledge is increasingly the major factor of production (as opposed to the tangible capital embodied in machinery, laborers, and financial capital that characterized the old economy). It is embedded in organizations and if organizations die so too does a significant amount of knowledge. Thus, losing international competitions in knowledge-based industries (whether through other countries’ interventionist policies or the superiority of their firms) means losing much more than just the firms; it means losing the value from these dispersed pieces of value now represented by unemployed workers and under-utilized suppliers.

Detroit Bailout vs. Globalization

At TPMCafe, Steve Clemons of the American Policy Institute raises some interesting questions about the Detroit bailout w/r/t globalization.

GM said that it was taking all of the technology it could get its hands on -- whether from the labs or elsewhere -- and fully deploying it in China.

GM felt that this was a way to embed itself deeply in the Chinese economy over the next three decades and would keep the car manufacturer ahead of the more technologically-stingy Japanese firms as well as Daimler and Chrysler which had already had hiccups at that time in their China activities.

In a different realm, Citibank has been a leader in off-shoring, pushing more and more of its financial services support base overseas.

I'm not an expert on globalization, or for that matter, free-market theories generally, and I don't know how to balance America's role as a leader that can help developing economies grow, with the need to support American society as a whole -- including all of its members.  But I think his points need to be addressed.  Because the concerns Clemons raises are going to be shared by a lot of people.

The other day, I was talking to a handyman working in my house, and after asking me what I thought about the automakers' bailout, he suggested it wouldn't be necessary if people bought American.  His truck, of course, was parked right next to my reliable, fuel-efficient, short person friendly Japanese car.

I babbled for a little while about Japanese auto plants here in the US and how the Big Three are outsourcing to China anyway, how the American companies I and my husband work for have huge chunks of their workforce in other coutries already.  Then I whined a little about how tough it is when your position requires you to work with people in other timezones and you end up being on the telephone at 11:00 or 12:00 at night, sometimes on a regular basis.  But I felt like part of the problem: after all, we are management, practically -- or at least professional staff, which is close to the same thing.  I don't think what I said to him was helpful.

There's not much doubt of the fact that any bailout will require the Detroit automakers to become more efficient.  And there's not much doubt of the fact that becoming more efficient -- in the way the government's bailout will require -- is going to involve reduced costs and improved efficiencies.  And there's no doubt that means eliminating positions in the US and moving operations overseas.  And for those who remain -- one way or another -- getting rid of the old way of doing things and replacing that with something new and more rational.  How can this be made to look like a rescue to the people who are being asked to give up what they know?