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From: logajan@ns.network.com (John Logajan)
Newsgroups: sci.electronics
Subject: Re: US consumer electronics industry
Keywords: Japan, US, industry
Message-ID: <1989Sep29.230925.15940@ns.network.com>
Date: 29 Sep 89 23:09:25 GMT
References: <1989Sep28.082305.10099@uokmax.ecn.uoknor.edu>
Sender: news@ns.network.com
Organization: Network Systems Corporation, Mpls., MN
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mflawson@uokmax.UUCP (Michael F Lawson) writes:

> Does anybody know the latest scoop on US vs Japanese electronics industries?
> Are we still losing ground?

> Are there any US companies which still make consumer electronics whom I can
> support?

> I hope the US still has a good lead in computers.

I recently discussed these issues on another newsgroup.  Rather than rephrase
it all to exactly fit your questions, let me simply repeat it here.  It is
long and repetitive, due to the fact that it was formed in response to a
chain of postings.

The main thrust of my points is that Japanese competition is good, not bad.
The stronger it is, the better it serves the customer.

 -----

Free trade (international and otherwise) fosters world prosperity by
allocating resources to the most efficient producers.  Restricted trade,
by its nature, allocates resources on the basis of criteria other than
efficiency -- thus the world in general suffers.

The greatest harm is, however, always inside the country that attempts
to protect itself the most from outside competition -- because it does
so by forcing its consumers to pay more for less.  This protection can
be in the form of subsides (from tax revenues), tariffs, or out and out
embargos.  The result is the same -- it costs more to get less.

The ONLY solution to efficient competition is to beat that competition
fair and square, or to move into new areas of production.  These new
areas open up in direct proportion to the consumer money saved and
hence spendable in the new areas, and/or from the foreign demand for
goods and services created by the need for the foreigners to recoup
the value of the money they earned on their other successful sales.

Japanese don't just sell the fruits of their labor to us so they can
collect green pieces of paper and magnetic ink.  To realize the gain
(or even break-even) of their sales, they must turn around and purchase
US goods and services.  Obviously, their purchases will primarily be in
markets other than the ones in which they made their profits.  Hence
the US labor force shifts from the area in which it was inefficient to
the area in which it is more efficient.

Trade with foreign countries is always a two way street -- or it wouldn't,
it couldn't occur in the first place.

The top 200 electronics firms in the US net over $335 billion a year.  The
top 10 get an average of 37 percent of their revenue from foreign sales.
IBM, #1 at $60 billion a year, gets a whopping 57 percent of its revenues
from foreign sales.

I don't care if the Japanese take over 100% of all US manufacturing (as
long as it is not thru the use of military aggression ) the US consumer
will still benefit.

The Japanese WILL NOT sells us goods UNLESS they can buy back something
with the dollars with which we purchase their goods.  If they do not sell
us stuff because we have nothing they care to purchase, then the internal
market will begin to supply the consumer with the goods he can no longer
get from Japan.  Thus even in this worst case scenario, the US economy
survives nicely.

 -----

The service sector (ignoring the phony way such jobs are labeled) is
increasing.  HOWEVER, there is no statisical evidence to suggest that the
RATE of service sector growth has changed in the last 120 years!  A linear
trend established between 1880-1930 forecasts our current ratio to within
a few percentage points (and all the years inbetween.)

Suffice it to say -- Japanese competition CANNOT be causing a growth
in service sector employment (unless there is some counter-acting
force.)

Although the relative number of non-service sector jobs is declining,
absolute numbers of such jobs are actually climbing slightly, but are
nearly steady since the 1950's.   But this makes sense, since as
manufacturing efficiencies continue to increase, it takes less workers
to produce the same output, or an equal number to produce greater
output.

One final note, the number of workers earning minimum wage has been
declining (their wages have been increasing) linearly since 1981.
In 1981, 15 percent of the workers were earning minimum wage.  In
1988, only 6.5 percent were.  SO WHERE IS THE JAPAN EFFECT?

 -----

Regardless of the color, culture, or location of his competitors, a specific
industry player, always has to be watching over his shoulder.  The fact that
one player has yellow skin or is greater than X miles away is irrelevant.

The efficient use of resources frees up formerly "wasted" resources
for uses in other areas.  Every increase in productivity enriches the entire
world.  It is competitive pressure that motivates the search for more 
efficient methods.  Competition (while harsh on the specific players) always
benefits the market (consumers) because it allocates the least amount of
resources to accomplish the task that the market will bear -- leaving, as
I just said, the most resources for use in other areas.

Any kind of non-market interference (the government) distorts the natural
valuations of the consumers by rewarding non-efficient producers.
Resources are diverted (or blocked) from the efficient producers -- thus
requiring a greater amount of those resources and, obviously, reducing the
amount of resources available for other tasks.

American consumers benefit from efficiency and competitive pressures -- no
matter the color of skin of the competitor, or the distance X that the
competition originates from.

Even if the Japanese are taking over the electronics business (a baseless
claim, by the way) that is GOOD news for the US for the reasons mentioned
above -- more efficient utilization of resources.

  -----

Although I've only read a review of it, there is a book on the USA/Japan
economic competition controversey called, The Third Century: America's
Resurgence in the Asian Era, by Joel Kotkin and Yoriko Kishimoto, 
New York: Crown Publishers, 286 pages, $19.95.

According to the review (Reason, March 89) Kotkin, West Coast editor for
Inc. magazine, and Kishimoto, trans-Pacific trade consultant, argue that
the "Asian challenge" is really the "Asian opportunity" for the USA.

They focus on two of the USA's unique strengths -- itsw entrepreneurial
culture and its open economic system.  Asia and Europe, by contrast,
sees few entrepreneurs and large corporations are the rule of the day.

Here is the telling statistic -- 90 percent of the 18 million new jobs
created in the USA between 1977 and 1985 were created by small companies.

Mercantilist Europe LOST 3 million jobs over the same period.

They also supposedly claim that MITI's reputation for successfully targeting
Japan's sunrise industries is vastly overblown.  They have not been able to
develop the breakthrough technologies that are the dynamic source of an
economies growth -- despite the money they have poured into various such
projects.


Which leads me to two conclusions:

1.) We do not want to emulate Japan (the working conditions are unacceptable
to my tastes!)

2.) We would be better off if Japan were MORE efficient and MORE competitive.

  -----

The USA has NO economic interest in suppressing foreign competition.   

There is no way the government can interfer without causing economic loss
to MORE of its citizens than the effects of the competition.

For instance, the US attempted in the recent past to protect US steel
industry -- and took several actions.  And, in fact, the gov managed to save
17,000 US steel jobs -- but at a cost of 53,000 other US jobs.

It is obvious that the resources costs that went to maintain these
inefficient US steel jobs had to be borne by someone.  The fact that
these 53,000 other jobs were spread out through-out the economy is the
same reason you didn't hear media hype about it.  The greater evil was
much much more diffuse.  There is no way that the local senator is going
to get camera time crying his eyes out over one or two jobs lost here
and there.

-- 
- John M. Logajan @ Network Systems;  7600 Boone Ave; Brooklyn Park, MN 55428 -
- logajan@ns.network.com, john@logajan.mn.org, Phn 612-424-4888, Fax 424-2853 -