I think that the most important thread throughout the history of this country has been its creative embrace of the industrial revolution. We've been, for nearly a century and a half, the leading producer economy. We've added more value per capita over time than any country in history. We passed the previous leading manufacturing economy, Great Britain, generations ago and we were the leader in productivity and gross output in nearly all industries until a couple decades ago. Then something called the Asian Invasion started and our leadership position eroded on many industrial fronts.
Once the leader in machine tools, we are now perhaps No. 5. Once the leading steel producer we are now No. 3 or No. 4. Once the leader in electronics production, we now barely make the list. Cars? Well, if you count our Japanese auto plants, we're still No. 1, but watch the 1.4 billion Chinese in the next few years. Now there's nothing wrong with China, India and other countries adding to the world's economic output. In fact, we should applaud these developments. It's not the new competition we should worry about; it's our own technological competitiveness that should concern us. Why are so many unconcerned with the decline in our manufacturing leadership? Whenever that question comes up, there are certain automatic responses. They include: "We can't compete with cheap labor overseas." "Manufacturing is not our thing anymore. We're a Service Economy." "We should level the playing field and slap tariffs on their stuff!" "We would rather be in the movies anyway."
All of these responses have one thing in common: They are all ridiculous ( except maybe the last one). We can compete successfully. Many of us do. Manufacturing is as American as apple pie. We are not entirely a Service Economy. A complete service economy is another way of saying "Third World." Protectionism is the last refuge of economic scoundrels. Movies? Now, that's one American industry that seems to be doing well overseas and in the United States while paying top dollar to its employees.
This country and its people have delivered the most astounding and long-lasting period of economic creativity in history over the past century. I don't see any good reasons why we can't claim the 21st Century as another American Century— unless more of us start to believe those ridiculous rationalizations for our decline in various manufacturing sectors.
Consider this: we didn't lead the world in the business of making things by hiring cheap labor. We produced quality products for generations by marshalling the talents of millions of Americans who worked in factories and offices large and small with their hands and their minds. Progress was made over the generations as we all learned how to up our own and our companies' productivity.
NAM's Task Force on the Future of American Innovation has just issued a report titled The Knowledge Economy: Is the United States Losing Its Competitive Edge? The report deals with five major areas of concern: education, the workforce, knowledge creation and new ideas, R&D investment, and the hightech economy.
"The U.S. cannot assume it is safely ahead of the world. Other countries are all trying to race up the technology ladder and stay on top of low-cost producers like China. But even China is rapidly increasing its R&D investments," notes NAM President John Engler.
Simply put, it's not cheap labor nor is it government subsidies nor is it luck that brings leadership to a people in manufacturing. It's creativity and the investment in creativity that brought history's attention to our shores. There's no reason why we can't continue that tradition today.
So what about the movies? There's an industry that seems to do it all well. They make a product based on an enormous amount of creativity and marketing savvy. They sell it all over the world and the market screams for more. They make their numbers and they attract all of the top talent they need. People used to say the same things about our manufacturing companies. Will they ever do so again?