Bush the Revolutionary?

By GotDesign

Until I read the article, I balked at the comparison the author made in his first sentence. Daniel Henninger wrote the following in today's WSJ Opinion Journal:

If the people of the United States hand him victory in the 2004 election, George W. Bush could emerge as the Deng Xiaoping of American politics.

How's that for a hook? Draw you in? Normally, I would not like the comparison of President George W. Bush (the best president since Reagan, in my mind) with the former leader of communist China. But as I read, the comparison became much more clear. Deng Xiaoping brought China out of Mao's Cultural Revolution and into the modern world. I find it both interesting and understandable that Henninger could see Bush as being in the unique position to revolutionize the American economy and usher it into the modern, globalized world.

For many years now, the United States has been pursuing (rather slowly) integration into a quickly globalizing "world economy." I began to see this process of globalization in the mid-90s when I worked for a management consulting firm. While working there, I learned about Supply Chain Management (SCM). SCM is the process a business goes through to ensure the continuous, uninterrupted flow of raw materials into its operations and the continuous, uninterrupted flow of finished (or near finished) goods through distribution channels to retailers and, eventually, to the end consumers. Where this bears on the subject at hand is that a client of my company at that time was a U.S.-based steel company that was advised to look for more cost effective sources of coal and coke used for manufacturing steel. They were advised to consider buying coal and coke from sources in China. That's right, China -- literally on the other side of the world.

How can buying coal from China be a good thing for America? Labor unions and increasing standards of living in the U.S. have raised the price of labor -- wages. Increased labor prices make the prices of products artificially higher. This, in turn, raises the cost of living, which drives up labor rates, etc. A vicious circle. In order to reduce the price of American made goods, companies look for lower cost material and/or labor outside the U.S. This is called "outsourcing." The loss of jobs to outsourcing is minimal, at present, and is more often offset by European companies who are setting up shop in the U.S. in order to better compete in the U.S. market. In the end, this outsourcing is a good thing as it allows for the development of better paying jobs for Americans.

How does this relate to Henninger's comments about President Bush? Simple. George Bush, with some foresight and good luck, will be the American president to usher the United States into the era of a global economy. This will be a good thing. It will allow companies to further reduce their costs and, therefore their prices, make consumer goods much more affordable. This will be painful in the short run. But it will be greatly beneficial in the long-term future. The trick will be to look now and find the next paradigm for a global economy and position the U.S. to be a "best-in-class" competitor in this global economy. Start thinking now. And think ahead.

 

3 comments so far.

  1. Sue Bob 3:30 PM
    I wish that there was some way to describe the benefits of outsourcing in a sound bite. I sure can't think of one.
  2. GotDesign 3:40 PM
    "Lower Costs = Lower Prices: Outsourcing is Good Business"

    Whaddayathink?
  3. harvey 7:00 AM
    Nice blog I have one myself great idea horse racing meeting

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