When heros were not zeros

So the election is over, I’m still struggling with the reality of what candidate Romney said he’d do and what President Romney would have had to do. A couple of recent things illustrate my confusion. Much of what the republicans were doing was looking back, back to a time when America was a producer, not just a consumer. Sure things are made here now, but so much of what we consume isn’t.

Here in Austin, at yesterdays City Council meeting, a big deal was made out of the package of incentives given to Visa to set-up office in Austin. Visa claim to be brining 800 jobs to Austin with an average salary of over $110,000 and in return they are getting some $10-million in tax breaks and other financial incentives. Texas gives away the highest tax breaks of any State in the nation, this week the NY Times ran a story on this, with the winners and losers.

The other piece of news that peaked my interest this week was the news that Apple would start making its’ Mac computers in the USA again, relying on tax breaks, and likely in “partnership with with FoxConn”. We will probably never know what this actually means since all tech companies try to keep their hardware operations veiled in secerecy, given the plummeting cost of hardware, that makes even the slightest improvement in process or manufacturing, potentially worth a fortune.

And there is my dilemma. Two big deals, both dependent on tax breaks, which ultimately either require some to pay more taxes, or services to be cut. The problem I have with Candidate Romneys proposal, was that it seemed to do both. While it made great political grandstanding, to claim to cut benefits and big government, the only way it made any real sense, was if he wanted or believed he could turn America into a low wage economy at the bottom of the stack, making people work for subsistence salaries, rather than get benefits and do nothing.

You could argue either way on this politically and humanely, but it would require huge tax incentives, which would be paid for by cutting benefits and effectively forcing people to work, which many would argue, isn’t a bad thing. However, the real problem is that there is a big difference between make and assemble. Assembling products in America would be entirely do-able. Making them much less so.

And, there’s the rub. In order to make things, you need the raw materials. For the last 20-years, and especially the last 6-years, the Chinese have cornered the futures markets in almost everything you’d need to make anything useful, their futures markets themselves have become essential in day to day trading.

So, I’m guessing Apple will be doing more assembly than making, FoxConn will be doing the making. In the next 4-years the Republican party is going to have to come up with a forward looking strategy, rather than a backward looking one. If that strategy is dependent on manufacturing, then it’s going to need a big government, even if only to cover the tax breaks needed to kick-start it. We’ll need real heroes to do achieve that, not just people who measure their value by the number of zero’s in their net worth.

Author: Mark Cathcart

Formerly an Executive Director of Systems Engineering and a Senior Distinguished Engineer at Dell. Prior to that, an IBM Distinguished Engineer working for the Systems Group in NY and Austin. I’m currently “retired until further notice”.

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