Posted on 07/20/2005 10:20:20 PM PDT by remember
CAN AMERICANS COMPETE?
Is America the World's 97-lb. Weakling?
In the relentless, global, tech-driven, cost-cutting struggle for business, America isn’t ready—here’s what to do about it.
By Geoffrey Colvin
It’s a crisis of confidence unlike anything America has felt in a generation. Residents of tiny Newton, Iowa, wake up to the distressing news that a Chinese firm—What’s it called? Haier? That’s Chinese?—wants to buy their biggest employer, the famed but foundering Maytag appliance company. Two days later, out of nowhere, a massive, government-owned Chinese oil company muscles into the bidding for America’s Unocal. The very next day a ship in Xinsha, China, loads the first Chinese-made cars bound for the West, where they’ll compete with the products of Detroit’s struggling old giants.
All in one week. And only two months earlier a Chinese company most Americans had never heard of took over the personal computer business formerly owned—and mismanaged into billions of dollars of losses—by the great IBM.
"Can America compete?" is the nation’s new No. 1 anxiety, the topic of emotional debate in bars and boardrooms, the title of seminars and speeches offered by the liberal Progressive Policy Institute, the conservative economist Todd Buchholz, and countless schools and Rotary Clubs. The question is almost right, but not quite. We’re wringing our hands over the wrong thing. The problem isn’t Chinese companies threatening U.S. firms. It’s U.S. workers unable to compete with those in China—or India, or South Korea. The real question is, "Can Americans compete?"
(Excerpt) Read more at fortune.com ...
Well, there's a lot of dirty poor countries where every 14 year old with ambition has an AK. But it hasn't improved their lives much.
This ploy didn't work for the British in 1776. Ostensibly, they owned America, but they didn't own Americans. Capiche?
I'm a UAW member (Caterpillar) and I disagree with this point. Seniority is beneficial to both parties as an older worker trains younger ones. Age does limit ones ability to do "faster and cheaper" work but knowledge is the benchmark of quality.
While young pups can work faster and accept cheaper wages, if these pups are retained in any layoffs over senior members, quality suffers.
Corporate investment in practices such as 6 Sigma, Lean Team and the Pacific Institute (Lou Tice) compounds the degradation of the quality factor as you have kids straight out of college attempting to improve production rates by charts, graphs and studies to workers who have made this or any other trade thier life's work in expectation of the best and fair compensation.
I'm ten years from retirement from CATINC and if you are familiar with the hiring practices in place now due to the last contract you would understand that CAT's ideology will turn it's machinery products into sub-standard, higher cost units.
They are hiring kids off the street in which if they maintain a "proper attitude" they will be retained, no matter what their skills or learning abilities are.
No. The Chinese were offering good money.
In fact, the U.S. is being financed by the China, which is buying U.S. treasuries like crazy (a big reason long term interest rates are so low and housing prices so high).
The ostensible reason for not choosing the higher Chinese bid is that it would take longer to get gov't approval--more red tape because the buyer is foreign or something like that.
But I don't think that's the whole story.
I think the powers that be don't want China to buy that company.
Perhaps there were strong hints from the government that the red tape might take especially long in this case, just to discourage the sale.
Meanwhile, with more than a billion people and rapidly industrializing, China knows it will be desperate for oil, and it's obviously doing what it can to prepare for the future.
As I suspect is the U.S. (Iraq invasion makes sense when viewed as a way to gain more influence over Mideast and its oil).
When China takes the money we spend on their trinkets to industrialize their nation and so develop a huge appetite for oil and increase demand for oil--
I wonder how much we'll save in the long run when stereos made in China cost $10 but a barrel of oil is up to $500.
Also check this out: http://www.latimes.com/business/la-fi-canoil17jul17,1,5245153.story
You know, it just occurred to me that Japan rapidly industrialized, and started a war with us because we got in the way of Japan's oil supply.
It's as much a strategic resource as bullets, tanks, sattelites, and jetplanes.
If you wanna be a player, ya gotta have it.
Just remember, if we're gonna have to pay $800/barrel for Light Sweet Crude, the Chinese will have to do the same.
Easy answer.
First we voluntarily slash rents or the sale price of our homes and a lot of other things by 90%.
Then American workers can afford to slash their salaries by 90%.
Then we can compete.
Simple.
Of course, the slashing of rents, home prices, and other things need not be voluntary. It would likely be forced by the market.
In any case, I would have liked to hear the article address this issue at greater length. Whatever happens, it's very difficult to compete with someone whose cost of living is a fraction of yours. There will be a great deal of pressure on costs of living to equalize. On page 4, the article does say the following:
For the U.S. the loss of technology leadership could be historic. Without that advantage, there would be little to prevent living standards in the world’s interconnected economies from equilibrating. The rest of the world’s living standards would rise, and—at least in the near term—America’s would decline.
That sounds about right. We have become spoiled and lazy, and as a whole, are unwilling to make sacrifices in order to achieve a larger, longer-term goal.
I'm afraid I have to agree. For example, what "sacrifices" are those of us not in the military being asked to make for the Iraqi war? We are being asked to accept tax cuts and higher spending.
Regarding education, I was struck by the following statement on page 2 of the article:
China will produce about 3.3 million college graduates this year, India 3.1 million (all of them English-speaking), the U.S. just 1.3 million. In engineering, China’s graduates will number over 600,000, India’s 350,000, America’s only about 70,000.
Hence, China and India are turning out about 2.5 and 2.4 times as many college graduates as the U.S., respectively. However, they are turning out about 8.6 and 5.0 times as many engineering graduates, respectively.
I heard the same crap in the 80's..
The brutal fact is that the interest of the big business and US of workers are very different now. The CEOs and large shareholders want to lower the wages below the minimum US level so they move jobs to poorer countries.
They expect the US taxpayers, families and communities to absorb the social costs of dislocation. Also they expect their country to protect their interests abroad as they are increasingly exposed to the dangers of overt or disgused nationalisation or technology "theft".
They also expect the government to remove the remaining protectionist barriers and secure the "free trade". They want borders to be open.
US workers would have different policies in place if they had more to say.
In engineering, China’s graduates will number over 600,000, India’s 350,000, America’s only about 70,000.
Freemarketeers will put blame on lazy and stupid American students. But why don't they provide some free market explanations for this worrying phenomenon? Or maybe this is all for good in their universe? (See my tagline).
You may have noticed but this isn't the 80's.
I know that but replace China with Japan and it is exactly word for word..
So the free market and private enterprise CANNOT fund the research? They need taxpayers to do it for them?
I see, being "business experts" in pricing tires is higher level than being a "coder". I guess being an HMO clerk is higher level than being a "driller" (dentist).
No suprise that young Americans do not want to study engineering.
"Education" is a bit overrated - what we need is "genius", and the early encouragement of children who show any. In today's politically correct, "Don't you dare excel because you make the other children feel bad about themselves!" public school environment, we are setting ourselves up to lose to countries like China and India who aren't affected by this national neurosis.
But U.S. policy is moving in the opposite direction. The number of available H1-B visas, which allow highly qualified foreign workers to remain in the U.S. for up to six years, has been cut from 195,000 to just 65,000 a year, based on security concerns following 9/11.
The big problem with the H1-B visa was that in too many cases companies weren't using them to hire ultra-rare, PhD-level talent that they couldn't find in America, they were using them to hire run-of-the-mill foreign programmers who were willing to work cheap. Forbes Magazine and others have been caterwauling about increasing the limit again - I say fine, increase it to a million, but make sure the people being hired under its terms are actually the best and brightest and that companies aren't violating the spirit of H1-B program by using the visas to trim payroll costs.
High productivity
Low power, water, land, taxes and other costs
Unbureaucratic compared to most (banking-environmental-legal, governmental……)
Leading in a broad range of technology and currently still with high investment
Skilled labor
Solid infrastructure
Low crime
Stable (look at Russia)
Wages are reasonable combined with a highly flexible labor force
Good work ethic compared too many
Permissive legal framework (Nuclear power etc)
Yes, the US can compete. Better yet I’d say that a lot of our trade issues are because of past blatant or subversive trade restrictions, a high valued dollar for decades, and other reasons. Internationally I think the US is not only good off today, but even has a bright future.
Free market economists will do two things. First, they will explain that free trade is good for everyone. This is true if "everyone" is defined as a nation's GDP. Second, they will state that workers dislocated have the opportunity to change skills and get out of high-labor jobs and into more high-skill jobs.
I basically used to believe this 100%. It's all true in economics class. I also thought it was true when I lived in CT and basically everyone had master's degrees and were very fluid as far as being able to jump from industry to industry and do well.
I largely changed my mind when I moved to Oklahoma, where I saw lots of people who worked at say the local Dayton Tire plant, yet lived better quality of lives then those in the NY area who made ten times as much money as them. That is, they lived in nice little houses in safe neighborhoods with swing sets in the back yard. They didn't work 18 hours per day either.
Of course, these people don't have the best educational background in the world. The dislocations of the free trade model will fall squarely on their shoulders.
Is it really worth it, even at the expense of long term GDP, to cost these people their jobs, wreck their families, etc?
That is a more difficult question than it sounds. You can't just say "no" and leave it at that. Ultimately, for the sake of our national security and well-being, we can't over-protect workers without doing long term damage to the economy. At the same time, however, it does not seem unreasonable to me to let the conversion to free trade be a longer 1-2 generation proces, as opposed to the 15-20 year process that we are seeing now so that there is more warning of the coming dislocations, and more time for people to prepare for it, and to raise their kids to learn different skills and areas of knowledge than what has gotten them through life. Furthermore, while the foreign nations will be competitive in terms of wage costs, it does not seem unreasonable to expect other nations to have minimal standards for pollution, child labor, etc.
Thanks for the ping. WE CAN'T COMPETE
This is like an economy horserace and the Amercian entry is handicapped carrying a much heavier load.
A complete bevy of taxes, regulations and law suits bend the back of American horses while foreign goods come in tax-free.
The cost of American education is out of sight and other countries provide subsidy.
Our best and brightest head for law schools, and Wall Street, not to create for America but to suck out from the producers.
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