Friday, November 4, 2011

What Occupy Wall Street is Really About

An analyst commenting on the U.S. Labor Department’s report that 80,000 new jobs were created in October (less than had been hoped) made this wry observation: U.S. corporations have increased hiring; the problem is that they are hiring somewhere else.

 

The Occupy Wall Street protesters are (the rioting fringe element aside) rightfully concerned that the good times are gone and showing no evidence of returning anytime soon.  Their frustration, vented on the financial sector and “the 1%”, though understandable, is directed at the symptom, not the problem.

 

The Problem: The U.S. is Losing its Competitive Footing

The United States is simply not the attractive mecca for business that it once was.  Just as water seeks its lowest level, dollars seek the most favorable commercial environment.  That environment, according to Harvard historian Niall Ferguson, lies in the East.

 

In his book Civilization: The West and the Rest, Ferguson describes 6 man-made institutions (he calls them “killer apps”) that explain the 5-century ascendency of the West to economic and political dominance globally. 

  • competition
  • science
  • private property rights
  • consumer protection
  • modern medicine
  • work ethic

He explains how these factors combined to contribute especially to the rise of the U.S.  He also goes on to illustrate how the East has been rapidly - and successfully - adapting these same methods to gain the upper economic and political hand. 

 

As this interview with Ferguson attests, it’s provocative stuff, and bound to fuel intense arguments at the dinner table.  If you accept his hypothesis, the link between the rise of the East and the economic difficulties in the West that are fueling protests like Occupy Wall Street is clear to see.

 

Implication: The Game is Changing

With the East catching up, the U.S. has to acknowledge the likelihood that it will continue to lose global economic and political leadership to China.  Unskilled jobs in the U.S. that have disappeared in the past 5 years, have disappeared for good.  The game has changed.  So have the stakes.

 

Takeaway

It’s not a Doomsday scenario; but it’s a very different story that the one we grew up believing.  Western corporations would do well to answer two questions:

  • What are the difficult realities we need to face to think globally?
  • What are the tough decisions we need to make to act globally?

Further Reading

A kinder and gentler view can be gleaned from ready Thomas Freedman’s two bestsellers, The Lexus and the Olive Tree, and The World if Flat.

 

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