January 20, 2021

Exporting: The Grand Illusion Washington-style

Posted on 28. Mar, 2011 by Administrator in Economy

My eyes are blurry.  I just finished reading the 75-page report on the Administration’s National Export Initiative (NEI) prepared by the President’s Export Promotion Cabinet (EPC).  This gem was ginned up in 180 days just in time for the election (though I’m sure not orchestrated to coincide with a White House attack on the Chamber of Commerce that represents the bulk of America’s exporters).

About the same time, I read a review of the report in the Albuquerque Journal (“Expansion of Exports requires recovery,” Oct. 11, 2010). Both accounts made me want to shout, “enough, already” at the top of my lungs!  If you like very old wine in new bottles — a re-packaging of ideas from 20-30 years ago — you will love this report.  Prepared by twenty different government agencies who all have a piece of the exporting portfolio and who form the ‘Trade Promotion Coordinating Committee,’ it is the perfect Washington PR tome designed to cause an uncontrollable bout of head shaking in the private sector. This report was written by bureaucrats for bureaucrats without the help of the President’s Export Council which, incidentally, has no representation from the small business sector. Like, ‘Girls Gone Wild,’ Government revealed its assets for all to see, and they came up short on substance but long on grandiosity.

The most startling is the sub-headline of the report which alludes to a ‘doubling of our exports in five years.’ After reading that I thought I had fallen into the rabbit hole and become part of Alice’s Wonderland.  NASA had an easier time sending astronauts to the moon than it will be for the USA to overcome decades of export lethargy and export illiteracy and double our exports in 60 months. I base my beliefs on an intimate working knowledge of Federal Government trade promotion agencies, America’s manufacturers and 20 years of practical experience as an export specialist in over 24 countries.

The priorities: nothing up its sleeve?

According to the report and the review, priority one is to assist small-to-medium-sized enterprises (SMEs) with a ‘national awareness campaign’ (we tried that for decades with only marginal success); more government trade missions and delegations (New Mexicans know how well those work out); more commercial advocacy for U.S. projects (we’re already at the top of our game);  continued support for exporters once they’ve entered the field (they usually want government to get out of their way at that point); more and easier credit (not usually high on serious exporters’ lists unless they need to tool up for a big foreign order). Then there is the usual, ‘better tracking of (GOV) export services, designed to improve policy-making,’ thrown out to appease the smaller government crowd.

There is also a policy wonk euphemism hiding in every report. My favorite in this one has to be the ‘macroeconomic rebalancing’ – a kind of ‘tough love’ program for the G20 trading partners that enables us to convince them to let us bend the international trading rules to get our jobs back from overseas. Ever heard of a lead balloon?   In short, the report and the review have something in common. They are both candidates for the Siegfried and Roy award for shifting realities.  Instead of dragging out the same old worn-out remedies in a ‘new and improved’ initiative to nowhere, what’s really needed are five things.

Five Essential Underpinnings

If we are to see even a modest growth in exports we will need five basic conditions or things to happen:

1. A resurgence of corporate interest in manufacturing and attendant investment

2. New, ‘return to the USA’ manufacturers’ incentives to bring back jobs

3. Better industrial and product design (we cannot sell ‘modified’ U.S.-style products to
sophisticated international customers)

4. More and better market information/commercial intelligence

5. Less government intervention not more

Our trade deficit is already running at an alarming $50 billion/month, of which $25 billion plus is with China! We have no time to wait around for a “global turnaround” or a “domestic recovery” to begin exporting (as the reviewer of the article suggests). A wait and see attitude has never favored the winners in any contest. Those who delay their plans or investments may save some money now, but will lose market share when the turnaround does come. The cost of catching up is infinitely greater when you’re way behind the curve. Just ask the authors of the report.

Stephan Helgesen is the former Director of the State of NM Office of Science and Technology and retired Foreign Service Officer who has worked in 24 countries. He is CEO of Second Opinion Marketing, a high technology consulting company in Albuquerque and Honorary German Consul in New Mexico.

Dangerous Times on the Cusp of Change

Posted on 26. Mar, 2011 by Administrator in Economy

It’s not scientific. There’s no hard data to support it, but I believe we’re most vulnerable to failure when we’re at the very cusp of change. That goes for all change: political, economic or societal. We’re seeing a breakdown (some would say meltdown) in our economy and society. People are seeking refuge, scrambling to readjust their finances, their obligations, jobs and lifestyles. Military veterans will probably identify with this situation better than the rest of us. They know the risks in moving camp or defending a position while replacements are on the way. There is always vulnerability between the time decisions are made and when they’re implemented. There is an even more dangerous period just before the last phase of any operation. This is the time I call the cusp of change, and I believe we’re there now. It’s a frightening time even for those of us who are prepared for it. We can argue how we got to this point of seeming economic Armageddon or lawlessness (there a plenty of folks only too glad to point the accusing finger at anything or anyone they believe responsible). While it’s essential we know what brought us to this point, it’s equally important to figure out where we GO from here to retrieve our society from a headlong plunge into a state of weightlessness where everything spins out of control back to a safe and familiar orbit.

On the economy, there is the extreme view that the American capitalist system is in its last stages, that we have made several critical errors in judgment, the largest of which is similar to the ‘expanding universe theory’ so popular among physicists. It contends that our economy could simply expand without end, that the market mechanism of supply and demand would continue unabated until every country achieved the same standard of living and the same consumption rates that we have enjoyed since the end of WWII. Unfortunately, that was based on the premise that we would be the suppliers and they would be the buyers. We didn’t count on them wanting their own manufacturing apparatus and turning the tables on us. We didn’t factor in the cheap labor component, the national pride factor and their competitiveness to displace us from our coveted number one manufacturing spot. And while there was the possibility of failure as they (countries like India and China for example) transitioned their economies, the potential gain far outweighed the risks. When you come right down to it they had no choice. Their burgeoning populations and the spread of technology were accelerating rapidly. Unless they did something quickly to offset the gains being made by high-tech nations they would have fallen farther behind. Managing the cusp of change moment was easier for them due to the willingness of international organizations to help them with financial and other assistance… and by OUR willingness to tap into their super cheap labor force. We not only gave them the keys to the car but we also drove it for them! They took full advantage of ‘free and unfettered world trade’ and America’s wish to make a quick buck.

We are a world of dominoes

When dominoes are lined up and start to fall, is there one that falls harder than the others? I haven’t asked my physicist friends about that, but I suspect it really doesn’t matter much when all you have left is a pile of collapsed dominoes. Economies are different. It matters who falls first, how hard they fall, who they hit next and when. There is a cusp of change moment just before a fall where motion can be stopped, and we have reached that point. We must make some critical decisions now. Will we support a continuance of failed taxation, investment and trading policies and stop the hemorrhaging of manufacturing jobs? If we ignore this opportunity I’m afraid our economy will continue on a tailspin towards oblivion. It doesn’t take a crystal ball to predict what will happen if we avoid taking steps to turn our economic system around. Our society will be hit by a twin tsunami of anxiety and crime. The anxiety will put already strained personal relationships at risk, and the crime will not only rob us of our possessions but our faith in the system. Those are two dominoes that had better not fall because the result would be decisions made out of fear, and fear is never a precursor to openness and bi-partisanship.

Stephan Helgesen is former Director of the New Mexico Office of Science and Technology and retired U.S. Foreign Commercial Service Officer who served in twenty foreign countries. He is Honorary Consul for Germany and CEO of 2nd Opinion Marketing, an Albuquerque-based international high-technology consultancy company.

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