Thursday, July 01, 2010

Exporting Their Way to Prosperity


In April I wrote about the pointlessness of the U.S. leading in the production of "specialty" steel when it's a loser in manufacturing nearly everything else that people around the world want.

In this morning's Post, columnist Harold Meyerson takes up this refrain and explains that Germany's and China's coherent industrial policies give them an edge in the manufacturing and export wars. Here he looks at the German example:

Germany has increased its edge in world-class manufacturing even as we have squandered ours because its model of capitalism is superior to our own. For one thing, its financial sector serves the larger economy, not just itself. The typical German company has a long-term relationship with a single bank -- and for the smaller manufacturers that are the backbone of the German economy, those relationships are likely with one of Germany's 431 savings banks, each of them a local institution with a municipally appointed board, that shun capital markets and invest their depositors' savings in upgrading local enterprises. By American banking standards, the savings banks are incredibly dull. But they didn't lose money in the financial panic of 2008 and have financed an industrial sector that makes ours look anemic by comparison.
Depressed yet?

Meyerson also notes that despite the self-perception of the U.S. as a high-tech leader, it's actually running annual high-tech deficits that reached $61 billion in 2008, quoting Clyde Prestowitz's new The Betrayal of American Prosperity. See Simon & Schuster's promo page for that book and notice the first stat: China's number-one export to the U.S. is now computer equipment, while our number-one export to China is waste paper and scrap metal.

Not rice, not aircraft parts, not Levi's, not Coca-Cola, not financial services. Junk.

Silver linings, anyone?

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