Chinese and Indian Entrepreneurs Are Eating America's Lunch

This is the usual theme of any article written by Vivek Wadhwa, and I don't want to be dismissive of the idea that young people in China and in India are entrepreneurial and awesomely well prepared educationally to take on a lot of challenging technical problems. One response that the United States will eventually have to develop to this competitive environment in world trade is to build up the skill sets of young people growing up in the United States, for which school reform is still urgently needed, and to increase the entrepreneurial orientation of young people born and brought up in the United States. (I am trying to do my part, as the homeschooling parent of four children who have lived in the United States and overseas, to ensure that my children get sound primary and secondary educations and are entrepreneurial in their thinking.)

That said, another response that the United States never forgets to use in such challenges is being open to immigration and to foreign investment. If young people in another country stand out and succeed, they are always welcome to move to the United States and set up businesses here. And foreign entrepreneurs are always welcome to sell their products and services here and to set up branch offices or the main corporation headquarters here. The openness of the United States population to immigration and the openness of the United States economy to international trade allows Americans to gain most of the benefits of these trends, even if American-born persons aren't the chief drivers of these trends. The countries whose lunch is really being eaten are those like North Korea, closed both to immigration and to trade, and oppressed by dictatorial governments.

Economic expansion is not a zero sum game. If China and India are training future engineers and scientist then great for them. We can hope to learn from them in the future and use there ideas in our own way. The article says something to the tune of: Indian companies taking knowledge from U.S. outsourcers and using that knowledge to start domestic firms. If Cina and India become leaders in the future for innovation the USA and the rest of the world will benefit in the same way.

This question has been answered several hundred years ago by David Ricardo, but others as well. This is not some crazy economic theory that is debatable today, its taken as fact by almost all economists. Economics makes takes no notice of national boundaries, they have no meaning.

I would encourage everyone to learn about some basic international economic theory, trade theory specifically. Knowledge shows that this article is total BS.

Xenophobia will not take us to the land of milk and honey.

In America, we need to start making structural changes to the system like eliminating bad teachers: http://papers.nber.org/papers/w16606 Doing so could produce $100 trillion dollars in gain for the U.S. (according to the paper above from HN yesterday).

Here's a positive view on U.S education standing: "The amazing truth about PISA scores: USA beats Western Europe, ties with Asia." http://super-economy.blogspot.com/2010/12/amazing-truth-abou...

I agree and am happy with the growth and flourishing of the entrepreneurial communities in foreign nations. But the picture is sometimes too rosy. I'm no expert, but this article poses some useful questions about China and India's future: http://www.bloomberg.com/news/2010-12-28/advanced-economies-...

The bearish view from the article:

"Some demographers say China and India are decades away from becoming advanced economies. “Both countries are still very, very poor,” said Jane De Lung, president of the Princeton, New Jersey-based Population Resource Center. “China is growing by leaps and bounds, but the majority of the Chinese still live in very poor and poverty- stricken areas. You don’t have widespread economic growth outside the cities in either country.”"

Ultimately, the U.S., China, and India each have their own strengths and can hopefully cooperate in a way where it's not one versus the other, but rather, together helping move innovation and the world economy forward.

In the 80s it was "the Japanese are eating our lunch". Now it's "the Indians and Chinese are eating our lunch". In the 30s, it'll be "the Africans are eating our lunch".

Every couple of decades the scare brigade starts clamoring in the US. The US survived the Europeans, the Japanese, etc. eating its lunch; it will survive the Chinese and Indians too.

The US has something that none of its competitors do: a free and open society, where entrepreneurs can flourish.

I have Chinese friends who went back to China and started companies in China; but they made sure that they had kids here first, so that the kids could be American citizens when they grow up. Were it not for the PRC's protectionist policies, many (most?) of the Chinese "success stories" would not have happened.

This is not to say that the US doesn't need to do more. We need to spend more on our universities, our schools and our infrastructure. We need more stress on science and math, and less arguing about "intelligent design". Keep the friggin religion out of our schools, let the kids learn.

From what I can see, a lot of the startups in China are just copying ideas and products that have gained traction here in the US. Look at youku.com and tudou.com, major video sharing sites in China, they seem very similar to youtube.com in layout, social network etc. Then look at baidu.com, the major search engine in China. Wow does that homepage remind you of some other search site? Hmmmm.

I am not trying to say that Chinese startups don't have good ideas. But why do they have to blatantly copy US startups that are successful? Obviously, startups inspire each other, but I will posit that what is lacking in China to a certain extent is:

1. Creativity, which leads to a strong tendency to generate knock-offs of Western companies or products. This includes both software and hardware. 2. Openess or ability for people with good ideas to step forward and actuate them. The Chinese educational system is segmented and once you are on a certain path there is not really the ability to change or reinvent oneself as easily as in the West.

Look at Twitter, Apple, and many of the other companies at the forefront of tech and business. The leaders and visionaries behind these companies were not necessarily formally trained in what they are doing cause who can be trained to be a trendsetter! No way. There can only be the right environment for innovation which needs creativity, access to resources, and lots of hard work.

I speak as someone trained in the US in philosophy and politics but learned software development as an afterthought and am building companies and products. Someone like me could not exist in China and to a lesser extent in India due to their narrow-minded educational systems.

I wish founders and developers across the world the best of luck in their endeavors, but know that me and my non-traditional founder compatriots here in the US will compete with you and compete hard!

Between China and India there are over two billion people. If there weren't successful businesses and new inventions coming from them in the future, I would be deeply saddened.

While this is of course sensational all I hear and read supports this.

(California department of corrections outspending department of education, etc, etc).

I think the problem in most of the western world is more general. We cultured societies of "individualists" the flipside of egoists. Most people just do not care what happens one or two generations down the road, they want their services, their money NOW.

Could we do something about this? Yes. Will "we", and by "we" I mean the government run by rich folks? Never.

But as the rich destroy the social fabric of the USA, they will get their due. The USA is as small to India and China as Britain is to the USA. Britain ruled the world just 70 years ago. It lost its wealth in a massive transfer to the USA industrial machine in WWII. The USA is managing to transfer its wealth quite happily without a war. The difference is, the rich Brits fit in quite well in the USA. Good luck with that in China, rich americans!

What can we do? Protectionism. The rich can show you all sorts of reasons why this doesn't work. Just add "for the rich" on the end of everything they say and its true: "protectionism doesn't work for the rich". I'm not sure we can manage IT protectionism (unfortunately, since this is what I do), but we can manage protectionism for manufactured goods. That's basically our only hope.

If we can get a manufacturing industry going again, we can have a genuine middle class, not funded by debt. That, in turn, can fund education and innovation.

Or we can do what Britain did: "We don't need manufacturing because we have our science, services and financial services". But manufacturing funded our R&D. "Well we don't need science, because we have services and financial services". But our services can be run from India. "Well we dont need a service industry because we have the city of london." So know if you live outside of the spending radii if the 20yr olds earning $5m then you're fucked. Hooker or coke-dealer is the most promising profession for a young brit.