Exports? What Exports?

Swapping Value Creation For Consumption

The Robin ReportEchoes from the near-past are so strong they are physically vibrating my brain. In the “Who Blinks First” article I questioned the notion that if we could only get China to increase the value of the yuan, it would make our goods cheaper, thus boosting our exports. To which I asked: what is it we actually produce today?

Well, I dug up a great report written by Nobel Prize winner and scientist Dr. Robert C. Richardson, who discovered a new state of matter, and in 2004, he and his sub-committee weighed in on yet another measure of the diminishing level of value creation in the U.S. Richardson, also a professor at Cornell University and chairman of the National Science Board, cited the declining number of young Americans seeking careers in science as a threat to our standard of living, to say nothing of the resulting decline in the pool of anything exportable.

He attacks the very argument made so often by so many economists, politicians, historians, and business experts, who posit that as the U.S. loses its manufacturing base it will simply move up the food chain, creating wealth and higher levels of value through innovation, technology and science. Richardson’s subcommittee, in its Science and Engineering Indicators Report, debunks this popularized notion with such sobering facts as the declining trend in scientific manpower since 1970.

DUMPING SCIENCE OUT OF BOREDOM, LAZINESS OR GREED?
TRY ALL OF THE ABOVE

Richardson echoes the lament of doomsayers when he claims that our youth view a math and science education as boring and tough, with too little encouragement from teachers that the exploration and discovery of new can be fun and exciting. Even worse, the portrayal of science and math types among the young is largely “uncool” or “geeky.”

And, of course, as the obsession for all things material, aka greed, has become imbedded in the DNA of our modern culture, an MBA could be an acronym for “Money Boat has Arrived.” In other words, the stairway to big bucks is through Wall Street and big business.

THE THREAT:
BYE, BYE, STANDARD OF LIVING

Much has been written about the “Walmartization” of America and the trading in of higher for lower paying jobs. So, too, Dr. Richardson adds his perspective: “…science and technology drive the economy. It’s not people suing each other or making hamburgers. The wealth of the country, I believe, is based on the invention of new products. That can only come from a thriving scientific community. I worry that this manpower gap can compromise our standard of living.”

In my opinion, it already has and continues to worsen.

WHY NOT JUST IMPORT ASPIRING SCIENTISTS?

In the 1970s, the U.S. ranked third behind Japan and Finland in the percentage of our students who became scientists and engineers. In the Richardson report of 2004, the U.S. ranked 23rd. For those 30 years we “imported” a large number of highly motivated, aspiring scientists from countries such as China and India who studied and settled in the U.S. Today, about half of our graduating engineers are foreign-born.
However, according to Richardson, even that infusion of talent is drying up, for several reasons. He points to post-9/11 policies established to delay and prevent students and scientists, including visitors in tech fields, from entering the U.S. Policies included a combination of demeaning interviews and an exaggerated screening process for potential terrorists.

It is Richardson’s opinion that the U.S.also tightened its visa requirements for those from countries who were considered potential economic competitors, such as China and India. In the year 2000, the U.S. gave almost 300,000 temporary visas to people working and studying in scientific and technology fields. It was down to half of that by the time of Richardson’s report, four years later.

IF THEY CAN’T JOIN US THEY JUST MIGHT BEAT US

The Robin ReportWell, if we can’t interest our own “home-grown” to pursue higher levels of value and wealth creation, and we won’t let outsiders eager to fill those needs join our country, then those outsiders will simply stay home and create such value and wealth for themselves.
And, of course, this is exactly what is happening. China alone is graduating 300,000 engineers annually, 5 times the number in the U.S., and installing high-tech R&D centers at a faster pace than ours, just to cite a couple of the “dragon’s” moves.

If this continues, how long will it take before we will have lost both the low and high ends of the value chain? And what will be left? Flipping burgers, greeting customers at Walmart, and getting obese on consumption are a few things that come to mind. Certainly, it does not bode well for a major increase in exports.

A final and chilling observation was made by Dr. Richardson about the seemingly misguided and paranoid attitude of our security process stifling the positive importation of much needed brainpower. This observation also gave me a chilling flashback to a recent New York Times editorial by Thomas Friedman who pointed out that the one great obsession in the Roman Empire just prior to its collapse was security.

Richardson suggests that our policy makers have twisted security objectives into a kind of 19th Century protectionism of intellectual property, believing that, “We’ve got to keep all those foreigners from stealing all our secrets and beating the pants off us.”

Oh, my! If that is only partially true, I fear the foreigners those policy makers are referring to will just simply “beat our pants off” faster.

Robin Lewis About Robin Lewis

Robin Lewis has over forty years of strategic operating and consulting experience in the retail and related consumer products industries. He has held executive positions at DuPont, VF Corporation, Women’s Wear Daily (WWD), and Goldman Sachs, among others, and has consulted for dozens of retail, consumer products and other companies. In addition to his role as CEO and Editorial Director of The Robin Report, he is a professor at the Graduate School of Professional Studies at The Fashion Institute of Technology.