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JANUARY 10, 2005
How The U.S. Can Compete With India And China The idea that increased global competition for white-collar jobs undermines the notion that countries are better off by trading with each other contains a number of practical flaws, despite theoretical conclusions and "proofs" to the contrary ("Shaking up trade theory," "The China Price," Special Report, Dec. 6). As long predicted, the Indian and Chinese economies are catching up to the West, a process that has accelerated in the past 20 years because of new technologies that have made the dissemination of knowledge (about markets, products, techniques, and so on) cheaper. This process is inevitable; we would be foolish to try to slow it. Relative wages in these countries are going to keep rising toward Western levels. Luckily, growth elsewhere represents new markets for Western goods and services, not just a new source of competition. The strict discipline imposed on business by competition drives the creation of new products and technologies. It improves efficiency and lowers costs. Increased competition in the software and other white-collar jobs will have exactly the same effect it does in any other sector. The question of how to maintain a high standard of living in a globalized economy is an important one. Domestic policies which favor innovation, competition, the development of human capital and potential, and quality of life will do this. Many countries back up such policies by actively redistributing wealth from globalization's winners to its losers. When new computer science graduates start to sell everything they have to seek job opportunities in Bangalore, I may worry that we have fallen behind. As long as the brain drain flows our way, we will have nothing to worry about. Steven Goodinson Moscow "Shaking up trade theory" offered scary anecdotes and factoids, tenuously suggesting that trade theorists may soon abandon the free-trade paradigm. No economy has ever grown or prospered by walling itself off from competition. Management guru Peter Drucker says cheap foreign labor has less influence on America's ability to compete and succeed globally than do our self-inflicted domestic costs for taxes, regulation, health care, energy and, especially, litigation. We must control these costs, strengthen and make permanent our research and development tax credit, and develop our math and science teachers so they can properly connect today's students with tomorrow's high-tech career opportunities. We also must invest in older workers' adjustments to changing skill demands and insist that our trading partners play by established global rules. But we'll foolishly jeopardize both domestic and international growth if we try to isolate our economy from the rest of the world. Frank Vargo Vice-President for International Economic Affairs National Association of Manufacturers Washington In reading this Special Report, a wave of déjà vu swept over me. All you have to do is dig out your stories from the 1980s and '90s, change the titles from Japan to China, and reprint them. Not only are the articles the same, but the conclusions are the same. Richard Brawer Ocean, N.J. Like your earlier pieces on outsourcing and our ballooning trade deficit, you have kept on message: We need to "start by cutting the budget deficit. And boost funds for education." However, we also need to recognize that the stage is set for the advance of a new "Creative Age," in which creativity and innovation will be the hallmarks of the most successful communities and vibrant economies. In that process we need to engage communities across the nation, and importantly those in each community with responsibilities for education. Those communities placing a premium on cultural, ethnic, and artistic diversity, and reinventing their educational systems -- from preschool through graduate school -- will probably burst with creativity and entrepreneurial fervor. John M. Eger San Diego State University San Diego In your reports on China, there was not one mention of how much more abuse the environment can tolerate. There have to be limits to how much cropland can be consumed for factories and how much air and water pollution the populace can absorb. China is poisoning itself in ways that will be difficult and costly to reverse. David Johnson Chula Vista, Calif. It's Hard To Rate Service That Isn't There "Why consumers hate mergers" (Special Report, Dec. 13) notes two seemingly contradictory survey findings about BP PLC: 1) your study that customers feel that they get 13% less value in terms of price and quality of service, and 2) BP's study that shows that their customers are more satisfied with service than before. This is attributable to two factors: First, when companies lower their product or service quality, raise prices, curtail distribution, or cut advertising, customers tend to defect. The ones who remain generally have the most positive attitudes, so the new average ratings tend to rise. Second, unless the meaning of service is explicitly defined to the respondent, the data are often uninterpretable. Attendant service? Self-service? Repair and maintenance service? Car wash? Food shop service? Ease of payment? Ambience? As fewer service stations have mechanics or technicians, as full-service and dealers have evolved toward obsolescence, as credit-card acceptors are now nearly universal, as bank cards have replaced oil company credit cards, customers change their referents, with many finding the service concept irrelevant. Joseph M. Kamen Flossmoor, Ill. 
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