Be Creative, Not Protectionist

The Wall Street Journal ^ | Friday, February 13, 2004 | CARLY FIORINA

[LowCountryJoe]

Wow! You mentioned process control. Would you be able to use this technology to - I don't know - diagnose the internal components of an engine to see where any wear & tear and potential failures may occur.

Does the fiber strand come to an abrupt end, spread light waves, and have a similar strand to collect the light on the "back end" or are there multiple continuous strands that - for the lack of a better understanding and terminology - "induct" the outlying images?

[Redcloak]

What I do is a little pricey for in situ monitoring of automotive parts, but it would certainly be useful in an automotive lab for measuring wear and tear on a prototype. The type of system I build uses a single fiber to both deliver the probe light and re-collect it for analysis. To develop an image, the light must be scanned across the target. This is also what an ultrasound head does, but with sound. (In fact, we tend to use some of the same terminology as the ultrasound geeks do.) We don't do the "B-scan" part of the image. We only do the "A-scan" part where we look along a line into the target.

[thedugal]

When you could hire Americans and make a profit

This is where your argument falls apart. You cannot profit if you hire Americans because you cannot compete with companies which already outsource. They can bid below your cost. There is no profit, you'd have to lose money to get work. This is not a simple issue. Calling businessmen greedy is just silly. Without "greedy" businessmen we'd still be living in caves.

Nonetheless, I sympathize with your point of view. Pro-free-trade conservatives are going to have to get their heads out of their collective arses on this issue. Low job growth=high dem vote=(liberal judges+higher taxes+nanny state)-freedom-security.

[x]

Low job growth=high dem vote=(liberal judges+higher taxes+nanny state)-freedom-security.

True. Even if there is going to be some movement of jobs overseas under any administration it doesn't pay to be complacent about it. I heard on McLaughlin that an administration official had called outsourcing a good thing. If true, we won't hear the end of it in this election year.

It's funny about the WSJ editorial page. You could always count on it to provide an alternative to the standard liberal line. But now, on issues like immigration or outsourcing, it has the same sort of unanimity and predictability and resistance to unconvenient facts that the Boston Globe or Pravda have long had.

[GOPcapitalist]

Pro-free-trade conservatives are going to have to get their heads out of their collective arses on this issue.

The free traders are not the problem. The real cause of the trade problem at present is the deficit spenders who are doing everything remotely possible that they can to ensure a trade deficit, and unwittingly so at that. Putting up protectionist barriers is not the solution because it addresses only false symptoms and normally ends up hurting more than it helps. The real solution is to (1) eliminate the deficit and (2) make the tax code friendly to at least a modest ammount of private savings.

Want to know how and why the deficit spenders are the problem? Take a look:

(1) GDP, or Y, = output for the US economy

(2) Y = C + I + G + (EX-IM) where C is consumption, I is investment, G is government spending, EX is exports, and IM is imports

(3) Since savings, or S, is all that which is left over after consumption by definition, S = Y - (C+G) = Y - C - G

(4) Rearranging equation 2 by simple mathematical operations, when get Y – C – G = I + (EX - IM)

(5) Substitute equation 3 into equation 4 and we get S = I + (EX - IM), which rearranges to S - I = EX - IM

Thus, as long as national savings are exceeded by investment, S - I will be a negative number, which in turn means only one thing: a trade deficit. Since the federal government is not only negligent of but also completely oblivious to the concept of savings in its own account, every year of deficit accumulation means the US is automatically disadvantaged in the S - I side of things.

[thedugal]

(1) eliminate the deficit and (2) make the tax code friendly

I agree wholeheartedly. But doing this will not fix the problem. I honestly don't think non-technical people can comprehend the seriousness of this problem. Indian programmers work for less than American programmers pay in rent. You CANNOT live on Indian pay in the U.S. That means you can NOT compete with them. Regardless of how low taxes go, rent for a 2 bedroom apartment will not drop below $100 anywhere in the US.

When I say non-technical people may not understand the seriousness I mean the scope of the problem. ANYTHING that can be digitized can be done in India, China, Russia. Some recent examples are U.S. tax forms being completed by Indian accountants is taking jobs from U.S. accountants. Another example, U.S. xray technicians take an xray and send the digital picture to India where Indian doctors analyze it and send their analysis back to the U.S. hospital in a matter of minutes.

This is serious not series. This new digital trend is changing everything, and the old economic formulas must be revised in order to figure out how the U.S. can maintain a high standard of living without a middle class workforce. I do not believe in protectionism, however, this is not an either or situation.

[GOPcapitalist]

I agree wholeheartedly. But doing this will not fix the problem.

It will fix, or at least go substantially in the direction towards fixing, the trade balance problem. What you speak of is a corrollary and related labor liquidity problem. I do think you overstate the labor liquidity problem somewhat in the sense that there are still substantial non-wage reasons why companies will still, in many cases, prefer the U.S. Proficiency in the English language is one of them. Another is political stability (i.e. governments don't get overthrown or attacked every couple of months). A third is infrastructure stability (there are many places in India, China, and Russia where blackouts happen on a daily basis for example). A fourth is a relatively sturdy legal system that, for the most part, applies uniformly to the business environment. A fifth is simply cultural, that is the United States is not impaired by historical cultural barriers such as the caste system or former or existing communism and authoritarianism. That said, I will grant you that there is a problem with labor liquidity as things stand right now. It's just not as severe as many make it out to be.

I'll also note that several things may be done to mitigate against this problem, among them formenting a business-friendly market environment within the United States itself. That means less government regulation, less government taxation of businesses and people in general, less OSHA, less EPA, and a less litigious society in the realm of tort law. By adopting these policies the country will add counterincentives for businesses to stay here or even come here through other benefits that offset the wage disadvantage we have against the third world. And, of course, having a more balanced trade inflow/outflow situation will help as well.