China, immigration and the presidential debate’s clueless moment

Vivek Wadhwa
Contributor, Innovations October 17, 2012

The moderator, CNN host Candy Crowley, asked a great question during Tuesday night’s presidential debate: “iPad, the Macs, the iPhones, they are all manufactured in China. One of the major reasons is labor is so much cheaper here. How do you convince a great American company to bring that manufacturing back here?”

It was clear, based on the candidates’ responses, that neither of them had a clue. Former Massachusetts governor and Republican presidential candidate Mitt Romney launched into a tirade against China for, among other things, manipulating its currency, while President Barack Obama talked about tax rates and loopholes.

Vivek Wadhwa is a fellow at Rock Center for Corporate Governance at Stanford University, director of research at Center for Entrepreneurship and Research Commercialization at Duke, and distinguished fellow at Singularity University. His past appointments include Harvard Law School, University of California Berkeley, and Emory University. View Archive

The real answer is that complex technology manufacturing requires sophisticated assembly. You need workers doing routine, repetitive tasks – in other words, mindless grunt work that few Americans are willing to do. When they do, they earn salaries that are significantly higher than what the Chinese earn. They won’t work the long shifts and they won’t put up with the abusive labor conditions that China iPhone manufacturer Foxconn has become known for. So companies such as Apple have little choice other than to be in China if they are to meet the almost insatiable demand for their products.

But the good news is that technology is rapidly changing the equation. If you visit the Tesla plant in Fremont, Calif., you see what is arguably the world’s most advanced vehicle—the Tesla Model S, being produced by artificial-intelligence controlled robots. Silicon Valley is, as I’ve written before, one of the most expensive places in the country, yet Tesla can afford to keep its plant there because of automation.

In Sept., Boston-based company Rethink Robotics, formerly Heartland Robotics, Inc., announced a robot called Baxter that has two arms, a face that displays simulated emotion, and cameras and sensors that detect the motion of human beings that work next to it. It can perform assembly and move boxes—just like humans do. It will work 24 hours a day and cost only $22,000. This is just the latest advance in robotics. Robots can now perform surgery, milk cows, do military reconnaissance and combat and fly fighter jets. In the U.S. “do-it-yourselfers” are now crowdsourcing the development of new capabilities for these robots. A number of companies are selling robot-development kits to university students and open-source communities. They are creating ever more sophisticated robots and applications for these.

And then there are the advances in 3D printing that I have also previously written about. As I explained, in conventional manufacturing, parts are produced by using power-driven machine tools, such as saws, lathes, milling machines, and drill presses to physically remove material and achieve a desired geometry. With 3D printing, parts are produced by melting successive layers of materials based on 3D models. This allows manufacturers to create complex objects without any sort of tools or fixtures.

But machinist jobs will need to evolve in order to deal with greater complexity and the new manufacturing environment will also need 3D designers and people who can operate and maintain sophisticated computer-based equipment.

This is a subject our leaders are not discussing: The need to upgrade our education system and to reeducate our workforce. This is what we need to focus our investments on: Our people—not tax breaks for the middle class or the wealthy and not trade wars with China. The way to decimate China’s advantage is to accelerate the progression of technology and have a workforce with better skills.

We also need to dramatically increase the number of innovative technology startups. In the debate, Romney talked about stapling green cards to science, technology, engineering and mathematics diplomas. That’s not enough. As I explain in my new book, America is bleeding entrepreneurial talent right now. Highly-educated and highly-skilled workers and potential entrepreneurs are leaving the U.S. in droves. We could stop the flow by offering them green cards and by instituting a Startup Visa—allow smart foreigners who are in the U.S. legally to start companies here without the bureaucracy and red tape that is holding them back. We would have tens of thousands of startups almost overnight.

So let’s foster innovation and entrepreneurship to continue bringing jobs to the U.S. and keeping the ones still here, rather than endlessly debating who can implement more toxic trade policies.

Wadhwa is the author of The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent.

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