Curiosity and Pluck Took Holstein Global

Former OPC President William J. Holstein spoke about his latest book, The Next American Economy: Blueprint for a Real Recovery, at an OPC book night on May 17 at Club Quarters. OPC member and Executive Editor at Roubini Global Economics Mike Moran served as interlocutor.

Holstein started the evening detailing his book that argues Americans as a whole have failed to launch a competitive response to the emergence of the Asian powerhouses, recently joined by India. Now that the financial bubble that propped up housing prices has popped, the United States has no choice but to come to grips with raising its technological level.

“My father once said, ‘you’re the most curious person I’ve ever known.’ I took that to mean not that I was curious in appearance, but that I had a curiosity about the world. And in fact, I did go on to be a foreign correspondent with UPI,” Holstein said. “I was desperate to go anywhere they would send me. When Jimmy Carter normalized relations with Deng Xiaoping, UPI sent their more senior people into Beijing and their younger guys into Hong Kong as backup. Off I went in January 1979 and stumbled into my first crash-course in globalization.”

As luck would have it, the story was in southern China. Beijing didn’t experience the change that the south was embracing. There was a debate at the time wondering if Chinese could ever modernize? Could they emerge? Holstein went to see one of the ports being built. What stood in the way of its construction was a 2000-foot high mountain. Holstein said he saw at the top of the mountain men with pick-axes and shovels, other men running the debris down the mountain in wheelbarrows. They were taking down the mountain rock by rock.

“Here’s a society that focuses its resources to achieve a common objective,” Holstein said. “They’re going to make it.”

Holstein won an OPC award for this reporting in 1979, besting his senior colleagues in Beijing with insight into what was happening in China. He went on to win the 1987 Morton Frank Award for his collaborative reporting for BusinessWeek, “Japan: Remaking a Nation.”

His UPI assignments in China, Japan and Korea concluded in 1983 and he began to report from across the U.S. covering the shift in many companies’ business models. He wanted to see how the parts fit together, how Asia influences the U.S. and vice versa to create a roaring globalized economy.

“The philosophy was that [the U.S.] would outsource the lower-level work because we would move up the ladder technologically speaking and would be creating wealth throughout the world, freeing countries like China from Communism,” Holstein said. “But the assumption is that Americans would move up and always have vibrant industries while shedding lower-level tasks, but here we are in 2011 and it hasn’t really worked out that way.”

Holstein sees today’s domestic economic problems as three-fold: loans to the U.S. have stopped, the overwhelming need to create jobs and the deep dependence on imported energy. “We need to learn to commercialize our own technology,” he said. “We need a smarter-kind of American capitalism. We can no longer dictate policies in Japan and China. This is not the way to bring about a more balanced relationship.”

Moran said he saw countries as being responsible to bring about change, whereas Holstein asserts the responsibility lies with corporations. Moran asked Holstein how countries like Japan and Germany keep “labor peace,” because these two countries outsource as well, but only certain things, not the entire making of an automobile or mobile telephone. “What are they doing that the United States could emulate?”

“We allowed our labor to reach a point of absolute bitterness,” Holstein said. He covered the auto industry and companies like GM and Firestone. His previous book is Why GM Matters: Inside the Race to Transform a American Icon. “Management and labor got to a point where they couldn’t even communicate. The Japanese and Germans have never allowed labor conditions to reach this level of hostility. They have a more fair distribution of income, which buys them some labor peace. In addition, they also feel a national urgency, a sense of economic patriotism, that they’re doing something for their country if they work hard, work smart and do it for the long term. Those are the things that have been conspicuously in short supply in this country.”

Learn more about the author at his website >>