Media Stupidities. I. The 'Innovation Tax!'

The other day I was watching the program Fareed Zakaria GPS on CNN. Now generally Mr Zakaria doesn't say incredibly stupid things; in fact, he readily admitted the old traditional jobs are not coming back to America, as opposed to those mouthing idiocies like "American workers are best"; "American companies are going to hire soon" - yes, but in India, China & Mexico. That was fine. But it was the solutions he proposed that amazed me. They were not only ineffective, but seemed Mr Zakaria was clueless about some realities.
So his first solution was learn a new language, like Chinese. Now apart from the fact that Chinese is a very difficult language to learn & master (I've heard even for the Chinese!)- I doubt very much there is a huge need for Chinese-speaking people in America. For one thing, international commerce is pretty complex, someone with say 1 year of beginning Chinese will hardly qualify to act as a language specialist. Secondly, many business processes have become so computerized that language issues are not that relevant anymore. And finally, there are enough Chinese who know reasonable English, since English nowadays is taught at high school level in most countries. So whom would you hire if you are doing business in China - someone who is a native Chinese speaker, knows Chinese culture & has learnt English at the high school level (& is cheaper to hire), or somebody who decided to learn Chinese just last year & may have never even set foor in China?
But the most bizarre of his suggestion was an 'Innovation Tax' to promote innovation in America! Now that would be popular, a new tax! It would have been hilarious except he was dead serious. Now as far as I know the Industrial Revolution didn't need an innovation tax. Nor did Bill Gates, Steve Jobs, Thomas Edison, or the explosion of software development in India. Innovators are a special breed. They don't need government inducements.
And how exactly will this Innovation tax work? Ah, more money for research & development. After all, so much of innovation came from DARPA, from NASA, from Government-funded research during World War II, & so on.
It would be a convincing argument except there is plenty of research money given out, the problem is how much of it will result in innovation. Undoubtedly, more research money helps unearth more knowledge, but in most cases doesn't result in commercial products. And R & D funding goes largely into academia, where university professors are more ineterested in expanding pure human knowledge & can't care less whether it would ave any commercial value. In fact, some university researchers regard only basic research as befitting academia & consider technologically-oriented research as glorified assembly-line work. On top of that, if research money is increased, most of the times the experienced professors who are already well-funded & their minions get most of the money, while new researchers, especially those into new ways of thinking get nothing - they don't have enough preliminary data, or they are not well-connected, or their project is a 'fishing expedition' (a favorite phrase of review committees), meaning the outcome is too uncertain. Hmmm, I wonder where innovative ideas will end up. Undoubtedly, some of the early research was critical in understanding molecular mechanisms & developing genetic technologies; but even then only a small percentage of government-funded reesearch has resulted in actual product development. Like, the mainstay of cancer treatment (despite all the publicity of wonder drugs, most of which actually have pretty modest benefits) is still traditional chemotherpay & radiotherapy. At this point we have enough knowledge for innovation, more research money would only have researchers figuring out rat psychology or zebrafish development which won't have anything to do with human disease & development of innovative medical products. World War II was a very different situation. There was a confluence of superb scientists, an overwhelming urgency to develop better war technolgies, & of course government funding.(The only similar situation was AIDS research, which thanks to the AIDS activists was focused on drug development rather than too much basic research. But there aren't that many situations with such urgency).
I guess Mr Zakaria thinks you can engineer innovation through funding. Maybe he believes every piece of research results in some wonder drug or better machine, therefore putting more research money will guarantee commercial benefits (again, I have no doubt more research money will result in more information, the point is how much if that is useful in the market place & how much is pointless pile of data). In all likelihood, though, an innovation tax will enrage Americans, spend most of the money in administrative costs, & provide more money to aging but influential professors. The innovators of the world will innovate no matter what & maybe, the best way of promoting that is for the government to step aside, to reduce red tape & regulations, rather than tryin to induce it.

Ask What the Country can do for You!

It has been nearly 50 years since President Kennedy enunciated the famous words "Ask not what the country can do for you. Ask what you can do for the country." Kennedy was outdated & nostalgic for an America that no longer was. Indeed, within 10 years of that famous speech minorities & women demanded the country do more for them! The counterculturists demanded the country change. So much for what you can do for the country.
Historically, modern United States surely was formed by people who were fleeing their own country, due to reasons ranging from political or religious persecution to famines & poverty for a second chance, a better life. All they could ask for was an opportunity; America owed them nothing more. They worked hard, the country needed to be built - roads, factories, houses, an army (& to some extent that is the basis for America's anti-academic & anti-intellectual orientation; unlike the established civilizations of Europe & Asia wih a privileged educated class, America couldn't be built by discussing Shakespearian drama or the Periodic Table but by people who built, invented, repaired, grew crops, hunted or fought. But that's the subject for another blog).
By the 1960s, however, that had changed. The younger generation had grown up in the prosperity of the postwar era. They couldn't care less how their parents or grandparents suffered in the Old Country. They were born & brought up in America, this was their country, and they had expectations from it.
And so America matured. And the population of America is no longer a selective group of entrepreneurial, adventurous, industrious immigrants glad to get a second chance, but rather similar to populations of other countries, most people are average. And in the age of globalization, the average American will lose when it comes to employability not only compared to the above average from say most other countries, but even to the average, since it is cheaper to hire an employee in India, Phillipines or Malaysia than in America. The average citizen of most other countries are less threatened because outsourcing in not that common & there are legal restrictions as well. While American companies definitely benefit from being able to hire the best &/or cheapest around the world, the loser in this equation is the American Middle Class. Money trickles down from profit-making American companies to China & India. The benefit to multinational corporate America is now divorced from benefit to the American Middle Class.
For a long time & even now it is very unfashionable for Americans to ask the Government for economic protection. That is socialism, isn't it!? In addition, the corporate-media complex colluded to propagate this idea that one should be happy & thankful to be American, no complaints entertained. Here, see these hellish pictures from Indian slums! Read these reports of the horrors of Chinese Communism! And if that didn't work, just Do Not Think. Here's the show for that:-A Show About Nothing! Yadda Yadda Yadda. The perfect formula to keep the population empty-brained! Doesn't woek anymore. To the New Generation, India & China are the countries their jobs are going to. It may be time to ask what the country can do to protect Americans from the onslaught of globalization & outsourcing/importing of jobs. Maybe, the time has come to recognize no country is the land of unlimited opportunity, and the rules of the 18th, 19th & even 20th Century don't apply to the 21st century anymore.

Where Will the Jobs Come From?

The official unemployment rate in America now is ~10%. Adding underemployment & those disenchanted with the job market, the total may well be close to 20%. That means, 1 in 5 Americans are completely or partially out of the job market.
Our politicians talk about creating jobs...the neocons have only one mantra - tax cuts, more money for business, especially small business, so they'll hire more people. The liberals believe more government intervention. Spend more money,stimulate the economy.
And both groups ignore the essential question: where will the jobs come from? I doubt having more money in the corporate coffers will necessarily result in more hiring. Corporations have amassed huge amounts of cash. They have also learned how to get by with less people. Maybe some small businesses would be more willing to take risks and expand if they had to pay less taxes, but in the end, even in a tough economy, somebody will take the risk & spend the money if they feel the return on investment will be high. The reason small businesses aren't hiring is not taxes but a pessimistic view of the economy. If he return on investment isn't high, even small businesses wil horde the cash if taxes are lower rather than hiring more employees.
And more government spending may result in a transient increase in hiring, but many of these jobs are temporary & unnecessary, & getting into more & more debt to create bloated jobs isn't a great idea either.
Among the major job-creaing sectors in America, manufacturing is on the decline. China has taken over American manufacturing. It will only shrink.
That leaves 3 other (non-governmental) sectors: service; research & development; special talent jobs (athletes, TV anchors, musicians, artists etc) - I'll leave the last segment out because its contribution is miniscule to the whole job market.
I was recently in India. I visited a city called Gurgaon. It is more a mega business park than a city, & most of these offices are either outsourcing companies or offices of foreign companies that have shifted some of their operations there. And these are not just those telemarketing or tech support jobs. Almost all sectors of the service industry is present: accounting, stock market reporting, educational services, customer realtions, advertising, you name it. And Gurgaon is just one of these centers, there are such business complexes all over India. NOIDA. Hitec City, Hyderabad. Bangalore. And other so-called Third World countries are building such centers as well. In addition to services, even some research & development is being outsourced. (And R & D jobs even those remaining in America are ver specialized, they need a master's or Doctorate degree, only a small fraction of the workforce will be eligible for those even if they aren't outsourced).
I won't go into the reasons for outsourcing in detail - we know it is due to cheaper labor, absence of frivolous lawsuits (& wastage of time) over harassment, less absurd environmental regulations & so on. In America a guy makes an off-color joke & the next thing you know someone complains, there is an HR inevstigation, a Disciplinary Action committee, a 6-figure lawsuit, & often the termination or suspension of an experienced employee. Sometimes when I hear about these lawsuits I wonder whether these women grew up under Taliban regime to be so easily offended! Same with racial harassment lawsuits, a well-meaning comment (like calling a Black person articulate) somehow becomes a racist statement! It seems businesses feel even the unions, the corruption, and the slowness of Third World countries are preferable to the lawsuit culture of America.
So the manufacturing sector is out. The service sector is severely endangered. Additionally, technology has made many low-skilled white collar & pink collar jobs obsolete. So where will the jobs come from in America? Oh, I hear nursing is a sector where jobs are plentiful. Oh Great! Out job growth depends upon how much we get sick! And who will pay for nursing care if the Middle Class is disappearing?
Two commentators, Lou Dobbs & Pat Buchanan, have actually identified the dangers of outsourcing jobs en masse to other countries, both economic, as well as security issues & permanent loss of skills. They are 'old-fashioned' conservatives and not the world-changing neocons. Unfortunately, as in many cases, they are slapped on with the labels 'protectionist' & even 'racist'. We would rather get screwed all over than be OMG a nasty protectionist!