There are some things done in American business today that don't even make sense to someone who has a business education and works in the business field. In its drive for creating a global economy, could the United States be going overboard in selling off its assets without considering the consequences? And who is to blame? The fault obviously goes beyond Bush who is a symptom of the problem. This will be a long read, but I think it's worth it...
Lets go back to 2003 when Iraq was invaded because Al-Zarawi jaywalked on a street in Baghdad, automatically making Iraq the great enemy. Yet Saudi Arabia and UAE which gave countless millions to terrorists, housed them and trained them are somehow great allies because they can sell lots of cheap oil to US companies? United States is currently rewarding Middle Eastern theocracies for being two-faced. As long as you have oil and internationally known terrorists aren't jogging in plain sight, you can do no wrong?
But wait, if we don't give the UAE our ports, then other nations won't trade with us? Is that why we blocked a Chinese energy company from buying the small US oil drilling operation UNOCAL last year? Last time I checked, China was America's biggest trading partner. So we can only outsource to China and China can't buy something of ours for a change, especially because America doesn't have that much advantage in energy production? American globalization seems to be all about American companies selling things they shouldn't be selling to foreign nations that shouldn't be able to buy them.
This is a symptom of a tragic disease plaguing American business at the moment. Thanks to Wall Mart and their ilk, the public at large now only cares about cheap products, not even so much about quality. As a result, companies are forced to outsource to reduce the product costs. However, what do the 60% of Americans who own stocks do? They buy more shares of the companies actively outsourcing, rewarding them, raising their market value and providing them with an incentive to outsource even more. Keep in mind that the stock owners are not all Republicans. Stock ownership doesn't bend to partisan lines.
But as companies get more and more rewards for outsourcing, they're risking to outsource something called core competencies. This is a fancy term for what the company is supposed to do, what it was designed to perform. Microsoft is outsourcing software and graphics design. Maybe I'm wrong, but if Microsoft is a software company, isn't that kind of research something they're supposed to be perfectly capable of themselves? This whole globalization thing only creates jobs and economic prosperity when there are jobs for everybody to do. Microsoft is giving China its primary means of making money while China can't buy an oil company to get energy to their research hubs because somehow the government says that selling multi-billion dollar business models is a-OK, so is selling national security, but giving China an extra 500 KW-hr is not.
The simple idea behind outsourcing comes from a principle of globalization which states that countries best at doing certain kinds of work should be the ones doing it. This is called Absolute Advantage. In theory, because China is good at manufacturing, it should do all the manufacturing and because the United States is good at high tech and medical products, this is what the United States should be working on. Ideally, the manufacturing workers that loose their jobs after a steel plant shuts down, should be working at a factory that makes medical devices or computers.
However, with their eagerness to drive down costs, many companies are giving away all the skills and abilities that give the United States advantage in certain industries. This is why China and India are the fastest growing economies in the world, not the US. If the US economy grew at the same clip as China's, there would be no unemployment. Demand for jobs would be so high and salaries so attractive, everyone would be making a live-able wage. But our economy won't grow as fast, because US companies are being encouraged to give away their core competencies, shed talent and give away their abilities and purpose to foreign nations by stockholders.
So where does the administration fit in? Simple. US is good at something. It has to be because foreigners invest in the United States. The country has natural resources, skilled labor and patents on some of the most sophisticated medical and IT technology in the world. For instance, when someone in India buys a cell phone, about 15% of what this person pays for the phone goes to Qualcomm, a US company. Also, the US still knows how to build cars. I just leased a car and after an exhaustive search through Japanese and German cars, the car that fit me best and had far more cool features that Honda, Toyota and VW was a Pontiac G6. Its fast, powerful, has a perfect little cradle for my cell phone, computer controlled indicators... Hell, it can even display what songs are playing on the radio. I know that Americans can definitely build good cars. I'm driving a great one right now. With a little good design and a focus on quality, there is no reason why American cars can't be considered great again.
So why isn't the administration promoting the things America is good at? Why does it insist on how good of a job US companies are doing outsourcing their core functions overseas and selling off bits of America to foreign nation who will take 5 or 6 years to learn how to do high tech jobs as well as Americans can do them now? Why doesn't the administration allow Americans to keep their core competencies and boost them with money, PR and giving companies massive incentives to hire talented designers and assembly workers? It worked for China and India. And speaking of which, why is the administration approving sales of core US business like IT to China, but at the same time forbidding the Chinese to buy energy companies, something that America does not have an advantage in?
The lousy excuses for economists who insist that this is all right and just a natural part of the globalization process must have buckshot for brains. Globalization doesn't mandate that people loose their jobs and companies sell off their business modal overseas. Boosting US business that produce the products and deliver the services America is so far the best in the world at producing and delivering isn't "protectionism." Its enhancing the Absolute Advantage.
So Mr. Shrub, err.... Bush, how about giving the IT, medical and biochemical fields in the United States a little boost? Or would you like to be known as the president who allowed crazy businesses to sell themselves off to foreign nations that will take away America's advantages in the next 10 years? Oh and selling port licenses to nations that give your family fat checks while they house terrorists... not a good idea. National security doesn't cost $6.8 billion. The US economy is $11.6 trillion, might as well get a better price if you're going to sell off the country.