US farmers: China's rise is good

Nice FT story with charts on how “US farmers cash in on China demand.”

US ag exports to China now surpass those to Japan, the EU and South Korea, all of which are declining while China’s imports come out of nowhere in 2000 to almost a five-fold increase since.

Biggest flows are soybeans (Indiana’s reason to live) at almost $10B, then cotton (under a billion), then nuts (peanuts at just $140m), tobacco, wheat and corn.

The bad spot:  China bans our beef since the minor BSE scare in 2003 that sent our beef exports plummet from $1.3T to about $.3T overnight (still hasn’t recovered).

Sign of the times:  the first US grain export depot built in 25 years since on the West coast, so say goodbye to a bunch of those barges heading down to the Big Easy on the Mississippi.

As US politicians lose sleep over the trade deficit with China and the dollar-renminbi exchange rate, American farmers are eyeing a record $14bn in exports there this year.  So naturally the logistical landscape is being reformatted.

Hyped this one a while back in a column, and yeah, exports “exploded” after the Chinese joined the WTO in 2001.  One expert says that one-third of the price on the Chicago Board of Trade is determined by China.

For now, US dairy exports held up, awaiting new Chinese certification reqs. Our poultry faces a lot of “antidumping” obstacles, so work to be done.

China’s government has made self-sufficiency in ag production a national goal, but that’s a dream at best, given how much of China’s breadbasket is located at or below the 35^th parallel, meaning more and lengthier droughts as global warming kicks in more extensively.

We are likely to have China over a breadbasket soon enough, my friends, despite Beijing’s attempts to buy up farmland all over the Gap.

For now, Canada remains the top destination for US ag exports (which I find stunning!) at $16B, then China at $13B, then Mexico at $13, then Japan at $11b, the EU at $8B and the ROW at $38B.

That’s a heap of billions—almost 100!

Beijing floats the notion of a basket value-setter for the yuan

A good and hopeful sign announced in a WSJ story: 

China will consider publishing a so-called effective exchange rate for the yuan against a range of other currencies in an effort to de-emphasize its value against the dollar, a further indication of how Beijing plans to manage the yuan since effectively decoupling it from the U.S. currency.

Last bit seems a bit kind: China announced a decoupling and we go a nice little spike there right off the bat, but a bit pokey since.

Still, this is a good and smart and inevitably move by Beijing, and something I’ve been arguing for going back several years:  the need for an “asia” to join the euro in balancing the dollar. We all know the yuan will be its center of gravity, just like China will play Germany in an Asian Union, and so I chose—not too naively, I believe—to interpret this as a small step in that direction.

The basket of currencies is expected to be based on the host of major currencies of countries/union with whom China has the most trade.

Skeptics cite the vagueness of the description from the vice governor of the People’s Bank of China, and no doubt there will be zigging and zagging and nothing done with any great speed.  The point is just the floating of the concept for now.

A strict linking of the yuan to a basket of currencies is unlikely in the near term, analysts say, as it would mean the yuan could fall against the dollar when the greenback is rising against other currencies, which could enrage parties in the U.S. calling for yuan appreciation.

So, for now, experts describe the announcement as part of an “education campaign” designed to get parties both inside and outside China used to thinking about its inevitability.

Again, a good, smart move by China.

Chart of the day: China's expected slowing growth

To be filed under “economic reality”:  A WSJ chart that projects likely decline of Chinese GDP growth rate in the years ahead.

Simple enough logic: the bigger the economy, the harder it is to get the same percentage growth. Plus, once all the easy extensive growth achieved, harder to make the intensive growth happen (productivity and innovation versus just building more-more-more!).

Then there’s the rising cost of labor as the labor pool shrinks relative to the rising dependency ratio (nonworking youth and accumulating pool of elders that will transform China into a civilization that got old before it got rich).

Yes, China will move manufacturing inland and westward to develop its interior (that which isn’t lost to competitors both near and far), but that will degrade the cost advantage further.

Peaking of labor population driven home in accompanying chart on jump page (peaks in 10s and then declines to pre-90s level through 20s, 30s,40s—ad infinitum.

Other jump-page charts show that China is following the same path as Korea and Japan previously—the golden period cannot last forever, because this isn’t a new economic model whatsoever.

Brief Reminder: The 2008 financial contagion = the un-Gap (2009)

A slide I still use in the brief to show a real-world example of the Core-Gap divide.

Core countries are the reddish ones, meaning they experienced fast and furious downward market pressure once the contagion began.  The degree of change is measured across the first 90 days.  And if you toss Indonesia into the Core, as I am increasingly wont to do, the match is that much tighter.

The mostly grayed-out Gap is explained two ways:  1) no real markets; or 2) where markets exist, not much tied to Western ones.

Eventually the slowdown reaches the Gap through the reduced commodity demand of the Core, but Africa, for example, continues to grow--ever so slightly--even through the worst stretch.

China is THE globalizing/shrink-the-Gap force today

Cool series of global trade charts from Bloomberg Businessweek.  One in particular shows the growth in Chinese exports to regions over the past decade.  Seventy-two percent increase to Europe, 410% to North America, 593% to rest of Asia (to include Persian Gulf), 1800% to Africa and 2133% to LATAM.

Corporate exposure to China, in terms of how much of their revenue comes from China:  Siemens and Boeing only around 7-8%, but Intel at 17%, Yum Brands (like KFC) at 34%, and major mineral companies like Valle and Billiton in the range of 20%.

Top US export by far to China is soybeans at almost $10B.  Would seem to account for the vast fields I see all over central Indiana.  Semiconductors second place at $5B.

Most fascinating to me, the huge upticks in Chinese exports to Gap countries over the past decade, clearly marking China as THE globalizing force on the planet today.

Hermes' trojan horse market entry strategy

Interesting FT story on Hermes, the luxury brand, creating a special subsidiary that’s completely separate from the Hermes line to pursue a market expansion strategy in China.  The goal is a Chinese brand, from Chinese designers, using Chinese production.

Question is whether Hermes is diluting its primary brand or finding a way around growing Chinese protectionism.  Hermes will continue its 18 stores in China and the main line will create no specific products for the Chinese market.

It’ll be interesting to see if the strategy works.  Are the Chinese ready to shift loyalties to a Chinese luxury brand or will they want to stick with their foreign favorites?

South Africa as the Core's great integrator of the continent?

WSJ on successful World Cup symbolizing South Africa's ambition to unite the continent economically.

Intra-African trade remains paltry by global standards, largely due to missing interior infrastructure, as one colonial legacy is that the entire place is built to move commodities to the coasts.

South Africa now pushes a Cape Town-to-Cairo free trade zone as part of its ambitious vision.  The self-confidence shown is a big deal, because South Africa has the biggest and most liquid financial markets on the continent, so everything has to start there.

But South Africa is part of the problem:  a ten-fold increase in trade with China since the century began, but only a 4-fold increase with the rest of Africa.  So gateway ambition, yes, but not gateway performance--yet.

But Africa is poised for better things, we are told, because it escaped the financial crisis and because it's sizable middle class continues to emerge--and spend.

Here's hoping South Africa's ambition and self-confidence are catching.

Defense, and especially aerospace, looks to emerging (country) sales

WSJ story on US defense firms finding their future in foreign sales in light of coming flat Pentagon budgets, with Asia and the Middle East obvious targets (follow the money), with Brazil, India and China leading the way. No choice, as everybody is predicting a global--as in, Western--defense spending downturn of great length. Second FT article on Italian defense firm says the same.

Wil it be sufficient offset?

No way, but it cushions the blow for pure defense firms.  Those who sell civilian aerospace too will do better.

Open season on Chinese business practices

FT front-pager.

One thing for GE to bitch and moan, as Americans as expected to complain about China, but another for Siemens and BASF, two traditional ostriches, to squawk so.  If anything, these guys have been vocal China boosters in the past.

But their unprecedented complaints come "against a backdrop of rising discontent among foreign businesses operating in China."

Especially striking is that the German CEOs said this to Wen Jibbao's face--in Beijing!  Wen countered with bland denials that the investment environment had deteriorated.

Merkel tried to smooth it over afterwards, but I think we're seeing the start of something big.

Being numero uno means being the world's biggest target for complaints.  We'll see how China likes that.

Chart of the day: China's loosened peg changes little

WSJ story noting that, after China's pledge to ease its peg to the dollar, the yuan has gained a whopping 0.7% over a month. Based on the 2005 de-pegging, no big change as hoped for.

Early judgment, yes, but the first month gives a strong hint that we won't get much relief this way.

The fight for depegging within China has been led by the People's Bank of China, but for now it seems that this view has not won out.

So expect more Congressional threats and some action, after a while.

Next pressure point will be the IMF's review of the Chinese economy.  China and the IMF have feuded specifically over this issue.

The great debate on too much-v-not enough stimulus

So many thundering op-eds to choose from on the subject that I instinctively cite the estimable Martin Wolf from the FT.

The opening:

To tighten or not to tighten – that is the question. It is one to which policymakers have started changing their answers. Are they right to do so? That is the issue addressed in the Financial Times this week, echoing the fierce debates of the 1930s. If arguments for tightening are correct, failure to do so would bring fiscal and financial shocks in some of the world’s most important countries. If arguments for tightening are false, decisions to do so threaten recovery and might trigger further financial shocks.

What has everyone agitated was the communique coming out of the recent G-20 that spoke of reducing public deficits by half by 2013.

So why the abrupt change after previous meets saw the 20 pledging whatever it took?

The first answer is that the world economy is recovering more strongly than expected. In April 2009, at the time of the London G20 summit, the consensus of forecasts for global economic growth this year was 1.9 per cent. By last September it had reached 2.6 per cent. By June 2010, it was 3.5 per cent. In the US, the consensus forecasts for 2010 were 1.8 per cent in April 2009, 2.4 per cent last September and 3.3 per cent in June 2010. Even for the eurozone, the consensus of forecasts has moved a little, from 0.3 per cent in April 2009, to 1 per cent last September and 1.1 per cent in June 2010.

The second answer is Greece, to put it simply.

Wolf covers the arguments:

At the anti-deficit extreme are those who argue fiscal deficits have no impact on activity since they lead to offsetting behaviour by private people. Thus, if governments run deficits, private people save, since they understand that their taxes will ultimately rise. Another, very different, extreme position comes from those who believe a deep slump would purge past excesses, and so lead to healthier economies and societies. While people who think in these radical ways influence the broader politics, they have limited direct influence on policymakers. So what is the latter debate about?

The “cutters” argue that such huge fiscal deficits – never seen in peacetime in big developed countries, notably the US – threaten long-term fiscal credibility and depress private confidence and spending. While piling fiscal stimulus on top of the built-in stabilisers made sense in the panic of 2008 and early 2009, the time has come for swift consolidation . . .

Finally, should economies weaken after a fiscal tightening, monetary loosening would be highly effective . . . Many cutters also argue that the best response would be to reduce spending. That is the lesson, they say, from past fiscal retrenchment.

The “postponers” agree there must be decisive slowing of the growth of long-term spending. But they emphasise the fragility of recovery and, in particular, the huge private sector financial surpluses. This private frugality has caused the fiscal deficits, they insist, not the other way round. The sequence of events makes that evident.

Moreover, add postponers, we have seen a strong flight to safety . . . 

Moreover, postponers would add, with interest rates close to zero, monetary policy is ineffective, except to the extent that it supports fiscal loosening. Fortunately, countries with their own central banks can finance fiscal deficits directly. This is untrue for members of the eurozone, which are, in effect, operating with a foreign currency. So long as excess capacity remains so large and normal bank lending so weak, such reliance on the central bank “printing press” creates no inflationary danger. On the contrary, the danger is rather that premature fiscal tightening would trigger a sharp economic slowdown, as in Japan in the 1990s, so pitching important economies into deflation.

The interaction of high indebtedness with deflation could, they argue, create a downward spiral. A Japanese-style “lost decade” . .  .

Wolf admits he sides with the postponers for now but says no one can be sure which side is correct for now. The answer, however, probably determines whether Obama is a one-termer or two.

Chinese custom meets the FCPA

The Chinese have a wonderful custom of gift-giving, which is why, whenever I go there, I pack a lot of small gifts--especially preferring to give out books.  If you don't, you'll end up feeling weird when your Chinese hosts give you all sorts of gifts at each stop, a lot of it being traditional crafts with company or agency logos attached.

But here's the rule for Americans or any company that lists here: whenever gov officials are involved, to include state-run companies, there are strict dollar limits on the value allowed for gifts exchanged. These limits aren't all that hard to meet, so long as you're not in the serious graft business.

But even in that more exalted realm, US agencies are more vigorously prosecuting violations of the Foreign Corrupt Practices Act (FCPA):

In late June, more than 150 executives from Siemens (SI), the German industrial giant, met in Beijing to discuss compliance with Chinese and U.S. anticorruption laws. That a multinational would spend millions to strategize about avoiding bribery charges in a country where bribery is rampant shows how much business is changing in China.

U.S. prosecutors, empowered by the Foreign Corrupt Practices Act of 1977 (FCPA) to investigate allegations of bribery anywhere in the world, have been stepping up their activities in China, where a tradition of gift-giving in business often degenerates into serious graft. The FCPA bans U.S. companies from bribing foreign officials. It also applies to foreign companies like Siemens that list their securities on U.S. exchanges. Companies that violate the FCPA face millions in fines, and executives can go to prison.

Yes, yes, it's a thin red line that separates pleasant custom from corruption.

Says one former USG official involved in compliance, it's all about "reconciling Chinese customs of entertainment and gift-giving with the culture of compliance."

Beware of enabling middlemen, says the article, because they can get you in trouble.

The more you connect, the more you're subject to the rules--and customs--of others.  I see this rule-set clash going down rather quietly, like the rustling of red envelopes.

China's squeeze play on US software industry

WAPO story by way of WPR's Media Roundup.

Subject is China's squeeze play on American software providers:

Nearly four out of five software applications running on PCs in China have been stolen instead of paid for, the market research firm IDC has found. China has made commitments to the U.S. government to reverse this trend by enforcing intellectual property rights, but IDC data show no discernable progress. Indeed, between 2005 and 2009, the commercial value of stolen personal computer software in China doubled, to $7.6 billion. Roughly half that amount should have been paid to U.S. companies, which could have used the money to hire more U.S. workers and invest in research and development for new products.

With most of this rampant theft occurring in Chinese businesses, the economic impact reaches far beyond the software industry. Software is a critical tool for production in every sector of the economy. Stealing gives Chinese companies an unfair cost advantage over their paying American counterparts.

Beijing late last year compounded matters for the software industry and several others -- from makers of clean-energy technology to producers of telecommunications equipment -- by instituting a heavy-handed "indigenous innovation" strategy that excludes foreign companies from important segments of the Chinese market, such as government procurement, and tries to compel transfers of intellectual property rights for key technologies as the price of market access. This squeezes us at both ends -- shutting many of our innovative products out of the market and stealing the rest.

The industry is fighting mad and pushing the Obama Administration for a generalized get-tough stance that avoids the past tactic of complaining about one trade obstacle, only to have it removed and replaced by a new one two steps over.

The hope?  Correcting the relationship like we did with Japan previously:

In Japan, for example, software theft was pervasive in the early 1990s -- accounting for two-thirds of all PC applications. In little more than a decade, however, thanks to public education and a strong judiciary system, the piracy rate there has dropped to 21 percent, a level on par with that of the United States.

So a discouraging and encouraging message at the same time. Nice piece.

Because what goes around, comes around

Couple of WSJ stories.

Beijing lets Google keep a toe-hold in China while Baidu’s grip on domestic searches reaches dominance level at nearly two-thirds.

Still, the Party does well by not shutting out Google completely, because soon enough, Western markets will retaliate more fully against would-be entrants like telecom equipment provider Huawei, which is already fighting an uphill battle in India.

The more China plays this game at home, the more it will face the same abroad.

The global imbalances equation: unchanged

Depressing bit from WAPO's Neil Irwin about how little has changed structurally since the Great Recession began:

The catastrophic economic downturn that began two years ago was supposed to shake up the global economy, ending an era in which Americans consumed too much and saved and exported too little.

But the recovery is being driven by a return to the very global imbalances that were a major cause of the crisis. Americans' savings rates have fallen over the past year, imports are rising faster than exports, and countries around the world are again turning to Americans to be the consumers of last resort.

"Despite all the good words and good intentions, I'm afraid we're going back to the same conditions that led us into this mess to begin with," said C. Fred Bergsten, director of the Peterson Institute for International Economics.

That's partly because countries around the world view those old ways, while dangerous over the long term, as the quickest option to power out of the deep economic decline. For China, Japan and Germany, that means exporting vast volumes of goods, saving too much and spending too little; for the United States, and to varying degrees Britain and other European nations, it is the reverse.

These trends are deeply ingrained in countries' policies and individual decisions by their citizens, such as the lack of a social safety net in China that causes people to save more and the mortgage-interest deductions in the United States that encourage people to take on more debt.

World leaders have pledged to guide the global economy away from those imbalances. Just this week, President Obama renewed his call for a doubling of U.S. exports. But that has been made more difficult given that the value of the dollar has risen 7.5 percent against other major currencies this year, making American exports more expensive.

Meanwhile, leaders in Germany and Japan have turned their focus to reducing budget deficits, but the rest of the world would benefit if those countries spent more aggressively, increasing their consumption.

The United States has been like a customer who outspends his paycheck by receiving store credit. The store -- in this case, China, which buys vast quantities of U.S. Treasury bonds -- essentially funnels its profit back to the customer in the form of more credit. Everybody is better off for a while; the customer gets more stuff, and the store does more business.

But that relationship can't go on forever.

Makes you wonder what level of crisis is required for real change.

I retreat to my old analysis:  this crisis caught both China and the US about a decade too early. China needed more time to develop and gain confidence re: necessary reforms and reorienting more heavily toward domestic consumption, while the US needed a new generation of political leadership to emerge.  Obama was the leading edge, all right, but not transformational enough on his own to create or lead the economic change, in part because of the perceived hostility between him and business.

To repair infrastructure, US must seek foreign $ & partners

FT story that states "US antipathy to foreign investment in its infrastructure threatens to deprive the country of much-needed capital as a time when state and local governments are struggling with rising deficits."

So warns legendary Felix Rohatyn, famed Lazard banker.

Great quote:

This dislike for foreign ownership is Kafka-esque; much of our country was built on foreign capital.

True enough: we were the rising China of the 19th century and got ahead with tons of foreign direct investment.

Recent polls say Americans are 80% opposed, because, I would surmise, the question is always framed in terms of foreign ownership rather than crumbling infrastructure.

Experts say we ned $2.2T in upgrades and repairs in the next half-decade alone.  Meanwhile, lots of cities are pressing ahead with privatization schemes, but even when US financial entities are involved, these efforts have a checkered history.

The outdated rule-set that governs the most important trade relationship in the world

FT "analysis" full-pager on US-China trade by Alan Beattie. Starts by noting China's slight loosening of the yuan's peg and says this won't change the relationship all that much.

Then the key point:

With discontent rising across American business, fuelled by incidents such as the Google China censorship spat, Washington is recognising to its intense frustration that it lacks the instruments to conduct international trade policy in a modern economy.

“China is distorting global trade and investment patterns with a web of state-sponsored industrial policies,” says Jeremie Waterman of the US Chamber of Commerce. “The tools the US government has are inadequate to cope with this interlocking web.”

The old-fashioned architecture of US trade policy largely reflects the metal-bashing economy of the past. It is predicated – as is the focus on the exchange rate – on its manufacturers competing head-on with Chinese companies, particularly in the American market.

The US has a panoply of “trade defence” instruments – antidumping, countervailing duty and safeguard measures – that allow it to block imports it deems unfairly priced, state-subsidised or flooding in too rapidly. One such tool was used in September last year to restrict Chinese tyre imports, provoking a storm of protest from free-traders.

But the goods to which the US applies such measures are mainly basic, low-margin industrial components in which American competitiveness is being eroded against many countries. The list hit with trade defence protection in recent months does not read like a tour of America’s economic future: drill pipe, phosphate salts, coated paper.

Francisco Sánchez, undersecretary for international trade at the Commerce department, notes such products cover less than 3 per cent of US trade with China. Yet because the industries are long established and often have powerful labour unions, they exert disproportionate control over trade policy. When China joined the World Trade Organisation in 2001, the negotiators’ focus was on goods such as these, and particularly the eternally controversial area of garments and textiles.

The problems started after China joined the WTO and the the government protectionists were given more free reign under Hu and Wen, who, when they came to power, saw that few Chinese companies were predominant in the high-tech local markets and wanted to change that.

From the piece:

Beijing says it is merely trying to do what other countries have done – modernise its economy, ascend the value chain and ease away from dependence on foreign companies for investment and technology.

But US companies say “indigenous innovation” goes way beyond familiar problems with software and movie piracy, and amounts to a full-blown system of government manipulation of large swaths of the economy.

Procurement is used to favour Chinese companies. Idiosyncratic technical standards such as a home grown wireless technology – “Wapi” – are given a clear run by denying licensing to more familiar international standards. Information, communication and technology companies complain about restrictions, such as requirements for products to be certified and tested in government laboratories, and for businesses to disclose source code.

Alarm about this is rising to the point where business representatives are increasingly prepared to criticise policy publicly. “We are feeling less and less welcome in China, which is why you are seeing more people speaking out and reconsidering their futures in China,” says John Neuffer of the Information Technology Industry Council.

Last week Jeffrey Immelt, chief executive of GE, expressed his growing concern about Beijing, telling an audience of Italian executives that “I am not sure that in the end they want any of us to win, or any of us to be successful”.

So the question for the US is, How to keep China's markets reasonably open for US company penetration while China seeks to fence those areas off for its own national flagships?--not exactly a new trick, I would add. Our trade instruments don't cover that scenario, the article argues.

How about suing China in the WTO?

But this strategy costs time and effort, and is not a cure-all. After the two or three years it can take to bring and win a case and an appeal, the remedy often comes too late. In the car-parts case, US business experts say, the delay gave Chinese industry more time to develop and American industry to weaken, foiling the goal of allowing US car-parts companies export significant quantities to China. Mr Neuffer notes that dispute settlement is even slower for high-tech industries, where product lifecycles can be less than a year.

In the end, no easy answer avails:

There are no strong rules about promoting competition in markets in WTO agreements. There is an agreement whereby governments commit to put public purchases of goods and services out to international tender but China has never signed.

“Government procurement in China is actually much more important to the American and European economies and companies [than issues such as textiles], but much less effort was put into getting China to join,” Mr Horlick says. China says it will make an offer to sign up this month but appears to have ruled out including regional and local government and state-owned enterprises, thus punching huge holes in any new commitment.

Debbie Stabenow, Democratic senator from Michigan, has proposed a bill that would cut China off from US government procurement if it does not open its own market. But few investors seem to think that would make a tremendous difference. Rules such as the “Buy American” provision already restrict China from bidding for some government contracts, against which Beijing has in turn complained.

So expect this relationship to remain tense as we seek to increase our exports in the face of Chinese efforts to dominate their own domestic market.  It would seem that the only way we're going to correct a trade imbalance with China is to restrict their exports--a tricky path with someone who owns so much of your debt.

Dodd-Frank will not lead to global imitations

Economist editorial on the 2,300-page bill.

What it got right was dealing with the fragmented regulatory nature of our financial system.

But the rule-set's global influence will be limited:

At the G20 Mr Obama boasted of “leading by example” on financial reform. In fact, Dodd-Frank is too idiosyncratically American and too incomplete to be a true template for others. And his claim that it would keep a financial crisis like the one the world just went through “from ever happening again” is bound to prove wrong. Yet imperfect though it is, the reform is proof that even a government as fractious as America’s can move with impressive speed when the motivation is there.

Expecting more or better in this age of globalization's rapid expansion is simply unwarranted. We may have birthed the system, but it has grown in complexity and heterogeneity beyond our ability to lead by example in rule-set resets.

Grove on what it will take to generate new employment in the US

Bloomberg Businessweek piece by Andy Grove, legendary retired CEO of Intel.

Basic point:  tech start-ups can't create enough jobs, as proposed by Thomas Friedman recently in the NYT.  

Reality of the tech world:  for every high-tech job in the US, there are ten connected manufacturing ones in Asia, like all those Foxconn workers cranking out iPods.  Also, over time, it takes a lot more money to create even those high-tech jobs we keep.  An HP could create a job for less than $10k back in the 1950s (when it did its IPO), but a Google today spends roughly $100k per new job.  

Grove:  "The obvious reason:  Companies simply hire fewer employees as more work is done by outside contractors, usually in Asia."  This results in Foxconn employing more people than Apple, Dell, MS, HP, Intel and Sony combined.

The same has happened with alternative energy.  Good example: we stand on the verge of mass production of electric cars and trucks, meaning lithium-ion batteries are to electric vehicles what microprocessors are to computing, but we basically abandoned any attempt to lead the world in that sphere three decades ago when we stopped making consumer electronics devices.  Grove doubts we can ever catch up now.

Groves passionate call is for America to begin once again valuing manufacturing and not simply give into the notion that, so long as we retain the knowledge work, we can stay current.  His point is that there is much innovation to be found in the challenges of manufacturing:

Not only did we lose an untold number of jobs, we broke the chain of experience that is so important in technological evolution.  As happened with batteries, abandoning today's "commodity" manufacturing can lock you out of tomorrow's emerging industry.

His prescription:  "job-centric economics," because "losing the ability to scale will ultimately damage our capacity to innovate." Thus we need to "rebuild our industrial commons" even to point of taxing the offshoring of jobs.

As someone not given to such arguments, I found this powerful in its logic, especially as we consider biotechnology.

I second that emotion

WAPO story on effects of the Great Recession in terms of employment and wages:

The recession has directly hit more than half of the nation's working adults, pushing them into unemployment, pay cuts, reduced hours at work or part-time jobs, according to a new Pew Research Center survey.

I can honestly say that every single one of those things has happened to me in the last year: losing jobs, pay cuts, and reduced workload.

I survived by having lots of jobs in the first place and replacing those I lost.  

One thing I learned with Emily's cancer:  never rely on a single paycheck.