Is America the World's 97-lb. Weakling?

[nodoodahs]

Page one of seven is quoted. "Service economy" means that we all have jobs washing each others' underwear and serving each others' meals, while all the things we own were either made overseas, or by companies owned overseas ... except our homes (and some of our produce), of course, which were made (or picked) in the U.S.A. by illegal immigrants. I'm feeling frisky today, aren't I?

http://www.fortune.com/fortune/articles/0,15114,1081269,00.html

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

(Illustration: R. Sikoryak)

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?"

The stakes are mammoth: Respectable analysts believe it’s possible—not certain, but possible—that the U.S. standard of living, after decades of steady ascent, could stall or even begin to decline. More worrisome is the chance that if the world’s most powerful nation finds itself getting poorer rather than richer, some kind of domestic or even global political crisis could follow.

As for the big question at the center of it all—Can we compete?—the answer isn’t obvious. The don’t-worry-be-happy crowd points out that our last national fit of wailing and garment rending, when Japan was going to smite us in the 1980s, proved unfounded. We adapted and prospered, as we always had (and Japan didn’t). But today’s situation is so starkly different that it’s tough to find comfort in our experience then.

We’re not building human capital the way we used to. Our primary and secondary schools are falling behind the rest of the world’s. Our universities are still excellent, but the foreign students who come to them are increasingly taking their educations back home. As other nations multiply their science and engineering graduates—building the foundation for economic progress—ours are declining, in part because those fields are seen as nerdish and simply uncool. And our culture prizes cool.

No one is saying that Americans can’t adapt and win once more. But look at our preparedness today for the emerging global economy, and the conclusion seems unavoidable: We’re not ready.

To understand better whether Americans are destined to be the scrawny and pathetic dweebs on the world’s economic beach, it’s necessary to refine the question. Who is most threatened? How come? What will it take to make America stronger in a new economic world? What political forces could propel—or derail—progress?

Many iconic U.S. firms—Coca-Cola, Procter & Gamble, Texas Instruments—already do most of their business and employ most of their workers outside the U.S. Conversely, some of the most American brands you can think of—Hellmann’s mayonnaise, Jeeps, BV California wines—are owned by non-U.S. companies (Unilever, DaimlerChrysler, and Diageo, respectively). To complicate matters further, many products of U.S. companies are made outside the U.S.—Maytag refrigerators are no longer made in Galesburg, Ill., but in Mexico—while many non-U.S. companies make products here—your new Toyota may have come from Kentucky. Now add a few more twists: Your Dell laptop may have been assembled in Malaysia from parts made by American companies in Thailand.
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I haven’t seen a beatin’ like that since somebody stuck a banana in my pants and turned a monkey loose.

[rffrydr]

Boeing now set to make ZERO profit on the "patriotic re-bid"... after all the dust settles I guess you can call it a "victory" for the american taxpayer.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Is nothing sacred? Forces of globalization now being felt in that last bastion of American "services" (Bill you forgot these trigger jobs). With the Joint Strategic Fighter Project they're being embraced. With Taiwanese software to pilot them it's not so clear.

http://www.ft.com/cms/s/0c15bcb4-2b5a-11dc-85f9-000b5df10621.html

Note the article frames it in terms of "challenges AND opportunites" Interesting things happen when two strong ideologies come into conflict.
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Good post, Bill. Definitely things to think about for would-be scientists and engineers who are currently studying law, etc. Historically, the U.S. has never had a problem because as a country, we have always attracted the best talent - said attractions being our universities, economic and political system, religious freedom, etc. On the other side of the equation, you had countries like Russia, China, and India consistently "screwing up" and not valuing their most-talented (in terms of the ability to innovate and to commercialize products) - and this is definitely changing. Like the Fortune article said, we are still attracting talent but that talent is increasingly moving back home after they have graduated or after they have spent a few years working here in the States.

One can just look at the number of my Chinese friends which have gone back to Hong Kong or to China to work. I don't have to name names here but a significant number of the top echleons of our most innovative companies (i.e. companies like Google, Yahoo, eBay, Intel, etc.) consist of immigrants or children of immigrants.

However, the 21st century will be increasingly, mostly about the ability to innovate, create, and the ability to commericialize those creations (including intellectual property rights and the expertise to market those to a globalized world). China cannot do that right now - it has no legal structure (in terms of intellectual property rights and/or the ability to enforce those rights). Neither does Russia or India. Companies like Baidu.com are looking to do an IPO on the NASDAQ - this tells you how much confidence they have in the Chinese or HK exchanges in the ability to raise money, etc.

That being said, I am very excitied about the prospects for people like me in the 21st century (entreprenurs, especially entreprenurs in the financial industry). America is still the biggest consumer market in the world. And it is also one of the wealthiest countries.

Does anyone remember the economic concept of "Acceleration?"

http://www.marketthoughts.com/z20050213.html

As a country with one of the world's biggest population and as one of the wealthiest (and one of the most educated) countries in the world, American citizens have a proportionally huge appetite for financial services. You just cannot do what I am doing and try to make a living out of it without involving American citizens.