"bg" wrote in message
om...

That's the point. It doesn't matter where these things are invented
anymore.
What matters, in terms of trade, is where they're put to use. To the
extent
that IT is a productivity booster for manufacturing, the benefit follows
the
manufacturing itself. And manufacturing in the U.S. is in decline, once
you
adjust for the booms and busts.

I disagree. What you are saying is that we do not benefit from
innovation, because in many cases other countries use that same
innovation or also benefit from that technology. That is far from the
truth.

No, I didn't say we don't benefit from innovation. I said that relying on
innovation to compete with 80-cent/hr. wage rates is an artifact of the
past. It doesn't work as a general method for competing with low-wage
countries, now that our free-trade policies are having success in breaking
down the barriers for capital flow. A multinational will take that
innovation and implement it in the lowest-wage country that it can. That's
why, for example, Shanghai-GM now has one of the most advanced engine lines
in the world, which, starting next month, will be shipping complete engines
to Canada for installation in the 2004 Chevy Equinox SUV -- which then will
be shipped to the US. And so on.



Innovation has driven economic engines in the USA since our inception.
Electricity, Automotive, Aircraft, Medicine/medical technology,
Biotechnology, and IT are just a few innovations that have driven the
USA economy in different time periods over the last 140 years. They
became engines for growth, that were actually able to take the rest of
our economy on its back and keep things moving forward. It is those
engines that drive prosperity forward. without those innovations and
the growth engines that result, we would be a far cry from where we
are now.

That's true, but it's also history.



Have things changed? Sure they have. But that doesn't mean that we
should lay down and become unproductive in research and development.
That would be a grave mistake.

Of course it would. It would be an even bigger mistake to believe that
innovation in product design and manufacturing technology will protect us
from low wage rates employed by world-galloping multinationals. It isn't the
answer anymore. Like tax breaks, it's a small contributing factor at best.

That is, unless you want to open up the discussion and include innovations
in hedge funds, bond creation, electronic securities trading and
split-second arbitrage. We're very good at those, and, given that they have
a half-life of a few months, we probably can keep innovating financial
instruments and keep the money flowing our way for quite a while. At least,
until the Indians get the hang of it.


Bio tech boom in the late 80's/early 90's
wasn't a loser. We put the money up here for research in both fields
and have been all the better for it.

Again, you're getting pretty far afield from manufacturing. If you're
saying
that we'd may as well kiss manufacturing goodbye and focus on other
things,
there are a lot of economists who agree with you.

I'm far from saying that. And I dot believe I am getting that far
from MFG. The issue is the same. Bio tech drove our economic growth
for a number of years. It was big enough to actually go that far.

Even after two decades of development, total employment in the US biotech
sector, according to the Dept. of Labor, is 191,000. In contrast, over just
the last 3 years we've lost 2,600,000 manufacturing jobs.

Biotech certainly is a growth area, it's exciting, and it's sexy. It has
consequences well beyond its employment figures. But, as I've said, if you
search on "biotechnology" on the major search engines, a US source typically
doesn't come up until page 2 or 3. The fact is that biotech innovation is
proceeding all over the world, and I see no reason that it won't follow the
same pattern as other technologies that require high levels of education:
its center of gravity will wind up wherever the required educational skills
are concentrated...in combination with low wages. As for it being so big it
was "driving our economic growth for a number of years," I'd like to see
your numbers on that.


Innovation in other energy sources has much greater potential.

Please, tell us about one. With the relevant numbers, please.


They will need to do research. Of course they wont come close to the
USA for at least 50 years in this measure.

Why do you say 50 years? Do you know what percentage of science and
engineering graduate students in US universities are from India? Are you
aware that fewer of them are staying in the US after they graduate, now that
they have emerging opportunities in their own country?

Innovations used to provide long-term benefits because they tended to be
implemented where they were created. No more. Technology is a commodity.
Innovation isn't what it used to be, in economic terms.


Innovation still provides long term benefit. What do you think Texas
Instruments is doing in Dallas? You think they dot benefit from the
research and innovation going on there? Sure they do. They still
profit from it. Intel is still profiting from their technology years
after innovation. And they are still moving forward.

Look at where they're moving their manufacturing operations.

The bottom line on all of this is that the sources and rates of innovation
have little connection today to the economic benefits from those
innovations. For that, follow the capital flow. Where the capital goes so
goes the employment, the machine purchases, and the value-added that accrues
to the local economy in the form of employment income and savings, wherever
that may be.

That's the way it looks if you're examining national economies. If you're
looking for investment opportunities, the picture looks very different. For
that, you want the company you're investing in to chase the lowest wages and
other costs, no matter where they may be in the world.

And that's our problem. We're still doing quite well in attracting capital,
but don't count on it as a given. Our coming deficits are a big threat to
attracting more of it at such low rates as we've enjoyed for the last
decade.

Good luck on the alternative energy, BTW. I fought that battle, and now it's
your turn.

--
Ed Huntress
(remove "3" from email address for email reply)