Shortly after President Obama recorded the Democrats’ “shellacking” in the midterm elections, he began a trip to Asia, starting with a visit to India. Prior to leaving he took responsibility for the large number of seats lost in the House, as well as losses in the Senate and Democratic state houses. “Some election nights are more fun than others. Some are exhilarating. Some are humbling,” he stated. The President said that he had to take “direct responsibility” for the failure to repair the nation’s economic fortunes. He also acknowledged that his relationship with the business community was troubled. He said that upon reflection, it was clear that businesses had drawn the conclusion from his policies that they were being portrayed as “the bad guys” and he accepted responsibility for managing that message poorly. He said that going forward he would need to make “absolutely clear that the only way America succeeds is if businesses are succeeding.” (NY Times November 3, 2010)
President Obama’s trip abroad was built around the G-20 meeting held in Seoul, South Korea. He clearly was looking to India as a counterbalance to China. The noise between the U.S. and China continues to get louder over his and Secretary Geithner’s desire to see the renminbi rise vs. the dollar and the Chinese concern that the second round of quantitative easing by the U.S. is going to result in significant inflation and not the desired goal of more competitive goods and services in the global markets that would result in more jobs back home. The Chinese have been joined by Germany and others in arguing that this latest move of increased capital flows into world markets will result in the destabilization of many currencies. Geithner countered by asserting that the administration would never deliberately devalue the dollar in order to boost exports. (FT November 12, 2010) His response was a reaction to a column in the Financial Times by the former Federal Reserve Chairman Alan Greenspan, in which Greenspan stated that U.S. was “pursuing a policy of currency weakening.” (FT November 12, 2010)
At the same time President Obama was in India on his trade mission, his counterpart, Prime Minister Cameron of the U.K., was leading a British trade mission to China. Cameron was also looking to build stronger economic ties with the fast-growing economies of the Asia/Pacific region. (FT November 8, 2010) This was consistent with his campaign promises and his earlier trip to India in July. Both western leaders need to understand that U.S. and U.K. businesses will need to innovate in order to produce products and services that consumers and businesses in the Asia/Pacific region will want to purchase. (They both have very different approaches to deficits and quantitative easing, which may need to be reconciled over time.)
I found a fascinating interview in the Wall Street Journal with Masayoshi Son, one of the richest men in Japan, who is the founder and CEO of Softbank. (“The World According to Masayoshi Son,” November 12, 2010) “As a natural salesman, Mr. Son seems to have an innate understanding of the ABCs of sales. Always Be Closing. So it should not come as much surprise that Mr. Son was effusive in his praise of Apple’s iPhone and iPad. Softbank is the only Japanese carrier offering the iPhone and iPad, which have helped to lift the fortunes of Softbank.” He compared Steve Jobs to da Vinci and Mozart. “Steve’s passion toward his own products is like an architect or artist who has the passion to create a totally new world,” he said. “He really created the personal computer industry and a bunch of other guys just mimicked. He recreated the music lifestyle with iPod and now this is the third time, he redefined the mobile phone life and extended it to the iPad. The biggest priority to him is not revenue or profit. It’s how he can change the life of humanity. His name will remain for a thousand years. Most of the other people’s names will be forgotten but not his.” I recall Masa Son from the days he owned Ziff-Davis in the U.S. and he always speaks in long time lines, for example 50- and 100-year strategic business plans. His point, though, that Steve Jobs has innovated in product design and functionality in a way that his much larger competitors, for example Microsoft and Hewlett Packard with much larger R&D budgets, have not, is insightful and accurate. Steve Jobs and Apple are brands recognized worldwide for innovation, quality and leadership.
Innovation and government fiscal and tax policies that encourage entrepreneurs in both countries to take risks will remove the malaise that both countries are experiencing. I for one believe that our best days are in front of us.