Thriving and Failing in the New Global Economy

Discussion in 'Business & Economics' started by KilljoyKlown, Apr 1, 2011.

  1. KilljoyKlown Whatever Valued Senior Member

    I think this Bigthink article is right on the mark. Please comment and tell me what you think about this subject.

    Venture capitalist Juan Enriquez analyzes the divergent fates of China and Latin America and what lessons they hold for the rest of the world.

    Question: What countries are thriving during the global recession?

    Juan Enriquez: One of the most extraordinary trends in the world—you know, there’s a couple of people that, if I had a wand and could put statues in different places, one of the statues would go to a man who just died, called Norman Borlaug, who came up with the Green Revolution. We traditionally in this world didn’t have enough calories to feed all of us and had huge famines, not just in Africa, but had them across India, across Southeast Asia, and across China. Because of Borlaug’s work at Simit and because of this we have huge excess, until very recently, in agricultural produce and the prices went through the floor. But there was more than enough to feed everybody in the world, if we could distribute it right. So, Borlaug would be one figure that I think fundamentally changed India, China, all of Southeast Asia, and gave them the time to be able to build on other things.

    The second person who I think one has to think about building a statue to is Deng Xiaoping, who took a country that had traditionally dominated the world economy, had traditionally dominated education in learning, exploration and science, and that country went into a 500-year sabbatical and it wasn’t pretty on the income per capita. The first time I went to China in 1977 was in the low 100’s, and everybody was wearing the same things, and the richest of the rich had bicycles, and you would walk in those streets and a thousand people would follow you because nobody had ever seen a westerner in some of these parts.

    Compare that with China today. China has, all of a sudden, found a way of putting the best of the best to work to build an economy that is growing at 10% to 12% per year, and now India is following. And those changes and how quickly they’ve come out of this mess, how little debt they have, is really important. It doesn’t mean they have perfect governance; in fact, there is much to be improved upon. But it does mean that they are catching up very quickly, and it does mean that as you begin to think about the United States in the context and Europe in the context of the world economy, it’s going to be a very different ballgame 10 years out and 20 years out.

    Question: How can your native Mexico end its economic struggles?

    Juan Enriquez: So one of the things that really worries me, in part about Mexico, in part about Latin America, and in part about the Hispanic population in the U.S. and Canada. It’s this lack of awareness of this whole science world.

    When I grew up, I simply didn’t have mentors that said, “Science is important. Science helps you build a country. Science makes a country powerful.” And that’s such a simple thought, but when you think about what’s powered Taiwan and Korea and Silicon Valley and Cambridge. In part it’s this wonderful culture and architecture and food and art, and everything else. But the gasoline for all that stuff is startup companies in science.

    To use the latest figures in the U.S., venture capital is about .02% of the U.S. economy invested, and it accounts for 11% of total U.S. jobs and 21% of U.S. economic output. And the reason why is because these companies can get very big, very quickly.

    Now, if you don’t have that science and technology and brains as an input, as you don’t have in large parts of Latin America, if you don’t focus your education on that, if you don’t find your 10,000 best scientists, but you do find your 10,000 best soccer players, the consequences are, you become a World Cup Champion in Soccer, like Brazil, but you don’t become Korea, which earned 1/5 of what a Mexican did in 1975 and today earns five times more.

    Within the United States, there is a real division between the PhDs given in science and math to the Asian community, to the traditional white community, and then to African-Americans and Hispanics. And until African-Americans and Hispanics can get serious, not just about area studies, which are important, but also about science and technology, they’re not going to generate that wealth and that job within those communities. And that has absolutely devastating consequences for the places where people live, for the jobs and for the wealth.

    Recorded on November 9, 2009
    Interviewed by Austin Allen
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  3. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    I basically agree with article; however, I note that in US all feel compelled to get higher education by social pressure, but not all need to. Now, and for more than a decade, the cost of higher education has been increasing much more rapidly than general inflation and student debts are climbing. (Their total now exceeds the total of all credit cards!) Thus, for most going to college is not a economic decision they will profit from as it once was, especially as many are unlikely in the current economy to find any job that requires their higher education. In less developed countries, higher education (which few get) is still the ticket to a comfortable life after graduation (and often debt free at graduation, as unlike in the US, their education is either free or not very costly.)
    From: where, but not reproduced here, is text that explains the fundamental reasons leading to this summary.
    Last edited by a moderator: May 7, 2011
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  5. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    The interaction of economy and education and globalization is taking a new turn and not for the good AsFarAs US is concerned, but great for China:

    The essence is that state schools, some of the best in California where budget problems are deeply cutting into University of California system (UCLA, Berkley etc.) budget support. State are responding by NOT accepting many well qualified Californians students applying for admission. Instead are accepting many more out-of state application, especially from China. For example:

    " ... Kwanhyun Park, the 18-year-old son of Korean immigrants, spent four years at Beverly Hills High School earning the straight As and high test scores he thought would get him into the University of California, San Diego. They weren’t enough.
    {UoC /San Diego} admitted 1,460 fewer California residents this year to accept higher-paying students from out-of-state, many from China. ...

    Park ... thinks he would have been admitted to UC San Diego if it hadn’t reduced the number of slots for California residents. His combined math and verbal SAT score of 1340 exceeded the university’s average of 1233. His older brother was admitted to the school in 2009 with lower test scores, Park said. ...

    California residents pay $13,234 in annual tuition while nonresidents pay $22,878. ..."

    "... One in five international students nationwide, or 57,000 undergraduates, came from China in 2010-11, a 43 percent increase over the previous year, according to the Institute of International Education in Washington. Colleges are more frequently tapping this pool as the surge in middle-class incomes in China coincides with steep budget cuts at U.S. state universities. ..."

    "... The University of Washington in Seattle, the number of in-state students in the freshman class declined by almost 500 between 2007 and 2011, even as the school enrolled more total students. The percentage of out-of-state students surged to 34 percent of the freshman class from 19 percent over that same period, with more than half from overseas. Almost two-thirds of the international students are from China.

    Washington residents pay $10,346 in tuition and fees while nonresidents pay $27,830. ..."

    "... At Michigan State University, in East Lansing, Chinese undergraduate enrollment soared 23-fold in five years, to 2,217 in 2011 from 94 in 2006. ..."

    For more, Read:

    Billy T comment: It is not just that the US owes China more than a trillion dollars and is going 1.5 trillion deeper into debt this Fiscal Year that is killing the US and boosting China, but perhaps worse for the long term is that US, especially the states, are so desperate for cash that they are: Selling our "intellectual seed corn."
    Last edited by a moderator: Dec 31, 2011
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  7. KilljoyKlown Whatever Valued Senior Member

    Billy T

    Yes it does seem like our higher education is selling us out. But I have to wonder how many of those foreign students will stay in this country after they graduate and create a brain drain from their home countries?

    Next I believe higher education in the form of brick and mortar places to go will start pricing themselves out of business. There's already some very good online university programs being developed. The idea that you can take the best educators and combine them with the best presenters and only charge half as much will allow a lot more qualified locals to get a better education than they might have got at twice the money. After all the local schools may not be able to attract the best educators, but an online program that can reach a lot more people worldwide, will be able to pay top dollar for the best educators.
  8. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Yes, I agree, this is how to go. China is already doing a lot of this, but as a suppliment to the local teachers, who in the rural areas may not be very well qualified still. China has more internet terminals than the US and many of them are serving many people in schools etc.

    As far as how many Chinese, get high quality US education and stay I don't know. Many did and more would have except for US restrictions, back when US's high tech job opportunities were much greater than in China. Now that is reversing - China has many jobs that will use their education and the US has less. It is a very important question - which way is the Brain Drain now?

    I sometimes joke with my Brazilian wife: Brazil needs more well educated people and has a lot of beautiful women, many of whom are quite smart. Our maid is one - she dropped out of school after grade 5 but is of very high native intelligence. I tell wife others should be recruited into a "Brain catching service core" and sent abroad to bring back a well educated husband as she did.
    Last edited by a moderator: Dec 31, 2011
  9. KilljoyKlown Whatever Valued Senior Member

    A Brazilian wife, now I am jealous. I've read some very good things about Brazilian women and if I was younger I'd love to give that a shot.

    Please Register or Log in to view the hidden image!

    Your point on that subject is well taken.

    The thing between China and the U.S. is that China is in a major infrastructure building phase in almost all areas of their economy and the U.S. infrastructure is reaching critical levels of decay in all areas of our economy and we are funding a really large military budget, so we can't spend on our schools or keep up with all the patches we need to make every year on the infrastructure. We need to get out of the war business. We need to overhaul our bad trade policies and give our own companies reason to keep more jobs here in the states.

    As far as our lower education goes we need more federal money spent on making use of the powerful tech we have and are not using very well. By producing better educated kids you get a major benefit in a lower crime rate as the kids get older.
  10. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Finally some published support for idea I have long expressed:

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    This is link of China Daily that often no longer will up link. It shows Ann Lee holding her new book, which has title: What the US can learn from China. Here, from Amazon, is the book at least:

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    "... Ann Lee lists in her book a host of Chinese practices in areas such as education,* Confucianism and banking that she believes the United States can learn from. ..." Here are a few more quotes from link below:

    “…Lee argues that China's leaders have earned their authority through a lifetime of meritocratic service that is far from arbitrary. …”
    The Chinese believe that the privilege of leading a country should belong only to those who have proven that they can serve the country over long periods of time in a selfless way and accomplish a great deal. Thus the process of leadership selection in China at its heart is based on merit rather than mere popularity contests during elections.

    Lee finds that unlike some US politicians who are elected to the federal government with limited leadership experience in both government and in the corporate world, a Chinese leader will have served in a variety of government roles that may be as diverse as leading several provinces as governor, engaging in trade negotiations, heading a State-owned company and running regulatory agencies.

    A 2010 Pew Global Attitude Survey reported that 87 percent of Chinese said they were content with their country's direction; only 30 percent of American respondents said they were content with their country's direction. …”

    Billy T comment: And makes exactly the point I have made, for example in post below last quote of her.
    Note Lee is an ethnic Chinese who came to US at age 2 and now is a professor of finance and economics at New York University and a senior fellow at Demos (a significant policy “think tank”). She is a frequent visitor to China - So see both both societies' merits and flaws.

    “…Lee also sees the brilliance of China's five-year plans, which she compares to a strategic plan drawn up by a US corporation. She argues that the beauty of China's system is that market forces are permitted to flourish at the corporate and retail level, but the government role is to make decisions independent of fleeting considerations like returns on investment. …”

    Quotes &photo from:
    * Note comments on Chinese education in several recent posts of this thread.

    From post here: Clicking on this still shows photo that will not up link anymore but this is likely to fail soon too. (None of my professors were as good looking as Lee is.)
    Last edited by a moderator: Jan 16, 2012
  11. elte Valued Senior Member

    While the resources available to the developed countries decline, education in science has declined as well--a double whammy for western countries like the USA. We haven't really the opportunity to educate ourselves out of the problem at this late stage since a whole generation or two of students has missed getting a deep education in science. Policy will have to be developed to try to reduce the economic decline by means of leveraging the important strengths we still have.

    One such policy might entail reaching parents of children with gifted minds and getting them to understand the importance of science in a country's economic future.

    The decline might still have happened even with a scientifically minded public, but it would likely have been much less steep and deep. For example, it would likely have lessened the trade deficit because science-oriented folks generally use less gasoline. That would have resulted in less importation of crude oil.
  12. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    "... A survey conducted by the American Chamber of Commerce in China shows that the profit of 85 percent of American enterprises in China increased in 2010. Besides, about 40 percent of the products China exports to the US are made by American companies in China. That is to say, these companies' exports are calculated as part of China's trade and go on to make China's trade surplus, whereas the profits are pocketed by American entrepreneurs and remitted back to the US. ..."


    Billy T comment:Yes, US companies are "Thriving" with production outsourced to China, even with the Chinese goods made in their US owned Chinese factories, which they bring back to the US to sell to Americans. Too bad Joe American is not - his job is now in China. Joe is "Failing" and many a jobless Joe has lost his home. But, hey Joe, that is the "new Global Economy" - if you don't like it move to China - there is a labor shortage there now.

    The GoP wants more tax relief for the already wealthy, so funds will trickle down making new jobs, but what they don't tell is those new jobs trickle down funds make are in China.
  13. scheherazade Northern Horse Whisperer Valued Senior Member

    The irony is not lost on me.

    The consumer demands cheaper goods.

    Trade Union labor rates cut into the profit margin.

    Outsource the jobs, import the cheap goods back into the economy and someone is getting rich while the unemployment numbers at home climb because we can't compete with the 'foreign' market. Meanwhile WE are the foreign market artificially creating our own competition in the same way that all those 'brand names' on the grocery shelves are just variations on a theme, all owned by a few big conglomerates.

    Talk about double dipping....

    Are people really so gullible? :bugeye:

    No need to answer the question. Evidently so....
  14. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    “…The long-awaited foreclosure settlement between the government {including proscuters of at least 26 states} and the banks appears to be at hand.

    A $26 billion settlement was announced Thursday morning between the federal government, state attorneys general and the five biggest banks in the mortgage market… but …the settlement is too small to really help the housing market, {Billy T insert: with its 700 billion under water debt hole} or even do much for individual victims of fraud and abuse.

    The deal may, in fact, hurt housing by sending a message to people who've stayed current on their mortgages that irresponsible behavior is what gets rewarded in America.* … More Americans may "walk away" from uneconomic loans, which will put additional pressure on local housing markets. {Billy T insert: Also as I understand the deal, foreclosure will surge to higher rates as foreclosures which were delayed because of uncertainites with "robo-signing" & illegal, unrecorded locally transfers documents, as they were sold into CDS packages with hundreds of new owners for each mortgage, will no longer be grounds for not paying the mortgage. Some who went to court when bank tried to foreclose won their cases as bank could not show either they had ownership of the mortgage or who did and thus had right to recieve the payments.}

    Furthermore, several experts note that for all the rhetoric about punishing corporate crimes and helping victims of abuse, the banks have once again gotten away with a slap on the wrist and may end up benefiting most of all from the settlement. According to The Wall Street Journal, the settlement will be broken down as follows:

    $5 billion in cash payments, including $1.5 billion to borrowers who were wrongly or illegally foreclosed on between September 2008 and December 2011. Borrowers could receive up to $2,000, depending on the number filing claims.

    $20 billion in "credits" the banks will receive for principal write-downs and other aid to homeowners at risk of default, up to $20,000 per. This tally includes $3 billion for refinancing of mortgages currently under water. …”**


    Billy T comment:
    * This bold is why I posted in this tread. I.e. to get ahead: be irresponsible - certainly don´t be a saver in banks, etc. with negative real returns due to interest paid being about ten times less than inflation rate.

    ** Not exactly clear yet, but seems Joe Taxpayer will give the banks 20 billion for them to forgive or refinance under water homes, they probably were about to take big losses on. – I.e. again Joe will make the banks who made loans that they never should have will come out smelling like a rose and Joe goes 20 billion deeper in debt.

    In modern USA you can give billions of Joe´s money to a very select few (much less than the 1%) IF you just package the deal well enough (wrap it in some flags, etc.) to make it look like the government is trying to do good, has a big heart, etc.

    For example, the government knows best that electric cars (not natural gas cars or sugar cane alcohol or butnol or benzine etc.) are best so gives $7,500 to their buyers, but that is tiny cost to Joe Taxpayer made by "all knowing big brother" compared to the billions of the farm subsidies, which of course are to save the almost non-existent "family farmer."
    Last edited by a moderator: Feb 10, 2012

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