Silly editorial
This PeeDee editorial from a few days back is silly.
When people talk about the economic glory days of Ohio, and especially its northeast quadrant, they invariably speak of this region's once-unsurpassed ability to "make things."
Unfortunately, many of the industries that made this region wealthy have grown old. The things they made are no longer relevant or are made far more cheaply somewhere else. The result: a precipitous drop in the number of manufacturing jobs and economic health.
But making things remains both a core competency of this region and a cornerstone of its collective psyche. It needs to be a central component of any strategy to restore prosperity.
Remember that bolded line, we're coming back to it in a minute.
Fuel cells produce electricity by uniting oxygen in the air with another element, usually hydrogen. They could be a future power source for cars, consumer goods, even homes and factories - a source that would be environmentally friendly and could make this country less dependent on Middle East oil. Getting in on the ground floor of such a revolutionary technology would give Ohio an enormous lift.
Understand that the recent flurry of fuel cell activity did not come out of the ether. It builds upon groundbreaking work that began years ago at the NASA Glenn Research Center and has continued there and at universities including Case Western Reserve. Entrepreneurs used that research to start companies that are now attracting outside interest. The state of Ohio nurtured some of the research and early-stage companies with incentives, including Gov. Bob Taft's Third Frontier program.
Taking fuel cells to market will require expertise in polymers, ceramics, metal-working and electronics, which Ohio has in abundance. Other emerging sectors - wind power, nanotechnology and biomedicine - also can tap that broad industrial know-how.
There's a reason fuel cells aren't yet made in China or elsewhere. They aren't comoditized. There's no money to be made from them yet.
But what reason or logic do the writers here have to believe that once this important technology has been perfected and comoditized it won't also find itself being shipped out to a cheap labor market for mass manufacture ? Do the writers believe that fuel cells are any more complex to make that high end electronics, such as mobile communications equipment or microprocessors ?
The asian tigers are not standing still either. We aren't the only country on the planet innovating new products and technology. We have no guarantee that ours will be the best, or get to market fastest in the future.
This notion that China or India will always be just a low wage economy and isn't advancing its own R&D needs to be disabused.
When people talk of protectionism being bad (and it is depending upon the type of protectionism we're talking about) they are only looking at one side of the equation. On the flip side to the US free trade policy is China with a protectionist currency policy holding down it's cost of goods sold. It's worker policy (Hey we could put kids to work cheaper too!) and its environmental policy. It's also easier to grow your economy when you can just steal with impunity anyone else's intellectual property. China also does not have strong financial controls and open books for its businesses. This allows massive amounts of government subsidy to be hidden in their cost structures.
While we have free trade agreements with the likes of China, they are actively engaged in protectionist polices. That's the flip side to the equation few mention. All that matters it seems is we get everyday low prices.
The low prices aren't even that much lower when all the costs are factored in. In the electronics sector we save about 8% by making it in China as opposed to the US. Quite small (but significant for low margin products such as cells phones and computer equipment).
It's quite short sighted to believe these low wage, low cost regions where we are sending all our capability is content to be just that. China as an example is now graduating 10 times more engineers than the US, and their best and brightest who once upon a time were happy to live and prosper in the US are repatriating to become their new technology leaders.
Global wage arbitrage isn't about call centers and "old industries", it's about emerging technology too.
Our leaders know this. They just aren't saying. Their solution is to engage in "black market" protectionism of the worst kind. This article is a good example of what I mean. China is already innovating new technology and the west is seeking to hamper it through standards committees. This is a rear guard action that is going to eventually fail. When it does we're in big, big, trouble.
I don't have all the answers. But I think the first step is to put an end to the nonsense that we are engaged in free trade. Many of our trading partners are actively engaged in protectionism within these trade agreements and suffer little or no consequences. If we ended these practices that 8% saving would disappear rapidly and we wouldn't need to be looking at programs like Third Frontier as our potential saviour. All that is doing is funding our expensive R&D ready for our global competitors to take advantage of.
