AMERICA WATCHES AS THE REST OF THE WORLD MOVES ON

In 1960, Japan was just rising from the ashes of WWII.  Businesses, government and universities got together and developed a 50 year plan.  Not a ten year plan or a one year plan or a quarterly plan (as has been the case for American companies for decades).

Within 20 years, Japan’s GDP grew from $500 million to $5 trillion.

In 1960, Japan purchased a vehicle from GM, took it back to Japan, tore it apart and found what was good and what was bad.  They then began building cars, better than anything Detroit produced.
In 1980, representatives from Japan came over and offered to show American car companies how to build better cars…a way to thank America for its efforts to help Japan recover from the war.  The United States turned down their offer, all too happy to sell cars with limited useful lives that self-destructed in three years.  In 1950, the U.S. produced 80% of the world’s autos.  They now produce 11% of the world’s automobiles.

Overseeing GM at that time was Roger smith.  Under his watch GM’s market share went down by 16%.  For his good work he was awarded a 6 million dollar bonus.

American businesses had a plan also.  Their plan was (and is) to maximize profits for the following quarter, and thereby boost the stock price and guarantee their executives bonuses for quick growth.  This meant whittling down R&D.

Since interest rates were lowered to almost zero, American companies began buying back their own stock rather than invest in R&D.  The result is that the US fell behind many countries, specifically China, in creating new technologies.

Where once the US, (Intel) produced 90% of all semiconductor chips, Now they control less than 10% of the market.

The shortsightedness of US executives and their blatant pandering to shareholders (who approve of their bonuses), has caused America to fall behind in almost all categories of technological innovation.

Maybe, just maybe, now, with the increase in interest rates, it will incentivise US companies to once again invest more heavily in R&D but they have a long way to go to catch up to China and Taiwan and South Korea.

Write me with your comments: jeffryweiss@gmail.com

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