Economic shock and awe

Without Chinese business prowess the Commonwealth wouldn’t be on the economic map, which is old news to anyone in the islands. But even I was surprised when the flagship company (IBM) of America’s flagship industry (computer technology) sold most of its personal computer action to a Chinese company (Lenovo). Got that? The company that gave us the personal computer can’t even compete in the industry that it pioneered. There are lessons for both sides of the Pacific on this, and when the inevitable strains come in Asia-U.S. relations (after the dollar crashes), Saipan is going to wind up being an economic ping-pong ball in the process. So the Commonwealth might as well ponder the context before things turn ugly.

But back to IBM for now: Wow. Talk about shock and awe.

This isn’t a cause of the U.S. racing toward serious economic problems; it is, instead, an effect. IBM’s personal computer marketing was so laughably incompetent, from a company so notoriously arrogant, that it proves that many American corporate bureaucracies have reached the point of morbid obesity. I love their products, but they are suffocating under their own corporate flab.

And this isn’t the first time that obesity has felled the fat cats. Remember the almighty U.S. airliner industry? It’s down to just one manufacturer now, Boeing, who is getting its butt soundly kicked by Europe’s Airbus. And even the helicopter industry, where U.S. pioneering is (well, was) legendary, has succumbed to the corporate waddle, as Europe’s Eurocopter now commands more market share than any U.S. manufacturer. I mention these industries because I follow them closely, and because I think they are leading indicators of the U.S. industrial situation at large. The famous Learjet? Owned by a Canadian company now. The new breed of small airliners? They’re coming from Brazil, yes, Brazil, which is eating away at Boeing’s shrinking market right under its nose in the good ol’ U.S. of A. Orville and Wilbur Wright must be rolling over in their graves right now…and I wonder if Henry Ford drives a Toyota in heaven, or if Alexander Bell is toting a Samsung phone…

Meanwhile, the spate of “outsourcing” continues to suck jobs from the United States to Manila, Mumbai, and Shanghai. American workers have found themselves mere commodity laborers, and commodities compete on price, not quality. It wasn’t too long ago that American society was famous for its grit, its gumption, its individualism, its risk taking. That was America’s advantage, plain and simple. And it’s largely gone, as a nation of rugged individualists became a nation of “human resources.” This is fact, not opinion, and conformity, even gender and race preferences, not merit, are the basis for workplace advancement. The workplace is a big and bland bureaucracy, which is fine with me if that’s what people chose, but, in so choosing, they are now on the same productive level as most of the rest of the world. This is a huge, huge shift, and I’ve watched it over the past couple of decades. Ah, the Dilbert Factor, where millions of cubicle ants serve ossified corporate bureaucracies…the Chinese worker bees are going to prevail on this plane of play. And they have. And they are. And they will probably keep doing so.

But the linchpin in this whole deal is the U.S. dollar, the preeminence of which is now the only comparative advantage that America enjoys in the global economy. As long as foreigners keep loaning piles of money to the U.S., thus keeping the dollar propped up, then this whole crazy spiral can keep spinning in ever weirder turns.

But when it all stops, the fallout will be ugly, and much of the American middle class will find itself downwardly, not upwardly, mobile. It already takes a two-income household just to keep the mortgage and taxes paid. When you need both legs to stand on, you don’t have double the strength, you’ve got double the risk. And as a human resource, competing on a commodity basis, all you can do to keep going is work cheaper than the next guy (so you don’t lose your house), and all he can do to compete (so he doesn’t lose his) is work cheaper than you can, and, well, you can see where all this is headed…offshore, of course, since a price war favors the lowest bidder with the lowest cost. When this dynamic manifests, there will be fear in America’s middle class. And anger. And blame. And when the blame starts circulating, I have a creepy feeling that some of it will be pointed at the Asian workers who have proven to be so competitive and productive. I hope I’m wrong on this. I guess we’ll see. The Commonwealth is going to be where the rubber meets the road, that’s for sure.

In the meantime, by sheer coincidence, I’m picking out my new IBM Thinkpad computer for the new year. And, yes, I am still a loyal Ford customer. I’m a proud Americano, through and through, but when humans become resources, what does a nation founded on individualism become?

(Ed Stephens, Jr. is an economist and columnist for the Saipan Tribune. Ed4Saipan@yahoo.com)