American Innovators: Coming Out of China’s Shadow

What political grandstanding would be complete without a well-worn lament about how the other party’s policies drove all the good jobs overseas?  And “overseas” — in the context of jobs — usually means “China”.

Should we embrace this as the “new normal”, try to get back the jobs we once had, or should we be looking at other solutions?

When we hear the topic come up, it’s usually in the context of “how can we get manufacturing jobs to come back?”  That will depend.  Certain jobs, like heavy Industry, will generate employment just by getting their facilities built. (Keystone for example.)  But if you are waiting for the day that manufacturing plants come back to North America from the far-flung nations and bring back ‘glory days’ like 1960’s Detroit — then, well … I’ve got a bridge to sell you.

The strategies that made Western nations, particularly the USA, so successful is the adaptability to change. They weren’t committed to a feudal system, an aristocracy, or other rigid structures preventing others from making rapid readjustments of how they ran an economy.  But is that still true today?

That the 1960’s are not coming back is neither good news or bad.  Whatever the future will look like will be different from what the past looked like.

For anyone who sold typewriters (or newspapers) in the 1970’s, economic changes between then and now will have certainly hurt business.  But those same changes have benefited the world as a whole.  Imagine what you might have done differently had you understood and anticipated the impact that telecommunications, the dot-coms, the internet or Apple would have on how we live and do business?  The problem isn’t that solutions don’t exist. They just aren’t readily obvious, which can make it difficult to catch the “next wave”.

Before we look at solutions, let’s quickly recap how we got to where we are.  Early settlers to the New World either worked the land, raising crops and animals, or they ran small businesses like bakeries, sawmills and blacksmiths. Alongside that, certain big-money players followed the Roman model of large tracts of land worked by countless underclass. (read: slaves and indentured servants)  

The Industrial Revolution introduced large-scale machine-aided production.  These tended to be large operations, employing many people, especially after the rise of production lines.  The national culture of independent operators and small businessmen (Entrepreneurs) gave way to a culture of employees looking to “hitch their wagon” to a lucrative employer
(Modern equivalent of serfs and lords?)  That held for a long time, but overburdened as they were in overhead, taxes, pensions and red tape, many of these relocated.

Although we’ve seen growth in tech and information sectors, domestic manufacturing is evaporating.  Many manufacturing centers, with their factories laying idle, have become ghost towns.  If you live in such an area, or have watched the documentary “Detroipia,” you’ve already seen this shift.

Should we just accept this as the New Normal?  I don’t think so.  However much China might want to convince us that they’re an unstoppable Juggernaut, I’m not convinced their economy or country are entirely stable.  They are paying a terrible price for their One Child policy.