The Globalization Challenge:
How the World’s Most Populous Nation is Engineering Itself for Success

 

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The American economy has undergone a number of significant changes over the years. What began as a primarily agricultural economy transformed into an industrialized economy in the mid-1800s. The transition was not easy and entailed a complete restructuring of lifestyle for most Americans. In fact, this tension was one of the key motivating factors that led to the founding of the Republican Party. Republicans represented “free soil, free labor, free speech, free men” - in other words, the interests of those in the north who sought to modernize the American economy.

When Republicans won the presidency in 1860, those in the south were terrified that the Republican’s pro-industrialist stance would tear apart the union. Instead, the conflict ultimately paved the way for America to become an economic superpower.

Fast forward to today. In the modern era, America’s robust economy has caused other countries to follow suit and industrialize. This increased competition from abroad has forced the American economy to seek out new niches and services. In short, we have become the “brain” of the new world, continuing to maintain the largest economy in the world through innovation. Yet, America must again shift its model if it is to remain the world economic superpower.

Just as Democrats were wrong in 1860 they are wrong today. The Democrat platform of our era champions federally regulated mandatory labor unions, protectionist tariffs, federal regulation of wages, price regulation and government subsidies of utility markets, socialized health care... the list goes on and on. Meanwhile, the rest of the world looks at America’s dense bureaucracy and scoffs. Consider this...

Hu Jintao - Hydrolics Engineering

Wu Bangguo - Radio and Electronics Engineering

Wen Jiabao - Geomechanics/Engineering

Jia Qinglin - Electrical Engineering

Zeng Qinghong - Control Systems Engineering

Huang Ju - Electrical Engineering

Wu Guanzheng - Thermal Engineering

Li Changchun - Electrical Engineering

Luo Gan - Machine Casting Mining and Metallurgy - Senior Engineer

These are the leaders of the Politburo Standing Committee of the Communist Party of China. In other words, these are the people running China. Notice something about them? China is literally engineering itself for success. America, on the other hand, is deciding between George Bush and John Kerry. I believe we can do better. The statistics out of China are staggering:

In the last 10 years, 300 million people have risen out of poverty in China on the back of China's massive manufacturing base and openness to free trade.

The Wall Street Journal's Index of Economic Freedom recently named Hong Kong the most-free market venue for business in the world.

This year, China will graduate 600,000 engineers. America will graduate 60,000. Even adjusted for population, this number represents a staggering discrepancy.

Wages in China have grown at around 6% per year, every year, for the last 20 years. Richard Freeman, a well known economist at Harvard, predicts that China's wages will overtake America's in 30 years.

I have never heard of any “humanitarian” aid program generating these sorts of results. Not only that, but American universities, which have provided for the best and brightest in the world for years, are increasingly viewed as a second alternative to universities in student's home countries. For instance, the number of Chinese doctoral students earning their degree in America has declined from about 3000 in 1995 to 2000 in the year 2000. Meanwhile, the number of Chinese doctoral students has doubled to nearly 8000 in that same time period.

Global competition is here to stay and attempts to insulate America will simply make matters worse. America will lose out in the global marketplace so long as it costs ten times as much to make the same product in America as it does in China. Thus, it is essential that America maintain its technological edge by encouraging an educated and competitive workforce. That means removing barriers for student visas and reforming our public school system to reflect the demands of a global economy. That means a cultural revolution that sees a picture that is broader than the short term goals of today, just as the Republican Party envisioned the future in 1860. It will not be an easy task, but it is the only path that will maintain America as an economic superpower.