Cheshire Cat Photo Blog(...said the Cat: 'we're all mad here....')

President Obama’s plan to boost the research tax credit is generally seen as necessary to keep America competitive in the world economy, but even if the $100 billion plan is approved, it will not address the conversion of new technology into jobs and prosperity for Americans.

Although U.S. scientists and engineers have pioneered many new technologies and products over the last 20 years, production, jobs, and the economic benefits of those discoveries have ended up overseas.

Commerce Department data shows that foreign subsidiaries of U.S. corporations increased their R&D spending by more than 7% from 2007 to 2008, to a total of $37 billion. The SAME multinational companies cut R&D spending in the U.S. 2.2% in 2008, to $199 billion.

The LATimes online article notes that the same trend holds true for HIRING:

“A similar but less dramatic difference was evident in hiring: Employment at these overseas units rose 1% in 2008 — and a stunning 15% in China — but was down 2% for the U.S. elements of the 2,200 multinational firms the Commerce Department studied.”

Government in the U.S. has taken a hands-off (laissez faire) approach to business. “By contrast, export giants such as Germany, Japan and South Korea have embraced government policies — and even pressure tactics — that push businesses to maintain operations at home.”

(Hey, as a “last resort,” the U.S. govenment could take a tip from “Third World” countries and threaten to nationalize companies that export too many of the economic benefits of their innovation! 😉 )

The LATimes article gives specific examples like A123 Systems Inc. from Massachusetts that is building plants in Michigan to produce its breakthrough lithium ion battery technology. In order to show its technology to customers quickly, it had to rely on China’s manufacturing capability. A123 eventually lost out to a South Korean company to make batteries for Chevy’s Volt.

Another example is that of silicon-based solar panel technology that was developed in the U.S. As the solar panel industry took off in countries like Germany, where it was supported with strong government policies, the industry declined in the U.S., where electronics manufacturing and other production capabilities declined earlier.

The article points to Apple as an example of a company that is doing it “right.” Sadly, most U.S. companies are not. Once again – “Are business people stupid?” “Only some….”

The LATimes quotes U.S. Commerce Secretary Gary Locke:

“When products are designed and manufactured side by side in America, businesses can discover new efficiencies and develop second-, third- and fourth-generation upgrades that simply would never occur in a cloistered research lab,” U.S. Commerce Secretary Gary Locke said in a speech early this year.

“When they are not, we allow other countries to develop new businesses and new jobs,” he added.

-Bill at

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