Sunday, March 25, 2012

America Invades the World (1900-style)

Last August, Nobel Prize winning economist Paul Krugman threw out the idea that if the American government faked an alien invasion from outer space, we’d have all the fiscal stimulus we could ever want.  The massive build-up would overwhelm our worries about inflation and budget deficits, Krugman said, and the slump would end in 18 months.

If the invader were the Borg, of course, resistance would be futile.  But still, the slump would end, one way or another.

Some of us lived through the Japanese invasion of the American auto industry in the 1970s and 80s when Detroit counter-punched with the Pinto (exploding gas tank), Vega (rapid rusting), installation of Chevy engines in Oldsmobiles (lawsuits) and, of course, the Volar√© (massive recalls).  America finally prevailed by building and purchasing 650 billion minivans--a good strategy, but hardly enough to slow down a real Borg.

Now, Americans are told they are suffering a full-on economic invasion by the Chinese.  Firms from China are the prime contractors on everything from infrastructure improvements in New York City to “almost every Americana-themed trinket sold in the Smithsonian.”  Former Goldman Sach’s bankers are authoring books with offensive, unspeakable titles telling us that we should be paranoid.  Websites list the many ways the Chinese economy is “beating the living daylights” out of the U.S. economy.

Should we run?  Hide?  Gaze lovingly at our Mt. Rushmore collectible post and faux bronze Statues of Liberty?  Is the wolf really at the door? 

Aliens are apparently libertarians

Wouldn’t it be interesting to know what the start of a real, massive, sustained economic invasion might really look like?

William Thomas Stead (1849-1912) was a colorful British muckraking journalist and editor, once thrown in jail for “buying” a young girl as part of a newspaper expos√©, and among the most famous people to die aboard the Titanic.  Ten years before that, his 1902 book, The Americanization of the World, warned his countrymen that the invasion of their land had begun, and carefully described  what it looked like.

The Americans have brought to us a host of ingenious inventions and admirably perfected machines which we are incapable of producing for ourselves,” Stead wrote.  “No one can say that in sending us the typewriter, the sewing-machine, the Linotype, the automobile, the phonograph, the telephone, the elevator, and the incandescent electric light, they invaded any British industry.  These things were their inventions.  After they were introduced, we imitated some of them or invented others on the same principle, but they first opened up the new fields. . .Several of our manufacturers who have been taught by Americans how to make these things, yet cry out that they are being invaded and ruined by American competition, whereas but for the Americans these appliances would never have been in demand in this country.
Is this perhaps what a real economic invasion looks like?  Stead didn’t talk about low cost.  He didn’t discuss industrial espionage or theft of intellectual property.  He talked about making new, ingenious things that people really wanted, and making them at a low enough cost that they could be delivered profitably across the ocean.

“The Americans have done with electricity what the British did with steam at the beginning of the last century,” Stead claimed about the two technological sensations of his times.  “All the nations came to us for steam-engines, just as we are going to the United States for dynamos and all the elaborate, ingenious and costly apparatus necessary for working electric trolleys.”
Just in case you needed to know what one looks like
Typewriters. . .are imported from New York at an average value of £200,000 a year.   The British Government had to buy their telephones for London from the Western Electric Company of Chicago.  In electric traction half of the motors on British street cars are American.  The Central Railway was equipped by the New York General Electric Company, and another New York firm boasts that they have supplied eleven of the leading street electric tramlines in Great Britain. . .The Eastman Kodak Company imports £200,000 worth of American photographic apparatus every year.  A similar amount of money is spent every year in the purchase of American sewing machines.  The sale of American drugs in Great Britain amounts to very nearly a quarter of a million a year.  The Americans are importing soda-water fountains, blouses for women, carpet-sweepers, darning machines, patching up apparatus. . . .
Stead believed that the success of Americans was their singular focus on industrial pursuits: Germany had an army to distract it,  France and Italy the arts and church, Britain its colonies and navy.  “In the United States the whole undivided genius of the people is concentrated upon the pursuit of wealth.”  This was reinforced by education, democracy and incentives to production—for example, an American secured a 17-year patent for £8 and an Englishman a 14-year patent for £99.

Stead gave Great Britain two choices, to “merge the existence of the British Empire in the United States” to remain part of “the greatest of all World-Powers,” or to accept US supremacy and “our ultimate reduction to the status of an English-speaking Belgium.”

Apologies to Belgium, but resistance, Stead believed, was futile.

He even quoted the New York Evening Journal
If any Englishman wants to know why the American race can beat the English race in the struggle for industrial precedence, let him stand at the Delaware-Lackawanna station, in Hoboken, from seven until nine in the morning as the suburban trains come in.  Far outside of the big railroad station the train appears, puffing and panting, and while it is still going at dangerous speed, men, young and old, are seen leaning far out from every platform.  As the train rushes in the men leap from the cars on both sides, and a wild rush follows for the ferry boat.  Not a man is walking slowly or deliberately.  It is one rush to business; it is one rush all day; it is one rush home again.  The gauge on the engine tells the pressure of steam and the work that the engine can do.  The gauge on the American human being stands at high pressure all the time.  His brain is constantly excited, his machinery is working with a full head of steam. . .The American succeeds because he is under high pressure always, because he is determined to make speed even at the risk of bursting the boiler and wrecking the machine.
Coxey's March on Washington
A little perspective here might be useful, because it's not entirely clear America felt like an invading economic army at the end of the nineteenth century.  The summer of 1893 brought a major depression to America--600 banks closed that autumn and perhaps 25% of the urban unskilled were unemployed. This was just one more blow in a global depression that stretched from 1873 to 1896. In 1892, Congress officially took aim at “the Chinese menace,” those immigrants with whom Americans were said to “have nothing in common."   In 1893,  the U.S. Census Bureau informed Americans that their beloved frontier was closed.  The following year, Jacob Coxey’s “petition in boots” drew ragged bands in a march on Washington punctuated that same year by the famous Pullman strike.  In 1896 the US Supreme Court sanctioned Jim Crow by ruling in Plessy v. Ferguson that states could constitutionally enact legislation requiring persons of different races to use “separate but equal” segregated facilities.  By 1901 Mother Jones was reporting on deplorable conditions in Southern cotton mills.  If Americans wanted a reason to panic, to envision the end of normalcy, they certainly had it. In his classic The Search for Order, Robert Wiebe concluded,  “Men from all walks of life, already shaken by an incomprehensible world, responded to any new upheaval as an immediate threat. . .Anxiety [was] like the common cold.”  (See here for my prior post on American nervousness.)

Meanwhile, armies of anxious Americans continued their global conquest.  A contemporary of Stead’s, journalist Frederick McKenzie, authored The American Invaders in 1901 and brought the full message home to the British Empire:
Carter's contained bisacodyl. . .look it up

In the domestic life we have got to this: The average man rises in the morning from his New England sheets, he shaves with ‘Williams’ soap and a Yankee safety razor, pulls on his Boston boots over his socks from North Carolina, fastens his Connecticut braces, slips his Waltham or Waterbury watch in his pocket, and sits down to breakfast.  There he congratulates his wife on the way her Illinois straightfront corset sets off her Massachusetts blouse, and he tackles his breakfast, where he eats bread made from prairie flour (possibly doctored at the special establishments on the lakes), tinned oysters from Baltimore and a little Kansas city bacon, while his wife plays with a slice of Chicago ox-tongue.  The children are given ‘Quaker’ oats.  At the same time he reads his morning paper printed by American machines, on American paper, with American ink, and, possibly, edited by a smart journalist from New York City. He rushes out, catches the electric tram (New York) to Shepherd’s Bush, when he gets in a Yankee elevator to take him on the American-fitted electric railway to the City.  At his office, of course, everything is American.  He sits on a Nebraskan swivel chair, before a Michigan roll-top desk, writes his letters on a Syracuse typewriter, signing them with a New York fountain pen, and drying them with a blotting-sheet from New England.  The letter copies are put away in files manufactured in Grand Rapids.  At lunch-time he hastily swallows some cold roast beef that comes from the Mid-West cow, and flavors it with Pittsburg pickles, followed by a few Delaware tinned peaches, and then soothes his mind with a couple of Virginia cigarettes.  To follow his course all day would be wearisome.  But when evening comes he seeks relaxation at the latest American musical comedy, drinks a cocktail of some Californian wine, and finishes up with a couple of ‘little liver pills’ made in America.
That, I submit to you, is what a true, “shock and awe” economic invasion looks like, from New England sheets to little liver pills:  It’s not built on being good at breaking into corporate websites.   It’s not built on the theft of intellectual property, or an institutional willingness to overlook it.  It’s not built on soul-numbing, low-cost labor.  It’s not built on risk-free government capital.  It’s not built on large populations (which cut both ways, as we are sure to find out this century) or high birth rates.  It’s not  built on the ephemeral advantages of exchange rates and inflation and “foreign investment.”  It’s not built on disenfranchising large segments of the population from the educational process, or judging them as “not worthy” in elementary school (or worse, at birth).  It’s not built on everyone having a cellphone.  It’s not even built on “world class quality,” which is its own kind of double-edged sword.

An invasion comes about when an economy puts the self-renewing, inclusive processes in place that create products and services that people desperately want, products that consistently improve the standard of living and the lot of mankind.  They might be cheap.  They might be expensive.  They might be government funded or privately made.  The good ones might take years to work really well.  But sustained creation and innovation is the only way to have a really profound invasion.

McKenzie believed the secrets of America’s success was better education, longer working hours, receptivity to new ideas, better plant, and most of all, the freedom from “hampering tradition.” He summarized it all by saying,  “American brains, enterprise and energy are today ousting British traders in the battle for commerce in many lands. ..The real invasion goes on unceasingly and without noise as shown in five hundred industries at once.  From shaving soap to electric.”

So, I've been reading the news and checking the blogs (of doom and gloom), wading through the jeremiads and surviving the manifestos and even skimming the books with unspeakable titles.  I’m looking for signs of relentless innovation from afar crossing the border and taking over my life, infiltrating my being from sheets to little liver pills.

I don't know if America is being invaded or not. I now know, however, what a real economic invasion looks like, and I don't see it.

I've even searched through my tchotchke collection from the Smithsonian. I’m looking, I really am. I'm paranoid. I'm anxious. 

I just don't see it.

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