Free Market Musings
February 1, 2005
7:58 a.m., MT
A very close friend works in the manufacturing industry. I've no experience in that kind of setting, so it's fascinating to hear him talk about what's going on whenever we get together. Of late, almost every time I hear from him I start having Atlas Shrugged flashbacks [LFB link; I'm not an affiliate]. His factory is trying to get new equipment made so they can start a new product line, but at almost every turn they meet with delays. It's apparently impossible to get the quantities of high-quality steel needed to machine the equipment -- the steel just isn't immediately available. The best estimate they have is that it'll be six months to get the steel. My understanding is that two things are contributing to this problem: 1] fewer steelmakers are making steel of the quality required for this project; and 2] China's economic boom is snarfing up much of the steel supply -- as well as other crucial infrastructure materials, including copper wire.

Speaking of China, my friend has had meetings with Chinese engineers, and others who've lived and worked in China, and says that elements of their business culture are evocative of the business climate that used to be the norm in the U.S. Specifically, Chinese companies compete in the marketplace, vying for individuals' business on the basis of merchandise quality, price, and such. Contrast that to our current business climate, where the first step in getting a new product on the market is running to the 'crats for their protectionism, otherwise known as patents and copyrights. In fact, in China, manufacturers don't consider their methods and materials proprietary, or "trade secrets" -- if Company L is working with a new material and having problems, it's common for them to approach Company C to ask them how they've solved them. And Company C actually helps Company L!

Can you imagine how much cheaper U.S.-made products would be without the hidden costs of the government protection racket? Can you imagine how far ahead we'd be, technologically speaking, if all the energy (time and money) that went into patent/copyright procurement and enforcement instead went into research and design? Instead, U.S. companies squabble like 8-year-old boys in a playground spat, sputtering "Mine! All mine! Mine-mine-mine-mine-MINE!!!"

Now that China is opening up, these differences are creating problems, as this Business Week article highlights. I came across the article via this News from Anarchistan post. Odd thing, that: what's a guy who names his blog that doing plumping for the state protection rackets?

"Free markets aren't what the Chinese have. Or rules of contract law, patents, copywrites [sic], and transparency in corporate governance."

I'm no expert in any element of Chinese society, but from where I slither, the Chinese market looks like it has a lot more of the freedom I'd enjoy.

Sunni