China, Patents & U.S. Jobs

http://online.wsj.com/article/SB10001424052702304066504576341834146711972.html?mod=WSJ_Opinion_LEFTTopOpinion

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"Teams share the credit for victories and the blame for losses. This fosters genuine humility and authentic community. Individuals take credit and blame alone. This fosters pride and sometimes a sense of failure." (John C. Maxwell quoting C. G. Wilkes)

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According to Matthew Slaughter, there's a new report that suggests better intellectual property protection by Beijing could create 2.1 million American jobs. Does anybody disagree that this is possible? Was it the CEO of Microsoft that was over in China sometime within the last month complaining again about the piracy issue?

Slaughter points out that two years into "recovery" (this is a recovery?), America's labor market remains extremely fragile. Unemployment is at 9.1% (officially) and 24 million Americans are unemployed or underemployed. Here's a stat that Slaughter throws out which is incredible: the 108.9 million private-sector U.S. jobs today is the same number we had "12 YEARS AGO!"

According to a new U.S. government report ("China: Effects of Intellectual Property Infringement and Indigenous Innovation Policies on the U.S. Economy," produced by the International Trade Commission (ITC) , one policy change would get 2.1 million jobs added to U.S. private sector employment: get China to protect intellectual-property rights of American companies.

The ITC surveyed 5,000 plus U.S. companies in high-tech, publishing, and software to gauge the incidence and extent of infringement in China. Based upon their estimates and projections, U.S. IP-intensive firms lost somewhere between $48.2 and $90.5 billion from foregone sales, royalties and license fees in 2009. What's so hard about dealing with this? Are we so worried about low prices at Wall-Mart?

Even the senior free trade intellectuals (like former Federal Reserve Vice Chairman Alan S. Blinder) have tempered their positions on "free trade": like maybe totally free trade is not so optimal. So, let's point out to China (we do have a functioning state department, do we not?) what's in it for them if they help us "police" this issue: the innovation they're looking for in their new 5 Year Plan gets a boost within China because their own "inventors" will be "protected." That's the "carrot." The stick is: we put tariffs (amounting to what our companies are losing) on China's imports. This will hurt China's economy right away because some U.S. companies have already learned how to manufacture goods cheaper elsewhere in Asia. In addition, China's labor economy is "fragile" and any loss of manufacturing export demand will immediately increase unemployment which is a significant concern already to China's ruling elite.

While I wouldn't want to overburden our state department, it might also be good to point out to China that we're in this worldwide economy thing together. I was going to read Henry Kissinger's new book (is it called "China"?) but then I read a review of what he wrote and an interview with him about what he wrote and I decided not to waste the money. Kissinger opened up China to the U.S. which was good for both countries but our policies TOWARD China are no more sophisticated today than they were then. My impression of Kissenger is that he embodies this concept of "realpolitik" which is basically that you deal with who's there (whoever's running a country) and get the most out of the relationship that you can. That's pragmatic but I'm not sure it's as sophisticated as it needed to be today. Perhaps Kissinger didn't and doesn't care.

But, enough about Kissinger. Slaughter has hit on something good and it's information that our own government has produced. Let's use it!

(As Slaughter accurately points out, "China may be on the rise, but the U.S. retains a comparative advantage in knowledge-intensive activities, thanks to such strengths as outstanding universities and a culture of risk-taking." So the real "tariff" China has already put on the U.S. is the stealing of ideas that have been turned into intellectual property which is the same thing as stealing jobs.)

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Did I see a report recently that no U.S. sitting President has ever been re-elected with an unemployment rate higher than 7.2%? (except, perhaps, for FDR)