What Makes America Great?

Jeff Jarvis has a good post up this morning talking about what makes America great.

His nine reasons are on the mark and I agree with all of them.

But the two reasons that really hit home for me, being the venture capitalist that I am, are #3 and #5. To quote from Jeff:

3. An economy that powers the world with courage and capital and ingenuity and imagination.

5. An entrepreneurial class that has created, in just recent memory, Amazon, Google, eBay, Starbucks, Microsoft, Cisco, Apple, CNN...

What we have got going here in the US is an economic system that attracts the best and brightest entrepreneurs, engineers, and scientists from all over the world. And we've got a capital markets system that takes risk, funds innovation, and rewards the incredible ingenuity and work ethic of these "best and brightest".

There is a ton of hand wringing in Washington about off-shoring. My Senator, Chuck Schumer, who I like and admire, co-authored an op-ed piece in the NY Times in early January titled Second Thoughts on Free Trade.

I think free trade is not something we need to rethink. In fact, free trade is a big part of why America is so great. I really like what David Kirkpatrick has to say on this subject in his most recent Fast Forward column.

You can't have closed borders to trade and capital flows and continue to attract the best and brightest to this country. A by-product of our ability to attract brilliant Indian, Chinese, Russian, and Israeli entrepreneurs, engineers, and scientists to our country is their ability to learn from us and go back home at some point and emulate us.

And we'd better be prepared to let our capital flow back with them so we can continue to invest in and benefit from the innovation and ingenuity of these brilliant people, wherever they are.

My point is this - That which makes America great today is what will make the World great over the next century. Globalization is upon us. Let's embrace it.

Comments

[Dan Malven]

Fred: Reading this and thinking about the laundry list of countries you mention where the scientists come to America....I can't help but think of immediate pre- and post-WWII era where all the great scientists of Europe flocked here to escape Nazi-ism. Those scientists created nuclear energy, and all the science and innovation that flowed from that has been enconsced in the U.S. and arguable created the post war boom of the 1950's and 60's that made the U.S. what it is today. It is not exactly on-point to your post, but that is the thought-tangent it sent me on. - Dan

[Bob Wyman]

At worst, the outsourcing of IT jobs to India, Romania, Russia, etc. only accelerates the inevitable. At best, the cost savings from such outsourcing will allow US firms to devote more of their resources to developing their *next* competitive advantage.

It has become clear to many that developing a strong IT sector is vital to advancing the prospects of their economies. Thus, concerted, government sponsored programs devoted expressly to IT development have become popular in countries like India. The result is that these countries will, inevitably, become significant players in the IT industry. The only question is when. Currently, the tremendous flood of work from the US and other "western" countries is accelerating the progress of IT development in these countries, however, it is important to recognize that it is merely an acceleration that is occurring. The end result is inevitable.

The critical task for US firms is to determine how they will maintain competitive advantage in the future. Clearly, it won't be by maintaining a large work force devoted to the relatively low-skill IT tasks that countries like India are now competing for.

The danger is that US firms will, by not anticipating the impact of growing skills in other counties, be caught in much the way that our television industry was caught by the Japanese a few decades ago. Back then, as the US manufacturers moved from black and white to color TV sets, the production of simpler black and white TV's was moved largely to Asia. The result was the creation of a skilled electronics production and design capacity that eventually came back and captured the color TV market. The US producers should have recognized that their Asian partners would, one day, be able to come back and compete on their own. Rather than simply enjoying the lower costs of Asian production, the US producers should have been devoting their increased margins to research and development of new competitive advantages.

We should be asking "How do we capitalize on the growth of IT skills in India, etc.?" This is something that can be accomplished. We should not be asking: "How do we hold them back?" That is something that cannot be done.

bob wyman

[Scott Partee]

I can get pretty rabid in my pro-free-trade beliefs to the point where I start to even scare pro-free-trade people, but one thing I'd like to see is the labor market freed as well.

My point is that when we "best shore" our workers in domestic organizations, shouldn't it also be the case that workers can follow the jobs? Just as our economy needs migrant farm workers and construction labor and all sorts of the other "knowledge workers" you mention, and they come to "where the best jobs are," don't you think American (or any nationality) workers should be able to move to Bangalore and work on a Java Farm?

Currently, it's very hard for people to work where they want to work or where their line of work has the best prospects if that person is coming from the economies that actually create those jobs.

So what's your take on these domestic job protection barriers? Should they crumble with the capital and trade barriers?

Sorry, my thoughts are only half-formed (didn't sleep last night).

[hugh macleod]

The reason the Romans were able to conquer the Celts, and the British likewise in India, was because they knew more. The triumph of intellectual capital. Globalisation is just an extension of that.

[MattS]

Free traders like to preach free trade absolutism. Progressive free traders like to preach free trade with aid for structural adjustment for people who are thrown out of work. Since you are rich, you're not going to immeidately think of the families of those displaced through free trade, but they exist, and they present a political problem at the very least. So let me make a suggestion.

Rather than preach how awesome free trade is, caveat your position with a nod to those who do not benefit. If you ignore them, you undercut the political support for free trade.

That's why Americans are turning protectionist. It ain't because the jobs are going overseas, it's because health care is too expensive.

[Mike Merrill]

Here is the link directly to the post:

http://www.buzzmachine.com/archives/2004_02_15.html#006259

[Delroy Frazer]

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[clive]

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[D'Amico Gaines]

i agreee all the way