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I find that most people’s arguments make sense 80% of the time, the problem is usually the remaining 20% (often their solutions) even assuming they are being sincere (big assumption).
– ‘…China’s top down approach works…’
– ‘..Is Google making an implantable chip?’
– ‘…You never know at Google because we’re a bottom up company…’
Hm. Maybe he should change Google to China’s top down model if he thinks it works so well. Or maybe he was just obfuscating.
#1 On China, the point he was trying to make was that their system gives them the opportunity to pursue long term goals. Such as becoming the world’s banker or owning the world’s solar technology.
The US system can’t focus on long term goals with lobbyist based legislation, a constant election cycle, and hyper news organizations. His question to you is how does the US compete with China?
Big deal. What’s his point? The federal government would be better run as a business? Not a shocking point of view from a business-type.
Government should not be run as a business but as a household. Not everything done in the name of profit but at least income must equal spenditure or you’ll be destitute. That simple truth scapes, apparently, the brilliant minds of the PhDs running many countries’ economies. No amount of fancy math or argument can change that cold, basic and universal truth.
ReadyKilowatt,
Schmidt is going to see things in a particular way but he has some good insights. You’re right, the US has shifted it’s economy away from growth and development to consumer driven services – mainly to support a privileged way of life for the baby boom generation.
Changing fiscal and monetary policy is only one part of that change. It will require a cultural change as well to mentally move back into a different style investment and entrepreneurship. If you’ve ever been involved with a new business and are looking for investment you find out very quickly that the western world wants 20-40% growth at a minimum per year with a horizon of 2 years for a public offering. Once you’ve done that you’re in the doghouse living from quarter to quarter.
The US political system just mirrors and reinforces that. That is what Eric Schmidt is really arguing against since he’s seeing the political and economic realities facing his company.
#2 Say What
“…The US system can’t focus on long term goals with lobbyist based legislation, a constant election cycle, and hyper news organizations….”
America became the most powerful country in the world under similar circumstances except it used to protect it’s own national interests. The reason China has become so influential is because globalist internationalists, largely in America and Europe, have made protecting your national interests (tariffs, trade barriers etc.) seem like a bad thing, because their interests lie in exploitation of whoever produces the most profit for them. China remains nationalistic (the internationalists are even now angered by the way China manipulates it’s currency for it’s own national interest).
If American scientific developments were protected and companies that utilise those technological and intellectual capital were punished for exporting them for their own profits (e.g. by imposing tariffs, trade barriers etc.), then there would still be a strong manufacturing base in America (assuming that was desirable). The main reason there is not is that slaves are cheaper than indentured servants (mortgage payers) or free people. The globalist system punishes those that seek to protect their national interests.
The Chinese government is interested in staying in control, it is not interested in improving the lives of Chinese people (unless that helps them stay in control). Their ‘long term goal’ is focussed on survival , power and personal wealth (much like Royalty, financiers, lobbyists, Democrats and Republicans).
Much of the world is controlled by international financiers, not as a ‘secret cabal’ (there is nothing secret about it) but the same way as when there were powerful nationalistic capitalists. Potential exists through innovation but only becomes tangible when the capital is made available to pursue it. You do not get to vote for bankers (and your representatives work for them not you) so it should be no surprise that they are not interested in the well-being of the general populous of a specific country.
It is not the lobbyist and media that choose the government it is the people that continue to vote for either of the intrenched parties against their own interests. If you think a one party dictatorial regime would be better than changing how Americans vote I would have to disagree.
China is not a leader in innovation largely because innovation mainly comes from (intellectual) descent and the Chinese leadership does not allow that. Innovation comes from freedom to deviate from ‘the plan’ and the capital required to pursue it.
P.S. China has four times the population of America but is even still the second largest economy in the world (i.e. America’s economy is over four times that of China per capita). A leader in every respect. The only issue is equitable distribution. If only America was a democracy (!?).
#7
Your ideas on labor are completely wrong. Businesses have *always* sought to lower costs especially labor costs and have always considered moving production elsewhere to lower costs. Technological advances in transport and communication have made it more viable to move production to less expensive locations to take advantage of cheaper labor. Let’s not forget that this is not a new phenomena. In the early 1800s, the South complained that the North kept trying to impose taxes to keep production from moving to the South where it was cheaper. Minimum wages, high costs of living, various additional employee costs imposed by local, State and Federal governments all go into the equation from the perspective of evaluating labor costs. In addition, factors such as expertise and productivity go into those equations. If two companies are making the same product that can be manufactured cheaper overseas with cheaper labor, the one that does will be able to offer their product at a lower price. Putting up tariffs and trade barriers will simply cause other countries to do the same and we’ll have a repeat of Smoot-Hawley. You want to move production back to the US? Make it cheaper to produce better products here than somewhere else.
If only America was a democracy (!?).
Somehow we became the most powerful economy in the world without ever being a democracy. It makes one believe that giving into mob rule does not equate to having a stronger economy.
The video you are trying to watch is currently unavailable.
Please check back soon.
Within the first few minutes of the interview Schmidt complains that the laws are written by the lobbyists, then goes on to complain this lobbyists are only 1 (group) of 1000s.
The solution to this problem is not to form even more lobby groups (or even grass roots groups). The solution is to limit the power of government so that even when the incumbents (both politicians and lobbyists) control the government, they have very little to actually control.
Chuck–make reality your friend.
The theoretical function of wallstreet/stockmarket/finance is to create capital pools to combine with labor to produce wealth.
Unfortunately, this theoretical role has morphed into a ponzi/manufactured bubble scheme where wallstreet skims off capital pools to benefit the SUPER RICH at the expense of everyone else.
Fools like chuck think that fewer/no rules will prevent this behavior whereas the obvious truth before us all is that lack of government/rules is what allows this behavior: the rape and destruction of the middle/working class, of America itself.
Wallstreet ran amuck in 2008 just as it did in 1929 for all the same reasons. In 1930 rules BY GOVERNMENT were put in place that prevented the boom/bust speculation/skimming market for 60 years but then starting in 1990 with Clinton and accelerated and completed by BushtheRetard, these rules were taken away. The “no government” position offered still by retards like Chuck, and criminals like Summers/Geitner/et al that allowed the crash of 2008. Now, 2 years later and the rules that are known and proven to work have not been re-instituted. Another crash will surely come as there are too many chucks around to chuck things up.
Silly Hoomans.
#9 Say What
“…the political and economic decks are stacked against building those innovations into thriving companies on shore…”
Allowing them to be built off-shore has seen the rise of a totalitarian one party state that is a political and economic threat to America and the decline of American political and economic power in the world, and it was done partly through American scientific advances.
“…It takes years to build out those innovations…”
It takes years to research and innovate but that still happens. Why can the capital be found for research but not implementation?
I agree that the government should get out of the way of those that are willing to invest in beneficial industries. If an endeavour is profitable and desirable it will find the capital and market and would be much more beneficial in the long run than selling patents (the Chinese government proved that).
#8 Thomas
You just made a national economics argument that was the same as I made about global economics, which equally applies to an economy of one boss and two available labourers (where you require only one). So we are either both right or both wrong. The question was how to increase production in America when you can’t win a ‘race to the bottom’.
I was not suggesting putting tariffs on imported goods produced by forign companies, I was suggesting a way to incentivize American companies, who are using American intellectual capital (that Mr. Shmidt claims was paid for by Americans), to increase American production by making exporting of production more expensive (i.e. putting a cost on the use of American intellectual property like is done on natural resources). You can not get that resource anywhere else and that is Americas most valuable asset and bargaining chip.
Mr. Schmidt suggested that a lack of long term planning was the problem, but plans without capital are just plans (whether short term or long term).
“Make it cheaper to produce better products here than somewhere else.”
How do you make products better and cheaper than in China?
Cheaper means slavery or mechanisation, better means the utilisation of American intellectual capital which is being transferred to China through outsourcing by American companies.
How would you protect American intellectual capital?
“Somehow we became the most powerful economy in the world without ever being a democracy. It makes one believe that giving into mob rule does not equate to having a stronger economy.”
I was being ironic “(!?)”. America was always a democracy (of sorts), at times more accountable than at others. One would suggest that the ‘mob’ is not the problem (do you remember the C.C.C.P.? No mob rule there).
America became the most powerful economy in the world because of it’s intellectual and military advances. If it gives up those advantages it will inevitably decline.
#10. hhopper. An updated link, shortened with Google’ new goo.gl URL shortener. http://goo.gl/Kclz
Eric has clarity of vision, honesty, urbanity and he is young enough to not feel that he has to accomplish something quickly. Which is probably why he left Apple.
Some specific points as the larger picture takes too long to paint:
China has just now surpassed Japan and is now the worlds no 2 economic entity. With the world and its own internal market, with natural resources, with human resources, with government direction, no reason at all they will not become No 1==absent some “non-economic” intervention.
When it comes to selling goods “economic competitiveness” IS having the lowest cost goods. That’s 19th century factory thinking and it is still the way of the world. “Value Added” is too easy to add yourself once a certain level of competency is reached. That level of competency is attainable by any country willing to make the intellectual investment in its people. The nature of international competition/marketplace is that the world “evens out.” Silly to think the world economies will even out but that somehow the living standards of the USA will not decline, at least by approaching the new mean?
Investment should be based on its return. When a social end like stack scrubbers is viewed as beneficial but is not a good investment on its own terms, then the government has to get in the way and mandate such investments and let the market work its magic with those initial givens.
Silly not to understand the future belongs to those societies that integrate the market and government for the maximum good.
With idiots like chuck thinking the government should have no involvement, it will be difficult for the USA to compete. After the idiots, the criminals will have to be removed from the system. THEN if energy/transportation costs are proportionately higher, maybe the cost of imported labor into the USA (legal or illegal as it may be) will allow America to enter a new round of growth and wealth creation.
Not until.
#18 Say What
That is a shame, but at least it didn’t take China to make it happen. Well done.
I’m for reform (and throwing out most of the shills). The Government is clearly hindering innovation.
LDA, I think throwing out the shills and getting new ones won’t do a thing. Different clowns, same clown suits. Tea partiers will be just as bad.
I think the US needs some fundamental changes in government structure. The initial structure was brilliant for 1776. It doesn’t function well in 2010.
Unfortunately many in the US view the constitution as a “sacred document”. Oi.
Oh, and thanks but don’t say “well done” quite yet. I think we may have 20-30% chance of making money. The payoffs can be big, the risks are as well.
The main thing we are doing differently is that we are structuring the company so the researchers can make the dough and continue researching. In most startups the investors would take the majority share of the wealth. I hope to make a decent amount of money but I won’t be stupidly rich.
The don’t teach that in business school.
#20/21 Say What
Agreed, however I meant non-party individual representatives with real world experience and skills.
As far as I am concerned the current reality deviates substantially from that intended by the constitution, regardless the constitution should be a tool not a chain.
Re: “Well done.” I was going to say ‘good luck’ but success doesn’t come from luck but ingenuity and perseverance.
jesus, enough with the “china rulez” meme! their whole economy is in a giant bubble, they need 8% growth per year just to break even and they’re massively overbuilt. their biggest customer is broke, they hold that debt in usd which will either default or inflate away.
Nobody on the show remembered to mention 100 trillion dollars of derivatives trading. Allowing that nonsense by the Obama administration’s incompetents along with the omission of the defense spending waste and inattention to a balanced budget makes the interview a puff piece.
#14
It is incredibly difficult, if not impossible, to prevent the export of intellectual capital. Once you get outside your own country, enforcement becomes significantly more difficult. In the end, it is up to the intellectual property owners to control the use and export of their own capital.
How do you make products better and cheaper than in China?
You make it sound like its impossible. Automation in large part is how the Japanese and America have been able to dramatically increase production while lowering cost. Inexpensive labor is inherently at risk to replacement by automation. Even if this automation is used by the Chinese, it evens the playing field with respect to labor.
How would you protect American intellectual capital?
Completely different question. Because intellectual capital can be easily moved, it is significantly more difficult to protect. Further, it is difficult to stop foreign firms from buying US firms that own the rights to intellectual property. You can’t use the government to bail out/protect every industry. Much like the UK, the US is moving away from labor intensive production because it simply is no longer economically viable in this country. Corporate taxes, land costs, the cost of labor and general bureaucratic red tape have all contributed towards movement of production to countries where it is cheaper.
America was always a democracy (of sorts)
The US has always been first and foremost a federated republic ruled by elected representatives. That’s a very different beast than a democracy. Democracy is effectively mob rule. The CCCP was a communist tyranny with power consolidated in the hands of a few individuals. No elections. No republic nor democracy.
It should be noted that American workers are some of the most productive in the world. However, in many cases where production is moved overseas it has very little to do with the cost of labor and instead the cost of simply doing business.
#25
However, in many cases where production is moved overseas it has very little to do with the cost of labor and instead the cost of simply doing business.
As I think about this, I overstated this. I would say that in many cases there are many costs beyond labor, but it cannot be argued labor is not a significant factor.
Schmidt ran Novell into the ground, then luckedboxed his way into the already successful Google.
A great many laws are passed in Washington to make it look like somebody is doing something useful. Many of them are very ill advised because the people running things simply do not understand cause and effect.
Barny Frank and friends wanted to do good things for his voters so he got low interest loans for families that didn’t qualify for loans so they could buy their own homes. They were grateful and voted for him.
The smart people making such loans sold them ASP to Fanny May and Freddy Mac or anybody ignorant enough to buy them because anybody with a working brain knew that most of those loans were going to be defaulted on.
The tax payers got shafted. The home owners got shafted. A lot of investors who took the word of dishonest people got shafted.
Barney is still in office and he’s going to fix things. How? By encouraging Fanny and Freddy to make low interest loans to people who couldn’t qualify to buy homes. Does this sound familiar?
One thing which unified Schmidt’s talk was the offer of Google’s approach of a self interested, but fair dealing, agent as an alternative system to our current political structure of obviously corrupted agents.
That was a ballsy attack that suggests recalibrating national roles. What he is talking about is something seriously different from business as usual.
Forget a debate about trade/tariff policy(I do like that debate(A lot)).
The meat of the material is an explicit challenge to the central operating principle of both the government and commercial investment in this country.
#28–chuck==what you said and have basically repeated is clear. The only limit we have on internationally based/operating corporations destroying the middle class worldwide in their rapacious drive for CEO bonuses/stockholder equity is effective regulation and enforcement.
Free market control is a lie meant for gullible LIEberTARDS.
You don’t get to control/limitation/redirection of corporations by a government so small they have nothing to control. You don’t get there by “more” but ineffective rules/regulations/laws.
Rules that worked were put in place in the early 1930’s by a government much smaller than the one we have today. Matters little how else you characterize it as long as it gets the job done.
They jailed some Rep caught up in the AbScam Scandal. He said “Money Talks and Bullshit Walks!” – That’s apparently how Washington works !!! Just ask Abrahmoff !!!
Sorry for the delay.
# 25 Thomas
“…Once you get outside your own country, enforcement becomes significantly more difficult…”
I suggested controlling how American companies use American research. The suggestion is that the knowledge is being willingly transferred to China for production purposes or even transferred to Chinese companies. I would suggest that is something that could be changed and that if it was not it would make it almost impossible to increase production of advanced technologies. Advanced mechanisation requires the protection of the intellectual property used to produce it.
“…it is difficult to stop foreign firms from buying US firms that own the rights to intellectual property…”
It is not difficult, you just ban the transfer of the intellectual property if it is in the national interest, you may argue it is not desirable, but that is a different argument.
“…US has always been first and foremost a federated republic…”
The U.S.A. is a Federal (made up of states) Constitutional (codified and limited powers) Republic (‘un-monarched’ of the people) by Representative Democratic (constitutionally limited elected representatives chosen by the polity) .
The context for me saying America is a democracy was as it relates to changing how things are done. The people can determine how public policy is run by electing representatives that follow their wishes (within the Constitution). They are also (theoretically) constitutionally entitled to demolish and reconstitute the government when they feel it is acting against there interests and democratic means are no longer working.
However both the government and the people (‘mob’) are limited by the Constitution from imposing certain restrictions, none of which include preventing intellectual capital produced with taxpayers money from being transferred to China (private property, yes). That said the Constitution is not the slave-master and I believe the people have the natural right to alter, amend or rewrite it if their interests are no longer served by it.
I also think that democracy is often two wolves and a sheep voting on what to have for dinner, but I prefer it to most other choices. The people that formed the U.S. government thought women shouldn’t have a say and non-Europeans were less than human, the people (eventually) disagreed.
# 26 Thomas
Agreed, but labour cost is usually cited as the main justification and other costs are more easily reduced (assuming they are imposed by the government).
“…it is difficult to stop foreign firms from buying US firms that own the rights to intellectual property…”
It is not difficult, you just ban the transfer of the intellectual property if it is in the national interest, you may argue it is not desirable, but that is a different argument.
Where do you draw the line of national interests? You’d almost have to make every industry part of “national interest”. For example, does all automation represent a national interest? I think that’s a slippery slope of trying to determine what intellectual property can be controlled or “known” by foreign entities and what cannot outside of information related to national security.
The United States was founded on opportunity for all including foreigners. Suppose a Chinese firm buys Segway. Does that represent intellectual property that cannot be moved outside the country? You’d almost have to bar foreign companies from buying any US firm because every firm has some sort of intellectual property.
My two favorite Churchill quotes sum up my attitude about democracies (in the more general sense of governments that elect officials):
“It has been said that democracy is the worst form of government except all the others that have been tried.”
“The best argument against democracy is a five minute conversation with the average voter.”