Why US companies are moving things to China, India, etc.

Thomas Friedman is at his best today, writing about why US firms are opening plants in Asia — and cheap labor isn’t the main answer.

I was just out in Silicon Valley, checking in with high-tech entrepreneurs about the state of their business. I wouldn’t say they were universally gloomy, but I did detect something I hadn’t detected before: a real undertow of concern that America is losing its competitive edge vis-à-vis China, India, Japan and other Asian tigers, and that the Bush team is deaf, dumb and blind to this situation.

Several executives explained to me that they were opening new plants in Asia — not because of cheaper labor. Labor is a small component now in an automated high-tech manufacturing plant. It is because governments in these countries are so eager for employment and the transfer of technology to their young populations that they are offering huge tax holidays for U.S. manufacturers who will set up shop. Because most of these countries also offer some form of national health insurance, U.S. companies shed that huge open liability as well.

Other executives complained bitterly that the Department of Homeland Security is making it so hard for legitimate foreigners to get visas to study or work in America that many have given up the age-old dream of coming here. Instead, they are studying in England and other Western European nations, and even China. This is leading to a twofold disaster.

In a nutshell, this is the two-fold disaster: 1.) Without the foreign students, we lose the ability to export American ideas and relationships around the world, and 2.) we lose out on the innovativeness that many foreign students bring to the US.

America’s incomprehensible visa policy is perhaps our most misguided reaction to 911, and I think one day we’ll see it as an absurd example of government going too far.

This article is rich in ideas and observations. As Instapundit would say, “Read the whole thing.”

Related post on US visa policy.

The Discussion: 4 Comments

The part that jumped out at me was this:

Because most of these countries also offer some form of national health insurance, U.S. companies shed that huge open liability as well.

This is a crucial but often-overlooked point. Why does the U.S., virtually along among rich countries, continue to cling to its quasi-feudal employer-dependent health insurance system? It’s bad for employees, bad for companies, and its exorbitant cost compared to single-payer systems means it’s ultimately bad for the country too.

Harry and Louise have a LOT to answer for.

April 22, 2004 @ 3:37 pm | Comment

Vaara, it’s quite simple: All those other countries are socialists. Don’t you believe in The American Way?

April 22, 2004 @ 4:36 pm | Comment

Speaking of going too far: Because the United States Consulate refused to issue visa documents to members of the PEKING OPERA OF JILIN, the company was forced to cancel its sixteen-city, twenty-two-performance 2003 North American tour. Never mind that they’ve been touring for 18 years with no problem, someone decided it was too risky.

Meanwhile, they let millions in from south of the border and Bush recommends a giant amnesty.

April 22, 2004 @ 7:31 pm | Comment

And honestly I’m not sure that it is a reaction to 9/11 or if 9/11 is conveniently used as an excuse to promote a right-wing Pat Robertson style xenophobia.

The insanity of US immigration is one of those topics that is near and dear to my heart. I’ve got a couple of posts with specific numbers on how bad the increase in time to get visas/travel documents processed since all of the extra money was poured in by the Dept of Homeland Security and the use of it to deny foreign reporters access to the States under previously unenforced visa regulations. And I’ve got another article bookmarked somewhere from The Standard on Hong Kong shipping magnates complaining about US visa rules for container ship crews heading for the States.

April 22, 2004 @ 9:21 pm | Comment

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