May 2011: Need for a New Race to the Moon

May 5:  Today was the 50th anniversary of Alan Shepard’s 15 minute flight into space.  I was all of eight years old then and I remember the impact the space race had on me.  Yuri Gagarin and the Soviets beat the US and Shepard into space by 23 days.   So, in actuality, Shepard was the 2nd man in space.  He was the 1st Amenican.  Gagarin orbited the Earth.  Shepard just peaked his head into space.  I think he was only in space for a grand total of five minutes.   He did not fly again until 1971 when  he was on the Apollo 14 mission and actually walked on the moon.

The Soviets took an early lead with the Sputnik satellite and Gagarin’s flight.  It shocked us as we were still feeling our new found economic and military superiority coming out of World War II.   President John F. Kennedy also felt this shock and motivated our nation, or at least NASA, to win the space race.  We out spent, out manned, and out engineered  the Soviets to win that race and land a man on the moon.  No other country has landed a man on the moon.  President Kennedy pushed an agenda of engineering, science, and math tied to the Space Race and it had an effect...  at least on me.

Some recent news has me believing we need a similar galvanizing mission or challenge of this nature today.  

What was this news?  On April 25th, the IMF released a report projecting that China will overtake the US are the predominant economy in the world.  That projection is not all that astonishing given that their economy is surging and they have four times the population as we do.  The surprise to me was that the IMF report forecasting that China will surpass us as early as 2016.  That fact astonished and jarred me.  But, I was in a distinctly small minority in finding this news unsettling.

What has happened to our national sense of competition and striving to be the best or to be #1.  I fear it has been supplanted with individual greed.  It is not that individual advancement and greed has not been parts of most societies throughout history.

The questions I ask myself at this point are:

1. Did we ever has a sense of striving together?
2. If we did, have we lost it?
3. Can we get it back?

The first question is easy to answer.  I think we did just that World War II.  Factoring out the treatment of Japanese Americans, we seemed to pull together in a real meaningful way to beat the Axis Powers and free Europe and Asia from tyranny.  Maybe I am naive, but this is the sense I took from growing up in the 1950s and 1960s.  There was a common sense of purpose and a common sense of sacrifice.  Everyone worked to achieve the common goal.  

This continued a bit through the fifties and sixties in fighting the Cold War and striving to win the Space Race.  While there was a shared sense of purpose and mission.  People were not all making the same sacrifices and everyone was not working toward the same goal.  The World War II notion of a collective sense of sacrifice and mission was still believed by my parents and grandparents generation.  It made less and less sense to my generation.  This difference became the famed Generation Gap of the late 1960s and early 1970s.   The focal point for this Generation Gap became the Vietnam War.  

We won the space race and we were all happy.  But, we were had changed somehow.  Wall Street took over and the striving for quarterly results dominated at the expense of strategy.  We become a nation of outsourcing, mergers, and acquisitions motivated by consolidations and cost reductions.   

While this was happening here, other countries developed that sense of collective mission and sacrifice.  Japan became an industrial power in the years following World War II.  By the time we took notice, their electronics and automobiles were serious threats eating into our market share.  They caught us flat footed.  They killed our consumer electronics industrial segment.  We survived in automobiles flourishing again in the 1980s and 1990s only to require a government takeover of GM and Chrysler a few years ago.  

There is probably a natural evolutions of economies.  People, governments, and corporations make sacrifices to grow and prosper.  At a certain point, the three segments lose their hunger and become complacent and thus vulnerable.  Complacency plus favoring the short term over the strategic makes us vulnerable to countries that have a strategic industrial strategy and are hell bent on making it happen.

I believe that after the Great Recession of 2008 - 2010, we have emerged as something less than we went into it as.  Maybe we are becoming the UK.  Our middle class continues to erode make us like most societies in the world:  a small rich class of HAVES and very large class of HAVE NOTS that struggle to make ends meet and survive.    OK it is not this horrible in America as yet, but I believe we are headed in that general direction.

So the answer to the above question #2 is Yes.  Yes, we had the common sense of purpose and sacrifice but we lost it in the 1960s and 1970s.  We have yet to regain it.  I believe that the IMF report should be taken as an economic Pearl Harbor.  It should be a call to action for the leadership and people of this great nation.  We need to pull together to drive more science and engineering graduates.  We need to pull together to create strategies to build our manufacturing base up.  We then need to execute those strategies and create meaningul jobs.  We need to do this whether we remain #1, #2, or even #3.

Since John F. Kennedy, we have tried to declare war a few times.  We have declared war on poverty and inflation.  President Lyndon Johnson declared War on Poverty in his 1964 State of the Union Address.  A few years later the worst rioting and looting occurred in poorest sections of Newark, Detroit, and Los Angeles.  That War was not what I would call a success.  Certainly Lyndon Johnson did not win it.  Arguably, we are still fighting this war.

The War on Inflation was actually a little comical.  In 1974, President Gerald Ford declared War on Inflation.  He wanted every American to take up a personal fight against inflation.  He called his program Whip Inflation Now and encouraged everyone to wear buttons with the letters WIN.  The whole program became fodder for every comedian and political satirist in the country.  Inflation was eventually whipped but it had nothing to do with President Ford’s program.

While those wars did not really resonate and take hold like the Space and Cold War with the Soviets, 9/11 had a galvanizing effect.  I saw a greater emotional commitment to the War on Terror. which seems to have culminated with the death of Osama Bin Laden earlier this month.

We need a state of war mentality in regards to our competitiveness.  We need to fight to shore up or middle class.  We need to be serious about our future, our status and stature in the world, and the well being of our citizens.  While we are a country of rugged individualism, we need to mobilize to create a strong and competitive workforce. We need to re-create a business and industrial base that is sustainable and renewable.  We need to renew and we need to renew now.

Maybe we are on the same trajectory as the UK.  Their empire began to fade after World War I and continued to the point where they are kind of an economic and military has been.  They have not been able to resurrect or revive whatever it was that made it great.  

May 16:  This morning I heard a report on NPR.  It was titled “College Student Debt Grows. Is It Worth It?”  The talking head expert in this piece suggested that debt one incurs should not exceed the starting annual salary expected upon landing a job..  This is dependant on the university and major.   The problem seems as bad as the housing crisis. http://www.npr.org/2011/05/16/136214779/college-student-debt-grows-is-it-worth-it


It made me think about the wonderful higher education system we have here and how we should leverage it to help our own people and industry.   I began to think of what we ought to be doing to turn this ship around.  My plan is simple, at least to say, and is two pronged.

1. Educate our workforce differently:  We have the biggest and best university infrastructure in the world.  We need to leverage this strength.  We need to educate our young people to compete in the world economy.  We need scientists, engineers, mathematicians, and computer scientists.
    
2. Provide jobs for the new workforce:  We then have to create the jobs to put these people to work to build our business and industrial infrastructure back-up.  

It is a great plan.  There is just one little question.  How the heck do we fund and provide effective incentives to students, universities, and businesses to make this plan work?  Three are models for this:  Japan (30 years ago), Korea, and, of course, China.  We are competing against countries that plot and plan.   They have focused on industries and sectors and have done a great job making inroads and even dominating industries.  Japan did this, as menitoned above, with consumer electronics, automobiles, and heavy industry.  Korea did it in consumer electronics first in microwave ovens and then having LG and Samsung do to Japan what Japan did to the US in consumer electronics.   China took a lot of production from Europe and the US with an army of really cheap labor.  Besides the cheap labor, the government created policies and incentives to facilitate industrial growth in the country.  As a nation, we let it happen.  Cost reduction was the major driver in the move.  There was the “huge sucking sound” that H. Ross Perot talked about in the 1990s about NAFTA.  He was absolutely right, his timing and geography were off is all.

We should do the same thing.  What is our industrial strategy in this country?  Seriously, what is our Industrial Strategy in this country?  Where do we see our place in the world economy in 2016 and 2021?  Where do we want to see job growth in the next five and ten years?  What are we doing to facilitate this?   Our politicians always seem promise the creation of quality jobs and then there is little follow through.  There has to be a partnership of government and industry to make this happen.  We are spending a lot of money funding wars in Iraq and Afghanistan.  Maye we can take some of these funds and invest them in our industrial base and our workforce.

We rely on the free market, the competitive marketplace, to drive our business sectors.  Companies either will adapt to be competitive or go out of business.  It is hard to argue that this does not work.  It worked from the beginning of the industrial revolution until today.   There was a lot of debate and criticism when the auto companies were taken over by the government in the Great Recession.  A lot of business people thought we should have let them fail.  The argument is that inept leadership and poor union relations took General Motors and Chrysler to bankruptcy.   I believe the government did the right thing.  General Motors paid back the government last year.  Chrysler did the same just this month.  We only did this with these auto companies and the banks because of the dismal state of the economy in the Great Recession.  We need to consider being more proactive in this regard.

The second part of the equation is education.  We need to make our students the best in the world.  We need to ensure that we are all literate, that we produce good managers, engineers, scientists, and mathematicians.  We need to ensure the education excels both in theory and practicality.  We need to also realize that college is not for everyone.  We need to people to learn trades that will be necessary to support the re-industrialization of this great nation.  

We cannot survive as a nation where the majority of the population works in the service industry.  There is no wealth or growth in that.

May 20:  I learned of another report that has a slightly different angle.  This comes from the Boston Consulting Group

Within the next five years, the United States is expected to experience a manufacturing renaissance as the wage gap with China shrinks and certain U.S. states become some of the cheapest locations for manufacturing in the developed world, according to a new analysis by The Boston Consulting Group.

http://www.bcg.com/media/PressReleaseDetails.aspx?id=tcm:12-75973

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Hmmm... which are we to believe?  Do we believe China will overtake the US or rather should we believe that manufacturing jobs will return to this country in great numbers?   Certainly, trends develop and play out faster these days than ever before in human history.  I am less sure that humans are equipped to keep up let alone ahead of these changes.

Think about it.  In just about a twenty year span beginning in 1996 to 2016 we have exported a large measure of our manufacturing base to China.  In the next four or five years, we can see both China becoming the predominant economic power and manufacturing jobs to return here.  It is a little mind boggling.  

Why would the jobs come back here and not to the next low cost geography like Africa or Latin America?  Without us being prepared and having an Industrial Strategy, jobs will only return here if the transportation costs increase to the point where production has to be near the points of consumption.  

Jobs and industry will not return here unless we want them too.  We equals the government, corporations, and people of this great nation.  We allowed the jobs to leave.  China had a strategy and funded that strategy to make it happen.  We went for the big fat cost reductions that moving production to Asia offered.  We allowed our corporations to make the easy short term profit decision.   Some of us foresaw the consequences but were not in positions of influence to affect policy.  So, the jobs left and we saw our stock market soar.  The same short term thinking, and yes greed, caused the housing market and banks to melt down causing the Great Recession.

We are a very independent country.  We have great pride, as well we should, in our freedoms and our independence.  But without a strategy and clear mission, short term optimization usually does not guarantee long term optimization.  This is a position that W. Edwards Deming was most passionate about.  It was true in 1970 and 1980.  It is even more true now.

We need determined leadership to make this happen.  We need determined and intelligent leadership to convince all the different segments and constituencies to get on the same page and then to work to realize the goals and objectives.

This is a gargantuan task.

May 25:  I sat down to work on this letter this evening.  First, I thought I would do a little Twitter.  Time magazine posted the following.  

TIME 50 years later, watch JFK's famous 'Moon' speech, now an American icon http://ti.me/iracRp

I did not realize that John F. Kennedy made his famous Moon Race speech until after the Alan Shepard flight.   A 1:45 minute excerpt of the speech is embedded in the Time article.  You hear President Kennedy lay out the objective:  "I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to Earth.”  I find the message inspiring today.  It was a different time but not all that long ago.  President Kennedy emphasized that we were doing this as a nation and doing it for mankind.  It was noble and good.

I believe we need something just like this.  We need something positive and looking to the future to drive us as a nation and unite us as a people.  We need something to galvanize us, give us a goal that we can collectively work for.  We need something positive to work for and do.

I will be called naive and overly optimistic by some.  Others will accuse me of being too liberal or too conservative.  Don’t ask me how are why I could be accused of both but believe me it will happen.  I will be happy if I can at least get people thinking about this.

I am certain my ideas are not remotely close to a plan.  The ideas need to be discussed, beaten into a plan, and presented to the American people, universities, and corporations in a way that unites us all.

I would love to President Obama lay out a proposal and fund a plan that does just as President Kennedy did 50 years ago.