Andrew Leonard on Taiwan vs Detroit

Taiwanophile Andrew Leonard, the Salon.com columnist, has a great piece comparing the bailouts of Detroit and Taiwan's semiconductor industries. The key observation:

Five separate memory chipmakers in Taiwan does seem like a lot, and some kind of government-brokered consolidation might not be a bad idea. But there's a context to the debate in Taiwan that is not getting enough coverage in the chip-watching trade press, and that offers a sharp contrast to how the auto-bailout is viewed in the United States.

And that is the historic role of Taiwan's government in encouraging the semiconductor industry to develop in the first place. Taiwan's status as one of the world's great hubs of high-tech manufacturing is no accident of market forces. It is the result of canny policy -- government incentives, tax breaks, and close linkages between the government and the private sector. By virtually any standard, it's been a phenomenal success. Decades ago, both government officials and private entrepreneurs realized that Taiwan's best bet to thrive in a highly competitive global economy would be go all in on high technology. The gamble worked.

Therefore, bailing out domestic chipmakers in Taiwan doesn't have to be seen in the same divisive political terms that bailouts in the United States get plugged into. There is a tradition in Taiwan of making strategic decisions for the benefit of the whole economy, and it is on that basis that one presumes the government is currently evaluating its options. In the U.S., however, the very idea of industrial policy has been so stigmatized by decades of market fundamentalist ideological domination that the only time strong intervention in the economy becomes palatable is when the economic circumstances are so dire that to do nothing is obviously more disastrous than doing something, even if there is no carefully thought out strategic blueprint to work from.

So now the U.S. is in the position of being forced to bail out an industry -- automakers -- that has consistently failed to position itself strategically vis a vis the future, while Taiwan is mulling over the benefits of helping out companies that are smack dab in the middle of the 21st century. By ruling the very concept of industrial policy out of hand, the U.S. has maneuvered itself into a quagmire where all it can do is flail about while reacting to the possibility of imminent disaster.

I'm still laughing -- what else can you do? -- at Congress, which handed Wall Street $700 billion to pass out as bonuses to its managers and to recompense wealthy and powerful clients for their losses, while balking at $15 billion for Detroit. Complaining about UAW workers making $50 an hour, but not mentioning the bloated salaries in the financial world.

It's not just that we don't have an industrial policy; we have the negative complement of an industrial policy -- gutting our industrial base while subsidizing our financial firms. And yet, during the heyday of Taiwan economic growth, the banks were not only government-owned, and the financial system was corrupt and incompetently overseen. It was the private sector supplied informal credit systems that enabled Taiwan's SMEs, the bulwark of the economy, to conduct business operations. There's a lesson in there somewhere, if only we can read it properly.

[Taiwan]

Nature on Nanotech and Gene Tech in Taiwan

Naturejobs.com offers an interesting look at Taiwan's high-tech dreams and their implications for the island's employment and technology situation:

Such aspirations are grounded in reality, because many of the country's senior faculty members and administrators trained and worked in top institutions in the United States and Europe. Some come back, mid-career, to care for ageing parents, and take a pay cut in doing so (see 'Low-tech, high-tech'). But schemes to address repatriates' salary issues are gathering steam as part of a bid to internationalize its workforce and to build better facilities in targeted areas.

One of the largest drivers toward Taiwan's goals, the Industrial Technology Research Institute (ITRI), is steering that change. ITRI boasts about 6,000 researchers, of whom roughly 950 hold PhDs. "We've created about 130 companies in the past 30 years," says ITRI's president, Johnsee Lee. But he acknowledges that many of those companies have focused on contract manufacturing, licensing out technology and outsourcing. The biggest example of this phenomenon is also one of ITRI's most prominent success stories. The Taiwan Semiconductor Company, spun off from ITRI 20 years ago, makes chips for most of the world's laptop computers, and sells them under many labels, including IBM. "We have to change from being a follower to being a differentiator, by combining technology and industrial design," says Lee.

It's a long article and there is plenty there.

[Taiwan]