I agree that R&D should be encouraged whenever possible, and protecting technology is a no brainer, but when you say that we should relax regulations and bureaucracy, slow down. 1: Businesses and Corporations want you to believe that we should get the government and regulations out of their way so they can be free to do business how they want and be free of government and bureaucreatic involvemnet. Sounds good on paper, but it has been proven that businesses can NOT be trusted, they only care about the bottom line, that is the nature of business and you can't expect any different. That is why we have these regulations. 2: Bureaucracy is defined as an "organization of non-elected officials of a government or organization who implement the rules, laws, and functions of their institution." Bureaucracy cannot be removed without losing the teeth of the regulations we have implemented to protect our citizen's health and welfare.
Kudos, Alex, for bringing up the P-word, Politics and the R-word, Regulation in the same column. I suspect this thread will be teaming with comments in a short time. If a simple mathematical equation could be applied to calculate the perfect amount of regulation required to balance positive and negative effects on any system, we would be using it. But as with all NP-Hard problems, our system is multidimensional and non-linear. I hope we can agree that regulations that treat our manufacturing system as uni-dimensional and linear are not helpful.
I agree with R&D credits, and keeping technology here, but time and time again we have seen the public damaged by companies that will do anything in the name of profit. Sometimes fines aren't enough because the companies are willing to pay the fines if they still make a good solid profit. There was an earlier article on ethical software practices, and in the same vein there are more amoral people than there are dishonest ones. Companies may be willing to do something that the public finds distasteful, but they are less likely to cross the line and do something that will involve prison or a hefty fine.
There should definitely be more tax credits for companies that build factories on U.S. soil, open up headquarters, and put people to work. There needs to be some sort of financial carrot for keeping innovation here as opposed to letting centers of excellence go off overseas.
The truth is though, companies are going to set up shop where they can find the talent. I've been hearing a lot about companies setting up simulation centers of excellence and other software-driven or consulting-driven, so-called white collar jobs in far off locale because that's where they can get access to knowledge experts for a reasonable investment. My point is is it's great to discuss the politics around regulation and the tax code, but let's not forget that investment in STEM (both government and private industry) is also an essential ingredient to rebuilding American manufacturing.
As much as companies like to blame their failures on government policy -- and deny that government policy plays any role in their successes -- my experience has been that much of the decline of U.S. manufacturing in the 1970s and 1980s was a result of poor management decisions. Instead of blaming unions, taxes, regulations, or foreign competition, CEOs would do better to look in the mirror.
If bureaucracy and regulations are the problem, then why is there so much manufacturing in China, where there is exponentially more bureaucracy and regulation?
If taxes or unions are the problem, then why is there so much manufacturing in Germany, where taxes and labor costs are higher?
The fact is that many U.S. companies made short-sighted decisions without considering the long term consequences. Often, companies continued to throw money away year after year in misadventures because the responsible decisionmakers couldn't admit their mistakes, and no one was allowed to question them. And executives who drove once-successful companies into the ground were rewarded with golden parachutes, while the communities which had been home to these companies were left with high unemployment and environmental problems, with no future in sight.
Thanks for a thoughtful column, Alex. My one quibble is that I don't think reducing regulations is usually a good idea, although that depends on what they are regulating. Many of them are protecting our health and the health of the environment. I think akwaman gives the rebuttle quite well. Also, the larger a social/economic/political system is, the larger the bureaucracy required to run it, so reducing it is unlikely and perhaps not even a good idea. Meanwhile, I definitely agree that the flood of technology transfers going to China is a big problem, and that the flood of jobs going there is an even bigger one: they've both been a big problem for well over a decade. I think tax incentives would make a lot of sense, as Beth mentions.
Well said, Alex. I think you're right on the money when you say that executives are chomping at the bit to spend more money, but their companies are sitting on piles of cash. It's going to take awhile for some of these companies to learn to trust the economy again.
I do not agree with removing regulations; perhaps sunsetting most regulations, so lawmakers have to revisit the existing regulations on the books, instead of spending their time writing new, sometimes insane regulations (i.e., now floating a bill past congress that would make it illegal for children to work on family farms). If lawmakers had to revisit many of the current insane regulations, they could revise the existing law(s) to better reflect the current economic/environmental situation, or remove the regulation if it is frivolous.
I think it is important to note that much of the "regulations" of industry are self imposed; i.e. ANSI standards. Much of ANSI is "self policing". So if you don't like the ANSI "reg" then don't follow it; of course, you can't mark your product with ANSI, but it is your business choice.
Sometimes regulations come about as the result of trade wars within industries. In the case of the farm bill cited, it is my opinion that there is a war between local, family farms, which, I believe, are more likely to be "Organic" producing farms and "Conventional" Industrial farms. I.e.; if your competition is taking away your profits at the checkout line then beat them at government handout line. One look at all the Monsanto transplants in government agriculture bureaucracy should give a good picture of whose behind pushing out the small farm competition that has been steadily increasing due to the increasing popularity of CSAs and Farmer's Markets.
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