Asia's Economic Lessons for the U.S.

The U.S. is mortgaging its future by outsourcing technological inventions in exchange for short-term cash. The current economic crisis should be a wake-up call that the U.S. needs to boost its productive capacity and win in global markets—something we've been neglecting for the last 40 years.

Outsourcing is necessary when the technological and manufacturing investment required of these businesses is too high for any nation, let alone an individual company, to handle on its own. The question is not whether or not to outsource, but are you outsourcing to advance your competitive position in the industry or are you really just on your way to exiting the business altogether?

In the case of the VCR, the TV industry, and most consumer electronics, U.S. companies chose to exit each business. Better profits were available elsewhere. But the price paid by the U.S. for this choice relative to its industrial competitiveness is enormous. For the last 40 years the U.S. has reduced its productive capacity and its ability to innovate, all for the sake of short-term profits and cash flow.

Without giving it a second thought, the U.S. has been willing to trade long-term national competitiveness for short-term cash. If this continues, the present may be ours, but the future will in the hands of someone else.