"Ed Huntress" wrote in message . net...
"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.

I agree that innovation will not totally protect us. it is not the
be-all, answer-all. we will definitely lose most mfg to other
competing economies. Anyone who thinks different is deceiving
themselves. Lets face it, when you have satellites being produced and
launched in China, what technology cannot be produced their
effectively?

But American companies do benefit from innovation. Whether it lasts 10
years or 50 years, there is still benefit. Intel still benefits from
their technology. They can produce the chips cheaper in China, and
they do. But the corporation still benefits and so do all of the
workers (including mfg) in the USA from the China operations. They
benefit, because they still have jobs. without the profit from the
China business, the workers in the USA would lose their jobs
completely. Intel gives the China operations the ability to produce,
but innovation and high tech production in the USA is what drives the
company.


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.

we are still benefitting from those innovations. Millions are.



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.

Innovating military hardware. While I believe it may not be really
productive. it is for those companies that produce. We have been
innovating since our birth and just look at all of the recent
innovation in the past 10 years. I'm not really talking about
financial instruments. However, we do seem to be very creative in that
area, dont we? Someone will always find a way to get everyones money.
when you are paid to think about it for 24 hours a day, I can
guarantee they will get good at it.

What about cellular/wireless technology? With our innovation, American
companies license that technology and still receive benefit from their
innovation. They continue to innovate here, produce the highest tech
here and license there (everywhere). Just think of CDMA for example.


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.

Do you remember the bio-techs driving our stock market for a number of
years? They may not be the largest of industries, but innovation there
became a driving force for our financial markets, that brought along
pharmaceuticals as well.


Innovation in other energy sources has much greater potential.

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

I still think you are misinterpreting my statement. I am not coming
down on one type of energy or another. I havent a clue as to which
would be more useful. But by investing in research on a very, very
serious level, we can determine which would be most productive and
follow through on it. The numbers say this at the very least: If you
were able to develop an energy source that frees us from the
dependence on oil, is cheaper than oil, is environmentally safe, and
is easily reproduceable, you have eliminated a huge crutch from the
hands of our economy. This will help benefit mfg and every other
industry in the USA. We can then of course license that same
technology to others. In the meatime, we can continue to improve on
that initial innovation and licensing more.


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?

Judging from the way India is run, it will probably be more like 100
years. They are not organized and far from the level of China today as
an economic force. While they do produce a good number of engineering
students, medical students, and scientists, they have brain drain
problems, economic problems that are immense, lousy government
administration of their economy, and population problems that stem
from cultural and governmental mismanagement. Maybe when they can
first feed all of their people, they can then begin to realize the
beneift of investing in research and technology.

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.

They just announced new MFG facilities to be built in Texas that will
be unrivaled. It will become their command post for innovation,
research and production of the latest technology.

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.

I disagree wholeheartedly. Source of innovation is exactly where the
benefit goes. Even in cases where there is no mfg benefit, there is
till benefit to be had in the innovating country. You still need
service people, marketing, administrative personnel, all of whom earn
a living and pay taxes. Do you think Motorola USA does not benefit
from having their largest factory in Tianjin, China? Of course they
do. Without the profit from those China operations, I can assure you
of USA layoffs.

while we will not necessarily always benefit from the mfg of that
innovation, we can still benefit from the innovation in all other
aspects.

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.

I agree. Though I dont think we are doing well in attracting real
capital. In the USA, with our current deficits, we are borrowing at a
tremendous rate. I also believe these deficits are an immense threat.
Unfortunately many politicos dont seem to realize this. It took the
greatest economic expansion in our history to eliminate our last
deficit, not debt. I guess they are banking they can do the same thing
again. Well I can assure you it doesnt have a chance in hell without
innovation.

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

I dont want to come off like a green. I am not. I am looking at it
from a purely economical standpoint. Hopefully, we can at least get
something going in the near term. It's not looking very pretty.

bg