McClatchy News web site has the article, How China Policy Squeezes Companies Anchored In U.S.
“The United States faces the lack of a national and international trading strategy, or economic policy . . . we as a nation don’t have an entity that competes with other nations, and I think this harkens back to a reluctance to get into national economic policy or strategies because of the concern that it has the taint of some kind of government control and government assistance,” he said.
The free-trade debate gets bogged down in political labels, which O’Shaugnessy thinks misses the broader point.
“So you have got ‘socialists’ fighting the ‘capitalists,’ and neither side realizes the mercantilists are kicking their ass. Both of them, it doesn’t matter whether you are on this side or that side, if you are dealing with a mercantilist society, and that’s what we’re fighting in China,” he said.
While I agree that the U.S. could benefit from strategic thinking, I also warn that we need to do it with some humility. Japan was beating us severely 20 or so years ago because of their strategic efforts of their Ministry of Trade and Industry. This ministry came up with the idea of the 5th generation computer strategy to emphasize artificial intelligence. It turned out to be a poor strategic choice. The diverse efforts of private companies in the U.S. tried many different things including artificial intelligence. I think the internet, the web, inexpensive computer chips, and mobile communication and computing did a lot more to stimulate the world economy than the efforts in artificial intelligence.
It’s not that the U.S. companies were smarter at predicting the technologies of the future. It is that the diverse set of U.S. companies and diverse venture capitalists were trying many different things. Of that broad set of initiatives, some really bore fruit and established the rapidly growing industries that fueled economic growth around the world.
Just as in investing and agriculture, diversification in industry has a lot of benefits.
Fitting in with my new emphasis on this blog of the perils of extremism, I am making the point that neither extreme laissez-faire in industrial strategy nor extreme centralization of industrial strategy is the best policy. Intelligent approaches are better than doctrinaire approaches.