American competitiveness = American creativity

Yesterday I was in a perfectly justified foul mood at the rampant economic stupidity being foisted upon America by our semi-permanent governing class, but while I am disgusted with many elements of American society, I still have great faith in this country.

I am a minor stockholder in a local manufacturing company that celebrated 95 years in business last month. My family’s involvement goes back almost 50 years, which is quite a statement of longevity in itself, but 95 years is just extraordinary. Even more impressive is the growth and dynamism of this very old company in the last decade. Under the vigorous leadership of the “younger generation”, it has more than doubled in size while maintaining stellar profitability and taking on NO debt. Simply astounding to watch.

This company has been an international player in its core market for decades. They’ve been selling overseas for longer than I’ve been alive. While maintaining their core manufacturing in the USA, they were outsourcing before it was cool. The management has guided the company along this journey by focusing on product innovation, customer service, maintaining profitability and keeping debt to a minimum.

There’s been plenty of bad press about the USA recently – our relative decline in competitiveness, our gruesome debt burden, the decline of the dollar, rumors of a new global currency – and one could be forgiven for thinking the best was behind us and that it was now a Chinese (or Indian or Brazilian or pick your country) world. Perhaps I am guilty for spreading this sentiment.

While we aren’t going back to 1950 ever again, the USA will remain a major, if not the dominant player for some time to come. While atrocious government policies have wounded us, in a democracy those can be undone. Despite our demographic challenges, we are still the 3rd largest population on the planet, and by far the wealthiest of the major economies. All of our major competitors, including China and India have huge challenges of their own.

From where I sit, what will define the future is creativity, and in that the USA has an astounding advantage. I meet a great many people from all over the world, but the numbers of inventors from the USA dwarfs what we see from other markets. The downside is that no one would be crazy enough to start a manufacturing company in Salem, VA today as they did 95 years ago. Taxes, regulations, cost of materials and labor make it prohibitively expensive, not to mention a gigantic pain. The corporate buyers demand a world price, which drives manufacturing to China.

I’ve written before that I view my role at PassageMaker as having a moral component – helping to lift some the desperately poor people in China out of poverty, and helping companies around the globe grow and successfully bring their products to market in an intensely competitive world. If I didn’t believe this, I couldn’t do this job. It is very easy to blame the outsider for all your problems, but I the truth is always more complicated and usually involves looking in a mirror.

If the crowd in Washington want to keep this country in manufacturing, they won’t do it with protectionism. They can do it by getting out of the way – in the form of reformed labor laws, rational regulations, and lower taxes – but it is just so much easier to blame the Chinese instead.

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