Saturday, February 24

The Accidental Century

<- click here
The Twentieth was the American Century. Why? As an economist I’ve read all the theories, mostly revolving around Yankee Ingenuity. Americans, they said, were a special breed bubbling out of a melting pot that assimilated the best of yearning emigrants. These were people who were enthused by a work ethic which was reinforced by a level of economic opportunity and mobility that may never before have existed. Okay, perhaps there's a hair of truth to the huddled masses theory of economic development. More probably it emerged from the rest of the world's lack of anger management.
When your natural competitors bomb the crap out of one another not once, but twice in the same five decade span, well it's hard for them to turn rubble into plowshares, rap music, or Fords. So, protected behind two very large moats, America became the only market to people too war crazed to provide for themselves. In return for Fords America imported the family jewels of Europe and Asia.
But over the course of the next five decades, the competition ramped down their nastiness, or at least relegated it to the noisy Balkans and the snarling Mid-East where they were sufficiently gracious to allow Americans to tend to the nasties with that large part of their budget that was siphoned off into police-protection-for-the-world.
And while the U.S. shifted taxed-away bucks into planes, tanks, and bombs, the old competitors shifted their savings into factories, machines, and education. Now they've built efficient new devices to produce far better stuff than Fords which wheeze out of fifty year old plants, produced under fifty year old work rules, by workers with benefit packages designed to be financed by the competitors' family jewels fifty years back.
Sometimes I fear that the accidental century is as over as the cog and lightning bolt on a rusting Ford medallion sitting unprotected against the snow.

2 comments:

Bill said...

This one also resonates with me. Perhaps it's simply because my head's in that space but the same metaphor comes to mind as in the previous image.
I enjoyed your comments (is diatribe too strong a word?) and hope it was at least a little therapeutic for you.

advman said...

Well, the rest of the world probably hopes what you fear, right?

Basically I think your analysis is sound. In that light the shift from manufacturing physical goods to administrating so called "intellectual property", something that I deeply dislike, seems almost understandable.

America's problem is not Europe. Europe and America have a common problem, that is China. Whatever we can do, the Chinese can do it for a thenth of the costs, and if the product is small enough like e.g. an integrated circuit is, then an awful lot of them can be packed into a ship or a plane, rendering transport cost per piece almost nil.

This is not even a nasty strategy. China plays by exactly the rules that the Americans have set up, they only have learned to play the game better than anybody would have guessed.

Andreas