Seeing the Round Corners

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May 26, 2020

As experts tried to warn America, cases have increased since opening up the economy. President Trump’s leadership is taking a bashing for all things wrong, even though they are not his fault. The push to find a vaccine is now of utmost importance. At some point, China must be held accountable for their responsibility as the source of the pandemic.

PART VI – PROSPERING IN THE 21st CENTURY
Some years back, just two years into the financial meltdown, a person (who shall remain nameless) made the comment, “America’s spending has the Chinese worried about their investment in America.”

America’s spending habits are of concern to many ordinary citizens, but perhaps the concern should be on what the spending is for, as much as the amount of dollars spent. The political rhetoric of the recent election(s) was relentless on the economy and creating jobs, ad nauseam some would say.

The economy is such a vast subject, then mix in the “global” aspect and how the economy really works pretty much goes right over the head of many, if not most Americans. Few Americans will dispute a major point prevalent in the National Academies Gathering Storm report: “The possession of quality jobs is the foundation of a high-quality life for the nation’s citizenry.”

The National Academies Committee on Prospering also found that America’s ability for sustained competitiveness has declined in recent decades to the point that the country faces a perilous path in competing for jobs in an evolving global economy.

Significant conclusions by the Committee:

  • A primary driver of the future economy and concomitant creation of jobs will be innovation, largely driven from advances in science and engineering;
  • Only four percent of the nation’s work force is composed of scientists and engineers, but this group disproportionately creates jobs for the other 96 percent;
  • Discoveries by scientists of how to decipher the human genome opened up many new fields including medicine; and
  • Discovery of how to increase the capacity of integrated circuits by a factor of one million enabled entrepreneurs to replace tape recorders with iPods, maps with GPS, pay phones with cell phones, two-dimensional X-rays with three-dimensional CT scans, paperbacks with electronic books and slide rules with computers (products from the work of a few individuals who probably never imagined what their work would lead to).

The Committee also points out the importance of leverage (also known as collateral effects or trickle down) of progress in the laboratory or design center:

  • The factory worker who builds the products resulting from progress in the laboratory or design center;
  • The advertiser who promotes them;
  • The truck driver who delivers them;
  • The salesperson who delivers them;
  • The maintenance person who repairs them; and
  • The benefit realized by the user.

 

The effects do not stop there. Statistics from an Economic Policy Institute Working Paper reveal that “each job directly created in the chain of manufacturing activity generates, on average, another 2.5 jobs in such related endeavors as operating restaurants, grocery stores, barber shops, filling stations and banks.”

For the assessment of America, the Committee used the principal ingredients of innovation and competitiveness:  Knowledge Capital; Human Capital, the existence of a creative “Ecosystem” and United States K-12 Education.

  •  Knowledge Capital:  Federal government funding of Research and Development as a fraction of Gross Domestic Product has declined by 60 percent in 40 years;
  • Human Capital:   Over two-thirds of the engineers who receive PhD’s from United States universities are not United States citizens;
  • Creative Ecosystem:   The United States firms spend over twice as much on litigation as on research; and
  • United States K-12 Education:   The most pervasive concern, on average is a laggard among industrial economies, while costing more per student than any other Organization for Economic Cooperation and Development country.

The Committee summarized its finding on America’s position now as opposed to five years ago:

  • The nation’s position has worsened;
  • The latitude to fix problems being confronted has been severely diminished by the growth of the national debt over this period from $8 trillion to $13 trillion (2010);
  • The 14,000 public school systems have shown little signs of improvement, particularly in mathematics and science; and
  • Marked progress by other nations affects America’s relative ability to compete effectively for new factories, research laboratories, administrative centers and jobs.

Innovation, according to the Gathering Storm Committee, is the only promising avenue that offers America hope to continue to be among those peoples who do prosper.

The most dire of the Committee’s conclusions was lack of progress made on the recommendation made five years ago having the highest priority – strengthening the public school system and investing in basic scientific research.

The overall, final conclusion of the Gathering Storm Committee:  “In spite of the efforts of both those in government and the private sector, the outlook for America to compete for quality jobs has further deteriorated over the past five years.” 

Now, as promised, a few of those “Factoids” that will warm the heart of every red-blooded American.

  • Roughly half of America’s outstanding public debt is now foreign-owned – with China the largest holder;
  • An American company recently opened the world’s larges private solar Research and Development facility . . . in Xian, China;
  • China is now second in the world in its publication of biomedical research articles, having recently surpassed Japan, the United Kingdom, Germany, Italy, France, Canada and Spain;
  • The legendary Bell Laboratories is now owned by a Chinese company;
  • China has a $196 billion positive trade balance. The United States balance is negative $379 billion;
  • In 2007 China became second only to the United States in the estimated number of people engaged in scientific and engineering research and development;
  • In 2009, 51 percent of United States patents were awarded to non-United States companies;
  • Only four of top ten companies receiving United States patents last year were United States companies;
  • United States consumers spend significantly more on potato chips than the government devotes to energy Research and Development;
  • General Electric has now located the majority of its Research and Development personnel outside the United States (GE is also known for paying no U.S. taxes on its more than $5 billion corporate earnings);
  • In a survey of global firms planning to build new Research and Development facilities, 77 percent say they will build in China or India;
  • Sixty-nine percent of United States public school students in fifth through eighth grade are taught mathematics by a teacher without a degree or certificate in mathematics;
  • Forty-nine percent of United States adults do not know how long it takes for the Earth to revolve around the Sun;
  • For the next 5 to 7 years the United States, due to budget limitations will only be able to send astronauts to the Space Station by purchasing rides on Russian rockets;
  • The average American K-12 student spends four hours a day in front of a TV;
  • Six of ten best-selling vehicles in the United States are now foreign models;
  • All the National Academies Gathering Storm committee’s recommendations could have been fully implemented with the sum America spends on cigarettes each year – with $60 bill left over;
  • Almost one-third of U. S. manufacturing companies responding to a recent survey say they are suffering from some level of skills shortages;  and
  • According to the ACT College Readiness report, 78 percent of high school graduates did not meet the readiness benchmark levels for one or more entry-level college courses in mathematics, science, reading and English.

The reader's comments or questions are always welcome. E-mail me at doris@dorisbeaver.com.