Monday, January 13, 2014

Make No Mistake, They're Coming For Our Jobs

There's a rich history of leading economies investing their wealth to establish and grow their rival's economies until they're trading places.  The former leading economy thinks it's going to get wealthy and winds up triggering its own decline.   Kevin Phillips in his 2005 book, American Theocracy, chronicles how this phenomenon brought low the Spanish, the Dutch and the British Empire by turns and now is poised to do the same thing to the United States.

The lesson is that nations that refuse to safeguard and nurture their manufacturing base trigger their own decline.  Phillips sees the signs in America's transition from a manufacturing economy to a FIRE (finance, insurance, real estate) economy in which little is made beyond notional wealth constructed on a bed of painfully real debt. 

Der Spiegel has an interesting piece on how Chinese firms have used the best Western know-how to take over global markets for truly world-class products.

The Far-Eastern firms have a major advantage: established competitors in the West usually don't take them seriously, in some cases until it's too late. Indian market expert Nirmalya Kumar warns that German firms must take care or they might find themselves as overwhelmed as they were by the assault by Japanese camera manufacturers decades ago.

There are many such firms on the world market now, the best known being computer maker Lenovo, which acquired the PC division of US group IBM in 2005. Lenovo is rapidly expanding its product range and aims to be perceived not as a Chinese, but as a global brand.

The firms need Western know-how to expand. Haier had Liebherr, while Pearl River Piano, now the world's biggest piano maker, had Yamaha. Half a century ago the company from the southern Chinese city of Guangzhou made just four pianos a month. Now it's 100,000. The company has a 15 percent market share in Europe. That was thanks to Yamaha. The Chinese entered a joint venture with the Japanese brand 20 years ago, and once they had accumulated enough knowhow, they dissolved the partnership. In 2000 they pushed their way onto the US market with low-cost pianos. Their instruments were around a third cheaper than Yamaha models.

But Pearl River Piano has been shedding its budget image. In 2005, it entered a cooperation with Steinway & Sons and now builds Essex brand pianos in Guangzhou for the premium American manufacturer.

The next aim is to build world-class cars. But the Chinese first need to work on the quality of their vehicles. They have already selected a German teacher: Daimler recently took a stake in BAIC, the car division of Beijing Automotive Group. There is much speculation in China about BAIC returning the favor by purchasing a stake in the German luxury automaker. 

This is the end product of the globalism launched by Thatcher, Mulroney, Reagan and Clinton.  It was bound to happen.  Instead of rising to meet the challenge, our leaders respond by trying to suppress collective bargaining and by doing whatever they can to curb wages.  There was a time when we thought of Canada as so much more than hewers of wood and drawers of water.  With the gang of petro-pols that infest every major political party in Canada our nation's promise will never be realized.  These political slackers are entirely content to go after the low-hanging fruit of our fossil fuels and other mineral wealth.  At times they give the impression they would gladly suck the life out of the country until there's nothing left.



Anonymous said...

You produced nothing, you COPIED IT....nothing wrong with that but use correct terminology..hmm?

Purple library guy said...

Meh, everyone copied everything. No idea exists ab nihilo, it's all building on the ideas of others.
But production is making shit. Just because you're using an existing design doesn't mean you're not producing--that's a ridiculous overextension of the "Intellectual Property" madness that's been distorting economic ideas for some time now. Who actually makes stuff matters a good deal, and there is lots of knowhow that never becomes "intellectual property" but comes from the process of making. The notion that actually doing is nothing while technocratting up the blueprints is everything leads to lousy economies (and indeed to lousy design).