Wake up America - Four ways to compete with China

Posted: Aug 20, 2006 12:00 AM

The deep polarization that plagues American politics has also infected our thinking on globalization. If China continues its rapid economic ascent, the conventional thinking is that this is bad for America.

I think that’s a false dichotomy.

Instead, I’m deeply optimistic about Chinese growth because I think it is good news for America, the Chinese people, and the world. As China continues its massive transformation from a peasant farm economy to an advanced industrial economy, it will bring about increased prosperity—and more importantly, hope—for millions of human beings just like you and me. Our job as Americans is to capitalize upon Chinese growth to create a win-win situation for both economies and for both of our children’s children. To accomplish this vital mission we must see beyond our fear and mistrust to focus on mutual opportunity.

As promised in my last article, here are four practical steps America must take now in order to keep us on equal footing with the new, emerging economic giant on the block. .

1. School Reform: Thomas Friedman, in his book The World Is Flat, describes a story he tells to his daughters: “Girls, when I was growing up, my parents used to say to me, ‘Tom, finish your dinner. People in China are starving.’ My advice to you now: ‘Girls, finish your homework, people in China are starving for your jobs.” This is a telling anecdote: Consider that China produces seven times the number of engineers compared to America. In fact, today American schoolchildren are finishing in the middle or low end of the pack on a world wide basis when tested in science and math. There is no quick way to solve this problem, but we would be well served to look closely at the approximately $100,000 we spend to publicly educate a single student from kindergarten through twelfth grade. Are we spending that money wisely? Are we examining everything from textbooks to school buses to determine if our schools are operating in a cost-effective manner that produces academic success? These are important questions that must be asked—and answered. More than that, we must also continue to support the development of school choice programs and charter schools, such as the KIPP program in San Francisco. Innovation and competition at the grass-roots level—and not at the federal level ala “No Child Left Behind”— is the key to education reform.

2. Tax Reform: We must pass tax incentives for saving and investing for both corporations and individuals. Right now the United States has the lowest savings rate in the developed world. If we reward more savings for individuals and reward more investing for corporations, it will ultimately lead to more capital available to be invested in the creation of new businesses, greater productivity, and research and development. Despite what the media will inevitably claim, this will not be a bonus for the “rich.” Rather, it’s a bonus for every American: As investment goes up, so does productivity, which results in higher wages for every American worker.

3. Immigration Reform: We must change the 401B visa status in the U.S. At this point, if a foreigner applies to study at a place like Harvard he or she must sign an agreement that they will return to their home country once they graduate. To reiterate: We make smart, ambitious future industry leaders sign a piece of paper promising to leave America when they graduate. What are we doing here? We want these people to stay with us, not go home. As a nation, our competitive advantage is our ingenuity and innovative spirit. We must not allow this spirit to be choked to death by overzealous labor unions complaining that these people are taking jobs from Americans when, in fact, the opposite is true. These people create jobs because they start and build new companies. From my own experience in the corporate world, I know many bright engineers working for companies like Cisco and Apple who want to stay in America but cannot get a visa to do so. This is craziness—and it needs to be corrected before this session of Congress ends later in 2006.

4. Attitude Reform: The American entrepreneurial spirit is alive and well. As Newt Gingrich says, “We can win the future.” A positive vision for a better America is critical to our future. We cannot get caught up in the talk that we are destined to decline or that we may as well resign ourselves to being “hollowed out” as jobs are exported overseas. I see American business at work everyday, and let me tell you: We get things done. Congress now needs to step up and align with the interests of American business and make sure they don’t hamstring us as we condition ourselves to compete with one of the greatest forces ever to be unleashed in the world—global capitalism. If we respond with vision and not fear, we will emerge stronger as a nation and—believe it or not—we will have China to thank for forcing us to face our current vulnerabilities.