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They Gave Away the StoreDaniel Johnson Salem-News.com
I am not optimistic about America’s future because of its ingrained attitude of “every man for himself.” If I was an American, I would be afraid. I would be very afraid.
(CALGARY, Alberta) - That’s what American politicians and business leaders have done. You, the ordinary citizen, are left behind to suffer and fight your fellow citizens for scraps of whatever you can get, and resent it if some other deprived citizen is given support. I deserve help, they don’t. That seems to be the dominant creed of most Americans today.
Andy Grove was one of the founders of Intel Corp. (2009 revenue $35 billion). He was President (1979) CEO (1987) Chairman and CEO (1997).
On July 1 he published an article in the Bloomberg press, titled “How to Make an American Job Before It's Too Late”. (You can read the complete article here: How to Make an American Job Before It's Too Late: Andy Grove)
Grove’s starting point is his disagreement with an article by Thomas Friedman in the New York Times. Friedman argues that if the government wants to create jobs, it should be funding startups, not doing bailouts of tired old companies. This approach, says Groves, is wrong.
In a startup, entrepreneur(s) invent something in their garage, persuade some angels to invest money and go on to mass production. During this process more people are hired, factories are built and the business grows. It’s called scaling.
“Scaling is hard work but necessary to make innovation matter. The scaling process is no longer happening in the U.S. And as long as that’s the case, plowing capital into young companies that build their factories elsewhere will continue to yield a bad return in terms of American jobs”.
There’s the problem with America in a nutshell.
“As time passed, wages and health-care costs rose in the U.S., and China opened up. American companies discovered they could have their manufacturing and even their engineering done cheaper overseas. When they did so, margins improved. Management was happy, and so were stockholders. Growth continued, even more profitably. But the job machine began sputtering”.
This is the fundamental attitude problem in the U.S. It’s okay to make money. People don’t matter. This is the story of how American politicians sold their constituents down the river. And the American people, gulls that most of them are, fell for it, thinking that they were getting cheaper goods and everyone was happy. They had no awareness of the ground crumbling under their feet.
The beginning of the end was 1973. Until that time America had lived happily off the rest of the world—cheap labour in Third World countries and, most crucial—oil for under $2/bbl from the Middle East. In response to the U.S. arming Israel after the Yom Kippur war, on October 16, 1973, OPEC announced it was raising the posted price of oil by 70%, to $5.11 a barrel. In December the Shah of Iran said:
“Of course [the world price of oil] is going to rise. You [Western nations] increased the price of wheat you sell us by 300%, and the same for sugar and cement...You buy our crude oil and sell it back to us, refined as petrochemicals, at a hundred times the price you've paid to us...It's only fair that, from now on, you should pay more for oil. Let's say ten times more.”
And so it came to pass.
America was going to have to live within its means, but it never took that lesson to heart. The American people continued to believe its own mythology while the rest of the world moved on. I noticed the decline myself as a lowly reporter in the 1970s. I discovered, using the Fortune magazine lists, that in 1969 U.S. companies occupied 36 of the top 50 spots in the world accounting for nearly 80% of the total revenues. By 1980 the American representation had fallen to 22 companies accounting for 52% of the total revenue.
In 2009, there are only 15 American companies in the top 50, accounting for only 33% of the total revenues. In forty years, 21 American companies have fallen off the list and the American proportion of revenues has fallen by nearly half.
What happened, unnoticed by most people, was that the rest of the world was growing and catching up to the U.S. Ignorance is normally bliss, but there is no bliss in America today—at least among the disenfranchised middle class.
Whenever you buy a computer from Dell or HP; a Nokia cell phone; Xbox 360—you’re giving away your country and the future of your children. Those products, and a host of others, are made in China. As Grove summarizes:
“Some 250,000 Foxconn employees in southern China produce Apple’s products. Apple, meanwhile, has about 25,000 employees in the U.S.—that means for every Apple worker in the U.S. there are 10 people in China working on iMacs, iPods and iPhones. The same roughly 10-to-1 relationship holds for Dell, disk-drive maker Seagate Technology, and other U.S. tech companies.”
In terms of alternate energy, photovoltaics (solar panels) were invented in the U.S. But, says Grove:
“Last year, I decided to do my bit for energy conservation and set out to equip my house with solar power. My wife and I talked with four local solar firms. As part of our due diligence, I checked where they get their photovoltaic panels—the key part of the system. All the panels they use come from China. A Silicon Valley company sells equipment used to manufacture photo-active films. They ship close to 10 times more machines to China than to manufacturers in the U.S., and this gap is growing. Not surprisingly, U.S. employment in the making of photovoltaic films and panels is perhaps 10,000—just a few percent of estimated worldwide employment.”
Another industry about to take off is the mass production of electric cars and trucks. They require advanced batteries. But, Grove says:
“The U.S. lost its lead in batteries 30 years ago when it stopped making consumer-electronics devices. Whoever made batteries then gained the exposure and relationships needed to learn to supply batteries for the more demanding laptop PC market, and after that, for the even more demanding automobile market. U.S. companies didn’t participate in the first phase and consequently weren’t in the running for all that followed. I doubt they will ever catch up.”
Grove concludes with:
“I fled Hungary as a young man in 1956 to come to the U.S. Growing up in the Soviet bloc, I witnessed first-hand the perils of both government overreach and a stratified population. Most Americans probably aren’t aware that there was a time in this country when tanks and cavalry were massed on Pennsylvania Avenue to chase away the unemployed. It was 1932; thousands of jobless veterans were demonstrating outside the White House. Soldiers with fixed bayonets and live ammunition moved in on them, and herded them away from the White House. In America! Unemployment is corrosive.”
This is something that FDR recognized at the time. In his 1936 presidential acceptance speech, he said:
“An old English judge once said: ‘Necessitous men are not free men.’ Liberty requires opportunity to make a living—a living decent according to the standard of the time, a living which gives a man not only enough to live by, but something to live for”.
Tens of millions of Americans are unemployed or underemployed which means that, through no fault of their own and not for lack of trying, they are denied the liberty so prominently promoted in the Declaration of Independence. Liberty is one of the so-called inalienable rights--but it is routinely denied to millions. They have life-but what kind of a stunted life is it? And it's hard to pursue happiness when your more pressing and urgent pursuits revolve around things like food and keeping a roof over your head and that of your family.
In America, government is the problem because it is effectively run by and for the interests of the corporate world. Americans have to learn that government can be a solution. Grove explains:
“The rapid development of the Asian economies provides numerous illustrations. In a thorough study of the industrial development of East Asia, Robert Wade of the London School of Economics found that these economies turned in precedent-shattering economic performances over the 1970s and 1980s in large part because of the effective involvement of the government in targeting the growth of manufacturing industries”.
Fundamentally, the problem is not the corporations, or the government. It’s the American people themselves who choose the government--their representatives. As the French philosopher Joseph de Maistre observed: "Every country has the government it deserves”. To have had eight years of G. W. Bush is a lesson in itself although most Americans seem immune to learning.
Overall I am not optimistic about America’s future because of its citizen's ingrained attitude of “every man for himself.” If I was an American, I would be afraid. I would be very afraid.
Daniel Johnson was born near the midpoint of the twentieth century in Calgary, Alberta. In his teens he knew he was going to be a writer, which is why he was one of only a handful of boys in his high school typing class — a skill he knew was going to be necessary. He defines himself as a social reformer, not a left winger, the latter being an ideological label which, he says, is why he is not an ideologue. From 1975 to 1981 he was reporter, photographer, then editor of the weekly Airdrie Echo. For more than ten years after that he worked with Peter C. Newman, Canada’s top business writer (notably on a series of books, The Canadian Establishment). Through this period Daniel also did some national radio and TV broadcasting. He gave up journalism in the early 1980s because he had no interest in being a hack writer for the mainstream media and became a software developer and programmer. He retired from computers last year and is now back to doing what he loves — writing and trying to make the world a better place
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