Pretty damn stupid.
Oak cites a new U.S. government report that shows China brazenly stole $48 billion and 923,000 jobs from us in 2009 through intellectual property theft. The Chinese stole copyrights, trademarks, patents and trade secrets. They forced U.S. multinationals manufacturing in China to turn over the technology they developed. They damaged brand names and product reputations by selling knock-offs. They pirated software, music, movies and books.
It gets worse. Turning a blind eye to intellectual property theft in China costs us 2.1 billion jobs (including better jobs than waitress, burger flipper and cabana boy) and $21.4 billion in exports.
Oak argues multinationals that move to China are cutting their own throats. The companies that decide to lower costs by using cheaper Chinese labor are way more likely to get ripped off. And they also lose revenue because they have to lower their prices in China.
Andy Grove, co-founder of Intel, it's stupid for the U.S. to let companies offshore to China (and other countries) for another reason: It creates a society with a small group of well-paid people doing high-value-added work while everyone else is unemployed or underemployed.
Writing for Bloomberg, Grove argues that U.S. start-up companies lose the ability to innovate if they manufacture their products overseas. Expanding a company involves know-how, experience and relationships, which in turn lead to further innovation. Even when intellectual property isn't ripped off at offshore facilities, domestic industries lose out. Grove uses the example of advanced batteries:
...finally we are about to witness mass-produced electric cars and trucks. They all rely on lithium-ion batteries. What microprocessors are to computing, batteries are to electric vehicles. Unlike with microprocessors, the U.S. share of lithium-ion battery production is tiny.
...The U.S. lost its lead in batteries 30 years ago when it stopped making consumer-electronics devices. Whoever made batteries then gained the exposure and relationships needed to learn to supply batteries for the more demanding laptop PC market, and after that, for the even more demanding automobile market.As a result of our misguided economic policy, writes Grove, there are 166,000 fewer jobs in the U.S. computer industry than there were in 1975 when the first PC was built. Meanwhile, Asia's computer industry employs 1.5 million workers. Asian countries, writes Grove,
...seem to understand that job creation must be the No. 1 objective of state economic policy. The government plays a strategic role in setting the priorities and arraying the forces and organization necessary to achieve this goal.Duh-oh.
