China Rising

Posted by Reed Hundt, author of In China’s Shadow.

While Iraq burns, China, inexorably, strengthens. Not a day goes by without reading in the newspaper, any newspaper, signs of China’s increasing economic prowess. But in a real sense, it’s not the Chinese government or even Chinese workers that pose a challenge to Americans: it is the thousands, and tens of thousands, of firms being born in the Asian entrepreneurial cauldron and that, lean and fit, will compete globally against American firms. If Americans work at firms that win in global competition they will be better off than if they work at firms that lose, or worse, lose badly and go out of business. Working at a winning firm, however, does not mean finding a job at an existing big firm and holding on through the cycles of history. Instead, for Americans in the 21st century, it means moving from job to job, and from old firms to new firms, from less productive to more productive enterprises. The new firms, like Google, will become in the fullness of time, big and somewhat old firms; in an America of entrepreneurship the rate of change in leadership from old to new firms will increase. Already in the United States, 10% of businesses close and 10% are born annually. The key to entrepreneurial success is for births to exceed deaths, and for new businesses to be born in every sector. The ossified and integrated energy and health care industries are the two main examples of sectors that could, if opened by law and technology and leadership, generate hundreds of thousands of new firms and therefore millions of new jobs. These new firms and new jobs will compete successfully with China’s armies of firms, and the result will be an expanding world economy that inures to the benefits of the world’s whole population. But both self-interest and a sincere belief in the American ideals embodied in the term “American Dream” requires that Americans hope and strive for leadership by their homegrown firms in the economy of the future. That’s the leadership Chinese firms also seek; trying to win the game is what is called for.

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