Monday, January 18, 2010

How many divisions does Google have?

by Bernie Quigley

- for The Hill on 1/18/10

A Sunday New York Times headline asks: Can Google Beat China? The answer might be seen in a paraphrase of Joe Stalin’s historic quip: How many divisions does Google have?

Last week before the Google kerfuffle, the Times complained: “As China has flooded the world with exports, it has edged out suppliers from other developing countries. This was bad enough when the world economy was growing briskly.” Now China’s strategy is doing considerably more harm, they say.

There is a scolding tone to the Times essay, but as Hu Jintao pointed out in the recent Copenhagen meeting on climate change, the United States and the West are no longer in the position to scold. Copenhagen should be seen as a pivotal turning point in our relationship with China and therefore with all other countries. At Copenhagen, China demanded a change in status to match the shift in economics variables and more precisely, economic dominance.

The idea of globalism and globalization with America dominant has been on our minds since colonial times. It was embedded in the minds of the founders, especially Hamilton. In 1869 when Walt Whitman saw the opening of the Suez Canal he wrote: Lo, soul, seest thou not God’s purpose from the first?/ The earth to be spann’d, connected by network,/ The races, neighbors, to marry and be given in marriage,/The oceans to be cross’d, the distant brought near,/The lands to be welded together. From then to now it has been the Roosevelts, Kennedy, Bill Clinton and onward and upward. After World War II, globalization was a matrix from which the smallest tribe in Indonesia could not escape.

But the rise to globalism may have limitations now to commerce and creativity. It was always to our advantage to expand and we only expanded because it was to our advantage. But if globalism is no longer to our advantage and is to our disadvantage then we should begin to consider alternatives. The globalist paradigm may now be a receding tide. It may be time for us to begin to start thinking of another framework for our place in the world. Germany, for one, is already doing so.

Required reading: Factory Girls: From Village to City in a Changing China, by Leslie T. Chang. Chang is a reporter for The Wall Street Journal. This is a brilliant and informative book which gives a fundamental framework for what can be seen ahead in China’s economic rise. Chang takes her title from a famous study of the farm girls in New Hampshire and Massachusetts who went to work in factories here 200 years ago and the attitudes which changed their lives as they moved from country to city and which in turn changed the country. She points out that in China’s case the 130 million migrant workers who have moved from peasant plots to work in factories form “the largest migration in human history.”

This group forms a new management and commercial class for greater China. China today spends focuses infrastructure cash on a rising capital and industrial realm not unlike America’s great rise in the 1800s. “They are great capitalists,” says legendary investor Jim Rogers, who has moved his family from New York to Singapore. The conventional wisdom is that China needs us to buy its stuff. But China is now in the position of developing its own internal markets for consumer spending.
Worth noting: The population of the U.S. is 308,491,141 and many of us are rapidly growing old. According to the CIA World Factbook, the population of China is 1,338,612,968.

The prospects for war always increase when economic variables change as they are rapidly changing now. They increase again when the country enters into denial about those changes.