Sony's TV plant closing is an American success story

No, I'm not being facetious with that headline. This is what the U.S. Congress was told just last year. The loss of the TV manufacturing industry is a good thing, despite what you may have read:  Sony to close last U.S. TV factory by IDG News Service reporter Martyn Williams.

The 560 employees whose jobs are affected by Sony’s decision, will no doubt ride off into the sunset to new vistas and frontiers, where they will realize the certain promise of American rebirth and renewal. Or they can go to Mexico, where Sony will now make the TVs. Am I being facetious yet? No. 

In June, 2007, the U.S. Committee on Science and Technology held a series on hearings on the offshoring of research and development. The overarching point from the economists, academics and researchers who testified, including Alan Blinder a professor of economics at Princeton University and former advisor to the Clinton administration,  was that to compete globally the U.S. needs to continually create  new technologies and industries beyond the capabilities of our global competitors

Blinder used the overseas shift in TV manufacturing to illustrate his point. His testimony:

The television manufacturing industry began here and, decades ago, provided good jobs for many American factory workers. But as TV sets became “just a commodity,” their production moved offshore to locations with much lower wages. And for years now, the number of television sets manufactured in the United States has been zero. In consequence, TV manufacture is often held up as an example of industrial failure: We started the industry, then lost it. Actually it should be viewed as a success story. The world’s industrial leader -- the United States -- must constantly innovate and move on, like the cowboy hero in the Western movies. In the case of TV sets, we got there first, but then left. Both were appropriate.

[At this point, the House committee breaks into applause over the loss of the TV manufacturing industry. One committee member says, "That's just great, professor, but what about the auto industry? Is that another success story in the making?" Editor's note: None of this happened. That question wasn't asked. The writer, who was at the hearing and who should know better, is being entirely fictional and facetious. Now, back to the actual testimony.]

This example illustrates an important point: It is crucial for the United States to remain the incubator of new business ideas and the first mover when it comes to providing new goods and services. If we are to remain big exporters as the rest of the world advances, we must specialize in the sunrise industries, not the sunset ones. We must do this not because we like the job destruction in the old industries that we lose, but because we want and need the job creation in the new industries that we gain, even if those jobs won’t stay here forever.

Blinder overreached in the metaphor department by comparing the loss of the TV industry to an old Ronald Reagan Western. The movie image it conjured up for me was the 1941 Western, They Died with Their Boots On,  the great Errol Flynn movie about Gen. Custer [pictured above] that succeeds in romanticizing hubris.  

Blinder's overarching point, that the U.S. has to ensure it maintains its capability to innovate, seems true enough. But what if the wave of research and development heading overseas is undercutting that ability?

More on this latter.