The Weakest Link in the U.S.

The Weakest Link in The U.S. Economy
Ndubuisi Ekekwe
2011-11-09T17:08:39Z
Apple used 49,400 employees to generate revenues of $65 billion in 2010. Its outsourcing partner, Chinese Foxconn, employed nearly a million people for $59 billion in the same year. In the U.S., Apple focuses on creating high-paying jobs while it outsources the low-paying ones to Asia. For companies from Dell to HP to Intel, outsourcing provides competitiveness. It makes the shareholders happy and helps produce good earnings. Every global company has the right to pursue opportunities to remain competitive. But the state of events happening in the U.S. economy right now calls for solutions which these very companies could provide.

The U.S. economic crisis could be traced to the structural economic changes which globalization facilitated. American companies are out-innovating most of their citizens. All across the nation, there are still community colleges and trade schools where students graduate and quickly join the unemployment pool, because the jobs for which they have been trained are not available — they weren't available even when they were enrolling. And those jobs may never be back — they are in Asia now. Still, no one is asking to shut down — or even change — these schools.

As the nation goes through this generational transformation, we must understand that the solution to the problem isn't far-fetched. The U.S. economy is innovating at the top, but is failing badly at the bottom. That a U.S. engineer with a Ph.D. in some high tech company creates up to ten jobs in Asia means that ten Americans are displaced from work. Some like this new model, where few are paid very well, and many are left unemployed. But, no one will like a neighborhood where for every mogul, there are ten homeless families. Yet that is what the system is setting up today.

Breaking the Cycle With a New Model

The U.S. will remain the epicenter of global innovation with its good universities and top-focused innovative companies. But for it to break this cycle of boom and bust, it needs a new model. America needs a system that works for the citizens, companies and the nation. That a Chinese company hires more people than the top ten U.S. high tech companies combined, despite getting the bulk of its business from them, shows that there is a weak link in the economy. And when families are broken with no jobs, it's difficult for a nation to hold up.

America's solutions may not necessarily come from Washington, but from the compassionate patriotism of American companies. Can the shareholders demand less and reduce the pressure to outsource? Can the citizens pay a little more to keep those making products in U.S. competitive? It is possible that what has worked for the U.S. in the last few decades may not be attainable in the new global arena?

This is not about building fences to protect against globalization; it is about developing a roadmap for U.S. companies. One lesson learned from the last recession is that every company needs a healthy economy in order to function. When the meltdown began, practically every company suffered. As the crusade for environmental sustainability wages on, now is the time for U.S. companies to begin a discussion on business sustainability at home. If they fail to do that, it is very possible that they may not have the right economic climate in which to do business.

The temptation to think that because revenue is coming in from overseas, and that what happens in China may not affect us, is erroneous. Even if China will eventually lead the world, it is decades away from that, politically and economically. A broken U.S. economy poses severe dangers because across most nations, opportunities will dry up. A sustainable U.S. economy that provides opportunities at the bottom is not just a problem for the president, but for every American employer. It is time to fix this link and rediscover innovation at the bottom.