Declining Industry Pat Ray M Dagapioso What is this report all about? 1. This report talks about ‘national interest’.
2. How national interest is used.
3. And the relevance of national interest in
a highly globalized economy. Nation State and the Global Economy • The Modern State is an inadequate mechanism for dealing with the threats and opportunities. • National Interests wall themselves (countries) off from the most powerful engines of growth (e.g. the issue of using the natural resources). Keeping the Global Economy Out: The Case of Australia • Growth depends on inviting the global economy in, not keeping it out. • Australia suffers from Asiaphobia. Australia drives itself off from a possible source of market, eg. Japan. • Foreign Investment in Australia is less amusing. The reason? Foreign investment in Australia is very restricting. • This results in low investments in Australia, that may result in discouraging huge investments in the future. Closed Country Model v. Region State Model • Ohmae proposed a region state model that is open to the global economy rather than the existing closed country models that makes cities and regions rival each other. The Use of National Interest • National Interest is continually used as a defense of special interests, instead of people’s interests (e.g., whaling in Japan.) • Whalers used national pride as a defense for critics of the whaling industry. • Dr. Johnson remarks that waving national interest is an effective defense of a nonsense act. Further, national interest is the mechanism left to protect what has become outdated industries. The Use of National Interest Part 2 • National Interest also paves the way to closing such important benefits of efficiency and cost cutting measures. • Example, providing subsidies for Russian fleets to fish for Japanese consumption. • This example is highly unlikely for governments find it hard to justify spending on anything that is not ‘theirs’. Traditional National Interest and the Borderless World • Traditional national interest has no meaningful place in a borderless world, according to Ohmae. • Hard pressed industries are being responded by governments through subsidies and protection. • Yet, subsidies and protection don’t create incentives for healthy change. Instead it generates unemployment on a wider scale. Nation v. Region • According to M. Porter, in a global economy skilled workers, extensive networks of supplier industries and so on perform better when they exist in close geographical proximity (nations). • Ohmae’s reply: ‘It does not follow that to be effective geogrtaphical groupings must co-exist within borders of a nation state and thereby participate in the same national interest.’ • A. Saxenian supports Ohmae: Silicon Valley prospers but Boston’s Route 128 declines, yet both are in the same country. • Ohmae summarizes: ‘The success of an industry is not a function of a nation’. Indeed, success lies in the combination of individuals, institutions and culture of that region. Nation v. Region: The Case of Japan • This section takes on the success of Japan in the ’70s and in the ‘80s. • Scholars attribute the success to the role of the Ministry of Internaitonal Trade and Industry (MITI), effectiveness of total quality management programs, and the leverage of zero-defects approach to manufacturing. • Ohmae argues, it is not Japan as a nation that did the talking, it was the industries, handful of them, in Japan and companies led by strong leaders that made Japan so competitively successful in those years. An Argument Against a Nation:
The Case of Obamalandia
•A country does not prosper uniformly. • In the United States the great mixture of people, loose federalism on the economic front, and the good capability to adapt changes bears weight on whether regions will work their roads to prosperity or be making their own road blocks to fell behind. • Light manufacturing once flourished in New York City and a booming textile industry in New England, both are now gone. Detroit is the seat of the glory days of US auto industry, yet crimes, homelessness now plagued the region after GM shifted its manufacturing plants to Mexico in the ’80s. Nation State and the Addiction to Centrally Provided Supports • Nation State provide the fuel for the engine of nation interest. • And National Interest drives the Machinery of Industrial Decline. • One of the greatest evidences that nation states are incapable of producing prosperity in a global economy is the case of Japan. Nation State and the Addiction to Centrally Provided Supports: Part 2 • Ohmae predicted that as the production capacity of 3 million ‘Japanese’ cars migrated to America (as one example), what’s left behind in Japan are fairly uncompetitive industries that cannot survive w/o subsidies--and that when their markets are finally deregulated and opened will die even w/ subsidies. • This indulgence over government subsidies in Japan resulted in investments had becomes sour, people inadequately skilled, and bank loans had become delinquent, among others. National Interest and the Quality of Life • National interest, in earlier age, provided a clear and unmistakable dividing line between what was theirs and what was ours. • Ohmae furthers the question of national interest in terms of Japan, again (no offense meant there). • Hokkaido is the recipient of a US$20 billion worth of annual subsidies. Yet Hokkaido still is not self supporting, nothing has worked from shipbuilding, coal industry, to pulp and paper, and even steel manufacturing. • In the end, Ohmae presented the clear answers to the question of validity of national interest in highly globalized economy. The End.