Like Great Britain, the USA was founded, economically, upon the central premise of simplistic self-improvement: if one took labour, added raw material plus a certain level of skill and/or innovation, one became successful. Originally, in both countries such success was agronomic: as engineering superseded an agrarian basis, however, parts of the core dynamic underwent a paradigm shift. 

Suddenly, invention was the main driver: pioneers, such as Samuel Colt, started making what were then revolutionary products, using early mass production techniques to drive costs down, make manufactured products more affordable and thus reach a wider market. 

From the turn of the 20th Century, such experiments became the norm: Henry Ford dominated auto manufacturing, again basing his product offering on the premise of simplicity and affordability, plus the replication facility of mass manufacturing. 

As metal fast became the transitory killer app of its day, from the railroad onwards, the USA rapidly became one of the worlds leading engineering powers, surpassing the UK in the development and precision of machine tools and techniques. 

Probably, WW II was an engineering watershed: Liberty Ships, built by advanced welding technologies, allowed the rapid construction of “System Built” vessels of all types and for most purposes.

Conventionally, ships were built, using riveting and plate bending methodologies, which had not changed since the Great Eastern was designed by the genius, Brunell. At a stroke, all welded ships, often built by women and other putatively unskilled workers, demonstrated to the World, US industrial might and inventiveness. 

However, life and economic activity evolves: thus the new heroes of industry, from the early 1970s, were those who developed very demanding skills, of creating fully active electronic circuits on slivers of pure silicon. It is easy to forget, now, that it is less than 30 years since Intel created the World’s first microprocessor, as digital electronics have become a basic component of all of our lives. This seminal event, led on to computer CPUs (Central Processing Units) and thus, logically, the PC. 

It is simple to ignore, that a core aspect of the USA’s economic success, during Clinton’s Presidency, were the mammoth gains in US technology and ICT (Information and Communications Technology). 

Simultaneously, emergent companies, such as Microsoft, Oracle, Sun, Cisco Systems et al, achieved exponential growth in revenue, profit and stock value. Dangerously, until recently, no dividends were paid to stockholders:rather, investors relied on continuing capital improvement. 

By the mid-nineties, Venture Capitalists, bloated on huge capital gains, thought they could do no wrong. They were thus well positioned, to create the Dot.Bomb fiasco, by slack lending and project evaluation criteria. 

In Lock-Step with VC’s frenetic successes, the rest of the capital markets jumped onto the gravy train: suddenly, stock options became normal. 

Now, I have nothing against company leaders being rewarded above the average, for above average ability and success. I have everything against their being rewarded for failing and additionally, when they are serving the wrong master! 

The relationship between equity markets and business, traditionally, was that the markets invested in a raft of equities and gained capital appreciation, as natural inflation eroded monetary value, plus in the good times, dividends on stock. Corporations raised extra cash. 

Today, the tail wags the dog and all too often industry leaders decide their corporate strategy and day-to-day policies purely on the market reaction. The true stakeholders – the investors and equally important, the workforce – are very much the poor relation in these cynical dynamics. 

Consider this: General Electric now achieves more revenue and profit from Financial Services, than it does from making things and selling them! Frightening? You bet! 

More and more Americans are working either part-time or on short contracts, with little or no compensation when their job is lost. Not the same for the boys at the top, with their greedy pension schemes, Golden Parachutes and director’s contracts, however! Year-on-year, the relationship between pay scales of Joe Average and Directors of corporations widens, inexorably. 

As more and more jobs are lost to outsourcing, as the level of imports (of consumer durables and semi-durables) increases, as more and more “McJobs” are hailed as the economic answer, how will the USA sustain its society? 

One major hidden weakness in many major corporations’ strategy, can best perhaps be exemplified by the PC market. With the singular exception of Dell, IBM, HP etc, import all their PCs, which are thereafter “Badged”. Most “manufacturers” also import their laptops, on cost-advantage. However, what must be remembered, is that by providing the industrial and financial infrastructure in this case to Taiwan (which is where the vast majority are made), eventually Taiwan will both manufacture and market, under their own brand names. As happened through the 60s and 70s with Japanese consumer electronics. It was a No Brainer, for US electronics manufacturers to transfer their costly manufacturing processes to the land of the rising sun. Unfortunately, once Japanese industry had learnt the right lessons and enjoyed access to huge financing sources (mainly from the massive Balance of Trade Surpluses built up!), they took over the market. Same with autos. 

Taiwan is probably now, the gateway to mainland China: huge current investment is taking place in Silicon Wafer Fab. Taiwan already has the World’s largest Fabs. China is next in line. Silicon Valley came and went in less than two decades! 

A core and worrying aspect of all this, is that both silicon and PC technologies are of huge strategic importance to any state, in this digital age. The UK has no independent PC capability and risible silicon capacity. It is thus totally dependant upon the goodwill of external nations in these areas. 

Since the 1980s – the battle for assets – is already well under way, China’s eventual control of core strategic resources is extremely worrying. Whilst the wheeler dealers of Wall Street buy and sell American’s future prosperity and seek, amorally, to make themselves wealthy at the expense of the majority, it is surely time for Congress to consider the industrial corner the USA is painting itself into? 

Worse, the central premise of Financial Services promulgates the somewhat simplistic belief that all citizens will desire financial products and above all, be capable of timely debt service and principal repayment, or an uninterrupted  investment stream for pensions, life assurance etc. 

If the very financial institutions which hold the above principles dear, are the very instrument by which US citizens lose their full expectation of fair, recompensed stable employment, how can the math equate? Simply, it cannot. 

It seems to this outside analyst, that the USA is now following the primrose path the UK chose, some 25 years ago. Problem with the UK model, is that we are now busy exporting the very “Service Industry” jobs which were promised to replace manufacturing and export activities. The basis of Victorian Britain’s economic success, these were lost as imports boomed and caused balance of trade deficits, which were hailed as central to a modern successful economy. Deficit Financing is good for your fiscal health, we were told, by economists promulgating ever more arcane self-serving theories. 

Presently, the USA relies upon the integrity of the Dollar remaining the main reserve currency in order to assist in balancing record trade deficits. Such offshore financing is free of any debt service. 

The problem now is that more and more commentators doubt the USA’s ability to adequately meet its fiscal obligations. Indeed, this has now become so serious, that Russians, forsooth, are rejecting the US dollar in favour of the Euro as a measure of backstop value. 

Yet, despite this reality and an ever-escalating budget deficit also, your President is committing ever more funds to a war of attrition in the Middle East! 

As Mr Greenspan is compelled, eventually and shortly, by extraneous economic circumstance, to increase effective Federal Prime and Discount rates of interest, the cost of Government borrowing will become unsupportable, international capital market concerns, over the inherent stability of the US economy, may well create an environment, where increasing numbers of foreign exchange holders, reject the US dollar in favour of more predictable hedges. Every public figure, no matter how insignificant or misguided, invariably enjoys the reputation of at least one germ of truth: in Margaret Thatcher’s words, “You cannot buck the markets!” I fear the USA is going to learn that lesson, in the very near future.