Diary

Why TechExodus.Org: Seven Considerations for Wise Tech Boards, Part 1

As Bank of America executives have discovered from the recent US Uncut demonstrations and ad campaign, a wave of market-based activism is rising in the United States. The issue in B of A’s case is crony capitalism pure and simple, i.e. non-payment of taxes.

Like US Uncut, TechExodus.Org has been founded to build a social network of market activists focused on crony capitalism—In our case the high tech industry version of crony capitalism that goes by the name of offshore manufacturing. This particular flavor of crony capitalism, embraced by shortsighted corporate boards and sanctioned by bad U.S. government trade policy, has led to the ongoing decimation of our high tech manufacturing base—What we in TechExodus call “Rust Belt 2.0”.
 
But unlike US Uncut, TechExodus does not practice market activism with the stated goal of sending more money to the U.S. government. It’s not that we don’t think corporations should pay their fair share of taxes. We do. We simply don’t think the government will be very productive in the use of those taxes—Except to grow even more wasteful spending and political pork.

For this reason, TechExodus sees itself in the tradition of Tea Party activism. In opposition to growing more government—we want to strengthen the private sector in ways that drive job creation, competitiveness and U.S. economic security. Simply put, we want to leverage customer and citizen power to reform high tech capitalism from within.

TechExodus is committed to the kind of market activism that reboots American economic growth by driving management teams at our leading tech superpowers (Apple, Microsoft, Dell, Motorola, Cisco, et al) to detox from the offshoring addiction, re-invest in our high tech manufacturing ecosystem and embrace U.S.-based strategic sourcing as their supply chain model.

On this crucial issue of the decline of our high tech manufacturing base, our thinking follows the point of view of Intel legend Andy Grove. We’d rather see tech boards and CEOs invest the mountains of cash on which they are now sitting into strategic initiatives along the line of what we call R.A.M.P. (Restore American Manufacturing Power), rather than strengthen the economies of global competitors. So in summary:

We want to reboot the American innovation ecosystem from within.

We want U.S. tech companies to think long-term and detox from the drug called offshoring.

We believe this is the best job creation policy long term, and the U.S. public agrees with us according to a recent Gallup poll confirming that restoring manufacturing is the best path to economic growth.

In that spirit here are 7 arguments we hope high tech boards of directors will consider to help them decide in our favor and support the R.A.M.P. initiative.

And if not, these same 7 points will help convince a future army of TechExodus.Org activists to show up at their board meetings and nudge them in our direction (on YouTube and national TV).

1. In the high tech industry, “free trade theory” equals economic malware.

The whole notion of free trade theory based on ‘comparative advantage’ sounds great to an auditorium full of grad students, K Street lobbyists and tech industry analysts. But in practice the multi-decade embrace of this notion by U.S C-level tech executives has infected and gutted the high tech manufacturing ecosystem in the United States.

Today, China enjoys an ever-expanding natural monopoly in high tech device manufacturing, including leading edge smartphones and tablets from Apple, as well as PCs, servers, routers and more from scores of vendors.  And let’s not forget the new cloud connected devices known as the ‘internet of things’.

Here’s one way to think of how natural monopolies arise from sourcing relationships. Twenty-five years ago, the dominant PC standard in the U.S. was described as “IBM-compatible”. When sourcing subcontractors Microsoft (operating system) and Intel (CPU) opened up the market for IBM clones to compete with IBM, IBM lost its innovation mojo in PCs and that mojo passed to Microsoft and Intel. The standard IBM created then become known as the Wintel standard. That’s the real reason why IBM ended up eventually selling their PC unit. I call this process ‘category leader regime change’ in my book, “Asymmetric Marketing”, available on Amazon.com.

This same kind of outsourced contractor-driven category regime change has happened in the electronics  manufacturing vendor set in the United States. Today, fostering more dependence on offshore manufacturing rationalized by free trade theory and comparative advantage is just like removing an innovation firewall and letting all your competitor’s malware into your economic network. There is no happy ending, just weeping and gnashing of teeth.

On today’s global landscape, C-level execs need to begin thinking of national economies like software engineers think of software applications. Sure, the U.S. national economy ‘app’ needs to be “interoperable” with the Chinese economy app.  But the U.S. economy also needs to be secure, scalable and self-sufficient within its own codebase. If not, economic malware will crash the system, as it is now crashing the U.S. economic system.

We are long past this kind of common sense approach to our national economy based largely on the free trade fetish of corporate elites.

Check out the interview with economist Ian Fletcher in the TechExodus videos section. I goes into the destructive results of unfettered free trade theory.

In Part 2 of this blog topic, I’ll go into how “Brand China” is now a net negative for U.S. tech superpower products.

Joseph E Bentzel is the founder of TechExodus.Org, based in California. He can be reached at joseph