Monthly Archives: January 2012
As Article II Section III of the Constitution mandates, President Obama gave his State of the Union address earlier this week. It ran over 60 minutes and covered a wide range of topics. I hereby offer my own State of the Union to you on several of the essential topics Mr. Obama covered. I will keep it to about 5 minutes.
Ladies and gentlemen, the state of the Union is strong. We may have seen better times but we are in the 236th year of a tremendous experiment in representative democracy. We have weathered the storms of great national calamity, war, natural disaster, terrorist and fascist threats and economic depression. We have witnessed great things: the emancipation of slaves; women’s suffrage; the dawning of civil rights. Some might say that these times are bleak but I say we are a nation of survivors. We are nation of optimists. We are a nation of transformational souls who have demonstrated time and again our penchant for leading ourselves and civilization; for making the world a better place in which to live. And so it is today.
We are in economic hard times born, perhaps, in a different era; of a different administration. That matters little. We are where we are and we have the power and the means to propel this great nation and this potent economy into a much higher gear. It is in our hands to secure the blessings of liberty to ourselves and our posterity.
What has worked for America ‘lo these many years is not shared sacrifice but shared commitment. We are in the boat together and we pull the oar together. We have been around long enough to know what does not work: blaming businesses for the ills of society; inciting an increasingly punitive regulatory environment that seeks to punish rather than promote; imposing a tax structure that only the well connected understand; and devising an educational system that rewards political correctness at the expense of discovery and inquisitiveness.
We can keep American jobs in this country by making the playing field level; not for some but for all. Set a goal to reduce the corporate tax rate by half this year and to zero within five. American entrepreneurs and businesses are intelligent enough to determine where to place their bets on the next hot product. They do not need government to tell them where to invest their money. Remove the unseen but heavy hand of lobbyists and special interests who peddle their influence in the halls of Congress. Eliminate industry specific tax breaks. Let American business compete with one another so that the best ideas emerge.
We must recognize that too frequently, our desire to expand regulatory oversight stems from a desire merely to increase power and authority in the Washington bureaucracy. Such expansions may stoke egos inside the beltway but they serve to extinguish the flames of creativity that can yield the next breakthrough in science or technology. It is time for the Department of Commerce to act to defend commerce in America. I propose that department review and approve regulatory actions that would hamper business activity as an advocate of American enterprise before the regulations have the force of law. They would serve as a Regulatory Board of Appeals for business.
God has blessed America with spacious skies and amber waves of grain. And our maker has also blessed us with ample reserves of oil and natural gas. We must balance the environmental concerns of well intentioned environmental interests, me included, with the needs of a growing population in a globally competitive world. The benefit of energy independence is not merely a lower price for gas at the pump: it is a lower cost for policing the actions of nations and rouge actors who use unfettered access to energy as a weapon for the destruction of civil societies.
All of our God-given resources, oil and gas, coal and wind, solar and nuclear, must be part of the equation. Onshore and offshore resources must be developed and judiciously used. Green energy is coming but it is not yet viable. When it becomes viable, it will take its rightful place alongside our traditional sources of energy.
Finally, there is no investment more important to make for the long term destiny of our nation than education. Learning must be a lifelong endeavor. What the pace of technological innovation has taught us is that skill sets must be firmly established in our young and then constantly refreshed throughout a lifetime. Our schools must return to the basics, to the so-called STEM subjects of science, technology, engineering and math. We do not have nearly enough people trained in these areas and we must have more in order to compete in a world full of degree holders. The role of the Federal Government must be to encourage and set the bar high. Incentives should be reserved for the students in the form of scholarship in exchange for service. Local school boards know how to make curricula. The role of government should be to ensure that our graduates have the skills that our businesses need when they graduate. And government should foster a business climate that seeks new hires.
I have spent a lifetime traveling this world. Let no one say to you that the Age of America has past. The world looks to America for political leadership, moral leadership and economic leadership. The American way of life is still the envy of the world. The role of the President of the United States of America is to ensure that the union endures.
Ladies and gentlemen, I say to you once again: the State of the Union, our Union, is strong. Let no one doubt our resolve. May God bless you and may God bless the United States of America.
My recent trip to China gave me an interesting perspective on how the world’s fastest growing economy, the People’s Republic of China, views the economic heavyweight champion of the world, the United States of America. It is a perspective gained over lunch. Multiple lunches in fact.
Our hosts were eager to entertain us in a manner that they have come to equate with successful American businesses. On successive noontimes, out came meals from Subway, Kentucky Fried Chicken and Papa John’s Pizza. We swilled this down with Starbucks coffee, of course. That part was my idea.
Has fast food suddenly become a leading economic indicator? Not in the classic sense. What it does indicate is an emulation of an American lifestyle. It is the impact of Western television and Western advertizing in a context of doing business in ways that have proven successful in America for a century.
I toured industrial parks that measured two hundred square miles. The government leveled rice paddies and poured concrete without looking back. I toured factories in excess of 600,000 square feet. That’s a big factory under one roof. And there is not just one of these factories or one of these industrial parks. The fact is that there are scores of these facilities in China. They are brimming with work. My tour took me to factories that manufactured medical devices, printed circuit boards, electronics, cable assemblies and sophisticated semi-conductor test equipment.
What I saw went beyond what I had previously seen outsourced to China. There is a growing level of co-development taking place. Engineers are working together to develop next generation products sourced in low cost countries. Once those seeds are planted it grows increasingly difficult to uproot that business. Supply chains grow out of assembly operations and special process clusters spring from those supply chains to support them. The same is true in reverse. As products leave America, so leave their supply chains.
When it comes to manufacturing, China is not a Paper Tiger nor is it omnipotent. China may looks invincible on paper but in actual practice it will be difficult to maintain the momentum necessary to eclipse and distance itself from the US economy. China is a difficult place to navigate. Language and infrastructure conspire against success. For every high speed train there is a congested highway; for every coastal city with unfettered access to distribution networks there is an inland city with difficult access. The largest manufacturing centers need to import workers from the interior. They dwell in company dormitories and live in circumstances that Americans cannot comprehend. Huge contract manufacturers like Foxcon have experienced worker suicides and just last week, a suicide pact among 300 of its workers over wages and conditions.
Chinese New Year is a two week celebration in China. Workers begin multi-day trips back to their homes only to turn around and repeat the sojourn in reverse. So tedious a lifestyle it is that as workers depart for the Chinese New Year, they are offered bonuses to ensure return, such is the lure of staying back at home.
So what did I learn from my quick trip to China. What lessons are there for America in all of this?
Lesson one: China acts first and asks permission later. Our dithering on the Keystone XL Pipeline project would never happen in China. There is no compromise on economic progress, no compromise with the environment. Economic stimulation is all that matters and the Chinese have a long range vision for their economy. Can that be said of America?
Lesson two: The Chinese worker will eventually revolt. They will demand better wages and better working conditions that will translate into decreased operating margins. The effects of inflation will begin to erode the labor advantage that China enjoys today. Chinese workers will need to organize in protest short of threatening mass suicide. Workers rights in China ought to be where the AFL-CIO and Teamsters should focus their growth opportunities. Really.
And lesson three: Time is running short for American dominance in manufacturing. Remember that the US is still the largest manufacturer in the world. Innovation and new product introduction are the hallmarks of the American factory. The role of government in America ought to be to ensure the success of that factory just as the government of China ensures the success of theirs. Our challenge is to do that within the context of a democratic society. The People’s Republic of China is not bound by such constraints.
Competitive taxes, judicious regulation and coordinated planning are missing in the American economy. We already have enough KFC’s and Papa John’s Pizza.