

Chinese and Indian Entrepreneurs Are Eating America's Lunch - emilepetrone
http://www.foreignpolicy.com/articles/2010/12/28/chinese_and_indian_entrepreneurs_are_eating_americas_lunch

======
tokenadult
This is the usual theme of any article written by Vivek Wadhwa, and I don't
want to be dismissive of the idea that young people in China and in India are
entrepreneurial and awesomely well prepared educationally to take on a lot of
challenging technical problems. One response that the United States will
eventually have to develop to this competitive environment in world trade is
to build up the skill sets of young people growing up in the United States,
for which school reform is still urgently needed, and to increase the
entrepreneurial orientation of young people born and brought up in the United
States. (I am trying to do my part, as the homeschooling parent of four
children who have lived in the United States and overseas, to ensure that my
children get sound primary and secondary educations and are entrepreneurial in
their thinking.)

That said, another response that the United States never forgets to use in
such challenges is being open to immigration and to foreign investment. If
young people in another country stand out and succeed, they are always welcome
to move to the United States and set up businesses here. And foreign
entrepreneurs are always welcome to sell their products and services here and
to set up branch offices or the main corporation headquarters here. The
openness of the United States population to immigration and the openness of
the United States economy to international trade allows Americans to gain most
of the benefits of these trends, even if American-born persons aren't the
chief drivers of these trends. The countries whose lunch is really being eaten
are those like North Korea, closed both to immigration and to trade, and
oppressed by dictatorial governments.

~~~
bluishgreen
"The openness of the United States population to immigration.."

What did you mean, that the people are open to immigration? Then maybe. But if
you are talking about govt. policy, this is not correct. The united states is
not at all open to immigration.

~~~
tokenadult
_The united states is not at all open to immigration._

Well, since I'm living with a counterexample right in my own home, I'd
certainly expect you to come forward with more evidence than that to back up
such a broad assertion. First of all, what example do you have in mind of a
country that is much more open to immigration than the United States is? What
are the rules on immigration in that country?

More to the point of the submitted article, which is an interesting
restatement of the usual views of Vivek Wadhwa, where is the evidence that the
United States lacks for visas to be offered to highly inventive,
entrepreneurial people from China or from India? What country in the world
does better than the United States in bringing in immigrants with those
characteristics?

(Yes, I used to be an immigration lawyer, although I have not practiced in
that area of law in recent years.)

------
TheBlack_knight
Economic expansion is not a zero sum game. If China and India are training
future engineers and scientist then great for them. We can hope to learn from
them in the future and use there ideas in our own way. The article says
something to the tune of: Indian companies taking knowledge from U.S.
outsourcers and using that knowledge to start domestic firms. If Cina and
India become leaders in the future for innovation the USA and the rest of the
world will benefit in the same way.

This question has been answered several hundred years ago by David Ricardo,
but others as well. This is not some crazy economic theory that is debatable
today, its taken as fact by almost all economists. Economics makes takes no
notice of national boundaries, they have no meaning.

I would encourage everyone to learn about some basic international economic
theory, trade theory specifically. Knowledge shows that this article is total
BS.

Xenophobia will not take us to the land of milk and honey.

~~~
mbesto
I agree with your point that economics knows no national boundaries.

> _international economic theory, trade theory specifically_

Do you have any good resources for this? Preferably free? Trying to expand my
brain here ;)

~~~
tokenadult
_Do you have any good resources for this? Preferably free? Trying to expand my
brain here ;)_

<http://iang.org/free_banking/david.html>

<http://www.netmba.com/econ/micro/comparative-advantage/>

[http://www.econlib.org/library/Topics/Details/comparativeadv...](http://www.econlib.org/library/Topics/Details/comparativeadvantage.html)

<http://www.econ.umn.edu/~lepetyuk/Econ1101/lecture12.pdf>

[http://www.flatworldknowledge.com/pub/international-trade-
th...](http://www.flatworldknowledge.com/pub/international-trade-theory-
and/199668)

Searches on "international trade comparative advantage" will turn up some more
links, as will combinations of other search terms with the two words
"comparative advantage." I hope these links get you started in your admirable
efforts at self-education.

~~~
TheBlack_knight
Those look good just glancing over them. To move beyond simple comparative
advantage (if you're interested) I would recommend looking into the Heckscher-
Ohlin theorem as well. It expands upon comparative advantage adding another
level of complexity and more insight. Empirically the theorem has been mostly
proven, something that not all economic theories are able to pass.

The Wikipedia page looks like a good overview:
<http://en.wikipedia.org/wiki/Heckscher%E2%80%93Ohlin_model>

Most insights into the benefits of trade can be seen in the Ricadrian
comparative advantage model (see post above).

~~~
binaryfinery
Nice, neat, simple equations and math, at the Macro level.

To put this in hacker terms, these simple rules are about as simple as the
http protocol. Now imagine the software that implements this simple protocol.
Think of all the different ways to exploit it. Now imagine all the complex
systems that can be created using these simple rules. Now add hackers, DDOS,
government censorship, wikileaks, peering disputes, etc.

Economists would have us believe that these simple rules are "how it is". Now
imagine the millions of people it takes to actually implement these simple
rules. Imagine what it takes to actually _make_ wine in Portugal. Now add that
these people want pensions. Now include that these simple rules assume
currency equivalence, or something like the gold standard to mediate
production disparities. Now add the governments _on top_ of this "protocol".

To believe this "proven economic theory" you have to live in a virtual
machine.

------
Miller450
In America, we need to start making structural changes to the system like
eliminating bad teachers: <http://papers.nber.org/papers/w16606> Doing so
could produce $100 trillion dollars in gain for the U.S. (according to the
paper above from HN yesterday).

Here's a positive view on U.S education standing: "The amazing truth about
PISA scores: USA beats Western Europe, ties with Asia." [http://super-
economy.blogspot.com/2010/12/amazing-truth-abou...](http://super-
economy.blogspot.com/2010/12/amazing-truth-about-pisa-scores-usa.html)

I agree and am happy with the growth and flourishing of the entrepreneurial
communities in foreign nations. But the picture is sometimes too rosy. I'm no
expert, but this article poses some useful questions about China and India's
future: [http://www.bloomberg.com/news/2010-12-28/advanced-
economies-...](http://www.bloomberg.com/news/2010-12-28/advanced-economies-
losing-ground-to-emerging-asia-census-shows.html)

The bearish view from the article:

"Some demographers say China and India are decades away from becoming advanced
economies. “Both countries are still very, very poor,” said Jane De Lung,
president of the Princeton, New Jersey-based Population Resource Center.
“China is growing by leaps and bounds, but the majority of the Chinese still
live in very poor and poverty- stricken areas. You don’t have widespread
economic growth outside the cities in either country.”"

Ultimately, the U.S., China, and India each have their own strengths and can
hopefully cooperate in a way where it's not one versus the other, but rather,
together helping move innovation and the world economy forward.

~~~
donteflon
US PISA ranks for 2009: Maths - 30th, Sciences - 23rd, Reading 17th.

[http://en.wikipedia.org/wiki/Programme_for_International_Stu...](http://en.wikipedia.org/wiki/Programme_for_International_Student_Assessment#2009)

------
ajays
In the 80s it was "the Japanese are eating our lunch". Now it's "the Indians
and Chinese are eating our lunch". In the 30s, it'll be "the Africans are
eating our lunch".

Every couple of decades the scare brigade starts clamoring in the US. The US
survived the Europeans, the Japanese, etc. eating its lunch; it will survive
the Chinese and Indians too.

The US has something that none of its competitors do: a free and open society,
where entrepreneurs can flourish.

I have Chinese friends who went back to China and started companies in China;
but they made sure that they had kids here first, so that the kids could be
American citizens when they grow up. Were it not for the PRC's protectionist
policies, many (most?) of the Chinese "success stories" would not have
happened.

This is not to say that the US doesn't need to do more. We need to spend more
on our universities, our schools and our infrastructure. We need more stress
on science and math, and less arguing about "intelligent design". Keep the
friggin religion out of our schools, let the kids learn.

~~~
omouse
_The US has something that none of its competitors do: a free and open
society, where entrepreneurs can flourish._

I'm impressed that you can say that when the US operates Guantanamo Bay and is
actively trying to prosecute Julian Assange of the Wikileaks organization. Not
to mention the DMCA, the Patriot Act and all these other laws/organizations
designed to constrain the rights of its citizens.

 _Were it not for the PRC's protectionist policies, many (most?) of the
Chinese "success stories" would not have happened._

Those policies _work_. It sounds like the US should put them into place since
they work.

~~~
ajays
The US has 308 million people. A society this big will have outliers; Gitmo
being one of them. And last I checked, Assange was _not_ in the US. And the
ones who are 'actively trying to prosecute Assange' are the _Swedes_ and the
Brits; not the US.

The protectionist policies absolutely don't work beyond a small point. If they
worked, then Baidu would be the number 1 search engine in Japan, Korea,
Russia, etc. Is it?

A (protectionist) wall may keep the outsiders out; but it also keeps the
insiders in....

~~~
chc
I don't think anyone really believes the Swedes and the Brits are acting
independently of the US on this one. But it all seems beside the point, since
none of this has to do with business.

------
flacon
From what I can see, a lot of the startups in China are just copying ideas and
products that have gained traction here in the US. Look at youku.com and
tudou.com, major video sharing sites in China, they seem very similar to
youtube.com in layout, social network etc. Then look at baidu.com, the major
search engine in China. Wow does that homepage remind you of some other search
site? Hmmmm.

I am not trying to say that Chinese startups don't have good ideas. But why do
they have to blatantly copy US startups that are successful? Obviously,
startups inspire each other, but I will posit that what is lacking in China to
a certain extent is:

1\. Creativity, which leads to a strong tendency to generate knock-offs of
Western companies or products. This includes both software and hardware. 2\.
Openess or ability for people with good ideas to step forward and actuate
them. The Chinese educational system is segmented and once you are on a
certain path there is not really the ability to change or reinvent oneself as
easily as in the West.

Look at Twitter, Apple, and many of the other companies at the forefront of
tech and business. The leaders and visionaries behind these companies were not
necessarily formally trained in what they are doing cause who can be trained
to be a trendsetter! No way. There can only be the right environment for
innovation which needs creativity, access to resources, and lots of hard work.

I speak as someone trained in the US in philosophy and politics but learned
software development as an afterthought and am building companies and
products. Someone like me could not exist in China and to a lesser extent in
India due to their narrow-minded educational systems.

I wish founders and developers across the world the best of luck in their
endeavors, but know that me and my non-traditional founder compatriots here in
the US will compete with you and compete hard!

~~~
slyall
> I am not trying to say that Chinese startups don't have good ideas. But why
> do they have to blatantly copy US startups that are successful?

Because the US startup had a good idea but made it US-only and/or English-
only. It's like 20 years ago when Detroit was complaining that it didn't sell
many cars in Japan, one factor (there were many others) was that Japanese
drive one the left-hand-side of the road and the US car-makers didn't make
right-hand-drive models.

With physical businesses (like zipcar or netflix) it's hard to build
infrastructure everywhere at once but don't comlain if you ignore 6.5 billion
customers ( 1 billion of whom are "rich" ) to concentrate on 310 million and
somebody else decides copy you.

------
krakensden
Between China and India there are over two billion people. If there weren't
successful businesses and new inventions coming from them in the future, I
would be deeply saddened.

------
linuxhansl
While this is of course sensational all I hear and read supports this.

(California department of corrections outspending department of education,
etc, etc).

I think the problem in most of the western world is more general. We cultured
societies of "individualists" the flipside of egoists. Most people just do not
care what happens one or two generations down the road, they want their
services, their money NOW.

------
binaryfinery
Could we do something about this? Yes. Will "we", and by "we" I mean the
government run by rich folks? Never.

But as the rich destroy the social fabric of the USA, they will get their due.
The USA is as small to India and China as Britain is to the USA. Britain ruled
the world just 70 years ago. It lost its wealth in a massive transfer to the
USA industrial machine in WWII. The USA is managing to transfer its wealth
quite happily without a war. The difference is, the rich Brits fit in quite
well in the USA. Good luck with that in China, rich americans!

What can we do? Protectionism. The rich can show you all sorts of reasons why
this doesn't work. Just add "for the rich" on the end of everything they say
and its true: "protectionism doesn't work _for the rich_ ". I'm not sure we
can manage IT protectionism (unfortunately, since this is what I do), but we
can manage protectionism for manufactured goods. That's basically our only
hope.

If we can get a manufacturing industry going again, we can have a genuine
middle class, not funded by debt. That, in turn, can fund education and
innovation.

Or we can do what Britain did: "We don't need manufacturing because we have
our science, services and financial services". But manufacturing funded our
R&D. "Well we don't need science, because we have services and financial
services". But our services can be run from India. "Well we dont need a
service industry because we have the city of london." So know if you live
outside of the spending radii if the 20yr olds earning $5m then you're fucked.
Hooker or coke-dealer is the most promising profession for a young brit.

