Andy Grove, past CEO of Intel, starts to figure it out on trade and offshoring:

You could say, as many do, that shipping jobs overseas is no big deal because the high-value work — and much of the profits — remain in the U.S. That may well be so. But what kind of a society are we going to have if it consists of highly paid people doing high-value-added work — and masses of unemployed?

[There is in some U.S. circles] a general undervaluing of manufacturing — the idea that as long as “knowledge work” stays in the U.S., it doesn’t matter what happens to factory jobs. It’s not just newspaper commentators who spread this idea.

Grove assails the dumb free-trader-who-has-never-read-a-trade-agreement Thomas Friedman.

New York Times columnist Thomas L. Friedman recently encapsulated this view in a piece called “Start-Ups, Not Bailouts.” His argument: Let tired old companies that do commodity manufacturing die if they have to. If Washington really wants to create jobs, he wrote, it should back startups.

And then there’s that smart guy Alan Blinder.

Consider this passage by Princeton University economist Alan S. Blinder: “The TV manufacturing industry really started here, and at one point employed many workers. But as TV sets became ‘just a commodity,’ their production moved offshore to locations with much lower wages. And nowadays the number of television sets manufactured in the U.S. is zero. A failure? No, a success.”

I disagree. Not only did we lose an untold number of jobs, we broke the chain of experience that is so important in technological evolution. As happened with batteries, abandoning today’s “commodity” manufacturing can lock you out of tomorrow’s emerging industry.

But Grove is right and wrong on this point… but mostly wrong for today’s situation.

Our generation has seen the decisive victory of free-market principles over planned economies. So we stick with this belief, largely oblivious to emerging evidence that while free markets beat planned economies, there may be room for a modification that is even better.

He is right because free markets beat planned economies, i.e. communism, in his century… the 20th.  But this century, the 21st, is about “state managed economies”.  State managed economies – state directed capitalism – are different than communism.  Some are indeed communist, like China, but some are not, like Japan, Germany, Korea, Brazil, India.  Right now, state-managed economies are beating us and we don’t even know we are in a war.

See my blog piece on Choate’s book for more.  As Pat wrote:

[N]ot only does America lack a strategy to deal with state capitalism, we even lack a lexicon.  The terms we use, such as free trade, fair trade, and protectionism, are as outdated as Marxism, proletariat, labor theory of value, and base superstructure.

Indeed.